Pecus Enterprises (Private) Limited t/a Tagtel Communications v Powertel Communications (Private) Limited & 1 Or

### Preamble
Judgment No. SC 74/25
1
Civil Appeal No. SC 389/24
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REPORTABLE   (74)

PECUS     ENTERPRISES     (PRIVATE)     LIMITED     t/a     TAGTEL COMMUNICATIONS

v

POWERTEL     COMMUNICATIONS     (PRIVATE)     LIMITED

(2)      PROCUREMENT     REGULATORY     AUTHORITY     OF ZIMBABWE

SUPREME COURT OF ZIMBABWE

BHUNU JA, MAKONI JA & CHATUKUTA JA

HARARE: 16 MAY 2025 & 11 SEPTEMBER 2025

Ms F. Mahere, for the appellant

Ms T. Chiguvare, for the first respondent

T.Mushoriwa, for the second respondent

MAKONI JA:

This is an appeal against the whole judgment of the High Court (‘the court a quo’) wherein it dismissed the appellant’s claim for damages for breach of contract.

FACTS

The appellant and the first respondent are companies duly registered in terms of the laws of Zimbabwe.  The second respondent is a procurement regulatory authority established in terms of the laws of Zimbabwe.  On 31 May 2023, the first respondent flighted a tender through ‘a request for quotation procurement method’, by   email, for the supply of 70km of 24 Core CST armoured cables.  On 1 June 2023, the appellant responded and sent a quotation of US$244 300.00 to the first respondent. In a letter dated 13 July 2023, the first respondent advised the appellant that its quotation was successful. It further requested the appellant to pay contract administration fees to the second respondent, and submit proof of payment. The fees were a pre-condition to the signing of a written contract between the parties.  On 26 July 2023, the contract administration fees of US$2 443.00 were paid to the second respondent.  After the payment the first respondent wrote to the appellant cancelling the award on the basis of an instruction from the second respondent. The tender was cancelled in terms of s 42 (f) of the Public Procurement and Disposal of Public Assets Act [Chapter 22:23] (‘the Act’) for the reason that the appellant’s prices were extremely higher than the market average prices.

Aggrieved, the appellant sent a letter of demand to the first respondent for the release of the prepared contract documents within seven days. After receiving no joy, the appellant instituted action proceedings, in the court a quo seeking an order for specific performance directing the first respondent to release the contract documents in terms of a tender awarded to it on 13 July 2023. In the alternative, it claimed damages in the sum of US$246 743.00 being the value of the tender and loss occasioned by the breach of contract.

PROCEEDINGS BEFORE THE COURT A QUO

Before the court a quo, the appellant sought an order directing the first respondent to release contract documents for the supply of cables by the appellant in terms of a tender awarded to it on 13 July 2023.  The appellant alleged that the respondents were in breach of the tender agreement.

The first respondent entered an appearance to defend.  It raised a special plea to the effect that the matter was not properly before the court.  The first respondent submitted that the matter pertained to a challenge to procurement proceedings and this was within the purview of the second respondent.  According to the first respondent, the matter ought to have proceeded in terms of s 74 of the Public Procurement Act.  The special plea was dismissed and that decision is not being challenged in the present appeal.

On the merits, the first respondent pleaded that the appellant did not urgently send proof of payment for the administration fees and this impacted the procurement process. The first respondent maintained that, by the time the appellant sent proof of payment for the contract administration fees, the first respondent had already requested the approval of the second respondent to set aside the tender award.  The first respondent averred that as there was no contract between the parties as such there was no legal basis to request for the release of the contract documents.

The second respondent was excused from the proceedings at the case management meeting which was held on 9 May 2024.  Its plea was basically that it would refund the appellant the sum of ZWL11 006 749.00 that it had paid as contract administration fees, upon the latter’s request.

The matter proceeded to trial.  At the commencement of the trial counsel for the appellant advised the court that the appellant was abandoning its claim for specific performance and would persist with the claim for damages for breach of contract.

