The Current Status of Exemption Clauses in the South African Law of Contract

Abstract

Exemption clauses are used in contracts to exclude liability that ascribes to a contractant under normal circumstances. They are often incorporated in the standard form contracts by the service providers to the detriment of the other contracting party. As a general principle, exemption clauses are enforceable as they reflect an agreement between contracting parties. Exemption clauses that are contrary to public policy are invalid and unenforceable. They are often struck down by a court. Public policy nullifies agreements that are offensive in themselves. It is now rooted in the Constitution and the fundamental values it enshrines. They include human dignity, the achievement of equality, the advancement of human right, freedoms, non-racialism and non-sexism. Both Consumer Protection Act and National Credit Act have exclusion clauses in certain agreements to achieve fairness between contracting parties. Consumer Protection Act creates a general standard of fairness by listing a variety of prohibited terms and terms which are presumed to be unfair for the benefit of the consumers. National Credit Act also controls the exemption clauses in order to ensure or facilitate the fair, reasonable and valid conclusion of contracts. Exemption clauses are no longer the prerogative of the contracting parties. Sometimes, the exemption clauses in a contract need to be pointed out to the other party or consumer. The principles of fairness, reasonableness and constitutional values have to be considered when courts decide on the validity of exemption clauses. Consumer Protection Act, National Credit Act and Constitution have altered the use of exemption clauses in the law of contract to ensure fairness between contracting parties.

DOI: 10.5901/mjss.2014.v5n9p164