The applicability of maxims in the interpretation of contracts

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(1)COPYRIGHT AND CITATION CONSIDERATIONS FOR THIS THESIS/ DISSERTATION. o Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. o NonCommercial — You may not use the material for commercial purposes.. o ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.. How to cite this thesis Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/ M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved from: https://ujcontent.uj.ac.za/vital/access/manager/Index?site_name=Research%20Output (Accessed: Date)..

(2) THE APPLICABILITY OF MAXIMS IN THE INTERPRETATION OF CONTRACTS by. CHANTELLE BOTHA (Student number: 200577443). Submitted in partial fulfilment of the requirement for the degree of. MAGISTER LEGUM (LLM) in. COMMERCIAL LAW. in the. FACULTY OF LAW. at the. UNIVERSITY OF JOHANNESBURG. SUPERVISOR: PROF. D. MILLARD. NOVEMBER 2016.

(3) taking the said prescribed oath. This affidavit conforms with the requirements of the Justices of the Peace and Commissioners of Oath Act 16 of 1963 and the applicable Regulations published in the GG GNR 1258 of 21 July 1972: GN 903 of 10 July 1998; GN 109 of 2 February 2001 as amended.. 3.

(4) TABLE OF CONTENTS. ACKNOWLEDGEMENTS. 6. ABSTRACT. 7. LIST OF ABBREVIATIONS. 8. CHAPTER ONE: INTRODUCTION AND PROBLEM STATEMENT. 9. CHAPTER TWO: ORIGINS OF MAXIM. 11. 2.. Origin of maxims within South Africa. 11. 2.1.. Ut res magis valeat quam pereat. 12. 2.2.. Eiusdem generis. 13. 2.3.. Noscitur a sociis. 14. 2.4.. Inclusio unius est exclusio alterius. 15. 2.5.. Ex contrariis. 15. 2.6.. Ex consequentibus. 16. 2.7.. Semper in absuris quod minimum est sequimur. 16. 2.8.. Contra proferentem. 17. CHAPTER THREE: CURRENT APPLICATION OF MAXIMS WITHIN SOUTH AFRICAN COURTS. 3.. 18. Introduction. 18. 3.1. 18. Ut res magis valeat quam pereat 3.1.1. 3.2. Airports Company South Africa Limited v Airport Bookshops (Pty) Ltd t/a Exclusive Books. 18. 3.1.1.1 Facts. 18. 3.1.1.2 Discussion. 19. Eiusdem generis. 20. 3.2.1 Sasria v Slabbert Burger Transport. 20. 3.2.1.1 Facts. 20 4.

(5) 3.2.1.2 Discussion 3.3. 3.4. 3.5. 3.6. Noscitur a sociis. 21. 3.3.1. Federated Employers Insurance Co Ltd v Magubane. 21. 3.3.1.1 Facts. 21. 3.3.1.2 Discussion. 21. Inclusio unius est exclusio alterius. 22. 3.4.1. Rossouw v First Rand Bank. 22. 3.4.1.1 Facts. 22. 3.4.1.2 Discussion. 22. Semper in absuris quod minimum est sequimur. 23. 3.5.1. Ex Parte Dell. 23. 3.5.1.1 Facts. 23. 3.5.1.2 Discussion. 23. Contra Proferentem. 24. 3.6.1. Sentinel Trust No V Barnes. 24. 3.6.1.1 Facts. 24. 3.6.1.2 Discussion. 25. Drifters Adventure Tours v Hircock. 26. 3.6.2.1 Facts. 26. 3.6.2.2 Discussion. 27. 3.6.2. 3.7. 20. Conclusion. CHAPTER FOUR: THE EFFECTS OF STATUTES ON MAXIMS. 27. 29. 4.. Introduction. 29. 4.1. National Credit Act. 29. 4.2. Consumer Protection Act. 30. 4.3. Scope of the National Credit Act and Consumer Protection Act. 30. 4.4. Case law. 31. 4.4.1. 31. National Credit Act. 4.4.1.1 Visagie NO and others v Erwee NO and Another. 4.4.2. 31. 4.4.1.1.1 Facts. 31. 4.4.1.1.2 Discussion. 31. Companies Act. 33 5.

(6) 4.4.2.1 Budge NO and others v Midnight Storm Investments (Pty) Ltd and. 4.5. Another. 33. 4.4.2.1.1 Facts. 33. 4.4.2.1.2 Discussion. 33. Conclusion. CHAPTER FIVE: UNITED KINGDOM. 34. 35. 5.1. Origins of the interpretation of contracts within the United Kingdom. 35. 5.2. Approach to Maxims within the United Kingdom. 36. 5.3. English case law. 37. 5.3.1 Introduction. 37. 5.3.2 Lexi Holdings PLC v Stainforth. 38. 5.3.2.1 Facts. 38. 5.3.2.2 Discussion. 38. 5.3.3 Credential Bath Street Ltd v Venture Investment. 39. 5.3.3.1 Facts. 39. 5.3.3.2 Discussion. 39. CHAPTER SIX: CONCLUSION. 40. BIBLIOGRAPHY. 42. 6.

(7) ACKNOWLEDGEMENTS I wish to thank the following people without whom this work would not have been possible: . Professor Daleen Millard for her continual guidance, constructive criticism and assistance to bring my legal writing and analytical thinking to the level it is today.. . My parents, for the love and support through all my years of studies and especially the added motivation to better myself academically with the completion of this degree.. . My brother, sister-in-law and the rest of my family for the ongoing love and support.. . Mr Christopher Wright for his motivation, support and continual belief in me throughout this process.. 7.

(8) ABSTRACT Maxims have been part of the law of interpretation of contracts for many years across numerous legal jurisdictions. In South Africa the current position with regard to the relevance of maxims within South African interpretation of contracts is being questioned. Taking into account that consumer legislation has been implemented which has had both positive and negative effects on the interpretation of contracts, it would need to be deduced whether these statutes have had any effect on the relevance of maxims. This dissertation outlines the origins of interpretation of contracts within a South African perspective. Further attention has also been given to the origins of the following maxims: ut res magis valeat quam pereat, eiusdem generis, noscitur a sociis, inclusio unius est exlusio alterius, ex contrariis, ex consequentibus,sempler in absuris quod minimum est sequimur and contra proferentem. In comparison this dissertation has looked at the origins of maxims and the interpretation of contracts within the jurisdiction of the United Kingdom. It can be argued that the courts in the United Kingdom have given special attention to the current position of the interpretation of contracts with special attention given to the relevance of maxims in the United Kingdom today. An in-depth analysis of South African case law is made in this dissertation showing how maxims may still have some relevance within South African law for the interpretation of contracts. However, the courts would need to take each case on its own set of facts in obtaining a just and equitable decision. This aspect is more fully elaborated on in this dissertation. In the final instance, this dissertation looks at the implementation of the National Credit Act and Consumer Protection Act. As a result of the enactment of these statutes it can be argued that the consumer contract has had to be amended to be brought in line with the terms of the statutes. This dissertation further considers whether the implementation of consumer legislation has had any effect on the relevance of maxims within the interpretation of. consumer. contracts.. 8.

(9) LIST OF ABBREVIATIONS CPA. Consumer Protection Act. Edin LR. Edinburgh Law Review. LJ. Law Journal. LQ Rev. Law Quarterly Review. LR. Law Review. NCA. National Credit Act. NO. Nomine officio. PER. Potchefstroom Electronic Law Journal. SALR. South African Law Review. SA Merc LJ. South African Mercantile Law Journal. UJ. University of Johannesburg. UK. United Kingdom. US. United States. 9.