The appellant led evidence from its general manager, one Sikhumbuzo Ndlovu, who gave evidence to the effect that the appellant had been awarded a tender by the first respondent. He explained that on 31 May 2023, the appellant received an internal memo, through an email, to bid for the supply of 2 core CST armoured cables. The memo had a specific request that ‘the bidder’, the appellant in this case, had to quote for what it had in stock. The closing date for the bid was 1 June 2023.  The appellant responded to the memo and thereafter was awarded the tender. This was communicated through a letter of award.  The witness also testified that the parties were communicating at all times, as such there was nothing that warranted the cancellation of the contract. It was the witness’s testimony that there was no need for the matter to be dealt with in terms of s 74 of the Act. This was because the said section was only applicable to a bidder who was querying the outcome of a bid, yet this matter was outside the bidding process. The witness further testified that the first respondent was claiming damages on the basis that it was not able to utilize the cables as it was under the belief that they were now under a contractual obligation.

[10] The first respondent led evidence from one Kudakwashe Gutusa, its procurement manager. He confirmed that the appellant participated in ‘a request for quotation tender process’ for the supply and delivery of the armoured cables. He explained that a request for quotation involves a process of soliciting for goods, works or services from reputable suppliers to satisfy certain procurement requirements. Further, he averred that two companies with ex stock material responded to the tender namely the appellant and Trade South Investments. He stated that both companies were awarded the tender. Additionally, he stated that the crucial terms of the letter dated 13 July 2023 were that the award was subject to due diligence on the price as evidenced by its para 2 and the winning bidder was to pay an amount of US$ 2 443.00 as administration fees.  It was his evidence that the appellant had charged US$3.49 per metre of armoured cable.

[11] He testified that after due diligence, the first respondent sought permission from the second respondent to cancel the award as the pricing of the appellant was too high but the second respondent stated that it was not responsible for issuing out directives and that it was the responsibility of the first respondent to handle its procurement issues and requirements in line with s 14 of the Act. Hence, the first respondent proceeded to cancel the award on 10 August 2023 in terms of s 42 of the Act specifically averring that it was in the public interest to do so. Further, he testified that during evaluation, they observed that there were some bidders who were quoting the same product at a cost of 91 cents per meter. Thus, in line with s 45 of the Public Finance Management Act which prohibits officials in public entities from irregular expenditure of public funds, they had to cancel the appellant’s award.   Questioned on whether there was a contract between the parties, he averred that no written contract had been signed between the parties, and the appellant had not even received the contract documents. Lastly, he stated that the appellant could not claim damages from the cancellation of an award.

[12] The court a quo held that there could be no breach without a contract in place.  It held that the understanding between the parties from the time of the award was that there needed to be a written contract.  The court further held that the offer between the parties was conditional on the appellant receiving a draft contract and reviewing it.  The court   a quo therefore made a finding that there was no contract between the parties and there could therefore be no breach of a non-existent contract.  As a result, it dismissed the appellant’s claim.

[13] Aggrieved by the decision of the court a quo, the appellant noted the present appeal on the following grounds:

GROUNDS OF APPEAL

“The court a quo erred in failing to find that the appellant and the first respondent concluded a contract when the first respondent indicated its acceptance of the appellant’s tender on 13 July 2023.

The court a quo erred in failing to find that the first respondent breached the contract by cancelling the tender award on 10 August 2023.”

The appellant sought the following relief:

“The appeal is allowed with costs.

The order of the court a quo is hereby set aside.

The matter is remitted to the High Court for a determination as to whether the plaintiff is entitled to:

An order for specific performance directing the first respondent to release contract documents for the supply and delivery of 70km*24Core CST Armoured cables by the appellant in terms of the tender awarded to the appellant on 13 July 2023, whose terms and conditions were breached by the defendants,

In the alternative

Payment of damages in the sum of US$246,743 being the tender value and administration costs paid to the second respondent by the appellant pursuant to a tender awarded to the appellant on 13 July 2023 whose performance could not be fulfilled as a result of defendant’s breach of the terms and conditions of the tender.

Interest at the prescribed rate on these sums from the date of summons to the date of payment in full.

Costs of suit on an attorney-client scale.

