Post-constitutional developments in the interpretation of contracts

Abstract

In South Africa, contractual law principles find their origin from the common law. As it is known today, South Africa is a constitutional democracy and all law, including contract law should comply with the Constitution to be valid. It is important to know where the interpretation of contracts started and how it developed over the years. With this study, a broad overview of the Roman law is given and how it started in the earliest years. The Roman-Dutch law and English law are also explained as it has a very important role in the interpretation of contracts. In South Africa, contract law principles reflect a mixture of Roman-Dutch Law and English Law principles and rules. The intentions of the parties are very important and therefor the courts look at the written agreement first to determine the intentions of the parties. When assistance is needed and the written agreement itself can't be used to determine the intentions of the parties and the purpose of the agreement, surrounding circumstances may be used to determine the intentions of the parties. No evidence used by the parties in order to assist them, may contradict or detract from the terms of a written contract. The above is referred to as the Parol Evidence Rule. Since the beginning of the new democracy in South Africa, there have been significant developments in the law relating to the interpretation of contracts and courts tend to take an open approach when interpreting contracts. More focus is placed on the natural meanings of the words to try and honour the purpose of the agreement. If the contract is able to clearly and unambiguously define the terms of the contract, the court will interpret those terms according to the contract as they are. In those circumstances, surrounding circumstances can't be used. With this study, a comparison between the South African and Canadian position is also drawn regarding the interpretation of contracts. Canada's Constitution also has an influence on their law of contracts, similar to the South African Constitution having a fundamental influence on South African law of contracts. Both countries tend to give preference to the meaning of the words and to read the contract as a whole. Surrounding circumstances are looked at when assistance is needed to honour the parties true intentions when it can't be seen from the agreement itself. Although there are small differences, both countries see it as important to use the agreement as it is intended by the parties and not to try and create a new agreement when interpretation is applied. It is clear that the South African Constitution, together with the Parol Evidence Rule brought profound changes to the law of contracts and especially to the interpretation of contracts.