The Unexpressed Terms of a Contract

• Jurisdiction: South Africa
• Published date: 27 May 2019
• Date: 27 May 2019
• Author: Steve Cornelius
• Pages: 494-504

THE UNEXPRESSED TERMS OF A CONTRACT

[Discussion of the judgment of Lewis JA in Seven Eleven Corporation of SA (Pty) Ltd v

Cancun Trading No 150 CC 2005 2 All SA 256 (SCA)]

Steve Cornelius

BIuris LLB LLD

Associate Professor, Department of Private Law, University of Johannesburg

1 Introduction

When parties conclude a written contract much inevitably remains

unexpressed. It would be impossible for parties to contemplate all

possible eventualities and provide for them in their contract. As a result

the law has long since recognised that the express terms of a written

contract can be supplemented with other unexpressed terms. The nature

and extent of these terms and the requirements that have to be met before

they can be read into a contract were once again considered by the

Supreme Court of Appeal in Seven Eleven Corporation of SA (Pty) Ltd v

Cancun Trading No 150 CC.

1

2 Facts

The appellant was a company which had for some time operated

‘‘Seven Eleven’’ convenience stores. It did so by granting rights to operate

these stores to franchisees. The respondent purchased a store from the

appellant and entered into a franchise agreement in respect thereof in

1999. Despite its bests efforts the respondent struggled to make its store

profitable. Approximately two years later, the respondent eventually sold

the store back to the appellant and bought another store which was

situated elsewhere. The respondent then submitted that the appellant

should have passed discounts which the appellant had received from its

suppliers on to the respondent. The respondent then instituted a claim

against the appellant based inter alia on a tacit or implied term to the

effect that any discounts would be passed on to the respondent. The court

a quo ruled on an interpretation of the franchise agreement in favour of

the respondent. On appeal, Lewis JA rejected the court aquo’s

interpretation of the franchise agreement and proceeded to deal with

the appeal by treating each of the grounds on which the respondent had

based its claim in the court a quo. The appeal would eventually be

dismissed on each one of these grounds. However, in this discussion I will

deal only with the court’s judgment in so far as it relates to the

respondent’s reliance on a tacit or implied term.

1

2005 2 All SA 256 (SCA).

494

(2006) 17 Stell LR 494

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