(10) CHAPTER ONE: INTRODUCTION AND PROBLEM STATEMENT. Maxims have been part of our law, in particular contract law, for some time. They have been utilised by both the courts and the parties to the contracts to interpret the contract or a clause when a dispute arose. However, are certain maxims still applicable to the interpretation of contracts taking into account the current position of the courts and the effects that legislation has had on the applicability of maxims? Contracts usually need to be interpreted when a dispute arises between the contracting parties with regards to certain terms contained within the contract and the enforceability thereof.1 The principles of interpretation of contracts are utilised in assisting the court and the reader in obtaining a better understanding of the contents of the legal document presented. However, the principles or rules of interpretation are said to be only “guidelines” to the parties as most of the principles underlying the interpretation of contracts are rebuttable.2. When the courts are faced with the difficulty of a dispute which may have arisen between contracting parties the court can draw on the “history of contract interpretation” seen throughout the years to assist with a just and equitable judgment with regards to the dispute.3 The courts can rely on various theories, contractual aids, presumptions, the reasonableness of the contract, extrinsic evidence as well as other factors to assist in the interpretation of contracts.4. The maxims utilised in the interpretation of contracts, their origins and current application which are to be more fully discussed herein are: ut res magis valeat quam pereat, eiusdem generis, noscitur a sociis, inclusio unius est exlusio alterius, ex contrariis, ex consequentibus, sempler in absuris quod minimum est sequimur and contra proferentem. However, it has been said that the prevalence of maxims within legal literature has diminished from the middle of. 1. Louw The Plain Language Movement and Legal Reform in the South African Law of Contract (LLM Dissertation UJ 2010) 42. 2 Butt and Castle Modern Legal Drafting: A Guide to Using Clearer Language (2006) 47. 3 Louw (n 1) 42. 4 Ibid.. 10.

(11) the nineteenth century onwards as maxims were regarded in law books as the central pillars of law prior to that time.5 With the implementation of the South African Consumer Protection Act 6 (hereinafter referred to as the “CPA”) and the National Credit Act7 ( hereinafter referred to as the “NCA”) one has to take into consideration the aforementioned Acts’ effects on the interpretation of contracts, if any, and determine whether these Acts have influenced the relevance of the abovementioned maxims’ application. This is best achieved by the comparison of case law and the courts’ current position with regards to the NCA and CPA in the interpretation of consumer contracts.. Maxims are utilised in jurisdictions all across the world for example that of the United States and the United Kingdom where they are referred to as the canons of constructions or alternatively maxims. However, their application is the same as if it were to be applied within a South African jurisdiction. By way of comparison the United Kingdom has for “sometime employed certain canons of construction or rules of thumb in an attempt to do justice between the parties.”8 In addition the United Kingdom’s courts look at the contract as a whole and consider the words and relevant clauses together with the “documentary, factual and commercial context.”9 The United Kingdom has however, questioned the relevance of maxims in recent case law more readily than South African courts with the implementation of a revamp in the way UK courts interpret contracts. The United Kingdom’s position with regards to maxims will be more fully discussed herein and how they may or may not vary to the position held by South African courts.. This dissertation seeks to determine whether the application of maxims in the interpretation of contracts is still applicable in South African contract law. It could be argued that the CPA and NCA may have had some influence on said application of maxims in consumer contracts however; this will need to be further investigated and discussed herein. Once the maxims have been more fully explained taking into account their origins and current application same will be compared to the United Kingdom’s view on the interpretation of contracts and the application of canons of construction. 5. McQuade “Ancient legal maxims and modern human rights” 1996 Campbell LR 75. The Consumer Protection Act 68 of 2008 (“CPA”). 7 The National Credit Act 34 of 2005 (“NCA”). 8 Ashurst https://www.ashurst.com/doc.aspx?id_Resource=4634 (10-11-2016). 9 Ibid. 6. 11.

(12) CHAPTER TWO: ORIGINS OF MAXIMS. 2.. Origins of maxims within South Africa. This chapter introduces a brief background to the origins of the interpretation of contracts in South Africa and more particularly the origins of maxims. A basic principle of the interpretation of contracts is that the document is to be considered as a whole and the words to be read in the context it is found in order to obtain the correct meaning of that word.10. South African interpretation of contracts is deeply rooted in Roman-Dutch law drawing from the influences of the seventeenth and eighteenth century jurists.11 The jurists relied on Roman law authority and utilised the principles of “equity and mildness” when interpreting contracts.12 Contracts were seen to be more as a “strict formalistic transactions in which the actual agreement between the parties was a secondary importance.”13. Roman-Dutch lawyers placed more importance on the intentions of the contracting parties as opposed to the meaning of the words contains in the disputed contract.14 Actual deviation from the meaning of the word would be allowed in order to properly give effect to the true intention of the contracting parties.15. The interpretations of contracts are assisted by certain internal and external aids. Internal aids are said to look at the language of the document and is the dominant aid as opposed to that of the external aids. The external aids of interpretation of contracts look at the documents for its meaning and legal effects.16. 10. Cornelius Principles of the Interpretation of Contracts in South Africa (2016) ch 9. Ibid 8. 12 Ibid. 13 Ibid 13. 14 Ibid 22. 15 Ibid 23. 16 Butt and Castle (n 2) 48. 11. 12.

(13) The development of maxims as they are applied today in South African interpretation of contracts can be seen in the writings of the Roman-Dutch lawyers and their application thereof. It is evident that when interpreting a contract the Roman lawyers would interpret the contract against the party responsible for the doubt that may have been placed in that contract.17 Furthermore, the rule in which the inclusion of one would be at the exclusion of all other similar matters was applied in the principles of interpretation of contracts by RomanDutch law.18 It was further seen that when a clause or word could have no “sensible meaning” it would have been removed from the contract as if it was never written.19. Not only is the South African law of contracts governed by the rules and principles of the Roman jurists but South African law also has strong influences drawn from English law.20 Roman-Dutch law and English law differ in the sense that they have not always developed on similar lines due to the early development and emphasis for the interpretation of contracts being placed on different aspects of interpretation.21. The Roman-Dutch jurist developed a more contextual approach to the interpretation of contracts which is now adopted by most legal regimes around the world and is said to be the preferred approach to the interpretation of contracts.22 The use of the Latin terms of the maxims as seen in the interpretation of contracts within a South African context makes it evident that the rules have been taken from Roman-Dutch law, and these maxims will be discussed further herein.23. 2.1.. Ut res magis valeat quam pereat. The maxim of ut res magis valeat quam pereat means that an interpretation of a contract which makes the contract valid is always preferred to an interpretation that would render the contract, in part or as a whole, as invalid.24 This can further be seen in the interpretation of 17. Ibid 23. Ibid. 19 Ibid. 20 Louw (n 1) 14. 21 Cornelius (n 10) ch 10. 22 Louw (n 1) 18. 23 Ibid 61. 24 Cornelius (n 10) 177. 18. 13.

(14) contracts in which the clause or term of the contract can result in two or more meanings. When applying the maxim to the interpretation of a disputed term the meaning which would result in the contract being preserved and not destroyed is always preferred.25. This maxim is based on the presumption that the contracting parties would have contracted with the intent of having a validly binding contract between them and not a contract which would best be interpreted to be void.26 Furthermore, the parties to the contract would not intend to include a term in the contract which can be said to be “futile, nugatory, unnecessary or meaningless.”27 In the case of Sunshine Records v Frohling28 it was held by the court that the aforementioned maxim cannot be used to interpret a contract contrary to the terms and intent of the contracting parties. This maxim dates back as far as the Roman-Dutch lawyers in that the contracts were always favoured to be interpreted as valid over the term to be interpreted against the true intention of the parties as mentioned above.. 2.2. Eiusdem generis. The eiusdem generis maxim works on the presumption that the contracting parties have chosen the words used in the contract to not be superfluous.29 The maxim of eiusdem generis is not only seen as a useful tool in the interpretation of contracts but can also be seen to apply in the construction of statutes.30 Cornelius states that in setting out the definition of eiusdem generis it is said to be as follows: “[I]f a word or expression with a broad, general meaning is used in conjunction with words that donate species of the same genus the meaning of the general or expression is limited to refer only to the matters of the same genus.”31 The maxim of eiusdem generis is considered by legal drafters to be the best known rule of construction. 32. 25. Louw (n 1) 61. Cornelius (n 10) 177-178. 27 Louw (n 1) 61. 28 Sunshine Records (Pty) Ltd v Frohling 1990 4 SA 782 (A). 29 Louw (n 1) 62. 30 Butt and Castle (n 2) 52. 31 Cornelius (n 10) 188. 32 Butt and Castle (n 2) 28. 26. 14.

