Valid and Enforceable: The Basics of Contracting in South Africa Image: GCIS Vuk’uzenzele

Valid and Enforceable: The Basics of Contracting in South Africa

The general foundational requirements for concluding a valid contract in South Africa, while taking cognisance of the role that fairness plays in regulating contractual relationships. 


Valid and Enforceable: The Basics of Contracting in South Africa Image: GCIS Vuk’uzenzele

Freedom and fairness are keystone principles within South Africa’s democratic era. This article seeks to briefly outline the general foundational requirements for concluding a valid contract in South Africa, while taking cognisance of the role that fairness plays in regulating contractual relationships. 


Contractual capacity refers to the state of mind of a party seeking to contract. To possess contractual capacity is to understand the nature of the purported contract and the legal effects that flow from there. As the point of departure, all natural persons over the age of eighteen years are said to possess contractual capacity. However, certain groups of persons do not fit into this default standard and are said to have limited or no capacity. Minors under the age of six years and persons with mental conditions that render them unable to appreciate the nature and effects of their actions (for example those suffering from dementia) are said to have no contractual capacity. Minors between the ages of seven and seventeen years have limited contractual capacity in that they are able to contract, albeit with the assistance of their legal guardian or the court. Similarly, un-rehabilitated insolvents are generally said to possess merely limited contractual capacity. 

The remaining contractual requirements that are detailed below are dependent on all the parties involved possessing contractual capacity. 

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Consensus is often referred to as ‘the meeting of the minds’. In other words, the contracting parties must agree (or at least appear to agree) on the material aspects of the purported contract. Misrepresentation of a material term has the potential to render a contract void and unenforceable on the basis that there was no consensus as to the true rights and obligations flowing from the supposed agreement. There is no hard and fast way to gauge consensus in a contractual setting; typically, if any agreement has been reduced to writing and signed, the signatory is deemed to be aware of the content thereof. The onus to prove a lack of consensus would fall onto the party alleging such. 

Legality, certainty, and possibility 

An agreement must be lawful. That is to say, no aspect of the agreement must be prohibited by statute or the common law. The content of an agreement must be definite or certain, meaning that the rights and obligations flowing therefrom must be easily ascertainable. An agreement cannot create obligations that are impossible to fulfill – in this regard it is required that the performance mandated by an agreement must be possible.  


While the default position is that an agreement need not adhere to any particular requirements, one ought to be aware of any formalities required by legislation governing agreements of a certain nature. For example section 7 of the Consumer Protection Act stipulates certain formalities that any franchise agreement must honour.  

Anything further?

What is interesting to note is that none of the bedrock requirements for the conclusion of a valid contract require the terms thereof to be fair. This notion of fairness in contract pits the notions of freedom of contract against that of sanctity of contract. While freedom of contract refers to being able to contract with anyone (subject to the capacity requirement) about anything (subject to the legality, certainty and possibility requirements), sanctity of contract speaks to the idea that once a valid contract has been concluded, the parties thereto can take sanctity in the knowledge that the contract is binding and enforceable. When read together, these two fundamental contractual sentiments can be seen to render validly concluded contracts with unfair terms binding and enforceable. The judiciary has seemingly confirmed the position that fairness is not a free-floating principle that all contracts are required to embody.  

In the 1989 matter of Sasfin v Beukes, the Appellant Division struck down a cession agreement which contained unseverable terms that were deemed to be repugnant to public policy. The effect of this judgment was that contracts could be voided on the grounds that the terms thereof were not embodied by the bone moras of society. Thirteen years later in the case of Brisley v Drotsky, the SCA confirmed the conservative position of the Appellate Division, maintaining that lack of contractual fairness was not an independent cause of action, rather fairness was merely an underlying principle that was given effect to through more precise contractual doctrines. In 2007, this issue of holistic contractual fairness was presented to the Constitutional Court in Barkhuizen v Napier. In Barkhuizen, a time bar clause in an insurance contract was challenged on the grounds that it infringed the constitutional right of access to a court. The court side-stepped fully interrogating the position of fairness as an independent cause of action in the law of contract as the case was dismissed due to lack of evidence. However, the court opened the door for a new discussion by stating that while fairness is merely an underlying value that is given expression through more concrete rules, it is uncertain as to whether such a limited notion of fairness in contract is appropriate within the era of Constitutional dispensation.

From these judicial decisions it becomes apparent that a contract housing terms that public policy deems to be unfair, may be declared void and unenforceable. However, the gates to this avenue of recourse only open in an ex post facto setting, leaving no mechanism to ensure good faith or fairness at the infancy of and throughout the contracting process. Nevertheless, legislation such the Consumer Protection Act, Labour Relations Act, National Credit Act, and Rental Housing Act can be seen as prescribing certain formalities and facilitating equal bargaining power within the corresponding contractual settings, in this way requiring a certain standard of fairness at certain points of the contracting process. 

Despite legislative intervention as noted above, there is no overarching requirement that demands fairness throughout the contractual process from start to finish. In this sense, it is advisable to seek professional legal help from the outset to ensure your contract is validly concluded and duly enforceable.

This article originally published by Reynolds Attorneys