Payment claims are rendered legally unenforceable
IN THE current climate of minuscule margins and cut throat competition, the temptation is always there for a forwarder to gain a shipper's business by bribing its export manager or similar person. According to the Supreme Court of Appeal, it does so at its peril.
In the recent case of Extel Industrial v Crown Mills, the Court had to consider what effect bribery has on commercial contracts. Extel, a supplier of sausage casings, had bribed two employees of Crown Mills to persuade Crown Mills to buy sausage casings from them. When the company found out, it refused to honour the contract or pay for the casings delivered to Crown Mills.
Extel tried to sue Crown Mills for the purchase price of the casings delivered to it. The Court held that the bribery by Extel of Crown's employees rendered its claim for payment in terms of the ensuing agreement legally unenforceable. This was despite the fact that Crown Mills had actually used the casings supplied to it in the course of its business.
Similarly, a forwarder foolish enough to fall into the same trap might find itself having to pay freight to a shipping line, but be unable to recover this from its client, where that client's employees have sent business to the forwarder pursuant to a bribe. A bribe is distinguishable from normal marketing efforts, in that a bribe is made secretly without the knowledge of the bribee's employer. Forwarders should make sure that any gifts given during the course of marketing are given openly with the full knowledge of the recipient's employer.
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