The Plaaskem/Nippon Africa Judgment below is important for planning practitioners. Various agreements are concluded from time to time (such as for joint ventures for tenders, etc.). The issue of duration of the agreement has been clarified by the Supreme Court.
LAW OF CONTRACT
OVER AND OUT
“Since there’s no help, come let us kiss and part, Nay, I have done: you are no more of me, And I am glad, yea glad with all my heart, That thus so cleanly, I myself can free,
Shake hands for ever, cancel all our vows.”
– Michael Drayton (1563 – 1631)
THE SUPREME Court of Appeal in Bloemfontein has dealt in detail with the position where a contract is silent as to its duration. The issue was whether the written contract could be construed as containing a tacit or implied term to the effect that the contract was terminable by either party on reasonable written notice.
Furthermore, when parties bind themselves to an agreement which requires them to work closely together and to have mutual trust and confidence in each other, it is not reasonable to infer that they did not intend to bind themselves indefinitely, but rather contemplated termination by either party on reasonable notice.
There does not have to be a valid commercial reason for terminating a contract which is terminable on reasonable notice.
Plaaskem (Pty) Ltd v. Nippon Africa Chemicals (Pty) Ltd 2014 (5)
SA 287 (SCA).
Source MacRobert Lawletter
30 January 2015