(15) The word genus does not have to specifically be applied in the scientific sense of “taxonomic category” but can also mean to apply to things which are similar or sufficient to be of “like kind.”33 However, the eiusdem generis rule or maxim cannot be applied to give a restrictive meaning to words which preceded the general words in a contract.34 In a situation where the specific words cannot be said to be part of the same genus in the disputed contract, the eiusdem generis rule cannot be applied to restrict the meaning of the specific words.35 The eiusdem generis maxim can only apply when the specific words do not lack an identifiable class. If this is the case the general words are to be interpreted on their face value with the ordinary meaning of the word prevailing.36 This maxim is however becoming of some concern to legal drafters, in that the drafters of the contracts are attempting to “cast” the class as wide as possible to make the general words “embrace more” and this is being achieved by the drafting of lengthy lists in contracts.37. It is evident that the maxim of eiusdem generis is most readily seen and applied to the construction of clauses where the words of limited meaning are followed by those of general application.38 In the case of Grobbelaar v Van der Vyfer39 it was held by the court that when the maxim of euisdem generis is applied the meaning of the general word in association with specific words needed to be determined and one would not be allowed to substitute an “artificial intention” of what was clearly meant by the contracting parties.. 2.3. Noscitur a sociis. The maxims of noscitur a sociis and eiusdem generis are said to be similar in application with noscitur a sociis seen as having a broader application than that of eiusdem generis.40 The maxim is seen as the extended version of eiusdem generis with the meaning of things known by its associates41 The Latin tag from which it is drawn can be translated to “it is known by its. 33. Oxford Dictionaries http://www.oxforddictionaries.com/us/definition/american_english/genus (10-11-2016) and Cornelius (n 10) 186. 34 Imperial Group (Pty) Ltd vs NOS Resins (2007) JOL 19493 (SCA). 35 Cornelius (n 10) 189. 36 Butt and Castle (n 2) 53. 37 Ibid 55. 38 Colonial Treasurer v Rand Water Board 1907 TS 479. 39 Grobbelaar v Van der Vyver 1954 1 SA 248 (A). 40 Cornelius (n 10) 189. 41 Louw (n 1) 63.. 15.

(16) neighbours.”42 Noscitur a sociis is to be applied where the meaning of a word does not necessarily have a general meaning and can been seen to be influenced by the association it may have with other words or phrases contained in the contract.43. One however needs to be cautious when applying the maxim of noscitur a sociis to ensure that the contract and phrase in question are read in their context and not extracted from the contract as a whole.44 Noscitur a sociis maxim is a helpful tool to determine the meaning of a term but should not be applied in a manner where the result is in conflict with the true intention of the parties.45. 2.4. Inclusio unius est exclusio alterius. The Inclusio unius est exclusio alterius maxim is defined as the inclusion of one at the exclusion of the other.46 The maxim can best be understood to mean that if the contracting parties mention one matter in the contract it is intended by the contracting parties that all other similar matters which were expressly excluded in the contract are to be treated on a different basis.47 It must however be kept in the mind that when applying the maxim of inclusio unius est exclusio alterius, the maxim only gives the “prima facie indication of the intention of the parties and not a final indication.”48. 2.5. Ex contrariis. The maxim of ex contrariis is said to be an extension of the inclusio unius est exclusio alterius maxim and the maxims are often used in conjunction with one another in the interpretation of a contract.49 Ex contrariis is defined to provide for matters in a contract in which the opposite would apply to opposite situations alternatively similar matters which are not mentioned in the contract.50. 42. Butt and Castle (n 2) 57. Cornelius (n 10) 189-190. 44 Ibid 187. 45 Ibid 188 46 Ibid. 47 Ibid. 48 Ibid. 49 Ibid 189. 50 Ibid. 43. 16.

(17) It must however be stated that even though the maxim is a rule of interpretation that forms part of South African contract law, it has been developed by legal drafters to always cater for all possible eventualities and situations.51 This may result in the question of whether the maxim of ex contrariis is still applicable in the current drafting of contracts, a question which would need to be addressed.. 2.6. Ex consequentibus. “When a term in a contract confers certain powers, duties or function on a party, it also by implication authorises the consequences that are naturally associated with the exercise of such powers, duties and functions.”52 For example, the means by which the maxim of ex consequentibus is applied is when a contracting party needs to perform in terms of the contract, all matters which are reasonably necessary to enable the party to perform that function are included with the exclusion of anything that may hinder the party in their performance of their duties in terms of the maxim.53. 2.7. Sempler in absuris quod minimum est sequimur. The maxim of sempler in absuris quod minimum est sequimur is applied where the terms of the contract are said to be ambiguous. In these situations the terms are to be interpreted in favour of the debtor in a way that the lesser obligation is placed on the debtor.54 This maxim can be seen in statutes protecting the consumer within a South African setting which will be more fully discussed herein. However, it has been seen that our courts will not deviate from the clear meaning of the words in order to reduce the burden being placed on the debtor in a consumer contract.55. The parties must further bear in mind that the maxim quod minimum is only applied and interpreted if the clause that is creating a contractual obligation is said to be ambiguous and. 51. Louw (n 1) 64. Cornelius (n 10) 191. 53 Ibid. 54 Ibid 190. 55 Louw (n 1) 64. 52. 17.

(18) all other presumptions and rules that are utilised in the interpretation of contracts have not assisted the parties in clarifying the ambiguous clause.56. 2.8. Contra proferentem. As is evident in the case of Sentinel Trust NO v Theresa57 the contra proferentem maxim is applied when the wording of a contract is ambiguous and cannot be corrected. In these instances the author of said contract should be the one to suffer, as the drafter of the contract has the power to make the meaning of the terms plain. An example of the use of this maxim can be seen in landlord tenant agreements in that an ambiguous obligation contained in a lease agreement on the tenant will be interpreted in favour of the tenant.58 The maxim is generally applied as a last resort until such time as all other presumptions and rules of interpretation of contracts have been fully exhausted.59 The maxim contra proferentem developed due to the inconsistencies seen in the rights of the different classes of individuals. It has however developed into a rule of general application regardless of the backgrounds of the contracting parties.60 Cornelius is of the opinion that the maxim contra proferentem should be applied more readily and ought to be strictly applied when dealing with standard form contracts, due to the likelihood of a severe imbalance in the bargaining powers between the parties.61. 56. Cornelius (n 1) 19. Sentinel Trust NO and another v Theresa Barnes NO (15583/2010) [2013] ZAGPPHC 390. 58 Butt and Castle (n 2) 59. 59 Cornelius (n 10) 193. 60 Butt and Castle (n 2) 60. 61 Cornelius (n 10) 194-195. 57. 18.

