The impact of pacta sunt servanda in the law of contract

Abstract

The research in this dissertation investigates the impact of pacta sunt servanda in the South African law of contract. The notion that agreements seriously entered into must be honoured is an age-old principle which has found recognition in South African law. The common law foundational principles of contract law are explained and the impact of the Constitution on these principles is analysed. The Constitution is the highest law in the land and all law, including the common law, must conform to it. The cornerstones of the South African law of contract are good faith, freedom of contract, sanctity of contract and privity of contract. The competing common law foundational values are discussed with particular emphasis on the principles of sanctity of contract and freedom of contract. The notion of freedom of contract is a constitutionally recognised principle which is associated with party autonomy and denotes minimal state interference. Pacta sunt servanda states that obligations created in terms of an agreement must be honoured; therefore parties who enter into contractual agreements with the relevant intention are obliged to respect the agreement. There are many dimensions to a contract which affect its meaning as a legal instrument, apart from the legal dimension there is also a structural dimension of contracts. With regards to the structural dimension, the interpretation and the drafting of contracts is relevant because this is the process by which the agreement between the parties is codified and interpreted. In order for the principle of pacta sunt servanda to operate successfully in contractual agreements, the written contract must clearly indicate the intention of the parties. In this research both interpretation and drafting of contracts will be examined to identify their impact on the principle of pacta sunt servanda. Pacta sunt servanda influences the interpretation and drafting of contracts and must therefore always be considered when executing contractual agreements. The case law in this research highlights the fact that courts are in favour of contractual validity and have accepted pacta sunt servanda as a cemented principle in the South African law of contract.