Adv Louis Nel Advice: Indemnities & Role of the Philosophy of ‘Ubuntu’ with Contract Interpretation
What exactly is the 'ubuntu issue' and the meaning of the word 'ubuntu'? Below is an indication:
'Ubuntu's ethos clearly reaches far and wide and is integral to many sub-Saharan African cultures. Though Ubuntu has various meanings, the core interpretation seems to remain the same: humanity rooted in kindness'.
(https://www.dandelionphilosophy.com/)
The question is whether ubuntu must play a role when a court is approached to reconsider the terms of a contract even if it has been entered into 'at arm's length'.
The court in the case of Beadica 231 CC (Constitutional Court) and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13 stated that provided an agreement was in "simple, uncomplicated language, which an ordinary person could reasonably be expected to understand", it should be enforced. Please note by inference the CPA requirement of 'plain and understandable language' (Section 22) i.e. '...ordinary consumer .............. with average literacy skills ..............could be expected to understand the content, significance and import of the notice, document ...'
It also considered the role of public policy in the context of contract terms being unfair and/or unreasonable and not in good faith (see the SA Constitution section 9 (2)). The finding was that the former will only play a role in the event that the contract/clause falls foul of the latter principles.
However, it also found that the point of departure that public policy underscores the pacta sunt servanda principle remains and accordingly the onus (burden of proof) will be on the party who alleges and argues that it must not be upheld i.e. such party must prove that not only is the clause in question contrary to public policy but also that the enforcement thereof will be contrary to public policy - A two-step test and the court's view is that if the clause per se is unreasonable, it is contrary to public policy and no further enquiry is required. However, if it is reasonable, the second step is whether the enforcement is contrary to public policy (See my discussion of this question and applicable aspects of the CPA and the case of Shamwari Game Reserve in my 8th insert).
Regarding ubuntu, the following observation by the court is noteworthy i.e. 'Ubuntu ... is recognised as a constitutional value.
Recently, the case of Municipal Employees Pension Fund v Aspara Tech and Projects (Pty) Ltd t/a Gadget Solutions and Another (2023/009050) [2024] ZAGJHC (31 May 2024) dealt with the principle of pacta sunt servanda.
The issue at stake was the failure by the lessee to give notice to the lessor of its wish to renew its lease and the ejection of the lessee. The lessee challenged the eviction based on the principles of public policy, Ubuntu, good faith and fairness.
Whilst the court was not averse to applying the principles enunciated by the lessee, it was of the view that it had failed the burden of proof required. It found on the contrary that the lease wording was 'certain, clear and unambiguous' (See 'two-step test' above).
What lessons can be learnt from the above regarding contract (which by definition includes indemnities) drafting, negotiation and enforcement?
- Ensure that you understand/know your client e.g. knowledge (general and of the destination and activities), experience, expectations, level of education and literacy
- Be aware of the imbalance (in most cases) in bargaining power
- Have a detailed FAQ section on your website
- Have a customer briefing – on your website and if required, on arrival and by the third-party service and product providers
- Ensure acceptance of all the elements of your contract as early as possible
- Advise and ensure the need for adequate insurance
© ADV LOUIS NEL
Louis-THE-lawyer
12 October 2024
DISCLAIMER - Each case depends on its own facts & merits - the above does not constitute advice - independent advice should be obtained in all instances
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