REPORTABLE
Case Number  : 429 / 98
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
In the matter between
NIEMESH SINGH
Appellant
and
McCARTHY RETAIL LTD
Respondent
(t/a McINTOSH MOTORS)
Composition of the Court :
O l i v i e r ,  S c o t t  J J A  a n d
Mthiyane AJA
Date of hearing :
25 August 2000
Date of delivery :
14 September 2000
SUMMARY
Contract - malperformance - right of rescission - test - value judgment of
Court.
J U D G M E N T
PJJ OLIVIER

OLIVIER  JA
[1] In February 1996 and at Pinetown the respondent sold to the
appellant a new 1996 model Mercedes Benz E 320 A Sportline motor vehicle in
terms of a written contract.   Respondent did not have the required vehicle in
stock at Pinetown, but could obtain one from a motor dealer in King Williams
Town.   It was agreed that the vehicle would be delivered to the appellant at
Durban, at the respondent’s expense.   In due course the vehicle was delivered
to the appellant at Durban, and he honoured his side of the bargain.
[2] In order to effect delivery at Durban, the respondent arranged for
the vehicle to be driven under its own power from King Williams Town to
Durban.   It was driven with its odometer disconnected, so that when it was
delivered to the Appellant, its odometer indicated a kilometre reading of 160,
instead of the true 920.   The appellant was unaware that the vehicle had thus
been driven.

[3] The appellant’s case in the court a quo was that what he bought
was a new vehicle and not one which had been driven from King Williams Town
to Durban.   He alleged that the respondent was made aware of the appellant’s
wishes in this regard and had in fact agreed that the vehicle would be brought
to Durban by road transportation carrier.   The respondent, so the appellant
averred, thus committed a breach of contract entitling the latter to rescission and
restitutionary relief.
[4] As far as the breach of contract is concerned, the appellant alleged
that the written contract of sale did not correctly record all the terms agreed
upon between the parties in that it does not record a term which was formulated
by the appellant as follows:
“Defendants (now respondent) will source the vehicle from another dealer
in King Williams Town in the Cape Province and the vehicle will be brought
to Durban by road transportation carrier.”
Appellant claimed, firstly, rectification of the written contract to include the above
term.   He based the allegation of a breach of the contract by the respondent
squarely on the facts mentioned above and written contract as rectified.

[5] The appellant further claimed rescission of the contract and
restitiutionary relief.   He based his entitlement to recission on alternative
grounds:  firstly, that the respondent breached the contract in a material
respect; and secondly, on an implied lex commissoria.
[6] The court a quo
(i)
upheld the appellant’s claim for rectification as set out above;
(ii)
found that the respondent had breached the contract as rectified,
by having the vehicle driven under its own power from King
Williams Town to Durban instead of having it conveyed by motor
carrier transportation;
(iii)
rejected the appellant’s claim that the said breach was of such a
fundamental nature as to justify his rescission of the contract;
(iv)
rejected the appellant’s claim that the parties had agreed tacitly to
a lex commissoria;
(v)
in the result, granted absolution of the instance with costs; and
(vi)
later granted leave to the appellant to appeal against the said
judgment to this Court.
[7] The following facts are not in dispute:
(a)
That the parties entered into a written contract for the sale of the

motor vehicle at Durban on 8 February 1996.
(b)
That the written contract contained the following terms:
“8
I [the purchaser] agree that the vehicle is new, notwithstanding -
8.1
that it may have been driven under its own
power with or without the distance travelled
having been recorded on the odometer -
8.1.1
from the plant where it was assembled to
the place of delivery; or
8.1.2
for demonstration purposes; or
8.1.3
for pre-delivery testing;
8.2
that it may have sustained minor damage in
the course of 8.1.”
(c)
That the vehicle was driven under its own power from King
Williams Town to Durban and during that time its odometer was
disconnected.
(d)
That the vehicle was so driven without the appellant’s knowledge or
consent.
(e)
That the appellant only became aware that the vehicle was driven
as described above after it was delivered to him and as a result of
him noticing minor damage or defects in the vehicle, caused by
the said driving.
The claim for rectification
[8]  The appellant bears the burden to prove, on a balance of probabilities,

either an antecendent or contemporaneous agreement or a common continuing
intention of the parties, in respect of the alleged term, which was mistakenly not
reflected or correctly reflected in the written document.   This is trite law.
[9] In this Court, the respondent expressed disagreement with the
finding of the court a quo that the appellant’s claim for rectification is to be
upheld.   It was not argued on behalf of the respondent that the judge a quo
misdirected himself or that he applied a wrong legal principle or test in respect
of the rectification issue.   It was, however, suggested that the learned judge had
made a wrong finding on the factual issue as to whether the parties had agreed
on the clause quoted above.
[10] In the light of the conclusion to which I have come in respect of the
appellant’s right to cancel the contract, it is not necessary to deal with the
rectification issue at all.   I will assume, in favour of the appellant that the court
a quo correctly found in his favour that the contract stands to be corrected as
alleged by him.   It follows from this that we must proceed on the basis that the

