The role of good faith in the South African law of contract

Abstract

In South Africa, courts and academia frequently refer to contracts as bonae fidei agreements. Often this term is invoked without further explanation or reflection on what the meaning of this term is. Upon closer inspection it seems that the phrase “bonae fidei has largely become devoid of any meaning. This study embarks upon a critical analysis of case law leading up to the remarks of the Constitutional Court in Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers Ltd 2012 (1) SA 256 (CC); 2012 (3) BCLR 219 (CC), with the aim of determining what the role of good faith in the South African law of contract is and how this concept is approached by South African courts. A brief overview of the historical origins of the concept is given and the English law is considered as a foreign jurisdiction in order to gain understanding of how the concept is dealt with elsewhere. This study does not propose to undertake an in-depth study of consumer protection legislation. The justification for this decision lies in the fact that moving beyond this scope will prove to be too wide a field of study; hindering the in-depth discussion and evaluation of the common law and moving beyond the research aims of this dissertation. A critical analysis of South African case law indicates that it is unlikely that the courts in South Africa will adopt a general defence based on good faith that would empower courts to set aside otherwise enforceable agreements. The principle of good faith now forms part of the umbrella defence of public policy: it is finally accepted that public policy is invested in equitable contractual relationships and not only in upholding the principle of pacta servanda sunt. This study shows that good faith has a more active role to play in the law of contract as there is a duty upon courts to develop the common law so as to bring it in line with constitutional norms and values. This study illustrates the importance of open-ended concepts such as good faith and ubuntu to achieve a greater degree of equity and justice between contracting parties. The conclusion is reached that public policy is informed by the reigning ideology of the day: the contract law of South Africa must reflect its adherence to upholding and promoting the values and norms underlying the Constitution. If courts step up and uphold the constitutional mandate to develop the common law to bring it in line with constitutional values and norms, there will be very little need for legislative interference.