AA Alloy Foundry (Pty) Ltd v Titaco Projects (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Grosskopf JA, Harms JA, Zulman JA, MelunskyAJA, Mpati AJA
• Judgment Date: 12 November 1999
• Citation: 2000 (1) SA 639 (SCA)
• Docket Number: 309/97
• Hearing Date: 02 November 1999
• Counsel: MVR Potgieter for the appellant CHJ Badenhorst (with him P Pauw) for the respondent
• Court: Supreme Court of Appeal

Harms JA:

[1] The plaintiff (the present respondent) was employed during 1989 by Purity Ferrochrome (Pty) Ltd (hereinafter referred to as 'Purity') to design, supply, erect and commission a smelter for smelting chromate G ore at Purity's ferrochrome plant in Rustenburg. This included the provision of two furnaces. A Japanese concern, Tanabe, as subcontractor, supplied the necessary technology and commissioning and engineering services. Each furnace has three electrode columns, the extremities of which penetrate the ore mix and generate the heat H necessary for smelting. Electric current is transferred through contact shoes to the upper part of the electrodes, each being serviced by eight shoes in such a way that the shoes are not directly in contact with the ore mix. Contact shoes have more the appearance of shoe soles than of shoes, are concave on the inner surface in order to fit snugly around the electrodes and have cavities for circulating cooling water. I

[2] They are conventionally made of either brass or copper, each shoe weighs several hundred kilograms and is about 1,25m in length and 0,5m wide. A casting process is used to manufacture them and the defendant (the appellant), who operates a foundry, was subcontracted by the plaintiff to produce 48 shoes made of brass. In due course the defendant provided the shoes ordered; they were installed and soon gave J

Harms JA

problems. The plaintiff, Purity and the project manager had great A difficulty in establishing the cause of the problems and eventually came to the conclusion that it was because the defendant had used a brass alloy which did not conform to the British Standards Specification (BS 2870/1980 CZ103). In the event, the plaintiff rejected the shoes, tendered redelivery and claimed damages. An alternative claim based upon an alleged repudiated settlement and which B was the subject of separate adjudication was dismissed. [1] The damages claim succeeded before Heher J and this appeal is with his leave.

[3] Brass is an alloy of copper and zinc and, depending on its intended application, the ratio between them may vary. Impurities are C always present and the nature and quality of the brass depend upon the identity of any particular impurity and the amount present. The said specification prescribes an 80:20 copper-zinc alloy with a maximum lead content of 0,05% by mass. It became common cause that the brass used by the defendant contained lead far in excess of the prescribed maximum. Generally speaking, lead deleteriously affects the quality of D brass and the higher the lead content the greater the loss of ductility and this, depending upon the operating conditions, may manifest itself in cracking. The scientific explanation is fairly simple. Lead does not dissolve in brass like sugar does in water but remains undissolved, much like sand. Due to its low melting point of 327° C, it will start E melting long before the alloy which melts at about 1000° C. Once the lead melts it weakens the brass.

[4] The first issue to decide is whether the defendant was contractually obliged to supply brass shoes with less than 0,05% of lead by weight in accordance with the said British standard. The answer F to the question depends upon the interpretation of clause 1 of the written contract (the purchase order) between the parties. Clause 1 provides that:

'This purchase order . . . constitutes the sole and entire agreement between the parties hereto. The contractor's quotation is incorporated in and made a part of this purchase order only to the extent of specifying the nature and description of the goods G ordered. . . . No other terms or conditions shall be binding upon purchaser unless accepted in writing.'

The focus is on the identification of the defendant's 'quotation': the plaintiff's case is that the quality control plan prepared by the defendant which specified that the material to be used for the contact shoes would conform to the British standard was part of H the quotation and was incorporated into the purchase order because it specified the nature and description of the goods ordered. Although admitting the existence of the plan the defendant denies that it formed part of its 'quotation'.

[5] Heher J held that, if it were established that the defendant had I submitted the plan as part of its quotation, compliance with the plan would have been a contractual obligation. He found that a document entitled 'quotation' together with the plan was submitted to the plaintiff

Harms JA

by the defendant in one envelope and that before the A conclusion of the contract these two documents were discussed and considered together by both parties. These findings, which are relevant in identifying the 'contractor's quotation' referred to in clause 1 of the purchase order, were rightly not attacked on appeal. Corroboration for this finding is to be found in the fact that there B was a reason why the defendant would have provided a quality plan as part and parcel of its quotation. According to the tender documents provided to the defendant and on which the tender had to be based, the defendant was obliged to 'submit with his tender details of his quality plans'. In particular, the defendant was called upon to submit C 'full details of the brass selected' for the contact shoes and the said British standard was suggested. The document headed 'quotation' itself did make reference to the nature of the brass by stating that the copper-zinc ratio would be 80:20 - which was in any...