By Jaco Fraser – Associate
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In the recent judgment ofM & J Da Costa Brothers (Pty) Ltd and Another v Ivor Michael Karan 2025] ZAGPJHC 1191, the Gauteng High Court (the “Court”) revisited one of the oldest battlegrounds in commercial law — the tension between the sanctity of the written contract and the practical realities of business dealings.
The case involved the sale of a farming enterprise as a going concern. The parties concluded a written agreement in August 2018 in terms of which M & J Da Costa Brothers (Pty) Ltd (“Costa”) sold its farm, equipment and business operations to Ivor Michael Karan (“Karan”). Like many such transactions, the contract contained various annexures, price formulas and adjustment mechanisms. Among these, “Annexure W” set out the cost of “other assets” such as raw materials, seed, standing crops and fertiliser.
The agreement contained the familiar protective clauses that commercial contracts routinely rely on:
- A “Whole Agreement” clause, stating that no party is bound by any undertakings not recorded in the written agreement or “in such other agreements”; and
- A “Non-Variation” clause, stipulating that no amendment is of any force unless reduced to writing and signed by both parties.
Despite these safeguards, disputes later arose about payments for farming inputs and operational expenses incurred during the interim period, prior to transfer. Costa claimed that an oral agreement was reached post signature to deal with certain expenses and that Karan himself had acted upon understanding. Karan, relying on the written contract, raised an exception, arguing that any alleged oral agreement was inadmissible and contrary to the written terms. The court a quo upheld the exception — but on appeal the presiding Judges of the Court took a more pragmatic view.
Wright J noted that the written agreement was inherently open-ended. Clauses 7.3 to 7.5 of the agreement contemplated that the parties would later “attempt to agree” on the price for the “other assets” and, failing agreement, an independent accountant would determine same. Clause 22 required the preparation of an adjustment account after the effective date to reconcile prepaid and accrued expenses.
In this context, the Court held, the agreement’s own structure envisaged future cooperation and further consensus between the parties. The reference in clause 31.1 to “such other agreements” reinforced the possibility that subsequent arrangements, even oral ones, could lawfully arise in implementation of the sale.
To hold otherwise, said Wright J, would be to “place form over substance” and render the contract unworkable in practice. The parties had clearly anticipated ongoing arrangements to finalise the transaction, and there was no basis, at exception stage, to rule out the alleged oral agreement. The appeal was accordingly upheld, and the exception dismissed.
Why the Judgment Matters:
This decision carries useful lessons for anyone involved in business sales, restructurings or ongoing commercial relationships:
“Whole Agreement”:
Where a transaction anticipates future adjustments or operational steps, the court may accept that later agreements were intended to give effect to the transaction.
Business Substance Over Form:
Courts value commercial sense over technical rigidity. Where strict wording makes a deal unworkable, later conduct or consensus may still be recognised.
Da Costa Brothers v Karan is a timely reminder that a contract’s power lies not only in its written words but also in its workability. Commercial law demands both certainty and practicality. As Wright J observed, the court must avoid allowing the whole agreement and non-variation clauses to get the better of the open-endedness of the written agreement. In other words, sometimes, business reality writes its own addendum.