Contractual obligation and the journey from natural law to constitutional law

• Jurisdiction: South Africa
• Published date: 15 August 2019
• Date: 15 August 2019
• Citation: 2015 Acta Juridica 281
• Pages: 281-312
• Author: François du Bois

Contractual obligation and the journey from

natural law to constitutional law

FRANÇOIS DU BOIS*

The bold promise of the Constitutional Court’s f‌irst foray into the f‌ield of

contract law during Langa CJ’s leadership remains unfulf‌illed. This paper takes

issue with both the Supreme Court of Appeal’sreticent reaction to Barkhuizen

v Napier and commentators’ criticism of the CC’s preference for indirect

horizontal application of the Bill of Rights. Proposing an expansive under-

standing of the reach and force of indirect horizontal application, it argues that

the Bill of Rights requires a new,constitutionally-informed, conception of the

normative foundations of contractual obligation in place of the natural law

approach of the Roman-Dutch tradition as articulated by Grotius. Such a

conception does not treat the enforcement of contracts as tantamount to

enforcing a duty to keep one’s word, a duty of virtue, but as supporting the

consensual creation and vindication of interpersonal rights when it is in the

public interest to do so. The SCA’s continued rejection of good faith, fairness

and reasonableness as principles on which parties and courts can rely directly,

as opposed to abstract values underlying operational rules and principles, are

shown to rest on a conception of contractual obligation that is incompatible

with the constitutionalisation of South African law.

I INTRODUCTION

Barkhuizen v Napier

1

provided South Africa’s Constitutional Court (CC),

then led by Chief Justice Langa, with its f‌irst opportunity to consider the

implications of the Bill of Rights for the law of contract. The CC united

in endorsing these words of Cameron JA, which had already commanded

unanimous assent in the Supreme Court of Appeal (SCA):

[T]he courts will invalidate agreements offensive to public policy, and will

refuse to enforce agreements that seek to achieve objects offensive to public

policy. Crucially, in this calculus ‘public policy’ now derives from the

founding constitutional values of human dignity, the achievement of equality

and the advancement of human rights and freedoms, non-racialism and

non-sexism.

2

Although the CC ultimately divided when it came to apply this approach

to the facts, Barkhuizen remains a strongly cohesive decision, with eight

justices concurring not only in the outcome, but also in the bulk of the

* Professor of Law and Head of School, University of Leicester; Honorary Research

Associate, University of Cape Town;BA LLB (Stellenbosch) MA BCL (Oxon).

1

2007 (5) SA323 (CC).

2

Napier v Barkhuizen 2006 (4) SA1 (SCA) para 7.

281

2015 Acta Juridica 281

© Juta and Company (Pty) Ltd

main judgment, penned by Ngcobo J.

3

One of the most notable features

of this judgment is its strikingly expansive formulation of the constitu-

tionalised concept of public policy. Again and again Ngcobo J indicated

that the compatibility of a contractual clause with public policy turns on

considerations of reasonableness and fairness.

4

‘Notions of fairness, justice

and equity, and reasonableness’, he said, ‘cannot be separated from public

policy’.

5

This was held to require not only a consideration of the objective

terms of the contract, but also of the ‘relative situation of the contracting

parties’, their concrete, particular circumstances,

6

including at the time of

enforcement.

7

Strikingly, Ngcobo J took the trouble of expressly reject-

ing the SCA’s dictum in an earlier stage of this case that ‘the fact that a term

is unfair or may operate harshly [does not] by itself lead to the conclusion

that it offends against constitutional principle’.

8

This signif‌ies a potentially remarkable opening up of South Africa’s

traditionally formalistic law of contract to substantive considerations of

fairness and justice.

9

Yet the SCA has taken every opportunity presented

by subsequent cases – at least four times, so far, in Bredenkamp v Standard

Bank of South Africa Ltd,

10

African Dawn Property Finance 2 (Pty) Ltd v

Dreams Travel and Tours CC and Others,

11

Maphango and Others v Aengus

Lifestyle Properties (Pty) Ltd

12

and Potgieter v Potgieter NO and Others

13

–to

insist that ‘reasonableness and fairness are not freestanding requirements

for the exercise of a contractual right’.

14

In doing so, it has stuck to the

approach adopted in two pre-Barkhuizen decisions on the impact of the

Constitution on contract law.

15

3

By a majority of 8:3 the CC upheld the validity of a 90-day time limitation clause in a

short-term motor insurance contract. This maintained the position of the SCA, which had set

aside a High Court decision invalidating the clause for being inconsistent with the

Constitution.

4

Barkhuizen (n 1) paras 48, 51, 52, 60, 72, 73.

5

Barkhuizen (n 1) para 51.

6

Barkhuizen (n 1) paras 59, 64, 66.

7

Barkhuizen (n 1) para 70 and 73. O’Regan J reserved opinion on this aspect (only) of the

main judgement.