The Registrar of the High Court is hereby ordered to set this matter down before a different judge.

SUBMISSIONS ON APPEAL

Ms Mahere, for the appellant, submitted that the court a quo erred in failing to find that the appellant and the first respondent had concluded a valid contract by acceptance of the tender.  Counsel submitted that the letter dated 13 July 2023 which indicated that the quotation from the appellant was successful had all the requirements of a contract.  She submitted that the said letter related to the supply of the merx, the purchase price and the delivery of the merx. She also submitted that the court a quo mischaracterised the letter as an offer.  Counsel further submitted that the release of the written contract documents was only a mere formality to give effect to the agreement.  Counsel also contended that due diligence had already taken place, as such, it was not in the contemplation of the parties that due diligence would take place after the acceptance of the award.

Ms Mahere went further to submit that the fact that the first respondent cancelled the award meant that there was a contract to cancel.  In any event there was no justification for the cancellation of the tender award.  Counsel prayed for the remittal of the matter to the court a quo to determine whether or not the appellant was entitled to damages.

Per contra, Ms Chiguvare for the first respondent, submitted that the notification of the tender award specifically stated that a draft contract would be prepared for review by the parties.  The parties therefore anticipated a written and signed contract. She further argued that a procurement contract ought to comply with the law.  She submitted that s 55 of the Public Procurement Procurement Act [Chapter 22:23] (the Act) stipulates that contracts ought to be in writing.  She concluded by submitting that no contract was signed and as such there was no contract between the parties.

Mr Mushoriwa for the second respondent, submitted that the second respondent was a regulator and was not a party to the contract.  He submitted that the role of the second respondent does not extend to disputes between contracting parties, as such it ought not to have been joined to the proceedings.  After an exchange with the court, counsel conceded that the second respondent could be cited as an interested party but however argued that the appellant could not ask for costs against the second respondent as it had refunded the contract administration fees to the appellant.

ISSUE FOR DETERMINATION

The sole issue that stands to be determined by this Court is:

Whether or not there was a valid contract between the appellant and the first respondent.

ANALYSIS

The appellant submitted that the court a quo erred when it held that there was no contract between the appellant and the first respondent.  It argued that the acceptance of the tender resulted in a binding contract.  It relied heavily on the case of PTC v Support Construction (Pvt) Ltd 1998 (2) ZLR 221 (S) and stated that the case was on all fours with the present matter. The fact that there was a written agreement that would subsequently be signed did not detract from the existence of a valid agreement prior to the signing of the agreement.  It was the appellant’s contention that the flighting of the public tender constituted an invitation to treat with the appellant offering a quotation which the first respondent accepted.  The appellant argued that the letter of 13 July 2023 which set forth the supply, delivery and price of the merx constituted a valid contract. The appellant further argued that the requirement that further documents would be processed was not a condition of the agreement, but a formality of the terms already agreed on.

On the contrary, the first respondent submitted that it was specified, in the award letter, that a draft contract was being prepared for review and would be subsequently signed by the appellant.  The first respondent submitted that the notice of the proposed tender award was conditional upon the appellant reviewing and signing a written contract and as such there was no contract between the parties.  The first respondent further argued that s 55 of the Public Procurement Act provides for the signing of the contract therefore, for a binding contractual agreement to exist, it must be in writing.

This Court has to determine whether the parties entered into a valid contract and whether the first respondent unlawfully terminated the said contract thereby entitling the appellant to damages for breach of contract.

The common cause facts are that the first respondent invited for bids through ‘a request for quotation procurement method’, via email, for the supply and delivery of armoured cables.  This is a method whereby a procuring entity gets exempted by the second respondent from using the normal tender processes on good cause shown.  The appellant responded and submitted a quotation in the sum US$244 300.  The first respondent in turn, advised the appellant that its quotation had been successful.  Accordingly, the appellant was requested and it paid contract administration fees to the second respondent. Subsequently, the second respondent cancelled the procurement proceedings in terms of s 4291) (f) of the Act on the basis that it was in the public interest to do so.

It is necessary to quote the letter of 13 July 2023 which is at the centre of the dispute between the parties.

