The constitutional exercise of the right of a bank to cancel its contract with a customer on notice: Revisiting Bredenkamp v Standard Bank of South Africa (SCA)

Abstract

The enforcement of a valid clause in a contract when determining public policy considerations is the subject of this study. This research report investigates the application of the public policy test for determining the enforceability of a valid contractual clause as established in Barkhuizen.1 After Bredenkamp,2 important legal developments arose in this area of law. In this report, the three Bredenkamp judgments are analysed. This discourse shows that Beadica3 provides clarity on fairness and reasonableness in contracts, but the clarity lacks practicality on how courts should determine cases that raise contractual disputes between the parties. Survé4 and Oakbay5 are discussed to examine the bank’s enforcement of its termination clause and the resultant effect on the client. This research report provides recommendations regarding the approach courts should take when considering the circumstances of the strict (unfair) enforcement of valid contractual clauses. It argues that a more practical guide, and assessment on a case-by-case basis, is prudent for judges when considering the strict (unfair) enforcement of a valid clause. The suggestions ought to allow for a more consistent analysis of the enforcement of contracts and its clauses in South African contract law