8

Barkhuizen (n 1) para 72. The quotation is from Barkhuizen (SCA) (n 2) para 12.

9

For rigorous accounts of the past, see ACockrell ‘Substance and form in the South African

law of contract’ (1992) 109 SALJ 40; DP Visser & D Hutchison ‘Legislation from the Elysian

f‌ields: The Roman-Dutch authorities settle an old dispute’ (1988) 105 SALJ 619; R Zimmer-

man ‘Good faith and equity’ in R Zimmerman & D Visser (eds) Southern Cross: Civil Law &

Common Law In South Africa (1996) 217.

10

2010 (4) SA468 (SCA) paras 52–53.

11

2011 (3) SA511 (SCA) para 28.

12

2011 (3) All SA 535 (SCA) paras 22–25.

13

2012 (1) SA637 (SCA) paras 32–34.

14

Potgieter (n 13) para 32 per Brand JA. The remarks by Malan JAin Thunder Cats Investments

92 (Pty) Ltd and Another v Nkonjane Economic ProspectingAnd Investment (Pty) Ltd and Others 2014

(5) SA1 (SCA) paras 19–20 might signal a change of sentiment.

15

Brisley v Drotsky 2002 (4) SA 1 (SCA); Afrox Healthcare Bpk v Strydom 2002 (6) SA 21

(SCA).

282 A TRANSFORMATIVE JUSTICE:ESSAYS IN HONOUR OF PIUS LANGA

© Juta and Company (Pty) Ltd

The SCA’s position is, of course, the outcome of careful and good faith

interpretation of the main judgment in Barkhuizen. But fairness and

reasonableness are so prominent in the CC’s formulation of public policy,

and the rejection of their role by the SCA so bald, that it may fairly be

asked whether this is the correct interpretation. Such doubts f‌ind succour

in the CC’s continued willingness in Everfresh Market Virginia (Pty) Ltd v

Shoprite Checkers (Pty) Ltd

16

to associate the infusion of constitutional

values into contract law with fairness, as well as its careful avoidance of

providing even a hint of support for the hostility to a free-standing

contractual requirement of good faith expressed by Brand JA, one of the

most prominent exponents of the SCA’s post-Barkhuizen line.

17

Indeed,

in Botha v Rich NO, Nkabinde J recently observed, with the concurrence

of all her colleagues, that it is an ‘object of our Constitution that

contracting parties are treated with equal worth and concern’.

18

Langa CJ’s own brief judgment in Barkhuizen appears remarkably

prescient in light of the SCA’s subsequent approach. Although concurring

in Ngcobo J’s main judgment, he expressed a notable reservation about its

approach to constitutionalising contract law. In Ngcobo J’s view, the only

acceptable methodology was via the indirect horizontal application of the

Bill of Rights in terms of s 39(2) of the Constitution. Langa CJ agreed that

indirect application might ordinarily be the best manner to address the

problem, but was not convinced that s 8 did not allow for the possibility

that certain rights might also apply directly to contractual terms or the

common law that underlies them.

19

This reservation betrays at least some

apprehension that the approach adopted by the main judgment might not

give the Constitution its full due, a concern also voiced more emphati-

cally by several subsequent commentators,

20

and arguably vindicated by

Barkhuizen’s lacklustre fate in the SCA.

As my tribute to Langa CJ, I wish to press these doubts further,

ref‌lecting critically both on the SCA’s reaction to Barkhuizen and on the

16

2012 (1) SA 256 (CC). This decision does not take matters further substantively, as the

majority refused to consider the argument that the Constitution required contract law to be

developed so as to give rise to a duty of good faith in the negotiation of the renewal of a

commercial lease, as this had not been raised in earlier stages of the litigation.

17

Everfresh (n 16) paras 22 and 71. For Brand JA’s views, see FDJ Brand ‘The role of good

faith, equity and fairness in the SouthAfrican law of contract: The inf‌luence of the common law

and the constitution’(2009) 126 SALJ 71 at 89–90; Brisley (n 15) paras 21–24 and 93–95; South

African Forestry Co Ltd v YorkTimbers Ltd 2005 (3) SA 323 (SCA) para 27; Maphango (n 12) paras

22–25, and Potgieter (n 13) paras 32–34.

18

2014 (4) SA124 (CC) para 40.

19

Barkhuizen (n 1) para 186.

20

See eg PJ Sutherland ‘Ensuring contractual fairness in consumer contracts after Barkhuizen

v Napier 2007 (5) SA 323 CC – Part 1’ (2008) 19 Stell LR 390; DM Davis & K Klare

‘Transformative constitutionalism and the common and customary law’(2010) 26 SAJHR 403;

S Woolman‘The amazing, vanishing bill of rights’ (2007) 124 SALJ 762; L Ackermann Human

Dignity: Lodestar for Equality in South Africa (2012) 293.

283

THE JOURNEY FROM NATURAL LAW TO CONSTITUTIONAL LAW

© Juta and Company (Pty) Ltd