“Good Faith” and “Ubuntu” in Contracts

By Yasmina Griesel 

The concept of good faith, or bonae fidel (Roman – Dutch), has been and still remains central to the nature of contracts. In the last two decades, legal academics have lead courts to develop and consider discussions relating to contractual obligations tied to the notion of good faith (which is fundamentally linked in discussions of “fairness” and “reasonableness”)  and Ubuntu. 

What is the principle of good faith and Ubuntu? 

In contract law, good faith and Ubuntu are concepts that are observed in interpreting and enforcing contractual clauses because the concepts speak to the values of fairness, reasonableness and public policy. While they are similar, the two concepts must not be confused.  

Briefly put, the idea of good faith derives from Roman law and can be understood as an individual’s expectation to “keeping their word”, or being “bound by their word”, because consistency and truth in what is agreed upon was seen as fundamental for justice. Good faith has also become embedded in the Constitution, upholding its principle values of dignity, freedom, and equality. 

Ubuntu is a human-oriented concept that is generally accepted as a factor that determines and influences social conducts. The concept derives from motho ke motho ba batho ba bangwe/umuntu ngumuntu ngabantu. The literal translation of this is “a person can only be a person through others” or loosely put “ I am because we are”. In other words, a person’s existence and value is dependent on their social group or community. The Constitutional Court defined Ubuntu in S v Makwanyane and Another 1995 (3) SA 391 (CC) 484 as a concept that carries the ideas of humanness, social justice, and fairness. It is intrinsically linked with the survival and upholding the community in solidarity. The concept of Ubuntu is accepted as public policy.  

What are the legal impacts of good faith, Ubuntu and fairness in contract? 

Courts have debated the question of the contractual implication of good faith and Ubuntu significantly over the years. One of the first weighty discussions of the Constitutional Court was in the case of Barkhuizen v Napier 2007 (7) BCLR 691 (CC) whereby the Court discussed whether a contractual clause was unreasonable and effectively contrary to public policy, and whether such clause should be enforceable on the merits of the case.  

The debate developed in Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd 2012 (3) BCLR 219 (CC) when the Constitutional Court questioned the Applicant’s prayer to impose an obligation to negotiate a contract in good faith. While the Applicant’s prayer was not successful, the Constitutional Court left the discussion open for debate by stating “Had the case been properly pleaded, a number of inter-linking constitutional values would inform a development of the common law. Indeed, it is highly desirable and in fact necessary to infuse the law of contract with constitutional values, including values of ubuntu, which inspire much of our constitutional compact.”  

In Bredenkamp v Standard Bank of SA [2010] 4 All SA 113 (SCA), the Supreme Court of Appeal found that fairness and reasonableness cannot be freestanding policies that excludes the unenforceability of contractual clauses.  

The most recent case relating to good faith and Ubuntu is Beadica 231 CC v Trustees for the Time Being of the Oregon Trust 2020 (9) BCLR 1098 (CC). In this case, the Constitutional court echoed that the values are fundamental in the interpretation of contracts and supported the views in Bredenkamp v Standard Bank of SA, namely that it is not enough that a contractual clause is “unfair” and / or “unreasonable” in order to render the clause unenforceable: the clause must also be contrary to public policy. In order for a litigant to prove that a clause is contrary to public policy, it must demonstrate before the court a good reason [on public policy] for its failure to comply with the contractual term. 

Conclusion 

While it is still possible to argue that for the development of the common law when it comes to good faith and Ubuntu, the common law and the courts continue to recognise contracts freely entered into as enforceable, observable and that they should be upheld. While courts have the discretion of exercising its power of invalidating clauses of a contract on the basis of fairness, reasonableness and public policy, it should exercise such power with restraints.  

Contact an attorney at SchoemanLaw for your contract and commercial needs by visiting our website at www.schoemanlaw.co.za.

By Yasmina Poundja Griesel \ SchoemanLaw Inc

Contract Law

www.schoemanlaw.co.za