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THE TENSION BETWEEN THE APPLICATION OF GOOD FAITH AND PACTA SUNT SERVANDA

International Construction Law Review

THE TENSION BETWEEN THE APPLICATION OF GOOD FAITH AND PACTA SUNT SERVANDA Patrick M M Lane SC The Maisels Group ABSTRACT The law of contract in South Africa has until recently regarded “good faith” as an underlying principle. A different approach to the application of “good faith” has followed the advent of the Constitution and the approach adopted by the Constitutional Court. There is, however, tension between this approach and that subsequently adopted by the Supreme Court of Appeal. This paper examines these different approaches and the impact that the judgments of the Constitutional Court will have on the law of contract. INTRODUCTION The principle of “good faith” as underlying principle of the South African law of contract has traditionally acted as an element of fairness in South African Law. Agreements must be obtained properly, there is a requirement of legality and the process of interpreting contracts takes cognizance of it. 1 More recently the Constitutional Court has applied a much broader application of the principle of “good faith”. Tension has, however, arisen between the approach adopted by the Supreme Court of Appeal and that adopted by the Constitutional Court to the application of the Constitution to the law of contract and in particular the extent to which the principle of pacta sunt servanda is affected thereby. THE LAW BEFORE BARKHUIZEN V NAPIER “Good faith” was held by the Supreme Court of Appeal in Brisley v Drotsky 2 as only being applicable as an underlying, general and supplementary value which operated in conjunction with other established rules. In other words, it was not considered as actionable in isolation. However, the dissenting judgement of Cameron JA marked a potential change of attitude in relation to the part that the principle of good faith, directed by constitutional values, 1 Contract general Principles van der Merwe, van Huyssteen, Reinecke and Lubbe, page 274. 2 Brisley v Drotsky 2002 (4) SA 1 (SCA), paragraph 22. Pt 3] The Tension Between the Application of Good Faith 295

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