KeyHealth Medical Scheme vs. Glopin (Pty)

South Africa

28.10.2022

Contract

Agreement could be terminated by either party in terms of the legislation

The issue in the appeal was whether the Appellant, KeyHealth Medical Scheme (KeyHealth), was entitled to revoke the agreement it had with the Respondent, Glopin (Pty) Ltd. (Glopin), on the basis that it constituted a mandate revocable at any time by KeyHealth.

KeyHealth contended that the agreement between the parties amounted to a contract of mandate and, as a result, either party was free to revoke it at any time. Therefore, it was entitled to revoke Glopin’s mandate as it did on 31 March 2017. To advance this argument, KeyHealth contended that, the services provided for in the Service Level Agreement (SLA) were provided on KeyHealth’s behalf and not on behalf of the members of the medical scheme per se.

KeyHealth failed to show that the mandate it contended for was the kind of mandatary’s authority in respect of which the irrevocability clause could not apply. KeyHealth seemed to base its argument purely on the use of the word ‘authority’ in the agreement and ignored other clauses, which gave rise to the context of the use of the expression. By KeyHealth’s own admission, and as stated in the agreement, Glopin was not an empowered agent. It did not have authority to conclude juristic acts on KeyHealth’s behalf.

Even assuming that a contract of mandate existed, KeyHealth’s predecessor, Munimed, had bound itself, in terms of clause 4, to the duration of the agreement and how it would have been terminated. In terms of clause 4, the parties agreed that the agreement would continue for the period of Glopin’s accreditation by the Council for Medical Schemes and it could be terminated by either party in terms of the legislation. The agreement could also be automatically terminated if any of the events stipulated therein occurred. None of the events stipulated in clause 4 for triggering the termination of the agreement had taken place. KeyHealth was, therefore, not permitted to revoke the contract at will.

Tags : Agreement Revocation Permission

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