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Legal termination possible but…

OP and Dignia Systems contract
Our legal expert MOTHEO MOMPATI* looks at the contract signed between Directorate of Intelligence and Security (DIS) and Israeli arms company, Dignia Systems and argues that it is doubtful if a legally tenable case for suspension is made on the letter written by DIS Director General Peter Magosi

It seems indelicate to suggest that the Government of Botswana (GoB) has terminated its contract with Dignia Systems Pty Ltd (the contractor). The GoB seems to be pleading inability to discharge its obligations in terms of the contract. As a result of the inability to perform, GoB has sought to suspend all its obligations under the contract.

The contract itself provides for instances where a party who is unable to perform under the contract may be relieved from the terms of the contract for the time that the non-performance subsists.

The question that arises is whether the reasons for non-performance as provided in the letter of suspension (the letter) accords with those provided in the contract. It is to this question that I turn.

In terms of the contract, force majeure will exculpate a party from its obligations under the contract. Force majeure defined as an event or occurrence beyond the reasonable control of a party and which renders the party’s performance impossible or impractical as reasonably to be deemed impossible under the circumstances.  It excludes an event arising from the negligence or intentional action of the party seeking refuge under impossibility of performance or an event which the party could reasonably have been expected to take into account or avoid or overcome in carrying its obligations. The letter says no procurement procedures were followed (thus rendering the contract irregular; the funds used to effect part payment are subject of a Directorate on Corruption and Economic Crime (DCEC) and a restraint order exist; GoB may be liable for contempt proceedings and

any continuation could be deemed as condonation of an otherwise gross irregularities.

Pending conclusion of the investigations, the letter suspends the operations of the terms and conditions of the contract.

No doubt the letter makes a morally compelling case for suspension and by extension, termination of the contract. It is doubtful if a legally tenable case for suspension is made on the letter. There seems to have been no due regard to the contents of the contract and its terms.

Factually and legally speaking, the procurement is assumed to have been followed in the contract to the extent that it is provided that GoB invited quotations for the acquisition of security equipment and surveillance and all necessary procurement approvals were to be obtained by GoB before signature.

The source of funds for the payment of the contractor is not a contractual matter. All these matters will be excluded by the definition of force majeure under the contract.

There may well exist genuine reasons for suspension, but certainly not as per the letter. There is still room to argue impossibility to perform for other reasons and doing so now has the potential to expose the mala fides of the GoB. Such conduct is manifest of a party desperate to resile from the terms of the contract for convenient reasons as opposed to genuine ones.

The contract has sufficient inbuilt mechanism to both suspend its execution, and in fact terminate the agreement. With sober and deeper reflection, a much more legally compliant termination is possible.

*Motheo Mompati is a pseudo name of a practising lawyer





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