Cubana Latino Caffe CC v Gapwedge Properties 53 (Pty) Ltd (1628/2011) [2011] ZAECPEHC 44 (3 November 2011)

Cubana Latino Caffe CC v Gapwedge Properties 53 (Pty) Ltd (1628/2011) [2011] ZAECPEHC 44 (3 November 2011)

The court found that clause 17 of the franchise agreement was a term and not a suspensive condition. The obligations under the contract were not suspended pending the conclusion of the lease; rather, the lease agreement was required to be concluded prior to the signing of the franchise agreement, which was done. The respondent, having become aware of the invalidity of the lease agreement shortly after signing, deliberately withheld this information from the applicant for over a year and continued to act as if the agreements were valid. By its conduct, the respondent was estopped from denying the validity of the franchise agreement. The parties tacitly agreed to treat both the lease and...

Citation
[2011] ZAECPEHC 44
Parties
Applicant: Cubana Latino Caffe CC; Respondent: Gapwedge Properties 53 (Pty) Ltd
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
3 November 2011
Case Number
1628/2011
Procedural Posture
Civil Application / First Instance Judgment
Outcome
Application granted in favour of the applicant.
Judges
Chetty
Legal Topics
Franchise Agreement, Suspensive Condition, Estoppel, Contractual Terms, Lease Agreement
Commercial and Corporate Civil Procedure Franchise Agreement Suspensive Condition Estoppel Contractual Terms Lease Agreement

Case Brief

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Parties

Cubana Latino Caffe CC

Applicant

Gapwedge Properties 53 (Pty) Ltd

Respondent

Procedural Posture

Civil Application / First Instance Judgment

Legal Issues

  1. 1 Whether clause 17 of the franchise agreement constituted a suspensive condition or a term of the contract.
  2. 2 Whether the respondent was estopped from contending that the franchise agreement was void ab initio due to the invalidity of the lease agreement.
  3. 3 Whether the applicant was entitled to the relief sought under the franchise agreement.

Ratio Decidendi

The court found that clause 17 of the franchise agreement was a term and not a suspensive condition. The obligations under the contract were not suspended pending the conclusion of the lease; rather, the lease agreement was required to be concluded prior to the signing of the franchise agreement, which was done. The respondent, having become aware of the invalidity of the lease agreement shortly after signing, deliberately withheld this information from the applicant for over a year and continued to act as if the agreements were valid. By its conduct, the respondent was estopped from denying the validity of the franchise agreement. The parties tacitly agreed to treat both the lease and...

Court Disposition

Application granted in favour of the applicant.

Orders

  • It is declared that, as at 19 May 2011, the franchise agreement between the parties was valid and enforceable and that the applicant thereafter validly terminated such agreement.
  • The respondent is ordered to forthwith vacate the premises known as Shop 1, MacArthur Pool and Leisure Centre, Beach Road, Humewood (erf 595 Port Elizabeth).