(19) CHAPTER THREE: CURRENT APPLICATION OF MAXIMS WITHIN SOUTH AFRICAN CASE LAW. 3.. Introduction. This chapter deals with case law in which the maxims relevant to this discussion have been applied by courts as a method of resolving the dispute between the contracting parties. Alternatively the case discussions will attempt to show the court’s dissatisfaction with the applicability of the maxims and determine whether the maxims have only hindered the court’s interpretation of the dispute. It must always be borne in mind that the cases are all decided on their own individual set of facts. The decisions taken by the court with regard to the maxims may only be applicable to the set of facts that were currently before the court and may not be the true position with regard to the particular maxim. This will however be discussed in further detail in this chapter. 3.1. Ut res magis valeat quam. 3.1.1. Airports Company South Africa Limited v Airport Bookshops (Pty) Ltd t/a Exclusive Books62. 3.1.1.1 Facts. The applicant and the respondent were parties to a lease agreement wherein the applicant leased a shop to the respondent in one of its airports. A secondary agreement was subsequently entered into between the parties whereby the lease agreement would be renewed on a month to month basis. The applicant at the end of 2013 invited companies to tender for the rental of shops available within the airport. The applicant submitted their tender with the intention of retaining the shop they currently leased in the airport. However, they were informed that their bid had been unsuccessful.. 62. Airports Company South Africa Limited v Airport Bookshop (pty) Ltd t/a Exclusive Books [2015] 3 All SA 561 (GJ).. 19.

(20) The respondent then attempted to challenge the lawfulness of the tender process undergone by the applicant but was met with a notice to vacate the property by the applicant. The respondent refused to vacate the property and the applicant launch an application for eviction of the respondent.. 3.1.1.2 Discussion. The applicant argued that on the basis of the extension agreement that was entered into between the parties the applicant was entitled to terminate the agreement with one month’s notice. The respondent however was of the view that the extension agreement was subject to a tacit term where neither party had the right to cancel the extension agreement until such time as a lawful tender process had been completed.63. Where the applicant intends to rely on the enforceability of the tacit term the applicant has the onus to prove the existence of such a clause.64 One of the requirements that needs to be considered to establish if the clause alleged by the respondent is that of a tacit term is whether same needs to be incorporated within the contract to give the contract business efficiency.65. The court in further assistance in the above mentioned case, utilised the maxim of ut res magis valeat quam pereat in order to determine the inclusion of the tacit term in the extension agreement and subsequent dispute between the applicant and respondent. The court was of the opinion that when applying the maxim of ut res magis valeat quam pereat as a rule of interpretation of contracts a meaning that determines the validity of a contract is preferred over one which would render the entire contract void.66 When applying the maxim to the facts of the case in question the court held that the tacit term was not only necessary to give the extension agreement business efficiency but also legal validity therefore ruling the inclusion of the tacit term into the extension contract in order to favour the validity of the contract.67. 3.2. Eiusdem generis. 63. Airport South Africa v Exclusive books (n 62) 25/ Ibid 41. 65 Ibid 32. 66 Ibid 70. 67 Ibid. 64. 20.

(21) 3.2.1. Sasria v Slabbert Burger Transport68. 3.2.1.1 Facts The respondent’s truck was damaged in strike action caused by a fire which was started by striking workers. The respondents lodged a claim with their insurer, the applicant for the recovery of damages sustained as a result of the vehicle fire. The claim was repudiated by the insurer on the basis that the respondent was unable to prove that the fire had been caused by an incident covered by the policy.. It had to be established by the court in the present case, whether the damages to the respondent’s truck was related to any riot, strike or public disorder as contained in the parties’ insurance policy as ruled in the court a quo.. 3.2.1.2 Discussion. The defendant argued that the court had to apply the maxims of eiusdem generis or noscitur a sociis in that the meaning of the word “strike” as contained in the insurance policy needs to be equated to the words riot or public disorder.69 The defendant attempted with the use of the maxims to equate the word strike with the modified meanings of the riot and public disorder in suggesting that the meaning of the word “strike” pertained to incorporate violence and unlawfulness. However, based on the arguments put forward by the counsel for the defendant the court found that the counsel was faced with the difficulty in that the intended definition put forward would render the word “strike” as redundant in the policy.70 The court then rejected the defendant’s argument of the use of the interpretation of contract principles of eiusdem generis or noscitur a sociis. The court ruled that it saw no difficulty in giving the word “strike” its ordinary meaning. The defendants could only blame themselves for the confusion the word had been given the. 68. Sasria v Slabbert Burger Transport [2008] 4 All SA 255 (SCA). Ibid 7. 70 Ibid 8. 69. 21.

(22) definition in the context it had been written and the defendant had failed to express the clause in clear language.71. Based on the court decision the maxim of contra proferentem was further applied in the present case. The court stated that if the appellant would suggest giving any other meaning to the word strike which would reduce the scope of the appellant’s liability to indemnify the respondent’s claim this would result in the contract being interpreted against the drafter of the said agreement.72. 3.3. Noscitur a sociis 3.3.1 Federated Employers insurance Co Ltd v Magubane73. 3.3.1.1 Facts. The respondent who was injured in a motor vehicle accident with a vehicle insured by the appellant made an application in terms of section 24(2)(a)(ii) of the Compulsory Motor Vehicle Insurance Act 56 of 1972 for leave to serve a summons after the expiry of the relevant period of prescription as defined in the Act. In terms of the procedure set out in the Act, to claim for compensation, a medical report is to be obtained by the claimant in terms of the prescribed form. There was a delay in obtained the aforementioned reports resulting in the respondent’s claim prescribing before the summons could be served on the appellant.. The court a quo granted the application in favour of the respondent resulting in the appeal to the current court.. 3.3.1.2 Discussion. The court of appeal utilised the maxim of noscitur a sociis in reaching their final decision with regard to the appeal before them. The court held that the late service of the summons was due to the negligence of the firm of attorneys acting on behalf of the respondent. 71. Ibid 9. Ibid. 73 Federated Employers’ Insurance Co Ltd v Magubane 1981 2 SA 710 (A). 72. 22.

(23) In order for the court to grant the relief for the late service of the summons in terms of section 24(2)(a) of the Compulsory Motor Vehicle Insurance Act the court must be satisfied that the circumstances resulting in the delay are the reason for the non-adherence of the service of the summons in the prescribed time period. Applying the maxim of noscitur a sociis to the set of facts before the court the court held that the words “omission” and “ignorance” are closely associated or related to the word “neglect” and in the circumstances thereof should be “interpreted as meaning only an omission or ignorance which is culpable.”74 The court held that there was a “clear and causal connection between the negligent oversight and the failure to effect service.”75. 3.4. Inclusio unius est exclusio alterius 3.4.1 Rossouw v First Rand Bank Ltd76. 3.4.1.1 Facts. The appellants entered into a loan agreement with the respondent granting the appellants a loan for the sum of R 1 030 000.00 payable in monthly instalments. The appellants fell into arrears after two years from entering into the agreement whereby the respondent forwarded a notice in terms of section 129 of the National Credit Act informing them of their default. A summons was subsequently issued against the appellants on the basis of their failure to adhere to the monthly instalments.. The appellants raised a point in limine, together with numerous other defences, that section 130(2) of the National Credit Act limited the respondent’s claim.. 3.4.1.2 Discussion The parties argued that the reasoning for the legislature’s exclusion of mortgage agreements in the application of section 130(2) could not be overlooked. In terms of subsection 2, 74. Ibid. Ibid. 76 Rossouw v First Rand Bank Ltd (640/2009) [2010] ZASCA 130. 75. 23.

(24) specific agreements were referred to however, mortgage bonds were not included in the listed types of agreements as envisages in subsection 2. The mortgage agreement was defined as a credit agreement. When applying the principle of exclusio alterius the court held that section 130(2) had no bearing or relevance on mortgage agreements.77. 3.5. Semper in absuris quod minimum est sequimur. 3.5.1. Ex Parte Dell78. 3.5.1.1 Facts The applicant was bequeathed in the will of his late father the property known as “Cross Roads Property.” The will contained a condition stating that the applicant was forbidden to sell or alienate the property during his lifetime to anyone outside of the family. The applicant and his wife had conducted a general business on the property for some years but due to their ill health the son of the applicant had taken over possession of the property and was conducting a business for his own account.. Due to the above mentioned condition the applicant had been unable to transfer the property to his son. The applicant subsequently brought an application to court for an order declaring the condition null and void alternatively for consequential relief. The applicants’ argument was that the aforesaid was void on the ground of vagueness, alternatively if not void that the word family must include the applicants’ son.. 3.5.1.2 Discussion. The finding by the court on whether the word family is to be interpreted to include the applicants’ son is not relevant for the purpose of this paper however, we shall look at the restrictive nature of the condition and the effects the condition has on the rights of the applicant. If the condition is ruled to be valid by the courts the conditions restricts only the. 77 78. Ibid. Ex Parte Dell [1957] 3 All SA 480 (C).. 24.

