Are Third Parties bound by Exclusive Trading Rights?

BY SANDY SCHOLTZ - MARCH 16, 2017
Are Third Parties bound by Exclusive Trading Rights?

Is there a duty on third parties to respect an exclusive trading right afforded in a contract to which they are not a party? This was the question raised in the recent Constitutional Court case of Masstores (Pty) Limited v Pick n Pay Retailers (Pty) Limited [2016] ZACC 42 where the majority judgement ruled that, in general, there is no legal duty on third parties not to infringe contractually derived exclusive rights to trade.

In the case before the court, Pick n Pay Retailers had successfully sought and obtained a final interdict in the High Court to prevent Masstores’ Game store from trading as a supermarket at a shopping centre where Pick n Pay had been granted an exclusive right to trade as a supermarket by the owner of the shopping centre.

Pick n Pay sought enforcement of the contractual right against Masstores’ Game store as a tenant in the centre on the basis of the delict of “interference with contractual relations” and despite there being no contractual relationship between Pick n Pay and the Masstores’ Game store. Pick n Pay did not pursue enforcement of the contractual right against the centre owner.

Are Third Parties bound by Exclusive Trading Rights?

The Constitutional Court held that, although there may be a claim based on other delictual grounds, the alleged unlawful interference by Masstores’ Game store cannot lie in a breach of contract with Pick n Pay as there is no contract between Pick n Pay and Masstores’ Game Store.

Justice Johan Froneman ruled that third parties did not, as a general rule, have a legal duty to respect exclusive rights granted under a contract to which they are not a party. Pick n Pay were thus refused an interdict to stop Masstores’ Game store from trading as a supermarket.

It is advisable to always seek professional advice and guidance when seeking to secure or enforce exclusive trading rights. Contact Sandy Scholtz at Goldberg & De Villiers Incorporated for assistance and advice on 041 – 501 9806 / [email protected]