Contracts and fairness and real life

Lessons from the Beadica case

Contracts are the building blocks of business deals. In legal terminology, “pacta sunt servanda”, or “agreements must be kept”. But what happens when sticking to the contract feels unfair? Can the courts intervene? The Constitutional Court recently had to answer a question of contracts and fairness in the case of Beadica v. Trustees, Oregon Trust, which involved lease agreements, a black empowerment initiative and missed deadlines.

“We messed up”

The case hinges on a simple instance of human error. A group of small business owners missed a deadline to renew their leases. When they tried to remedy the situation, their landlord refused, putting them at risk of losing their businesses. They asked the courts to step in and stop the evictions because the consequences were unduly harsh. They argued, “We messed up, but evicting us would destroy everything we’ve built.” The court responded by enforcing the contract terms. It was not deemed appropriate to overturn the terms just because the result seemed unfair. Enforcing the contract did not go against public policy or constitutional values.

Key takeaways from the case – contracts and fairness

For business owners, tenants and legal professionals, the lessons from this case include:

Contracts and fairness matter, but deadlines matter even more

The franchisees didn’t follow the process to renew their leases. The court made it clear: adhere to the terms of a contract. Dates, milestones and deadlines in contracts must be observed. Courts won’t make exceptions for shoddy administration just because the outcome feels harsh, even if a consequence is loss of livelihood. 

Always diarise important contractual dates. If you’re unsure about something, talk to a lawyer early – not after the fact.

Fairness isn’t enough

It is not enough to claim a decision or action is unfair. The courts want to know the basis for unfairness. Is the decision unconstitutional? Does it go against public policy? In the case of Beadica v. Oregon Trust, the franchisees didn’t give a credible reason as to why they missed the deadline. The court was not convinced that enforcing the lease terms would violate constitutional principles like equality or dignity.

The Constitution matters in contract law, but there must be a connection between your personal situation and broader legal values.

The law is moving – but slowly and carefully

Some judges believe the law should give more weight to things like fairness, ubuntu and unequal power in business relationships. But changes to the law need to be clear, structured and predictable. Judges can’t make decisions based on what “feels right” in each case.

The law is evolving to reflect South Africa’s constitutional values – but it can’t ignore well-established contract principles like certainty and accountability.

Support for B-BBEE entrepreneurs and small businesses

The businesses at risk in this case were part of a B-BBEE initiative. The franchisees weren’t experienced businesspeople; they were former employees trying to build something new. Therefore, their legal and commercial position was weak.

If South Africa is serious about transformation, B-BBEE businesses need access to legal advice, training and ongoing support. A B-BBEE initiative isn’t empowering if people fail because they miss a step in a contract they don’t fully understand.

Always get legal advice before you sign

This case is a reminder that contract terms are critical, especially clauses about renewal, cancellation and notice periods. If you’re not sure what you’re signing or what the consequences of missing a date might be, speak to a lawyer. The cost you incur now can save your business later.

Remember: Courts can’t fix every mistake. You need to take active steps to protect yourself.

SD Law can help

Contracts are the backbone of business. But they don’t exist in a vacuum. They operate within the values of our Constitution – values like fairness, equality and human dignity. The courts can refuse to enforce contract terms, but this case shows that this is the exception, not the rule.

If you’re a small business owner, tenant or part of a B-BBEE venture, don’t wait for a crisis before getting legal support. At Simon Dippenaar & Associates, we’re here to help you understand your rights, your contracts and your options and enable you to grow your business. 

Contact Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za to arrange a discussion.

Further reading:

• Starting a business as a foreigner in South Africa
• Employment contracts and labour disputes
• Contract disputes

SD Law

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