Seedco wins US$1 million in breach of contract lawsuit

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By Mary Taruvinga

SEEDCO Pvt Ltd has won a US$1 million claim against Credcorp Investments (PVT)LTD being damages for breach of contract.

The initial claim was U4$1 517 465 but was reduced to US$1 014 483-00 by an amendment to the summons and declaration at trial.

Credcorp according to court documents is a registered company involved in crop production in Zimbabwe.

In terms of some standard contracts, Seedco sponsors the growing and production of seed crops by various farmers or growers.

In essence, it supplies the farmer with the stock or parent seed and funds the production costs.

The value of the seed is agreed upon.

Stringent control measures for the preparation of the fields, the planting of, and care for the crop in the fields, the harvesting and processing of the new seed, and so on, are put in place to ensure a quality product.

After harvest and processing the grower delivers the new seed to Seedco.

Seedco then recoups the production costs and the cost of the parent seed and pays the balance to the farmer.

After this, it will then sell the new seed to foreign and domestic markets.

The present case concerned the production of three types of crops during the 2018/2019 agricultural season, namely sugar beans, soya beans and sorghum.

They were grown on four farms operated by Credcorp in Sanyati, Impalavale, Doreen’s Pride and Antelope.

Seedco’s case is that it funded the full cost of production in anticipation of the defendant delivering all the new seed to it, but that Credcorp in stark breach of the agreement, only delivered 44.7 metric tonnes of sugar bean seed and sold the rest to third parties.

“The quantity of the seed the defended side marketed, in metric tonnes[“Mt”], was 75 sorghum, 70 sugar beans and 560 soya beans,” the court heard.

Parties according to Seedco held a meeting in September 2019 where they agreed that Credcorp would trace the seed which it had side-marketed.

It was also agreed it would repay the production costs plus the cost of some centre pivots.

In regards to its claim before the court, Seedco avers that Credcorp was at all times aware that all the seed that it had been contracted to grow would be sold to third parties and that it had ready markets for such seed.

It submitted that because of Credcorp’s breach, it has suffered damages and that the defendant should make good those damages, together with costs of suit on the legal practitioner and client scale.

The defendant has opposed the claim but High Court judge Justice Jacob Mafusire said the plea was a confession and an avoidance.

“There has not been a much-informed challenge on the quantum of the plaintiff’s claim. The defendant’s plea was just a bare denial. More importantly, neither in the plea nor in evidence has the defendant disclosed the price at which it sold the seed in contention,” he said.

Mafusire also said a party is entitled to express his or her loss in the currency in which it is incurred.

“I find no irregularity in the plaintiff expressing its loss in United States dollars if that was the currency of the invoices, which it was.

“However, given that this is not a foreign obligation as contemplated by s 22 and 23 of the Finance (No. 2) Act No. 7 of 2019, and, at any rate, in line with the previous dealings between the parties, the defendant shall have the option to pay in the local currency,” said the judge before ordering Credcorp to pay US$1 014 483 plus costs of suit.