Equity and certainty in contract law

• Author: Brand, F.
• DOI: https://doi.org/10.47348/ACTA/2021/a6
• Published date: 23 August 2021
• Date: 23 August 2021
• Pages: 141-176

141

https://doi.org/10.47348/ACTA/2021/a6

Equity and certainty in contract law

F D J BRAN D*

The role of abstract values such as equity and fairness in our law of

contract ha s been the subject of controversy for a number of yea rs.

In 2002 the Supreme Court of Appea l took the position that these

values do not const itute self-standing grounds for i nterfering with

contractu al relationships. Despite this being consistently mainta ined

by the SCA in a number of cases, some High Court jud ges deviated

from this position on the basis that they were per mitted to do so by

some minor ity judgments and obiter dicta in t he Constitutional C ourt.

The uncertainty thus created ha s fortunately now been removed by

the judgment of the Constitut ional Court in Beadica v T he Trustees for

the Time being of the O regon Trust.

DEDICATION

Through contact with judges from mostly common-law

jurisdictions, I have lear nt that they envy u s the close co-operation

we have with academic ju rists in our count ry. My thesis is that it can

mainly be ascribed to the fact that we have a mi xed legal system.

Although we in herited our system of precedent or stare decisis from

the English law of procedure, we have at the same time fallen

heir to the search for theor y and doctrine behind the pr inciples

of the law inherent in the codied continental systems. Hence,

we never followed the custom in vogue during an earlier era of

British jur isprudence, namely, not to rely on living authors in our

judgments, appa rently under the pretext that t hey may change their

minds! But I th ink there are other reasons for the clo se relationship

between judges and academics in South Africa. Included amongst

these is the fact that some of us, perhaps fortuitously, came to

know one another personally. So, for example, at one stage, Danie

Visser, Dale Hutchison and I all lived in the suburb of Pinelands.

* S C BA LLB LLM LLD (hc); former Jud ge of the Supreme Court of Ap peal;

Judge of the Appe al Court o f Botswan a; Justice of the S upreme Court of F iji;

Judge of the Int ernational Com mercial Court of Qa tar; Professor Extraordin ary

of Private L aw at the Univers ity of the Free S tate; Honorar y Professor of Law at

the Universit y of Stelle nbosch. Below I use t he judicia l titles of my col league s

when referr ing to their judgm ents and the names un der which they publish when

referr ing to their extra -curial wr iting.

2021 Acta Juridica 141

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142 THE FUTU RE OF THE LAW OF CONTRACT

https://doi.org/10.47348/ACTA/2021/a6

Through Danie, I had regular social contact with Dale and over

the years we became good friends. I would like to think that this

friendship endured despite my temporary exi le to Bloemfontein.

I THE ROLE OF EQUITY: POSITION TAKEN BY

THE SCA

On one occasion, in par ticular, my fr iendship with Dale Hutchison

stood me in good stead . It happened in Brisley v Drotsk y.1 To c onv ey

the true value of Da le’s contribution on that occa sion I have to give

some background that you will not nd in the law reports. The

panel in the Supreme Court of Appeal (SCA) consisted of Harms,

Olivier, Streicher, Cameron JJA and me. Harms JA presided and

nominated Pierre Olivier to write the judgment. Oliv ier JA, as

we know, previously chaired an enquiry by the Law Commission

into the question ‘whether the courts should be enabled to remedy

contracts or contractual terms that are unjust or unconscionable

and thus to modify their application’. In its report on the matter,2

the Law Commission introduced a draft Bill. Broadly stated,

the Bill recommended that the courts should be aorded the

jurisdiction to amend or rescind a contract, or any of its terms, if

it is of the view that the enforcement of the contract or some of its

provisions would be unreasonable, unconscionable or oppressive.

The proposal by the Law Com mission elicited objections from

various quarters, including strong adverse comment by one of our

colleagues in the SCA, Hefer JA, wr iting in extra-curial capacity.3

Olivier JA, on the other hand, decided not to wait for the

legislature to react but to seek an endor sement for the proposals

put forward by the Law Commission from his colleag ues in the

SCA instead. That happened in Eerste Na sionale Bank van Suidelike

Afrika Bpk v Saayma n.4 The presiding judge on appeal was

Hefer JA. The plainti in the matter, Mrs Saayman (the respondent

on appeal) acted as curatrix bonis for her mother, Mrs Mal herbe.

She was appointed in that capacity when Mr s Malherbe was

1 2 002 (4) SA 1 (SCA).

2 T he Report on Unrea sonable Stipu lations in C ontracts a nd the Rectica tion

of Contract s, South Africa n Law Commission, Pr oject 47, April 1998.

3 J J Hefer ‘Bil likhe id in kontrak tereg volgens d ie Suid-A frik aanse Reg s-

kommi ssie’ (200 0) TSAR 142.

4 1997 (4) SA 30 2 (SCA) 318.

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EQUITY A ND CERTAINTY IN CON TRACT LAW 143

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declared to be menta lly incapable of managing her own aairs.

Mrs Malherbe’s late husband was a professor at the University

of Stellenbosch for 40 years. Unlike some professors I know, he

was a fairly wealthy man because of his hobby of investing in

shares, which he conducted successful ly over many years. Upon

his death he left his whole estate to Mrs Malherbe. Shortly before

the declaration that she was not able to manage her own aa irs,

Mrs Malherbe signed a suretyship in favour of the appellant bank

for her son Willem. Suretyships generally come across as unfair.

After all, they generally result in an undertaking to pay the debts

of someone else. But, in this case, enforcement of the suretyship

would cause part icular hardship in that success by the ban k would

probably leave a frail 85-year-old widow, suering from dementia

and depression, dependent on others.

Fortuna tely for Mrs Malherbe, t he majority of the Appeal Cou rt

agreed with the judgment of Conradie J in the Cape High Court

that, on the evidence presented, Mrs Ma lherbe lacked contractual

capacity when she concluded the suretyship agreement and that,

in consequence, she was not bound by it. These ndings were

hardly groundbreaking or novel. This much appears from the fact

that Streicher AJA, writing for the majority, could rely on the

judgment of Innes JA in Pheasant v Warne5 almost a century ag o, to

the eect that a person is only bound to a contract if ‘his mind was

such that he could understand and appreciate the transaction into

which he purported to enter’. The relevance of the case lies in the

minorit y judgment of Olivier JA. He started out by saying that he

did not agree w ith the factual nd ing by the trial cour t as endorsed

by the majority on appeal, which was that Mrs Malherbe lacked

contractua l capacity when she signed the suretyship. Despite this

nding, he concluded that Mrs Malherbe was not bound by the

agreement that she signed. He did so, broadly stated, on the basis

that in the circumstances of the case, considerations of bona des

and equity m ilitated against the application of the principles of

contract law. In the event, so he held, the court was entitled in this

case to refuse to enforce the terms of the suretyship, though such

enforcement may on the face of it be dictated by law.

5 1922 A D 481 at 488.

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