Nine Hundred Umgeni Road (Pty) Ltd v Bali (92/85) [1985] ZASCA 76; [1986] 1 All SA 289 (A) (12 September 1985)

Nine Hundred Umgeni Road (Pty) Ltd v Bali (92/85) [1985] ZASCA 76; [1986] 1 All SA 289 (A) (12 September 1985)

The court held that the lease agreement was a contract for the benefit of a third party—the company to be formed. The respondent, as trustee, did not become personally liable for the obligations under the contract unless the contract expressly or by necessary implication provided for such liability. The clauses relied upon by the appellant were standard and did not indicate an intention to impose personal liability on the trustee prior to acceptance by the company. The court found that, pending acceptance by the company, performance of the lessee's obligations did not create personal liability for the trustee; rather, the lessor's remedy was to resile from the contract if performance was...

Citation
[1985] ZASCA 76
Parties
Appellant: Nine Hundred Umgeni Road (Pty) Ltd; Respondent: K B A Bali
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
12 September 1985
Case Number
92/85
Procedural Posture
Civil Appeal / Appeal From Provincial Division
Outcome
Appeal dismissed with costs.
Judges
Jansen, Kotzé, Viljoen, Grosskopf, Nicholas
Legal Topics
Contract for Benefit of Third Party, Personal Liability of Trustee, Company to Be Formed, Lease Agreement
Commercial and Corporate Contract for Benefit of Third Party Personal Liability of Trustee Company to Be Formed Lease Agreement

Case Brief

Summary, issues, holding and outcome

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Parties

Nine Hundred Umgeni Road (Pty) Ltd

Appellant

K B A Bali

Respondent

Procedural Posture

Civil Appeal / Appeal From Provincial Division

Legal Issues

  1. 1 Whether the company to be formed accepted the benefit of the lease agreement.
  2. 2 Whether the respondent, as trustee for a company to be formed, was personally liable under the contract.
  3. 3 Whether the terms of the contract expressly or impliedly imposed personal liability on the respondent prior to acceptance by the company.

Ratio Decidendi

The court held that the lease agreement was a contract for the benefit of a third party—the company to be formed. The respondent, as trustee, did not become personally liable for the obligations under the contract unless the contract expressly or by necessary implication provided for such liability. The clauses relied upon by the appellant were standard and did not indicate an intention to impose personal liability on the trustee prior to acceptance by the company. The court found that, pending acceptance by the company, performance of the lessee's obligations did not create personal liability for the trustee; rather, the lessor's remedy was to resile from the contract if performance was...

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.