The role of the principles of good faith and ubuntu in contract law | Knowledge

Historically, the roles of fairness, reasonableness and good faith in contract law have been debated; one of the most controversial issues is whether a court can refuse to enforce a valid contract if it considers that enforcement would be unfair, unreasonable or unduly harsh. In light of this, our courts have developed principles governing the enforcement of contracts, through principles such as good faith and ubuntu.

In the particular case of S against Makwanyane and another 1995 (3) SA 391 (CC) 484, the Constitutional Court explains ubuntu as humanity, personality and morality. Metaphorically, it is expressed in umuntu ngumuntu ngabantu, describing the importance of group solidarity on issues of survival so essential to the survival of communities. The court points out that the spirit of ubuntu “…emphasizes respect for human dignity, marking the shift from confrontation to conciliation…”

Since the advent of the constitutional dispensation, the principle of good faith now draws its strength from the Constitution and the values ​​enshrined therein. These values ​​include human dignity, the achievement of equality and the promotion of human rights and freedoms, and the rule of law. Embedded in our law as a constitutional value is the principle of Ubuntu; Ubuntu, in turn, informs the principle of public policy.

HM Du Plessis, lecturer at the University of South Africa[1], makes an essential distinction between the concept of good faith and ubuntu and provides that while both notions encourage contractual justice between parties, ubuntu includes an additional duty to promote the social and economic well-being of the parties and the community. Accordingly, contrary to good faith, ubuntu is concerned with promoting substantive equality in private relationships.

It is against this background that we present below a timeline of how courts have applied the principles of good faith and ubuntu, which have influenced the interpretation of contracts over time.

good faith and ubuntubased on a case law analysis:

  1. Sasfin (Pty) Ltd v Beukes [1989] (1) SA 1 (A) 7
    1. The court held that the interests of the community or the public are of paramount importance to the concept of public order. Furthermore, that agreements manifestly contrary to the interest of the community, whether contrary to law or good morals, or contrary to social or economic expediency, will therefore not be executed for reasons of public order.
    2. However, the court warns that the power to declare contracts contrary to public order must be exercised sparingly and only in the clearest cases. Moreover, care must be taken not to conclude that a contract is contrary to public order simply because its clauses (or some of them) undermine his individual sense of propriety and fairness.
  2. Brisley vs. Drotsky 2002 (12) BCLR 1229 (SCA)
    1. This case laid the foundations of the approach that governs the principle of good faith in contract law. In this case, the court held that the principle of good faith informs substantive contract law by performing a creative, controlling and legitimizing function.
    2. The Supreme Court of Appeal points out, however, that good faith does not constitute an independent or autonomous basis on which a court may refuse to enforce a contractual provision, and that to accept it as an autonomous basis would introduce an unacceptable state of uncertainty into contract law.
  3. Afrox Healthcare vs. Strydom [2002] 4 All SA 125 (SCA)
    1. The Supreme Court of Appeal held that courts do not determine the applicability of contractual provisions on the basis of abstract concepts such as good faith, reasonableness and fairness, but only by applying established legal rules. The court further stated that although these principles form the basis of our legal rules, they are not legal rules themselves.
  4. Barkhuizen v Napier 2007 (7) BCLR 691 (CC)
    1. This case played an important role in determining the role of good faith and ubuntu in contract law in South Africa.
    2. In this case, the Constitutional Court developed a two-step inquiry to determine fairness:
      1. The first step is to examine whether the clause itself is unreasonable and contrary to public order and if the clause is found to be reasonable, the court will then consider the second investigation.
      2. With respect to the second investigation, the court will have to determine whether the clause should be enforced given the particular circumstances of this particular case.
  5. Bredenkamp v Standard Bank of SA [2010] 4 All SA 113 (SCA)
    1. The Supreme Court of Appeal concluded that fairness was not a stand-alone requirement of a contractual right and further crystallized the two-step inquiry established in Barkhuizen.
  6. Beadica 231 CC against the directors for the time being of the Oregon Trust 2020 (9) BCLR 1098 (CC)
    1. The majority of the Constitutional Court pointed out that factors such as ubuntu, good faith, fairness and public order play an important role in the application and interpretation of contract law. More importantly, these factors are necessary to establish substantial contract fairness. The application of these principles is facilitated by the rules of contract law and it is only when it is so unfair, unreasonable or unjust that it can be said to be contrary to public order.

Conclusion

The case law above underscores the position that principles such as good faith, fairness, reasonableness and ubuntu do not provide a stand-alone basis on which a court can interfere in contractual relationships, but rather the enforcement of these principles is facilitated by the rules of contract law and only where it is so unjust, unreasonable or unfair can it be said that a court can intervene in an agreement taking into account principles such as good faith and ubuntu.

This article was prepared by partner Bianca Da Costa, senior partner Andricia Hinckemann as well as candidate lawyers Barr-Mary Tyzack and Caleb Mapatha.


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Steven L. Nielsen