eBusiness Weekly
Business Writer
A BID by Doves Funeral Assurance to be paid more than US$4 million by Zimplats after withdrawal of a tender award for funeral cover, has flopped after the High Court threw out the suit.
The suit sought either damages or to bind the mining giant to what the court found to be a non-existent contract.
Zimplats cancelled the tender it had awarded Doves to provide funeral cover for its more than 2 000 workers in early 2013 before signing the contract because the insurer’s financial books were not in good standing as was a requirement for the tender.
Before signing the contract, Zimplats commissioned auditors Ernst & Young to examine Doves’ financial status, and they came up with a report that caused Zimplats to cancel the tender and not confirm the contract.
Doves then approached the High Court suing Zimplats.
Firstly, Doves sought an order declaring Zimplats’ decision to cancel the tender unlawful and to order restoration of the contract.
It also sought to compel Zimplats to finalise the implementation of the company’s employee funeral scheme, or if Zimplats was totally opposed to the contract, to pay US$4,2 million in damages for breach of contract.
But High Court judge, Justice Amy Tsanga, threw out the suit after finding that there was no contract that could be deemed binding to justify specific performance, as claimed by Doves.
During the hearing, Doves sought to argue that non-disclosure of material information of the insurance company’s financial standing was not part of the tender.
But Justice Tsanga, in her judgment, did not agree, finding the argument unrealistic in a serious business world where things are expected to be done professionally.
“It would be unrealistic and simply self-serving rhetoric to suggest that a company’s real financial standing is of no consequence to an intended business partner,” she said.
A tenderer is expected to disclose all material information about its status in good faith for the party seeking a contract to make an informed decision.
Justice Tsanga said Doves sought to abuse the court to facilitate acceptance of an uncompleted and an unexecuted document when it was clear that failure to disclose material information to the intended business partner demonstrated an unwillingness on the part of Doves to move forward with the completion of the agreement because of the misinformation it provided leading to the award of the tender.
“It is tantamount to dragging an unwilling partner to the altar or, worse still, condoning the operation of business gangster style, through arm-twisting, were a party to insist on specific performance for a contract that was never perfected or claim damages where the tender documents specifically provided to the contrary,” she said.
“More significantly, where the very award of the tender had been gotten through non-disclosure of key information, this would hardly be in keeping with the ethos of promoting sound ethical business.”
In its application, Doves, represented by Advocate Sylvester Hashiti, insisted that an agreement existed between the insurance company and Zimplats for the establishment of the Zimplats Employee Funeral Scheme.
Hashiti said the bid, having been accepted on March 20 2013, resulted in a binding contract and any subsequent negotiations pointed towards implementation of that contract as opposed to inception of a contract.
But Addington Chinake, arguing the matter for Zimplats, submitted that there was no existing contract between Doves and his client that could be used for the court to rule in favour of the insurance company.
He said mere acceptance of the tender was not a contract itself and urged the court to dismiss Doves” contention that a contract existed between the parties.
Chinake said at the material time the purported contract was cancelled, there existed only an intention to contract Doves and nothing had been reduced to writing, so no contract existed.
