OK Bazaars (1929) Limited v The Standard Bank of South Africa Limited

An employee of OK Bazaars (trading as Hyperama), Mr Overton, furnished Standard Bank with a written undertaking confirming that Hyperama had purchased certain imported goods from KTC Resources (Pty) Ltd and irrevocably undertaking to pay the purchase price to Standard Bank. In truth, Hyperama had purchased the goods from a different company, Samarkand (Pty) Ltd, also controlled by KTC’s principal. Relying on the undertaking and the implied representation that a debt would become due to KTC, Standard Bank established a letter of credit in favour of the overseas supplier and ultimately paid out under it. When payment was not received from KTC or Hyperama, and KTC was liquidated, the bank suffered a substantial loss and sued Hyperama for damages based on negligent misstatement.

The appeal was dismissed with costs, including the costs of two counsel, and the High Court’s judgment in favour of Standard Bank was confirmed.

The case is a leading South African authority on negligent misstatement causing pure economic loss, particularly in a commercial and banking context. It clarifies how undertakings and representations are assessed together, affirms the flexible approach to legal causation, and illustrates when subsequent acts will not break the chain of causation. It is frequently cited in cases involving letters of credit and delictual liability for incorrect commercial assurances.