(25) applicants’ freedom of disposition and not any subsequent person to whom the property is bequeathed.79. The court had to take into consideration the maxim of quod minimum in determining whether the condition had imposed a restriction on the applicant as opposed to the common law which allows the applicant to dispose of the property freely.80 When a condition is contained in a document, the condition which imposes a restraint on an individual must be properly worded by the drafter of the condition in order to clearly show the extent of the restraint.81. When doubt arises with regard to the restraint in accordance with the maxim of quod minimum, the condition is to be interpreted in favour of there being no restraint against the party.82 In this instance the condition imposed a restraint which may affect either a “small or a large class” of individuals and upon application of the maxim it is the court’s duty to determine that the testator of the will intended that the property be transferred to the larger class.83. The interpretation of documents when applying the maxim is always against the restraint contained, the construction should be that the restraint against the intended party is always as little onerous as possible.84 It followed in the above mentioned case that the property can be transferred at the consent of the applicant’s siblings to the applicant’s son free from the condition.. 3.6. Contra proferentem 3.6.1 Sentinel Trust NO v Theresa Rose Barnes NO85 3.6.1.1 Facts. 79. Ibid. Ibid. 81 Ibid. 82 Ibid. 83 Ibid. 84 Ibid. 85 Sentinel Trust NO v Barnes (n 57). 80. 25.

(26) The case revolves around the dispute regarding the sale of shares between the plaintiffs and the first and second defendants. The plaintiffs are alleging breach of the contract by the defendants resulting in a claim for cancellation, damages and restitution. The defendants allege that they are entitled to a reduction in the purchase price of the shares due to the plaintiffs’ misrepresentation with regards to clause 6.3 contained in the purchase agreement.. The defendants alleged that clause 6.3 was an expressed warranty which was contained in the agreement. Clause 6.3 dealt with the extension period for the conversion of an old mining right. Due to the allegations raised by both parties, the plaintiff bears the onus of proving the terms of the agreement and the breach thereof by the defendants as opposed to the defendants bearing the onus of proving the entitlement to a reduction in purchase price based on the misrepresentation by the plaintiff.. The dispute therefore is whether clause 6.3 refers to the existing mining rights and whether the clause can be said to be ambiguous in the agreement.. 3.6.1.2 Discussion. As stated in the judgment of the abovementioned case, when a dispute arises regarding a clause contained in an agreement the courts need to take “cognisance” of the rules and principles which govern the interpretation of contracts.86. One such rule that can assist the court with the dispute arising in the aforementioned case is that of contra proferentem. The court applied this maxim due to the ambiguous nature of the clause in dispute being that of clause 6.3. With regards to the application of the contra proferentem rule, the author of the document should suffer as he has the ability to make the meaning of the clause clear.87 When applying the contra proferentem rule the contract is to be interpreted against that of the plaintiff who bears the onus of excluding the alleged warranty.. 86 87. Ibid. Ibid.. 26.

(27) The courts in this case, as is evident in the judgment, applied the contra proferentem rule. The court ruled against the plaintiff in that the clause which was added, at the plaintiff’s request and drafted by the plaintiff, resulted in the ambiguous nature. The court interpreted the clause and contract against the plaintiff, and in line with the principle of contra proferentem, finding in favour of the first and second defendant.. 3.6.2. Drifters Adventure Tours v Hircock88. 3.6.2.1 Facts. The abovementioned case was heard in the Supreme Court of Appeal from a judgment handed down in the Cape High Court. The matter relates to the court’s decision where it was held that an indemnity clause contained in the appellant’s contract, entered into between the parties, did not exempt the appellant from injuries sustained by the respondent due to the negligent driving of an employee of the appellant.. The appellant had admitted prior to the proceedings that the accident in which the respondent sustained injuries was caused by the negligence of their driver however, they denied that it amounted to gross negligence. The respondent therefore instituted action for damages suffered as a result. The Cape High Court found in terms of the interpretation of the clause that it did not protect Drifters from the negligent actions of the employee resulting in the matter being appealed.. 88. Drifters Adventure Tours CC v Hircock [2007] 1 All SA 133 (SCA).. 27.

(28) 3.6.2.2 Discussion. The appellant’s one argument that was raised was that the court had erred in the application of the contra proferentem rule in that the clause was not ambiguous alternatively if it was ruled that the clause was ambiguous the court incorrectly applied the principle.. The appeal court followed the strict application of the contra proferentem principle as set out in the Durban’s Water Wonderland89 case where it was held that when ambiguity is seen in the language of the contract same has to be interpreted against the “proferens”, in other words the person who drafted the agreement, or clause.. The court had to ascertain whether the indemnity clause was to be interpreted in such a way to include damages arising from the negligent driving on a public road. When the court is asked to interpret such an exemption clause and the clause is reasonably capable of being said to be ambiguous, the interpretation that is least favourable to the proferens is preferred.90 As is evident in the case the definition of driving can have such a vast meaning which can be interpreted differently by the drafter of the agreement to that of the reasonable reader. On that finding by the court the clause containing the word “driving” was said to be ambiguous and therefore the court ruled against the drafter of the agreement by applying the contra proferentem principle of interpretation.. 3.7. CONCLUSION. An interim conclusion can be drawn from the case law discussions as set out above. It is evident that certain maxims still have their place within our contract law with regards to the dispute of contracts. It can be said that the applicability of maxims have not yet been abolished by our courts. If the set of facts that have been presented to the courts resulting in a dispute, the courts still readily apply the maxims in assisting with resolving the dispute between the parties in a just and equitable way.. 89 90. Durban’s Water Wonderland (Pty) Ltd v Botha [1999] 1 All SA 411 (A). Drifters v Hircock (n 88) 13.. 28.

(29) The maxims of ut res magis valeat quam pereat, eiusdem generis, noscitur a sociis, inclusio unius est exlusio alterius, sempler in absuris quod minimum est sequimur and contra proferentem have found relevance in the court judgments set out above. However, this does not mean that the maxims of ex contrariis and ex consequentibus are to be disregarded in their entirety. No court judgments, for the purpose of this paper, have been found in which a court within South Africa has utilised the maxims ex contrariis and ex consequentibus for the interpretation of a contract nor have the courts questioned their applicability.91. 91. See Mpehle v Government of the Republic of South Africa and Another 1996 7 BCLR 921; Ferreira v Tyre Manufacturers Bargaining Council and others (2012) 11 BLLR 1154 (LC); Moleah v University of Transkei and others (1998) JOL 1766; and Wonderhoek Farms (Edms) Beperk v Burgess en andere 2016 JOL 35114 for the court’s uses of the maxims ex contrariis and ex coseuentibus in the form of definitions explained in the judgments.. 29.