“SUPPLYAND DELIVERY OF FIBRE OPTIC CABLE

Reference is made to the above matter.

In terms of s 55 of the Public Procurement and Disposal of Public Assets Act, please be advised that your Quotation was successful as detailed below: The Procurement Regulatory Authority through their minute of 4 July 2023 raised no objection to the award subject to due diligence on the price.

We accordingly advise that a draft contract payable in local currency at the

prevailing interbank rate is being prepared for your review and subsequent signing (sic). We therfore (sic) request that you pay contract Administration fees of USD$2,443.00 and provide proof thereof in line with Part VI of the PPDPA (General) Regulations as amended before contract signing.” (My emphasis)

It is also pertinent to point out that Ms Mahere conceded that the first respondent was a procurement entity as defined by the Act and that the transactions between the parties were governed and guided by the Act.  Of note is the fact that she never addressed her mind to the provisions of the Act in her heads of argument.

Section 2 of the Act defines a “procurement contract” as a contract between a procuring entity and a contractor which results from procurement proceedings. Procurement proceedings or procurement processes are defined in the same section as all stages or any stage of the procurement of goods, construction works or services conducted by a procuring entity from the pre-bid stage up to and including the award of the contract.

Section 55 of the Act provides;

“55 Contract award

(1) Having evaluated the bids, a procuring entity shall award the procurement contract to the bidder that—

(a) submitted the lowest bid which meets the price and non-price criteria specified in the bidding documents; or

(b) offers the most economically advantageous tender.

Before the expiry of the period of bid validity, the procuring entity shall notify

(a) the successful bidder of the proposed award and of the time within which the contract must be signed, subject to any intervening challenge filed in accordance with Part X; and

(b) the other bidders of the name and address of the proposed successful bidder and the price of the contract; and the contract shall not be signed until at least fourteen days have passed following the giving of that notice.

(3)  If the successful bidder fails to sign a written contract when required to do so or fails to provide, when required, any performance security before the time stated in the bidding documents for the signing of the contract, the procuring entity shall accept the next ranked bidder from among the remaining bids that have not been rejected, and shall thereupon comply with subsection (2) in relation to that bid:

Provided that the procedure set out in this subsection may be applied only to the next two ranked bidders after the original successful bidder, and only to the extent that the bids can be economically justified.

(4) Procurement contracts shall be signed by the procuring entity’s accounting officer or a person delegated by him or her.”

[30] A close analysis of the letter of 13 July 2023 and the above quoted statutory provisions yields the result that the court a quo was correct in its finding that there was no valid contract between the appellant and the first respondent.  The point must be made at the outset that if a contract was to materialise between the parties, in casu, it would not only be guided by common law principles of contract but by the provisions of the Act as well.  The letter of 13 July 2023 is very clear that the procurement processes were being done in terms of the Act by specifically making reference to s 55 of the Act.  In terms of that section the letter of 13 July 2023 is a notice of a proposed award which should then be followed by certain processes, as provided for in the Act, to complete the procurement proceedings.  The term proposed award is not without significance.  It is meant to make it clear to all concerned that it still has to become final.  In this instance the procurement was subject “to due diligence on the price,” the preparation of a draft contract for review and signature and as is provided for in terms of s55 (2) (a) of the Act ‘subject to any intervening challenge filed in accordance with Part X;’.  To cap it off, the signing of a written contract is made mandatory by s 55 (4) of the Act.

[31] That the appellant was aware of the need to sign a written contract is borne out by its correspondence with the first respondent whereby it consistently referred to the draft contract that it was awaiting to receive, in order to review and sign, in its various emails to the first respondent. It is also confirmed by the original prayer in the summons which it later abandoned.

[32] Ms Mahere relied heavily on the authority of PTC v Support Construction supra for the proposition that there was a valid agreement entered into by the parties. In that matter, the appellant had invited tenders for the construction of a post office in Marondera.  The tender documents were to be submitted to the Secretary of the Government’s Tender Board. The respondent submitted a bid and was informed by the appellant that its bid was successful. The appellant sent a further letter to which was attached contract documents for the respondent to sign.  The respondent signed the contract and retuned the documents to the appellant.  The appellant did not sign the contract. Instead, the appellant informed the respondent that it had been ordered to cancel the contract by the Tender Board and to accept the bid by another company.

