The role of good faith and fairness in contract law: where do we stand in South Africa, and what can be learnt from other jurisdictions?

Master Thesis


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University of Cape Town

Good faith is recognised as an underlying principle in South African contract law, and the contract law of many countries. There has been noticeable reluctance in some common law jurisdictions against the elevation of the role of good faith in contract law. This paper seeks to explore the tension between the Supreme Court of Appeal and the Constitutional Court in the application of good faith and by implication, fairness to South African contractual disputes. It illustrates that the Constitutional Court seeks to elevate the role of good faith while the SCA is not in favour of such an approach. As the two benches are not in step with their approach, this has led to legal uncertainty in this area of South African contract law. In South African consumer contracts, the concept of fairness is explored, and the remedies at the disposal of consumers to escape the operation of unfair contract terms in different sectors. As South Africa has only provided legislative protection for consumers in the past twenty years, this area of law is comparatively speaking 'new' when compared with other countries. There are therefore lessons to be learnt from other countries in this regard as they have the advantage of time and thereby experience gained over South Africa. For comparative purposes two common law jurisdictions were also explored, namely Australia and the United Kingdom. Both countries are facing similar challenges as South Africa to elevate and expand the role of good faith in the contractual space. Recent notable court decisions in Australia and England in the commercial contract space are explored to demonstrate these challenges. This paper also considers their consumer protection legislation in order to identify if there were lessons to be learnt from their protections that should be considered for South African legislation. Due to the EU membership by the UK, the increased recognition of good faith in civil law jurisdictions has made its way into UK legislation. Good faith as a concept has also found its way into Australian consumer legislation. It may only be a matter of time before the three countries explored in this paper elevate and expand the role of good faith and fairness beyond consumer contracts. The Constitutional mandate to develop the South African common law, the UK's (current) need to comply with civil law principles due to EU membership and generally, the conventional practice by common law legislatures, academics and courts of looking to England for legal developments, are factors which will contribute to the development.