GROUNDS OF DECISION

The Appellant/Plaintiff and the Respondent/Defendant has entered into a written agreement dated 6th July, 1992.

Clause (5) of the Form of Agreement (at page 36 of the Record of Appeal) reads as follows:-

“(5) The contract shall be effective from 00:00 hours on the 15th day of July 1992 (hereinafter referred to as the “Effective Date“) and shall be valid for 12 months from the Effective Date with an option to extend for up to another 12 months by the Company“.

With regard to the suspension or termination of the contract the parties had agreed to the following terms:

Clause 5: SUSPENSION OR TERMINATION

1.The company shall have the right at any time, at its absolute discretion, to suspend the work or any part thereof or terminate the contract by giving written notice to that effect.

2.If the company terminates the contract because of a breach thereof by the contractor, then the contractor shall only be paid for work satisfactorily completed less any additional costs incurred by the company as a result of such breach.

If the company terminates the contract for any reason, the contractor shall be paid for work satisfactorily completed and also for the unavoidable costs of cancelling committments necessarily and already entered into by the contractor at the date of the notice of termination for the purpose of performing the work.“

On the 25th August, 1992 the Respondent/Defendant sent a letter of termination to the Appellant/Plaintiff. The pertinent part of the letter reads as follows:

“Subject: CONTRACT NO. Q/SHE/OO1/92

We refer to the above contract and would like to inform you the SMDS will terminate this contract as per clause 5(2) (second paragraph) of the General conditions of contract.

The termination will be effective 24th October, 1992.“

The parties have come to agreement that the sole issue for determination by the Sssions Court is “whether upon construction of the agreement of 6th July, 1992, the Defendant’s termination of the said agreement vide its letter of 25th August 1992 and correspondences of 5th November, 1992 and 16th November, 1992 is correct in law.“

By a letter dated 5th November, 1992 the Respondent/Defendant informed the Appellant/Plaintiff“that this contract has been terminated effective 24th October, 1992“. By another letter dated 16th November, 1992 the Respondent/Defendant vide paragraph 3 stated that “We wish to inform you that under clause 5(1) of the General Condition of Contract Agreement signed between your Company and our Representative on 6th July 1992 we have the right to terminate the contract at any time at our absolute discretion. However in our letter to you dated 25th August, 1992 we have been considerate enough to give you 2 months notice of termination to enable you to carry out this transaction smoothly. As such, effective 24th October, 1992 your services to SMDS were officially deemed to have been terminated“.

The learned counsel for the Appellant/Plaintiff submitted that firstly the Respondent/Defendant has by its own admisssion relied upon clause 5(2) of the Agreement to terminate. Since clause 5(2) spoke of termination “for any reason“ then the Respondent/Defendant was bound to give its reasons for termination. Secondly and alternatively there was no contractual basis for the termination since no written notice was given by the Respondent/Defendant under clause 5(1) which is the termination clause.

The learned counsel for the Appellant/Plaintiff submitted that the letter of termination dated 25th August, 1992 is wrong in law as it was pursuant to the wrong clause. By normal reading of the general conditions of contract the Respondent/Defendant must give written notice by virtue of clause 5(1) only by express intent the Respondent/Defendant gave written notice under clause 5(2) 2nd paragraph.

The court below held that the letter of termination was pursuant to clause 5(1). He submitted that the learned Sessions Court Judge reasons were firstly the Respondent/Defendant had the absolut