In South Africa’s commercial environment, clear and precise contract drafting is crucial. Ambiguities or missing details often lead to disputes, as illustrated by the recent case of G Phadziri & Sons (Pty) Ltd v Do Light Transport (Pty) Ltd and Another [2023] ZASCA 16.
One of the disputes in this case arose from a commercial contract that failed to clearly set out its duration in the event that a specific future event did not materialise. When a disagreement later emerged, the appellant argued that a tacit term should be implied into the agreement to provide for a reasonable duration under such circumstances.
The Supreme Court of Appeal, however, reaffirmed the established principle that courts are generally reluctant to impute tacit terms into contracts – particularly when those terms relate to essential elements of the agreement, such as its duration. This reluctance is especially strong where the tacit term would be at odds with the express provisions of the contract. In this case, there was no evidence to support the appellant’s assertion that the parties had contemplated an alternative duration if the specified future event failed to occur.
Ultimately, the Supreme Court of Appeal in this case dismissed the appeal and ordered the appellant to pay the respondent’s legal costs.
This decision highlights the risks associated with poorly drafted commercial agreements. It serves as a cautionary reminder to businesses of the importance of clearly documenting all key contractual terms to prevent uncertainty, disputes, and unnecessary litigation.
To manage these risks, businesses are strongly advised to engage legal professionals when drafting and reviewing contracts. Doing so ensures that agreements are clear, complete, and tailored to the specific circumstances of the transaction – thereby protecting the parties’ interests and minimising the potential for future conflict.
For further assistance, you may contact me at emilio@caf.co.za or call on 021 674 2083.
Written by Emilio Ramos
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).