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CTC wins breach of contract case

by Rodney Martinesz

The court of appeal recently affirmed a district court ruling compelling an employee of CTC services ltd. To pay back Rs. 17,305 plus costs to the company after finding him guilty of breach of contract.

Justice Upali de Z. Gunawardana in his judgement interalia noted;

"The plaintiff-respondent company has filed this action to recover from the defendant-appellant, who had been one of its employees, a sum of Rs. 17,305 together with interest and costs - the said sum of Rs. 17,305 being half the amount of expenses incurred by the plaintiff respondent company on the course of training and study which the 1st defendant-appellant had undergone in Denmark in pursuance of an agreement embodied in the writing marked X1 dated 1.9.1983."

"In terms of the agreement X1, the defendant-appellant had undertaken or contracted to serve the plaintiff-respondent company for a minimum period of 3 years from the date of his return to Sri Lanka, after concluding the course of study or training and in the event of his failing to do so, had further agreed to repay or to reimburse to the plaintiff respondent the amount of the expenses incurred by the plaintiff-respondent company, after making a deduction of an amount proportional to the length of the period that the defendant-appellant had served upon his return after training from Denmark. Of one thing, one can be certain, if of no other, i.e for an agreement to acquire binding force or to be enforceable as against the one or the other of the parties, it need not be in writing - let alone be signed by the parties to it. It is worth observing that the defendant-appellant's position, ironically enough, is that the agreement is unenforceable, not because he has not signed it - a position which he is precluded from adopting since, in fact, the defendant-appellant had signed the agreement but because the plaintiff-respondent had not done so. Admittedly, all the obligations devolving on the plaintiff-respondent company pursuant to the agreement had been fulfilled."

The Judgement stated:

The signature of parties, it is well known, is not essential to the formation of a valid contract. A Signature is only needed for the purpose of authentication of the document embodying the agreement in case the parties have reduced the agreement to writing. The questions of genuineness or authentication of agreement, rather of the document X1 in which the agreement is enshrined, do not arise in the case in hand, as both parties had agreed that there was such an agreement as is embodied in the document marked. X1.

A signature is appended to a writing with a view to causing or facilitating documents to be identified. In other words, the signature would facilitate the proof the of the document which embodies the agreement, if one party were to deny it.

The salient feature of this case is that no party denies the agreement or the fact that they of their own free will entered into the same. The court must not look for authentication of a document when the authenticity of it is freely and unreservedly admitted.

The plaintiff-respondent company agreed to train the 1st defendant-appellant, at its own expense, in consideration of the 1st defendant-appellant agreeing to serve the plaintiff-respondent company for a period of 3 years - whilst the 1st defendant-appellant had agreed to serve the plaintiff-respondent company in consideration of the plaintiff-respondent company agreeing to bear the expenses of his training abroad.

Thus, it will be seen that there was consideration moving from the plaintiff-respondent company to the 1st defendant-appellant and vice versa. Consideration is a vital constituent element or essential of a valid contract. Consideration is the inducement to contract or to enter into a contract i.e. some right or benefit accruing to one party or some detriment, loss and so on suffered or undertaken by the other.

For the aforesaid reasons, the appeal of the 1st to 3rd defendants-appellants is hereby dismissed and the judgement of the learned District Judge is affirmed. Mr. V.K. Choksy, learned counsel for the plaintiff-respondent, moves for costs.

As such I award costs, as well, as prayed for in the plaint. (In the result judgement will be entered in favour of the plaintiff-respondent as prayed for in the plaint with costs.)

The other Judge, Justice Shirani Tilakarardane agreed.

D.S. Wijesinghe PC with N. Weerapana appeared for the defendant-appellant Pannipitiya Arachchige Don Upali Dayani.

V.K. Choksy appeared for the plaintiff-respondent.

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