FIRSTEL CELLULAR (PVT) LTD v SEFAIDIGA & ANOR 2012 (1) ZLR 231 (H)

Flynote

Contract — sale — option — offer — essential element of option — when offer can be said to exist — offer vague and capable of more than one meaning — effect of alleged option contained in a scheme whereby employees could purchase vehicles from employer scheme vague as to details including the purchase price — no enforceable option resulted

Headnote

• "If an offer which is an essential element of any option is vague or capable of more than one meaning, it is open to the offeror to contend that it is not capable of being accepted and thereby converted into a binding contract" (dicta per Levy J in Wasmuth v Jacobs 1987 (3) SA 629 (SWA) followed).

The applicant sought the confirmation of a provisional order relating to two motor vehicles which the respondents claimed to own in terms of "options" which, they said, they had exercised. The respondents, both former senior employees of applicant, sought, in a counter-application, the surrender of the vehicles upon payment to the applicant of their value. The affidavits revealed that, consequent upon an internal audit, which had revealed possible fraudulent behaviour by the respondents, they had both tendered their immediate resignations. Both, however, had refused to return their respective vehicles to the applicant, alleging that they were entitled to purchase them. The "option" upon which they reliedfor their claim resulted from a scheme devised by the applicant so as to retain and motivate its key staff by the provision of vehicles for their personal use. While, in terms of the scheme, the vehicles were registered in the names of the senior employees, including the respondents, the scheme did not disclose for how long the "option" would remain open. The terms of the sale were not fully set out, as the sale price remained unfixed. It was doubtful whether there was any formula to fix the sale price and, in any event, the applicant retained the final decision to sell those vehicles which were part of the scheme.

Held, that an option is an "offer" which is irrevocable by the grantor during the period stipulated in the contract or, if there is no such provision, within a reasonable time. If the option is exercised, the potential contract contemplated by the parties to the option agreement is complete. The option holder has merely to accept the offer in the manner and within the time prescribed by the contract, and a new contract comes into existence between him and the other party. An option constitutes nothing more than an offer coupled with an arrangement (express or implied) to keep the offer open for a certain period of time. It is fundamental to the nature of any offer that it should be certain and definite in its terms. It must be firm, that is, it must be made with the intention that, when it is accepted, it will bind the offeror. If an offer, which is an essential element of any option, is vague or at all capable of more than one meaning, it is open to the offeror to contend that it is not capable of being accepted and thereby convert it into a binding contract. Where there is an "offer" which provides that certain terms were to be "renewed" or to be "negotiated" or to "stand over" for decision at a later stage, then, pending agreement on such outstanding terms, neither party has any rights against the other. Similarly, where no time is specified and no price is fixed or ascertainable, no option can be said to exist.

Held, further, that the option set out in the scheme upon which the respondents relied was no option at all. Notwithstanding that the applicant allowed its vehicles to be registered in the names of its senior employees, the scheme could not, having regard to the terms thereof, be construed as bestowing any right upon the respondents to purchase the vehicles.

Held, further, that the motor vehicles remained the property of the applicant. The provisional order must be confirmed and the respondents' counter application be dismissed with costs.