Quenty’s Motors (Pty) Ltd v Standard Credit Corporation Ltd 1994 (3) SA 188 (A)

Quenty’s Motors (Pty) Ltd v Standard Credit Corporation Ltd 1994 (3) SA 188 (A)

Issue

Whether a finance house was liable for breach of contract for failing to make good on a guarantee of payments made by a third party.

Facts

Quenty’s Motors (Pty) Ltd (Quenty’s) entered into a contract with a customer to sell him a motor vehicle. The customer obtained finance from Standard Credit Corporation Ltd (Standard Credit).

As part of the finance agreement, Standard Credit agreed to guarantee the customer's payments to Quenty’s. However, the customer failed to make his payments and Standard Credit refused to make good on its guarantee.

Quenty’s sued Standard Credit for breach of contract.

Procedural History

The trial court held that Standard Credit was not liable for breach of contract because the guarantee was not clear and unambiguous. Quenty’s appealed the decision to the Appellate Division.

Holding

The Appellate Division held that Standard Credit was liable for breach of contract. The court reasoned that the guarantee was clear and unambiguous and that Standard Credit had breached its contract by failing to make good on its guarantee.

Reasoning

The court reasoned that the guarantee was clear and unambiguous because it stated that Standard Credit would "guarantee the [customer's] payments to Quenty’s Motors in full." The court also reasoned that Standard Credit had breached its contract by failing to make good on its guarantee.

Conclusion

The Appellate Division's decision in this case is significant because it clarifies the law relating to guarantees. The decision emphasizes that guarantees must be clear and unambiguous and that parties who provide guarantees must be held accountable for their promises.

The decision also provides guidance to parties who are involved in contracts with finance houses. Parties who are involved in contracts with finance houses should be aware that they may be able to hold the finance house liable for breach of contract if the finance house fails to make good on its guarantees.