23 October 2019 by and Dispute Resolution Alert

Umuntu Ngumuntu Ngabantu… except in the law of contract

Judge Brand, in the case of South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) stated that “… fairness and justice, like beauty, often lie in the eye of the beholder”. He was quoted with approval by the Supreme Court of Appeal (SCA) in Liberty Group Limited and Others v Mall Space Management CC t/a Mall Space Management (644/18) [2019] ZASCA 142 – a case that discussed contractual law and the values of ubuntu, a word that derives from the Zulu phrase umuntu ngumuntu ngabantu: A person is a person through other people.

In this case, one of the issues that the SCA had to decide was whether the first four appellants in the matter (the Liberty Group), were obliged in terms of a verbal contract of mandate concluded between them and Mall Space Management CC t/a Mall Space Management (Mall Space Management), to give Mall Space Management six months’ notice before terminating its mandate to manage the promotional mall space and exhibition courts so as to market, plan and co-ordinate promotional events at the shopping centres co-owned by the first three appellants and managed by the fourth appellant.

Due to Mall Space Management’s failure to properly account to the Liberty Group for the rental income it received, which had led to Mall Space Management being indebted to the Liberty Group, the Liberty Group served Mall Space Management with a notice of termination of its mandate within five days from the date of the notice, being the required notice period in terms of common law. Mall Space Management sought to interdict the termination of the mandate; contending that any termination of the agreement between the parties would require at least a six-month notice period.

Considering that the parties had a long-standing contractual relationship, the court a quo in applying the underlying constitutional values of Ubuntu and fairness, granted interdictory relief to Mall Space Management in terms of which the Liberty Group was directed to permit Mall Space Management access to the rental court space at the relevant shopping centres in order to carry on its mandate and further interdicting the Liberty Group from terminating the verbal agreement between Mall Space Management and themselves for a period of six months from the date of the order. It further stated that, “in the development of the common law, it is highly desirable and in fact, necessary to infuse the law of contract with constitutional values, including the values of Ubuntu which inspire much of our constitutional compact”.

The SCA, however, disagreed with the court a quo’s approach and held that the concepts of good faith, justice, reasonableness and fairness are not self-standing rules which can justify the avoidance of performance under a contract; but are merely underlying values that are given expression through existing rules of law. Therefore, these abstract values, albeit fundamental to our law of contract, do not constitute independent substantive rules that courts can employ to intervene in contractual relationships.

The court alluded to the fact that, should each judge be guided by what he or she regards as fair and equitable as opposed to applying the established principles of the law of contract, it would lead to inordinate legal and commercial uncertainty. It cannot be accepted that a judge can refuse to enforce a contractual provision merely because it offends their personal sense of fairness and equity.

Despite Mall Space Management’s reliance on s39(2) of the Constitution which calls for the infusion of contract law with constitutional values such as Ubuntu, the SCA held that it would be against public policy to coerce a principal to continue with an agreement they no longer wish to be party to. It was the court’s contention that it was unreasonable, in a purely business transaction, to rely on Ubuntu to import a term that was not intended by the parties to deny the other party the right to rely on the terms of the contract in order to terminate it. It would, in fact, be against public policy not to apply the principle of sanctity of contract.

Therefore, in circumstances where the relative position of the parties is one of bargaining equality and Mall Space Management could have negotiated a clause in terms of which it was given notice to remedy a breach before the contract was cancelled, it is impermissible for a court to develop the common law of contract by infusing the spirit of Ubuntu and good faith so as to invalidate the term or clause in question.

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