ARTICLE
22 April 2022

Cooking With Oral Agreements? Spur Corporation Faces Massive Damages Claim

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Barnard Inc.

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Moneyweb reports that the Spur Corporation, a JSE-listed multi-brand restaurant franchisor, is currently facing a R183-million rand damages claim from GPS Food Group RSA, a subsidiary of the global GPS Food Group.
South Africa Food, Drugs, Healthcare, Life Sciences
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Moneyweb reports that the Spur Corporation, a JSE-listed multi-brand restaurant franchisor, is currently facing a R183-million rand damages claim from GPS Food Group RSA, a subsidiary of the global GPS Food Group.

GPS Foods Group RSA served summons on the Spur Corp for alleged damages related to the establishment of a so-called joint venture for a rib supply and processing facility they set up in Cape Town in 2017. GPS says that an oral agreement was concluded between itself and the Spur Corporation in 2017 in terms of which the parties would establish a joint venture to acquire, develop and manage a rib processing facility. The facility stopped production in 2020.

Spur Corporation confirmed in a note to its latest financial results that it has been engaging with GPS Foods over several years regarding the product supply and the prospect of a rib processing joint venture. But, further to that, Spur said no written agreement was ever executed with GPS.

It is surprising that big corporations can conclude agreements verbally without ensuring that it is put in writing. Nonetheless, in general, oral agreements are as valid and enforceable as written agreements.

However, GPS will have its work cut out. The reliance on oral agreements can be formidable, because having to prove the existence of the agreement can be a onerous exercise. Parties rely on “he said, she said”, just as the GPS Food Group alleged that the parties reached an agreement on verbal terms; whereas Spur has stated the contrary.

It is always better to document an agreement between two parties to avoid possible contractual disputes. The summons was already issued in the Western Cape High Court by GPS Foods Group RSA in December 2019 but parties have not yet been informed of the date when the claim will be heard.

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