P Christodolou & Sons Textiles CC and Another v Woolworths (Pty) Ltd (3541/12) [2013] ZAWCHC 96 (12 June 2013)

P Christodolou & Sons Textiles CC and Another v Woolworths (Pty) Ltd (3541/12) [2013] ZAWCHC 96 (12 June 2013)

The court found that the parties' sustained common intention was for the franchise agreement to endure for ten years, concurrent with the lease addendum, and not to expire on 23 September 2013 as recorded in the addendum. Woolworths' conduct, including negotiating a ten-year lease and requiring ten-year viability projections, led a reasonable person in the plaintiffs' position to believe that the franchise would be extended accordingly. The court accepted the plaintiffs' evidence that the addendum was signed under pressure and without knowledge of the incorrect expiry date. Woolworths' failure to clarify the discrepancy and its insistence on signature during a busy period constituted a...

Citation
[2013] ZAWCHC 96
Parties
Plaintiff: P Christodolou & Sons Textiles CC; Plaintiff: Paulos Christodolou; Defendant: Woolworths (Proprietary) Limited
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
12 June 2013
Case Number
3541/12
Procedural Posture
Civil Trial / First Instance
Outcome
Plaintiffs succeed in their claim for rectification of the franchise agreement addendum. The addendum is rectified to reflect expiry on 30 April 2019. Defendant to pay plaintiffs' costs, including costs of two counsel.
Judges
KM Savage
Legal Topics
Rectification of Contract, Franchise Agreements, Good Faith, Misrepresentation, Tacit Terms
Commercial and Corporate Civil Procedure Rectification of Contract Franchise Agreements Good Faith Misrepresentation Tacit Terms

Case Brief

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Parties

P Christodolou & Sons Textiles CC

Plaintiff

Paulos Christodolou

Plaintiff

Woolworths (Proprietary) Limited

Defendant

Procedural Posture

Civil Trial / First Instance

Legal Issues

  1. 1 Whether the addendum to the franchise agreement should be rectified to reflect the parties' true common intention regarding the expiry date.
  2. 2 Whether the plaintiffs are entitled to rectification of the franchise agreement based on mistake or misrepresentation.
  3. 3 Whether a tacit option to extend the franchise agreement for a further five years existed.

Ratio Decidendi

The court found that the parties' sustained common intention was for the franchise agreement to endure for ten years, concurrent with the lease addendum, and not to expire on 23 September 2013 as recorded in the addendum. Woolworths' conduct, including negotiating a ten-year lease and requiring ten-year viability projections, led a reasonable person in the plaintiffs' position to believe that the franchise would be extended accordingly. The court accepted the plaintiffs' evidence that the addendum was signed under pressure and without knowledge of the incorrect expiry date. Woolworths' failure to clarify the discrepancy and its insistence on signature during a busy period constituted a...

Court Disposition

Plaintiffs succeed in their claim for rectification of the franchise agreement addendum. The addendum is rectified to reflect expiry on 30 April 2019. Defendant to pay plaintiffs' costs, including costs of two counsel.

Orders

  • Clause 3.2 of the Addendum to the Franchise Agreement signed by the plaintiffs on 4 December 2009 and by the defendant on a date thereafter is rectified to read: 'Clause 7.1.2 shall be deleted in its entirety and replaced by a new clause 7.1.2 which clause shall read as follows: "7.1.2. endure for a period reckoned...
  • The defendant shall pay the plaintiffs’ costs, inclusive of the costs of two counsel.