18 June 2015 by Cliffe Dekker Hofmeyr Dispute Resolution Matters

Commercial law update

Cascadelle Distribution et Cie Ltée v. Nestlé Products (Mauritius) Ltd2015 SCJ 120 – 15 April 2015.

A plaintiff who is party to an agreement can establish on a balance of probability that the termination of the agreement by the other party was abusive and made in bad faith having regards to all the circumstances of the case and claim for damages for 'abus de droit' and 'faute' and this would not be in breach of principle of 'non-cumul de la responsabilité contractuelle et délictuelle' (ie, a claim cannot be brought both in contract and in tort).

On behalf of the defendant company it was argued that in view of the contractual relationship which existed between the plaintiff and the defendant, the plaintiff was wrong to have based its claim on 'faute' (tort) as opposed to 'breach of contract'.

In its claim, the plaintiff stated, after setting out the turn of events which led to the termination of the exclusive distribution agreement with the defendant company, that "the means adopted by the defendant to achieve its purpose were reprehensible, illicit, arbitrary and unfair and that the termination was done in utter bad faith and was calculated to harm the economic and commercial interests of the plaintiff, depriving the latter of the fruits of its investment in the common interest venture which had been set into place by the agreement." The plaintiff further stated that "the termination of the agreement made in the described circumstances constitutes an 'abus de droit' (ie exercising a right abusively) and a 'faute' (ie a tort)."

According to the principle of 'non-cumul de la responsabilité contractuelle et délictuelle' (ie a claim cannot be brought both in contract and in tort) which is applicable in Mauritius, a claimant must opt to base his action either on contract or in tort but cannot proceed by way of a hybrid action.

A plaintiff who is party to an agreement can, however, establish on a balance of probability that the termination of the agreement by the other party was abusive and made in bad faith having regards to all the circumstances of the case and claim for damages for 'abus de droit' and 'faute'. The plaintiff’s action would not be a breach to the principles of 'non-cumul'.

Commentary:

It would be for the plaintiff to establish those facts which would entitle it to claim damages for the tortious act ('abus de droit' and 'faute') of the defendant distinct from the breach of contract. If the plaintiff does not establish that the termination of the contract was abusive and in bad faith, the claim will be dismissed. In the context of a commercial claim, it is advisable that accounting evidence is produced in court to establish the different heads of damages such as loss of profits, loss of opportunity and capital expenditure.

Although there was no exit clause in the two agreements binding the plaintiff and defendant, and the agreements would therefore be considered as 'contrats à durée indéterminée', ie of unlimited duration, this, however, does not mean that such a contract cannot be terminated. As rightly observed by the Supreme Court, the parties cannot be tied up for life as that would infringe on the freedom of the individual. The parties may obviously mutually agree to put an end to the agreement or one of them may unilaterally put an end to it with all its legal consequences. However, there must be reasonable delay given before its termination to temper the damages the other party might endure and such termination must also be made in good faith. The Court held the view that a one year period is more than reasonable for the other party to mitigate its losses.

Ammar Oozeer
Partner & Barrister
Juristconsult Chambers

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