(30) CHAPTER FOUR: THE IMPLEMENTATION OF STATUTES AND THEIR EFFECTS ON MAXIMS. 4.. Introduction. This chapter discusses the influence that the implementation of statutes may or may not have had on maxims and their influences on the interpretation of contracts. With the introduction of the National Credit Act and Consumer Protection Act, there has been a shift to consumer protection within consumer agreements.92 This shift in perception has had a knock on effect to influence both the drafting and interpretation of contracts which could render the positions of maxims as less applicable to the interpretation of consumer contracts.93 For the purpose of this paper the National Credit Act and the Consumer Protection Act will be the primary focus with a minor discussion of the effect that the Companies Act of 71 of 2008 may have had.94. 4.1. National Credit Act. The National Credit Act came into effect on the 1st of June 2007 with the purpose of providing consumers with a fair and non-discriminatory marketplace for access to credit. The purpose of the implementation of the National Credit Act is to provide the information of credit agreements in a standardised manner and to insure consistency across the board in the way that credit products are handled by credit providers.95 The Courts are now left in the position of honouring the maxims of interpretation of contract whilst upholding the principles and purposes of the National Credit Act and the reasoning by the legislature for the implementation of same taking into account the unequal footing the parties may be on.. 92. Louw (n 1) 66. Ibid. 94 As the effects of only consumer legislation has been investigated and fully discussed, further investigation would need to be made into the Financial Advisory and Intermediary Services Act 37 of 2002 and Short-Term Insurance Act 53 of 1998 and their effects on the applicableness of maxims. 95 The National Credit Regulator All you need to know about the National Credit Act as a consumer (2007) 4. 93. 30.

(31) 4.2. Consumer Protection Act. The Consumer Protection Act came into effect on the 1st of April 2011 with the purpose of promoting fairness and respectable business practices between suppliers and customers.96 It has been said that “transparency” was needed in relations to terms contained in contracts entered into between consumers and service providers.97 This call for transparency resulted in a regulation in terms of contents within the contract requiring them to be in clear language, cross-referenced and with special attention given to the terms of the agreement which may be detrimental to the consumer.98. 4.3. Scope of the National Credit Act and Consumer Protection Act. The contents of consumer contracts have been influenced by the introduction of the National Credit Act and Consumer Protection Act as opposed to the burden which was once placed on the debtor and consumers by the common law.99 Furthermore, the above mentioned Acts have had some application to the standardised contracts that consumers are sometimes subject to when dealing with larger corporations, as the consumer is often found on unequal footing in terms of the contract, which may lead to unfairness.100 With the call for consumer contracts to be written in plain language as specified in both the National Credit Act and Consumer Protection Act, it has been suggested that when it comes to the vocabulary, grammar and style of a consumer contract, Latin maxims, in general should be eliminated from the agreements in order to avoid confusing the consumer and having to translate the Latin to a language which the consumer may understand.101. Not all maxims will be influenced by the promulgation of the consumer acts and the acts may even have the effect of strengthening the application of them. An example of such a strengthening would be the enforcement of plain language to be used in consumer contracts; 96. Stoop and Churr “Unpacking the right to plain and understandable language in the Consumer Protection Act 68 of 2008” 2013 PER 517. 97 Ibid 519. 98 Ibid 517. 99 Louw (n 1) 64. 100 Ibid 65. 101 Gouws “A Consumer’s right to disclosure and information: Comments on the plain language provisions of the Consumer Protection Act” 2010 SA Merc LJ 79 91.. 31.

(32) when not adhered to or where the wording in a contract leads to an ambiguous result, the maxim contra proferentem would be applicable and the contract would be interpreted against the drafter for failing to make use of plain language.102. 4.4. Case law. 4.4.1. National Credit Act. 4.4.1.1 Visagie NO & others v Erwee NO & Another103. 4.4.1.1.1 Facts. The Supreme Court of Appeal had to rule on whether an agreement entered into between the parties amounted to a credit transaction in terms of the National Credit Act. If it was held to be a credit agreement the party extending the credit had to be registered as a credit provider, failing which, the agreement would be rendered unlawful and null and void.. The main issue before the court by the time the matter went to litigation was whether the agreement of purchase and sale of shares between the parties whereby the contract provided for interest to be paid on deferred payments amounted to a credit agreement in terms section 8(4)(f) of the National Credit Act. The trial court held that the agreement failed to provide for interest paid in respects of deferred payments and as a result the agreement was therefore not a credit transaction, the decision of the court a quo was appealed by the appellants.. 4.4.1.1.2 Discussion. The court a quo firstly looked at the principles governing the interpretation of contracts more particularly the maxim of ut res magis valeat quam pereat in which an agreement should rather be upheld than destroyed. In doing so, the court looked at the judgment of Hughes v Rademeyer104 which set out the principles to be applied when utilising the maxim:. 102. Louw (n 1) 66. Visagie NO and others v Erwee NO and another (74/2013) [2014] ZASCA 121. 104 Hughes v Rademeyer 1947 3 SA 133 (A). 103. 32.

(33) “It appears to me that, in construing a contract, the Court is not entitled to strain words because of the provisions of an Act which might affect the validity of the contract, or to be influenced by those provisions in determining whether the contract is reasonably capable of a meaning which will not make the contract invalid, but that when it has come to a conclusion that the contract is reasonably capable of such meaning, it will apply the maxim.”105. The maxim is not to be used as a “point of departure in interpreting agreements” and only to be applied if the agreement is ambiguous but still capable of a meaning which renders the contract valid.106 The court a quo rendered the agreement invalid due to the fact that it did not meet the requirements of section 8(4)(f) of the National Credit Act and the court held such an act would lead to “unbusinesslike or oppressive consequences.”107. The Supreme Court of Appeal though coming to the same decision as the court a quo that the agreement was null and void, reached this conclusion for a different reason. The Supreme Court of Appeal held that the payment of interest of deferred payments was a standard business practice especially in the case where the merx has been transferred and the purchaser has the right of use and enjoyment without the full purchase price being paid to the seller.108 The sale and purchase agreement was held to be a credit agreement as envisaged in terms of section 8(4)(f) of the National Credit Act and was accordingly void. The courts differed in their findings in that the Supreme Court of Appeal disagreed with the court a quo that the maxim that the agreement is to be upheld rather than destroyed is the starting point to the interpretation of the contract.109. On application of the National Credit Act, the agreement in question failed to meet the requirements of the relevant section and no further investigation into the contract being upheld in terms of the maxim ut res magis valeat quam pereat was necessary. In this case the compliance with the statute outweighed the application of the maxim.. 105. Ibid 138. Visagie NO and others v Erwee NO and another (n 103) 10. 107 Ibid 20. 108 Ibid 21. 109 Ibid 22. 106. 33.

(34) 4.4.2. Companies Act. 4.4.2.1 Budge NO and others v Midnight Storm Investments (Pty) Ltd and Another110. 4.4.2.1.1 Facts. The applicant sought an order in terms of section 81(1)(d)(iii) of the new Companies Act (Companies Act 71 of 2008), for the winding up of the first respondent together with an order for the same relief against the first respondent’s close corporation. The applicant relied on the judgment of Judge Weiner in the matter of Heinrich Muller v Lily Valley (Pty)111 in which it was held that the legal basis for the winding up of an entity is the same under the new companies act as it was under the old companies act.. The counsel for the respondent however argued that the just and equitable grounds for the winding up of a company should be restrictive and limited to the circumstances as provided for in section 81(1)(c) and (d), which was contrary to the circumstances being relied upon by the applicant.112. 4.4.2.1.2 Discussion The respondents attempted to sway the courts to find that the new Companies Act’s section 81(1)(d)(iii) should be construed eiusdem generis to the other sections of 81(1)(c) and 81(1)(d). The court was of the opinion that the eiusdem generis rule of interpretation did not apply to specific section of the Companies Act.. Section 81(1)(d)(i) applies in situations where the directors are deadlocked on the management of the company as opposed to section 81(1)(d)(ii) which only applies to situations where the shareholders are deadlocked in voting power. The court in this instance. 110. Budge NO and others v Midnight Storm Investments (Pty) Ltd and another 2012 2 SA 28 (GSJ). Heinrich Muller v Lily Valley (Pty) (2011/22041) [2011] ZAGPJHC 146. 112 Budge NO v Midnight Storm Investments (Pty) Ltd (n 110) 3. 111. 34.

