Nedbank Ltd v Capital Refrigerated Truck Bodies (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Milne JP
• Judgment Date: 03 December 1987
• Citation: 1988 (4) SA 73 (N)
• Hearing Date: 19 November 1987
• Court: Natal Provincial Division

Milne JP:

The plaintiff seeks default judgment against the second defendant as surety and co-principal debtor with the first defendant on an agreement of overdraft. In the particulars of claim, it is pleaded that it was an express, alternatively implied, term of this agreement G that:

'7.3 Plaintiff would also be entitled to debit such account with interest on any debit balance from time to time at a rate fixed by plaintiff from time to time at its discretion, provided such rate would not be greater than the maximum permissible rate prescribed from time to time by the Usury Act 73 of 1968, such debit balance being H comprised of capital debts, disbursements, charges and interest previously debited, which interest would be calculated on daily balance.'

It is further pleaded that the first defendant's account was debited monthly 'with interest which became due and payable each month in terms of the agreement of overdraft', and that on 28 July 1987 the total I amount of the debt was the sum of R33 075,78. On that date the rate of interest fixed by plaintiff 'at its discretion' was 16,5% per annum and it was alleged that the plaintiff had fixed that rate until payment of the debt. The maximum permissible rate of interest under the Usury Act 73 of 1968 in respect of this sort of transaction is presently 19%.

The Judge, before whom the matter originally came, raised the question of whether the provision for the plaintiff to fix the interest at its J discretion

Milne JP

A was enforceable. Presumably what the learned Judge had in mind was the principle so succinctly put by Wessels J in Davidowitz v Van Drimmelen 1913 TPD 672 at 676 where he said:

'If I say, for instance "I will buy your horse for what it is worth" or "for what I choose to pay for it", there is no sale. This principle applies to every form of contract. If the person who claims that he has B made a contract proves that it depends wholly upon his own will what part of it he should perform, then according to my view there is no contract; it is void for vagueness.'

Mr Dickson, who appeared for the plaintiff and to whom I am indebted for a full and helpful argument, referred me to the following passage in C Corbin on Contract vol 1 s 98:

'An agreement that provides that the price to be paid, or other performance to be rendered, shall be left to the will and discretion of the parties has been held not enforceable. This is supportable if the party having such a...