[33] Aggrieved, the respondent sued the appellant claiming damages for unlawful cancellation of the contract.  The appellant argued that there was no contract between the parties. It contended that the acceptance of the respondent’s bid should have been by the Tender Board and that the contract documents that had been signed by the respondent, were not signed by it and thus, the signing did not constitute an agreement. The court a quo found, and correctly so in my view, as follows;

“While cognisant of the dicta in the PTC Construction (Pvt) Ltd case that an invitation to bid constitutes an invitation to treat, I distinguish that matter from the present in that in the former, contract documents were send(sic) and the award was not conditional.  In casu, the offer was conditional on the plaintiff receiving a draft contract and reviewing it- See generally, Christie, Business Law in Zimbabwe, Juta and Company Ltd (2016) edition at pp52.  None of this was done hence the constant clamour by the plaintiff for the first defendant to avail the draft contract. I therefore make a finding that there was no contract between the plaintiff and the first defendant.”

[34] To the above findings by the court a quo I would add that in the PTC v Support Construction case, supra, the contract documents which were sent to the respondent were signed and returned to the appellant unlike in casu where no contract documents were sent and signed by either party. No wonder why the appellant’s main claim was couched as follows:

(a) “An order for specific performance directing first defendant to release contract documents for the supply and delivery of 70km by 24 core CST Armoured cables by the plaintiff in terms of the tender awarded to plaintiff on 13 July 2023, whose terms and conditions were breached by the defendants.” (Emphasis added)

[35] Another distinguishing feature, of importance, is the fact that in the PTC v Support Construction supra the bids were in terms of the procurement processes where bidding /tender documents were generated unlike in casu where there was an abridged version of a bid through ‘a request for quotation procurement method’.

[37] In Doves Funeral Assurance (Pvt) Ltd v Zimbabwe Platinum Mines (Pvt) Ltd HH-68/23 at p.14, the court held as follows:

“It is not in dispute that the tender was accepted. The legal onus rests on a party who alleges that the validity of a contract is not meant to take effect until reduced to writing.  See Afritrade International Limited v Zimbabwe Revenue Authority and the cases discussed therein in particular Woods v Walters 1921 AD 303 at 305. In this case, whether the acceptance itself resulted in the binding contract between the parties is a question that is easily answered and ought to be answered by referring to the tender documents themselves. Clause 1.3.5 of the tender procedure documents has already been captured in so far as it alluded to acceptance of terms in a formal written contract.”

The respondent in casu successfully established that the proposed award did not result in a binding contract as it was conditional, inter alia, upon the parties signing a written contract.

[38] Having found that there was no contract between the appellant and the first respondent, the court a quo was correct that there can be no unlawful termination of a contract that never came into being. In the Doves Funeral Assurance case (supra) the court held as follows:

“The aim was always to articulate the full agreement in a written document. In other words, there is absolutely no doubt from examining the tender documents that a contract was envisaged as an integral part of completing or perfecting the tender process. To the extent that the contract was not executed to its logical conclusion purposefully, for reasons outlined by the defendant, there was simply no contract that can be deemed binding to justify specific performance.”

The same can be said in respect of the present matter.

[39] In light of the above, the court a quo cannot be faulted for making a finding that there was no contract between the parties on account of non-fulfilment of the conditions precedent.  The appeal lacks merit in its entirety and must be dismissed.

Regarding costs I see no reason to depart from the general principle that costs follow the cause.

DISPOSITION

[40] Accordingly, it is ordered as follows:

“The appeal be and is hereby dismissed with costs.”

BHUNU JA			:	I agree

CHATUKUTA JA		:	I agree

Shava Law Chambers- Rights and Business Centre, appellant’s legal practitioners

Muvirimi Law Chambers, 1st respondent’s legal practitioners

Mushoriwa Pasi Corporate Attorneys, 2nd respondent’s legal practitioners