respondent committed a breach of the contract by having the car driven from
King Williams Town to Durban , instead of transporting it by carrier.
Cancellation of the contract
[11] The crucial question is whether the appellant was entitled to cancel
the contract because of such breach, either because the breach was material,
or because the parties had tacitly agreed on a lex commissoria entitling the
appellant to cancel if the contract is breached as aforesaid.
[12] The right of a party to a contract to cancel it on account of
malperformance by the other party, in the absence of a lex commissoria
depends on whether or not the breach, objectively evaluated, is so serious as to
justify cancellation by the innocent party.
[13] When is a breach, in the form of malperformance, so serious that
it justifies cancellation by the innocent party?   Van der Merwe et al (Contract,
General Principles 1 ed 1993, at 255) summarises the position as follows, with
reference to decided cases and various writers:

“The test for seriousness has been expressed in a variety of ways, for
example that the breach must go to the root of the contract, must affect a
vital part or term of the contract, or must relate to a material or essential
term of the contract, or  that there must have been a substantial failure to
perform.   It has been said that the question whether a breach would justify
cancellation is a matter of judicial discretion.   In more general terms the
test can be expressed as whether the breach is so serious that it would not
be reasonable to expect that the creditor should retain the defective
performance and be satisfied with damages to supplement the
malperformance.”
[14] As long ago as 1949 it was said by this Court in Aucamp v Morton
1949 (3) SA 611 (A) at 619 with regard to the relevant question, that it was not
possible to find a simple general principle which can be applied as a test in all
cases, because contracts and breaches of contract take so many forms.   In
deciding, in that case, whether the respondent was entitled to cancel the
contract, the Court said (at 620)
“ ... nor were the obligations which were broken so vital or material to the
performance of the whole contract that respondent could say that the
foundation of the contract was destroyed.”
[15] I perceive the correct approach to be as follows : The test, whether

the innocent party is entitled to cancel the contract because of malperformance
by the other, in the absence of a lex commissoria, entails a value judgment by
the Court.   It is, essentially, a balancing of competing interests - that of the
innocent party claiming rescission and that of the party who committed the
breach.   The ultimate criterion must be one of treating both parties, under the
circumstances, fairly, bearing in mind that rescission, rather than specific
performance or damages, is the more radical remedy.   Is the breach so serious
that it is fair to allow the innocent party to cancel the contract and undo all its
consequences?
[16] Approaching the matter from this broad perspective, I am of the
view that the breach of the contract by the respondent does not justify rescission
of the contract.   It is true that the appellant wished to buy the Mercedes
delivered to him in Durban, as a new car.   He was adamant that it should be
transported by road carrier.   But if one analyses the evidence, the matter
becomes more opaque.   The appellant suggested to Reddy that if the

respondent could not deliver the Mercedes by carrier, it must pay his air fare to
King Williams Town and he would drive it back to Durban at their expense.   The
true implication of this scheme was that he would drive the car to Durban as
agent of the respondent, and true delivery would take place in Durban.   His real
complaint, therefore, was not that the car was driven from King Williams Town
to Durban, but that it was not driven by himself.   The appellant relied on this
solitary fact; he did not rely on any substantial damage to the vehicle due to its
having been driven as explained.   The breach, in this form, does not justify
rescission.
[17] The appellant also relied on a tacit lex commissoria, i.e. that the
parties tacitly entered into an agreement that should the contract be breached,
the appellant would be entitled to cancellation.   A tacit term is
“ ... an unexpressed provision of the contract which derives from the
common intention of the parties, as inferred by the Court from the express
terms of the contract and the surrounding circumstances.”
See Corbett AJA in Alfred McAlpine v Son (Pty) Ltd v Transvaal Provincial

Administration 1974 (3) SA 506 (A) at 531 H.
[18] The contract in this case makes no provision for a right of
cancellation in favour of the purchaser under any circumstances.   And it
is impossible to find, on a preponderance of probabilities, and applying the
officious bystander test, that both parties would have agreed to a lex
commissoria in respect of the breach now under discussion.
[19] In the result, the appeal cannot succeed.
The following order is made :
The appeal is dismissed with costs.
P J J OLIVIER   JA
CONCURRING :
SCOTT  JA
MTHIYANE  AJA