Pecus Enterprises (Private) Limited t/a Tagtel Communications v (1) Powertel Communications (Private) Limited (2) Procurement Regulatory Authority of Zimbabwe

On 31 May 2023, the first respondent issued a request for quotation for the supply of 70km of 24 Core CST armoured cables. On 1 June 2023, the appellant submitted a quotation of US$244,300.00. On 13 July 2023, the first respondent advised the appellant that its quotation was successful and requested payment of contract administration fees to the second respondent as a pre-condition to signing a written contract. On 26 July 2023, the appellant paid US$2,443.00 in contract administration fees. Subsequently, the first respondent cancelled the award on instruction from the second respondent in terms of s 42(f) of the Public Procurement and Disposal of Public Assets Act [Chapter 22:23], on the basis that the appellant's prices were extremely higher than market average prices. The appellant instituted action seeking specific performance for release of contract documents or alternatively damages for breach of contract in the sum of US$246,743.00. The High Court dismissed the claim, finding no contract existed between the parties. The appellant appealed.

• Whether a valid contract was concluded between the appellant and first respondent upon acceptance of the tender/quotation on 13 July 2023
• Whether the first respondent unlawfully terminated the contract thereby entitling the appellant to damages for breach of contract
• Whether the procurement process was subject to statutory requirements under the Public Procurement and Disposal of Public Assets Act requiring a signed written contract

The appeal was dismissed with costs.

In public procurement governed by statute, a notice of proposed award does not constitute a binding contract where the governing legislation mandates a written and signed contract. Where statutory provisions such as s 55 of the Public Procurement and Disposal of Public Assets Act require procurement contracts to be in writing and signed by authorized officials, compliance with these formalities is a condition precedent to the formation of a valid procurement contract. A proposed award that is expressly conditional upon due diligence, preparation of a draft contract for review and signature, and the absence of intervening challenges does not create an immediately binding contractual obligation. The legal onus rests on a party alleging that a contract has been concluded to establish that all conditions precedent, including statutory requirements for written and signed contracts, have been fulfilled.

The Court noted that the appellant's awareness of the need for a written contract was evidenced by its consistent correspondence requesting the draft contract and by the nature of its original claim for specific performance directing release of contract documents. The Court observed that the term "proposed award" is not without significance and is meant to make clear that the award still has to become final. The Court also noted that the case was distinguishable from PTC v Support Construction on the basis that in that case the bid was through standard tender processes with tender documents, whereas the present case involved an abridged version through a request for quotation procurement method. The Court applied the general principle that costs follow the cause.

This case is significant in Zimbabwean procurement law (and provides instructive guidance for South African procurement law) as it clarifies that acceptance of a tender or quotation in the public procurement context does not automatically create a binding contract where the governing legislation requires a written and signed contract. The case establishes that statutory procurement requirements, particularly those mandating written contracts, constitute conditions precedent to the formation of a valid procurement contract. The judgment underscores that procurement contracts are governed not only by common law principles of contract formation but also by statutory provisions that may impose additional formalities. It emphasizes the importance of distinguishing between a notice of proposed award and a concluded contract in the procurement context. The case provides guidance on when parties to procurement proceedings should be deemed to have entered into a binding contractual relationship and reinforces that compliance with statutory procedures is essential for the validity of public procurement contracts.