The fair price rule and the South African law of contract: A historical and comparative analysis

Visser, Wiaan (2018-12)

Thesis (LLM)--Stellenbosch University, 2018.

Thesis

ENGLISH ABSTRACT: This thesis focuses on legal rules that allow a court to set aside or modify a contract on the basis of a large discrepancy in the value of the respective performances. These “fair price” or “just price” rules have been the object of debate and disagreement among jurists for centuries. Although one such a rule previously formed part of the South African common law of contract, the prevailing view is that the price does not have to be fair or reasonable for a contract to be valid. However, due to changing attitudes to price control both locally and internationally, this view might require reconsideration. To this end, the study traces the treatment of fair price rules historically and comparatively, and thereafter evaluates the application of these rules in the South African context by taking account of certain underlying values and principles of the law of contract. The historical overview studies the development of the fair price rule from its origins in late classical Roman law to its reception and subsequent abolition in modern law. The overview shows that jurists during the Middle Ages had a well thought-out understanding of the fair price rule as a doctrine aimed at enforcing a market-oriented just price in order to avoid the exploitation of weakness, price discrimination, fraud, and exceptionally harsh bargains. The comparative overview in turn shows that while a variety of different approaches to dealing with substantively unfair prices exist, there are signs of an increased willingness to engage in price control. It is also evident that more modern fair price rules follow a flexible approach to the determination of whether the price is fair. This approach does not only take account of the objective disparity in the value of the respective contractual performances, but also of the procedural fairness of the conclusion of the contract. These modern fair price rules follow a similarly flexible approach to restitution, by investing the court with the discretion to adapt the contract price, or to avoid the contract and award damages to the disadvantaged party. Building on the comparative and historical analysis, the thesis concludes that it would be both desirable and suitable that a modern fair price rule, which follows a flexible approach to the determination of fairness, should be introduced into South African common law of contract. This can be achieved through the development of the common-law rule that contracts may not be contrary to public policy. It is argued that this will lead to a law of contract that is better equipped to provide relief to prejudiced contracting parties, and that gives greater effect to a number of fundamental values of our law of contract, such as dignity, party autonomy, good faith, and Ubuntu.

AFRIKAANSE OPSOMMING : Die fokus van hierdie tesis is gerig op regsreëls wat howe toelaat om ‘n kontrak ter syde te stel of te wysig as gevolg van ‘n ernstige wanverhouding tussen die waarde van die onderskeie prestasies. Hierdie “billike prys” of “regverdige prys” reëls is reeds vir eeue ‘n bron van dispuut onder regsgeleerdes. Alhoewel so ‘n reël voorheen deel gevorm het van die Suid Afrikaanse kontraktereg, is die heersende mening dat die prys nie regverdig of billik hoef te wees vir ‘n kontrak om geldig te wees nie. Hierdie posisie verdien egter heroorweging in die lig van veranderende houdings jeens prysbeheer in Suid Afrika en die buiteland. Met hierdie doel voor oë begin hierdie studie met ‘n regshistoriese en regsvergelykende ondersoek na die toepassing van “billike prys” reëls, en evalueer dan die toepassing van hierdie reëls in die Suid Afrikaanse konteks met betrekking tot sekere onderliggende waardes en beginsels van die kontraktereg. Die regshistoriese oorsig ondersoek die ontwikkeling van die “billike prys” reël vanaf sy oorsprong in die laat-klassieke Romeinse reg tot sy resepsie en uiteindelike afskaffing in die moderne kontraktereg. Die ondersoek toon dat juriste gedurende die middeleeue ‘n goeddeurdagte begrip gehad het van die “billike prys” reël as ‘n leerstuk gemik op die afdwinging van ‘n markgeoriënteerde prys, ten einde die uitbuiting van kwesbaarheid, prysdiskriminasie, bedrog, en uitsonderlike nadelige kontrakte te bekamp. Die regsvergelykende oorsig toon weer dat, alhoewel ‘n verskeidenheid van benaderings tot die bekamping van onregverdige pryse bestaan, ‘n toenemende bereidwillligheid om pryse te beheer waargeneem kan word. Dit is verder duidelik dat moderne “billike prys” reëls ‘n buigsame benadering volg tot die vastelling van wanneer ‘n prys onregverdig is. Hierdie benadering neem nie slegs die objektiewe verskil in die waarde van die onderskeie prestasies in terme van die kontrak in ag nie, maar ook die prosedurele billikheid van kontraksluiting. Hierdie moderne “billike prys” reëls volg ook ‘n buigsame benadering tot restitusie, wat aan die hof die nodige bevoegdheid verleen om die prys aan te pas, of om die kontrak ter syde te stel en skadevergoeding toe te ken aan die benadeelde party. Op grond van die regsvergelykende en regshistoriese analise, is die tesis se gevolgtrekking dat dit beide wenslik en gepas sal wees indien ‘n “billike prys” reël, wat ‘n buigsame benadering volg tot die vastelling van wanneer die prys regverdig is, deel sou word van die Suid Afrikaanse kontraktereg. Dit kan geskied deur middel van die verdere ontwikkeling van die gemeenregtelike reël dat kontrakte nie strydig mag wees met die openbare belang nie. Dit word geargumenteer dat so ‘n ontwikkeling sal lei tot ‘n kontraktereg wat beter ingerig is om bystand te verleen aan benadeelde partye, en wat sterker uiting sal gee aan ‘n aantal grondliggende waardes van ons kontraktereg soos menswaardigheid, party-outonomie, goeie trou, en Ubuntu.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/105030
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