Leather firms sue bank over breach of contract 

Source: Leather firms sue bank over breach of contract -Newsday Zimbabwe

TWO Marondera-based leather firms, Eagle Italian Shoes and Eagle Italian Leather Private Limited have sued Ecobank Zimbabwe over its decision to withhold the companies’ funds without due process.

The companies supply shoes and other leather products to the Zimbabwe National Army, Zimbabwe Republic Police, Zimbabwe Prisons and Correctional Services among other entities.

 In their application to the Commercial Division of the High Court, the two companies claimed they lost business worth US$7 152 206,38 following the bank’s post-no debit order placed on their accounts.

They also described the bank’s unilateral decision as a breach of its contractual relationship with clients as it was done without a court order.

According to the court papers, sometime on or about October 14 2022, Eagle Italian Shoes and Eagle Italian Leather (Pvt) Ltd, through their representatives instructed the bank to change the signing mandate to bank accounts for a bank transaction and to cancel out the name of a director who had been removed; and add the name of a new director appointed on October 7, 2021.

In breach of the contractual obligation emanating from the bank-customer relationship, the bank allegedly refused to act upon the instructions. Instead, it unilaterally placed a post-no-debit order on bank accounts of the firms and adamantly refused to appreciate the consequences of the move.

“Defendant chose to consider claims of a dispute by the director who had been removed as director in the absence of a court order on that basis interdicting defendant from following the instructions of the plaintiffs.

“Defendant acted illegally, and unreasonably so, by placing a post-no debit order given the circumstances without a court order at the first place and also without a court order justifying the unreasonable length of time of the post-no-debit,” the submissions read.

 “As a result of the unilateral, unreasonable and illegal post-no-debit order by defendant, plaintiffs could not among many others, pay salaries and wages, buy or purchase raw materials, buy or purchase machinery, supply goods and products to  customers, pay levies and taxes, access its bank accounts and pay its day to day running expenses.

“As a result of the breach by defendant thereof, plaintiffs lost business and value to the tune of US$7,152 206. 38,” they submitted.

The matter is pending.