(35) was of the opinion that the rule was excluded due to the fact that the specific word of deadlock as contained in the separate sections exhausted the genus.113. The application of the eiusdem generis rule would be in direct conflict with the intention of the legislature’s object of adopting the same meaning.114 The meaning has been given to the words which equate to a just and equitable basis for the winding up of a company by the courts which has been developed over many years and incorporated into the new Companies Act with the same words as used by the old Companies Act.115. 4.5. Conclusion. It is evident from the cases above that the consumer legislation and the Companies Act has had some impact on the applicability of maxims. For instance, the amendments made to consumer contracts in that they are to be written in plain language resulted in maxims not being used anymore when drafting agreements. With regard to the interpretation of contracts, the applicability of the statute will always outweigh the relevance of the maxim, if the set of facts before the court call for such a finding, in order to obtain a just and equitable ruling for the disputing parties.. 113. Ibid 10. Ibid 11. 115 Ibid. 114. 35.

(36) CHAPTER FIVE: UNITED KINGDOM. 5.1. Origins of the interpretation of contracts within the United Kingdom. English law has taken a purposive and constructive approach when dealing with disputes relating to the interpretation and construction of a contract.116 Judges were involved in the drafting and passing of the legislation and were said to be acquainted with the policy behind the drafting of the said legislation in parliament.117 The judges would in turn interpret the disputed contract in terms of the policy relating to the implementation of the legislation rather in terms of the contents and text contained in the contract.118 As a result of this approach that has been used by the English judges, English law developed more rigid rules as opposed to Roman-Dutch law.119. When taking into account the development of contract law within the United Kingdom for the past 50 years, parliament has only played a subsidiary role. 120 The changes being brought about in contract law has been at the work of the bench. 121 The courts have historically adopted a “literal approach” to the interpretation of contracts.122 This approach would entail the courts simply interpreting the disputed contracts on the basis that the written agreement, “as contained in the four corners”, was the true intentions of the parties.123. When interpreting a contract in terms of English law the court’s objective is to look at the outwards expressions of the contract rather than the inner intentions of the parties. 124 The intention of the document is seen more as a question of law and the interpretation of the words classified as a question of fact.125 The meaning of the word is interpreted irrespective of the ordinary or specialised meaning of the disputed word which may result in disputing the. 116. Ashurst https://www.ashurst.com/doc.aspx?id_Resource=4634 (11-11-2016). Cornelius (n 10) 9. 118 Ibid. 119 Ibid. 120 Gutteridge “Contract and commercial law” 1935 LQ Rev 91 92. 121 Ibid. 122 Ahmed “The interpretation of commercial contracts: Time for reform” 2012 Nottingham LJ 26 27. 123 Ibid. 124 Mitchell Interpretation of Contracts (2007) 13. 125 Louw (n 1) 66. 117. 36.

(37) contract as a whole.126 English law has also viewed the interpretation of a disputed contract to be the duty and role of the court and not of the parties to the agreement.127. With the role which the English court play with the interpretation of contracts the parties to the dispute would be able to have a relatively quick decision from the courts with regard to the disputed contract as the courts would never need to look further than the document itself for its decision.128 The external evidence, matters leading up to the contracts and other circumstances were not considered by the courts resulting in a quick litigation process with regard to a court decision.129. The approach to the interpretation of contracts was reformed by the decision of Lord Hoffmann in the matter of Investor Compensation Scheme Ltd v West Bromwich Building Society.130 The courts moved to a more modern view of the interpretation of contracts in that, unless the words in dispute had a more technical meaning the words are to be interpreted in their natural and ordinary meaning as per the context of the contract as a whole.131 The effects of the decision in the aforementioned case on maxims will be more fully discussed below.. 5.2 Approach to maxims within the United Kingdom. Maxims or canons of construction as they are referred to in English law were part of the specific rules of interpretation the courts would utilise together with general principles and exclusionary rules for the interpretation of contracts. The definition of a maxims in terms of English law is a “traditional legal principle that has been frozen into a concise expression.”132. Maxims were given the position of guiding legal principles of a legal argument and had to be utilised as such.133 The maxims had deep roots in Latin, Norman French and old English and due to the wording of the maxims it would result in the reader and legal authors having the. 126. Louw (n 1) 66. Mitchell (n 124) 31. 128 Ahmed (n 122) 28. 129 Ibid 28. 130 Investor Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WCR 896. 131 Mitchell (n 124) 37. 132 Davenport Legal Maxims and Adjudication (2010) 2. 133 McQuade (n 5) 2. 127. 37.

(38) maxims remain in their memory due to the way the word would “musically roll of the tongue and capture the attention and respect of the hearers.”134. Maxims have not always been favoured in English law of interpretation of contracts and Lord Hoffmann has stated his dissatisfaction with the traditional approach to the interpretation of contracts and therefore put forward a new approach to interpretation.135 The reason for the dismissal of maxims by Lord Hoffmann was due to the change in thought with regards to the interpretation of contracts. The intention boiled down to the facts of the true intention of the parties and the actual meaning of the words used in the agreement.136. An example of Lord Hoffmann dislike for maxims was the maxim of contra proferentem which formed part of the “intellectual baggage” that Lord Hoffman was eager to discard of in his new approach.137 However, contra proferentem is described in the case of Sinochem International Oil v Mobil Sales Supply138 as the rule of last resort and has had particular effect prior to the inception of the Unfair Contract Terms Act 1977 on including the limiting terms contained in contracts.139. The incorporation of the maxims within English law as a point of last resort for the interpretation of contracts makes more sense on the basis of the objective approach utilised by the courts for contractual interpretation.140 However, if the courts are to revert to the subjective approach, the utility of traditional rules or maxims would have no connection and should be excluded from the principles of interpretation of contracts.141. 5.3 English case law 5.3.1 Introduction. English legal scholars are of the opinion that case law may have limited influence with regard to the application of maxims on the interpretation of contracts. When dealing with a dispute 134. McQuade (n 5) 108. Hogg “Fundamental issues for reform of the law of contractual interpretation” 2011 Edin LR 3 406. 136 Mitchell (n 124) 37. 137 Ibid. 138 Sinochem International Oil v Mobil Sales Supply [2000] 1 Lloyd’s Rep 670. 139 Mitchell (n 124) 37. 140 Hogg (n 135) 6. 141 Ibid. 135. 38.

(39) with regard to the content of a written agreement, the interpretation of each set of facts can be unique which may result in legal precedents having limited role in the interpretation of contracts.142 The courts as a result have a certain amount of leeway in their decisions on the interpretation of the contracts allowing them to seek a result which is ultimately commercially sensible.143 5.3.2 Lexi Holdings PLC v Stainforth144. 5.3.2.1 Facts. The matter involves the appellant’s appeal against the decision with regards to the respondent’s liability towards a loan in terms of a written sale agreement between the parties. The respondent was experiencing difficulty in financing the loan for the residential property to be purchased from the appellant. The appellant found a property investor who was able to assist the respondent with the purchase of the property. However, the sale never came into being. The appellant then attempted to rescind the agreement and served a demand for payment. The respondent argued, which argument was accepted by the lower courts, that his liability had been extinguished in return for his “relinquishing all rights” to the property.. 5.3.2.2 Discussion. The above matter is said to be the courts’ current position on the applicability of the maxim of contra proferentem.145 The appeal by the appellant was dismissed on the basis that the lower court’s interpretation of the agreement was correct. The respondent was required, in terms of clause 4 and the wording “relinquishing all rights,” to transfer all benefits in the property which in turn resulted in his liability also being discharged at the same time.146 The terms of the agreement were ruled to be “inadequate and ambiguous” and therefore construed against the appellant in accordance with the rule of contra proferentem.147. 142. Mitchell (n 124) 31. Ibid 32. 144 Lexi Holdings PLC v Stainforth (2006) EWCA Civ 988. 145 Mitchell (n 124) 37. 146 BD Online An Exclusive Deal (2006) http://www.bdonline.co.uk/an-exclusive-deal/3072670.article (11-112016). 147 Ibid. 143. 39.

