MDA Law
Fairness and its uncertainty
In recent years, we have witnessed the Constitutional Court developing the law of contract so as to bring the commercial sector in line with constitutional principles such as fairness, equality and dignity. Some academics and legal professionals have criticised this approach for compromising legal certainty.
Let’s consider an example of a recent case where a court has embraced the Constitutional Court’s approach – Beadica 231 CC v The Trustees for the time being of the Oregon Trust & Others[1].
The applicants (the “lessees”) in the Beadica case concluded lease agreements with the first respondent (the “landlord”) as part of a black empowerment initiative. The terms of the lease agreements contained a right to renew the leases, provided the lessees gave notice of their exercise of this option at least 6 months prior to the termination dates – the lessees did not exercise their option within this period. In terminating the agreements and requesting the lessees to vacate its premises, the landlord relied on this non-compliance.
The court held that where the very idea of the agreements between the parties was to promote the interests of historically disadvantaged people, more is required to justify the landlord’s case than that the lessees requested a renewal of their lease in a form that should have been more precise and submitted within specific dates.[2] The court concluded that the option to renew the lease had been validly exercised.[3]
Although equitable, the conundrum of this approach is that it creates a level of legal uncertainty. No longer can one merely rely on the written terms of their agreement. Even if those written terms are unmistakeable, they may be determined as being inapplicable should they result in unfairness to either party.
Wallis JA has raised concerns with the Constitutional Court’s approach[4], including that the approach renders the law unpredictable and dangerously enforces commercial relationships purely as a matter of discretion. What is “fair” is often an obscure concept that academics have clashed over. Wallis JA uses an apt example of how this approach may be desirous in concept but impracticable in reality, when he states that judges of the Supreme Court of Appeal may be able to determine what is “fair” but how can your average person, or even magistrates, be expected to grapple with and enforce the concept daily.
So how does all of this affect those who are parties to a construction contract? Well, in terms of this approach, contractors that could not reasonably be expected to know any better could get out of the strict timing requirements of notices of claim for example. Or perhaps, contractors could wriggle their way out of strict compliance with quality requirements.
It is expected that parties to construction contracts will begin to seek to rely on the principles of fairness and good faith in their interpretation and enforcement of contracts more and more, and as and when it suits their case. However, as construction disputes are rarely heard in court, the likelihood of us seeing the courts applying and confirming these principles in respect of construction contracts is slim. Without any such case law to solidify the approach will adjudicators and arbitrators be convinced? We shall be keeping an eye out for court judgments with bated breath.
- (CCT 89/13) [2014] ZACC 11. ↑
- Para 44. ↑
- Para 45. ↑
- Malcolm Wallis JA “Commercial Certainty and Constitutionalism: Are they compatible?” (2016) SALJ 133 p569-599. ↑
Appeal may be able to determine what is “fair” but how can your average person, or even magistrates, be expected to grapple with and enforce the concept daily.
So how does all of this affect those who are parties to a construction contract? Well, in terms of this approach, contractors that could not reasonably be expected to know any better could get out of the strict timing requirements of notices of claim for example. Or perhaps, contractors could wriggle their way out of strict compliance with quality requirements.
It is expected that parties to construction contracts will begin to seek to rely on the principles of fairness and good faith in their interpretation and enforcement of contracts more and more, and as and when it suits their case. However, as construction disputes are rarely heard in court, the likelihood of us seeing the courts applying and confirming these principles in respect of construction contracts is slim. Without any such case law to solidify the approach will adjudicators and arbitrators be convinced? We shall be keeping an eye out for court judgments with bated breath.
Author: Kelly Stannard, Associate
