Validity of contractAdministrative law - public procurement - validity of contract


In the unreported case of MD Business Solutions v Ikwezi Local Municipality (Case No. 3304/16, Eastern Cape Division, Grahamstown), the High Court considered claims for payment in terms of contracts that were not preceded by a public procurement process.

The Municipality had approached MD Business Solutions and requested proposals for an information system service and data cleansing process, and a performance management system. Consequently, the parties entered into service level agreements with regard to the services required. The Municipality did not follow any public procurement processbeforehand.

MD Business Solutions provided the services and submitted invoices for payment. The Municipality failed to pay the full amounts claimed.

In the legal proceedings that followed, the Municipality argued that the contracts were invalid as a result of a complete absence of compliance with public procurement law. However, MD Business Solutions argued that the contracts were effective for as long as the decisions taken by the Municipality to enter into them were not successfully challenged in judicial review proceedings.


The High Court referred to the judgment of the Constitutional Court in MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye and Laser Institute 2014 (3) SA 481 (CC), where it was held that administrative decisions cannot be set aside without a proper court application to that effect. There were good reasons for this, as explained in the judgment.

In the present case, the Municipality had failed to make application to the High Court for the review and setting aside of the decisions to enter into the contracts with MD Business Solutions. Consequently, the contracts remained effective.

The High Court ordered the Municipality to pay the outstanding amounts claimed.

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