Department of Mercantile Law

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Browsing Department of Mercantile Law by Author "Bailly, Chantal"

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    The role of implicit contract terms as a determinant of contractual consequences
    (Stellenbosch : Stellenbosch University, 2005-12) Bailly, Chantal; Lubbe, G. F.; Stellenbosch University. Faculty of Law. Dept. of Mercantile Law.
    ENGLISH ABSTRACT: It is clear that the classical concept of contract suffers from weaknesses because it takes too little account of social and economic changes that have occurred in our highly competitive global climate. More particularly, it fails to acknowledge implicit dimensions of contract. The classical contract theory was designed for transactions rather than to regulate relations. In view of the relational contract theory, contracts are agreements, often developed gradually, over a period of time and last over a period of time, perhaps indefinitely. As illustrated, with a discussion of the various theories attempting to qualify the classical law, the development of the relational contract theory and the need for implicit dimensions is in line with changes in business, market transactions and the economic and social environment of today. The relational contract is gradual and emphasises the relationship between the parties. Focus is placed on their understandings, party practices, customs and expectations as opposed to formal doctrines and principles. Characteristically, relational contracts are often incomplete in their specifications, thus leaving room for the creation of expectations and understandings inter partes. These expectations and understandings along with co-operation, rationality and trust are the implicit dimensions, which reflect the shared interest the parties have in their transaction. The ways in which these implicit dimensions can be recognised, developed and applied to contracts, particularly in the South African context is considered in light of our law's treatment of the implication of terms into contracts. It was found that considerations of reasonable expectations and policy do playa role in our law, albeit not to such an extent as to meet the demands of the relational contract theory and the recognition of implicit dimensions. Existing contract principles are also evaluated in the light of the relational contract and implicit dimensions. It is not suggested that classical contract law doctrines are to be dispensed with but that a shift of focus should occur, from the traditional focus on the ''paper'' deal to focusing on the ''real'' deal, between the parties. It is concluded that a principle of good faith would be a suitable starting point to give cognisance to implicit dimensions and to regulate relational contracts. In recognising a principle of good faith, the courts will be able to better respond to the expectations of the parties. A principle of good faith is recommended as being advantageous towards developing a pre-contractual duty of disclosure and encouraging more co-operative thinking and dealing in both legal doctrine and contracting practice.