Hangar v Robertson

The appellants, directors of Merlog Foods (Pty) Ltd, concluded a written consultancy agreement with the respondent, a retired businessman, in June 2006. The respondent agreed to assist in improving Merlog’s profitability and value. His remuneration included reimbursement of expenses, a percentage of profit before tax above a threshold, an option to purchase shares, and 10% of any increase in the company’s value above R24 million, payable when the value was ‘realised’. Although Merlog’s value increased during the respondent’s tenure, the business was not sold and the respondent did not exercise his share option before it lapsed. After the consultancy relationship ended in December 2009, the respondent claimed payment of 10% of the net increase in value. The appellants resisted, arguing the clause was vague, unenforceable, or dependent on an actual sale during the contract period.

The appeal was dismissed with costs, and the declaratory order holding the appellants jointly liable to pay 10% of the increase in value when realised was upheld.

The case reaffirms modern South African principles of contractual interpretation, emphasising context, commercial purpose, and business efficacy. It confirms that deferred-payment clauses linked to future realisation of value are not unenforceable merely because the triggering event is uncertain, and that courts should not lightly find commercial agreements void for vagueness.