The appellant, an electrical contractor, sued the respondents (trustees of a trading trust leasing commercial premises for a Spar store in Port Elizabeth) for R47,991.11, being the balance owed for electrical work done at the leased premises. The work was initially quoted at R390,956.00 to the landlord (Cohen). The quotation included an adjustment clause on page 3, but when annexed to the lease between Cohen and the respondents, this page was omitted. The lease obliged the landlord to carry out improvements per the Spar Specifications, subject to quoted limits. During the work, the second respondent requested substantial additional electrical work beyond the original quotation. The appellant's managing director, Burriss, testified that the respondents agreed to pay for all extra work. The second respondent testified she only agreed to pay for work beyond the Spar Specification, arguing the landlord was responsible for specification-compliant work and the appellant could claim extras from Cohen. The respondents counterclaimed R57,008.40 for alleged overpayment.
The appeal was allowed with costs. The order of the court a quo was set aside and replaced with: (1) Judgment for the plaintiff (appellant) with costs in the amount of R44,522.28; (2) The defendants' (respondents') counterclaim was dismissed with costs.
An adjustment clause in a construction quotation permitting price adjustments for extras and omissions after final design must be interpreted in the context of other contractual terms, particularly clauses requiring written instructions for extra work. Where a quotation requires written instructions for extra work before such work can be claimed, and no such instructions are given, the contractor cannot rely on a general adjustment clause to claim payment for extras from the party who provided the quotation. When a trial court misdirects itself by incorrectly interpreting a contractual term that affects the assessment of probabilities, an appellate court must decide the matter afresh on the record.
The Court expressed doubt (without deciding) as to whether the landlord was obliged under the lease to pay for all work necessary to make the premises comply with the Spar Specification, given the express wording of clause 1.1.6 and Annexure 'D' of the lease. The Court also noted that concessions made by a witness during cross-examination may be disregarded where it is clear from later evidence that such concessions were made in error and do not reflect the true position.
This case is significant for establishing principles regarding the interpretation of construction contracts, particularly quotations with adjustment clauses. It clarifies that adjustment clauses must be read in context with other contractual provisions, especially those requiring written instructions for extra work. The judgment emphasizes that when interpreting commercial contracts, courts must consider the commercial probabilities and the parties' incentives. It also demonstrates the application of the rule that appellate courts can decide cases afresh when trial courts have misdirected themselves on the probabilities, and reinforces principles regarding the assessment of credibility and probabilities in determining disputes about oral contracts.