(40) 5.3.3 Credential Bath Street Ltd v Venture Investment Placement Ltd 148. 5.3.3.1 Facts. In the event of the non-performance of the tenant, the guarantor would be liable for the obligation under the lease agreement. The guarantee was only for a specified period and after the expiration of the specified time the guarantor would not be liable under the guarantee except to “any antecedent breach of the guarantee”.149. 5.3.3.2 Discussion. The court held that the expression regarding the antecedent breach meant what it had said and the literal approach to the interpretation of the contract and words had to prevail. 150 The court further pointed out that the canons of constructions such as the rule of contra proferentem might need to be reconsidered in light of the new approach to the interpretation of contracts.151. Legal authors, however, are of the view that the rule of contra proferentem may still have its place in a subsidiary role where there is doubt as to the meaning of the contract term which has not been “individually negotiated”.152. 148. Credential Bath Street Ltd v Venture Investment Placement Ltd [2007] CSOH 208. Clive “Interpretation, implied terms and interference with conditions” 2008 Edin LR 283. 150 Ibid 284. 151 Credential Bath Street Ltd v Venture Investment Placement Ltd (n 148). 152 Steven (n 149) 285. 149. 40.

(41) CHAPTER SIX: CONCLUSION In view of the above discussion setting out both the South African and United Kingdom’s respective views of maxims and whether they are still applicable to the interpretation of contracts some similarities can be drawn. It can be seen that South African contract law has developed along the lines of Roman-Dutch law with strong influences from English law.. The history and development of maxims within South Africa can be seen by the incorporation of the Latin terminology still being used in South African law today. The South African legal system may be even more influenced by its Roman Dutch basis than other legal systems as it is “permeated with Latin words, expressions and maxims.”153. However, is the use and effectiveness of the maxims ut res magis valeat quam pereat, eiusdem generis, noscitur a sociis, inclusio unius est exlusio alterius, ex contrariis, ex consequentibus, sempler in absuris quod minimum est sequimur and contra proferentem are still applicable to South African contract law as a whole. The courts have ruled that maxims may still form part of the general principles of the interpretation of contracts as a last resort. However, when considering that no two set of facts to any one case are identical the courts may have to consider the application of maxims to assist them with obtaining a just, equitable and economically sound decision.. That being said the current approach followed by South African law is less drastic than the one taken by English law. South African judges have not yet called into question the relevance of maxims and calling for their demise in South African contract law which is what Lord Hoffman did when setting out the English law’s new approach to the interpretation of contracts. The maxims of contra proferentem, ut res magis valeat quam pereat, eiusdem generis, noscitur a sociis and sempler in absuris quod minimum est sequimur have found particular favour, as shown in the case law discussed in this dissertation, that maxims still have some influence on judges when the facts call for interpretation.. 153. Scholtens “Latin and the lawyer” 1957 SALR 136.. 41.

(42) South African legislation has also had minimal influence on the applicability of maxims and may have reciprocal relationships in the enforcement of consumer contracts with regard to plain language and the consequences thereof. However, the compliance with statutes, in certain circumstances depending on the facts of each case, outweighs the application of the maxims although this does not rule maxims as null and void. Therefore in conclusion by comparing South African and the United Kingdom’s contract law, with respects to whether maxims are still applicable to the interpretation of contracts, this dissertation has argued in light of the current common law that maxims are still applicable to the interpretation of contracts due to the uniqueness of each case. Maxims can still find their applicability to a certain set of facts either as the first port of call or as a principle of last resort and maxims may still have their place in South African contract law for some time.. 42.

(43) BIBLIOGRAPHY Books . Butt P and Castle R Modern Legal Drafting: A Guide to Using Clearer Language (Cambridge 2006).. . Cornelius S J Principles of the Interpretation of Contracts in South Africa (LexisNexis 2016).. . Davenport P “Legal maxims and adjudication” in Davenport (ed) Adjudication in the Building Industry (Federation Press 2010).. . Mitchell C Interpretation of Contracts (Routledge Cavendish 2007).. . National Credit Regulator All you need to know about the National Credit Act as a Consumer (2007).. Unpublished dissertations . Louw E The Plain Language Movement and Legal Reform in the South African Law of Contract (LLM Dissertation UJ 2010).. Journal articles . Ahmed M “The interpretation of commercial contracts: Time for reform” 2012 Nottingham LJ 26.. . Clive E “Interpretation, implied terms and interference with conditions” 2008 Edin LR 283.. . Gouws M “A consumer’s right to disclosure and information: Comments on the plain language provisions of the Consumer Protection Act” 2010 SA Merc LJ 79.. . Gutteridge H “Contract and commercial Law” 1935 LQ Rev 91.. . Hogg M “Fundamental issues for reform of the law of contractual interpretation” 2011 Edin LR 406.. . McQuade D J S “Ancient legal maxims and modern human rights” 1996 Campbell LR 75.. . Scholtens J E “Latin and the lawyer” 1957 SALR 136.. 43.

(44) . Stoop P N and Churr C “Unpacking the right to plain and understandable language in the Consumer Protection Act 68 of 2008” 2013 PER 73.. Case law . Airports Company South Africa Limited v Airport Bookshop (pty) Ltd t/a Exclusive Books [2015] 3 All SA 561 (GJ).. . Budge NO and others v Midnight Storm Investments (Pty) Ltd and another 2012 2 SA 28 (GSJ).. . Colonial Treasurer v Rand Water Board 1907 TS 479.. . Credential Bath Street Ltd v Venture Investment Placement Ltd [2007] CSOH 208.. . Drifters Adventure Tours CC v Hircock [2007] 1 All SA 133 (SCA).. . Durban’s Water Wonderland (Pty) Ltd v Botha [1999] 1 All SA 411 (A).. . Ex Parte Dell [1957] 3 All SA 480 (C).. . Federated Employers’ Insurance Co Ltd v Magubane 1981 2 SA 710 (A).. . Ferreira v Tyre Manufacturers Bargaining Council and others (2012) 11 BLLR 1154 (LC).. . Grobbelaar v Van der Vyver 1954 1 SA 248 (A).. . Heinrich Muller v Lily Valley (Pty) Ltd (2011/22041) [2011] ZAGPJHC 146.. . Hughes v Rademeyer 1947 3 SA 133 (A).. . Imperial Group (Pty) Ltd v NOS Resins (2007) JOL 19493 (SCA).. . Investor Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WCR 896.. . Lexi Holdings PLC v Stainforth (2006) EWCA Civ 988.. . Moleah v University of Transkei and others (1998) JOL 1766 (Tk).. . Mpehle v Government of the Republic of South Africa and Another 1996 7 BCLR 921.. . Rossouw v First Rand Bank Ltd (640/2009) [2010] ZASCA 130.. . Sasria v Slabbert Burger Transport [2008] 4 All SA 255 (SCA).. . Sentinel Trust NO and another v Theresa Barnes NO (15583/2010) [2013] ZAGPPHC 390.. . Sinochem International Oil v Mobil Sales Supply [2000] 1 Lloyd’s Rep 670.. . Sunshine Records (PTY) Ltd v Frohling 1990 4 SA 782 (A).. . Visagie NO and others v Erwee NO and another (74/2013) [2014] ZASCA 121. 44.

(45) . Wonderhoek Farms (Edms) Beperk v Burgess en andere (2016) JOL 35114 (ZAFSHC).. Internet sources . Ashurst https://www.ashurst.com/doc.aspx?id_Resource=4634 (11-11-2016).. . BD Online http://www.bdonline.co.uk/an-exclusive-deal/3072670.article (11-112016).. . Oxford Dictionaries http://www.oxforddictionaries.com/us/definition/ american_english/genus (11-11-2016).. Legislation South African . Companies Act 71 of 2008.. . Consumer Protection Act 68 of 2008.. . Compulsory Motor Vehicles Insurance Act 56 of 1972.. . National Credit Act 34 of 2005.. United Kingdom . Unfair Contract Term Act 1977.. 45.

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