Insight
August 11, 2026
Generally, once an agreement has been signed the provisions contained therein is binding and enforceable against the parties. This general rule is affirmed in the legal maxim known as pacta sunt servanda which means that agreements and the provisions therein must be honoured by the parties.
South African law places considerable importance on contractual certainty and the freedom of parties to regulate their own affairs.
That freedom is, however, not without limitation. A contractual provision may in fact be invalid or unenforceable if it requires unlawful conduct, removes a statutory protection that cannot lawfully be waived, or is contrary to public policy.
Understanding these limitations is important. A problematic provision should ideally be identified and addressed before the agreement is signed, rather than challenged after a dispute has arisen. 2.
The General Rule: Pacta Sunt Servanda
As stated, the starting point in South African law is the principle of pacta sunt servanda, which means that agreements must be honoured as they have been entered into. This principle enables individuals and businesses to negotiate and conclude agreements with confidence that the obligations voluntarily undertaken will generally be enforced.
In the case of Barkhuizen v Napier 2007 (5) SA 323 (CC), the Constitutional Court confirmed that pacta sunt servanda gives effect to the constitutional values of freedom and dignity. Parties should generally be permitted to regulate their own affairs and will ordinarily be held to obligations that they have freely and voluntarily accepted.
The Court nevertheless made it clear that this principle is not absolute. All contractual provisions, and their enforcement, remain subject to the Constitution and public policy. As will be explained below, a signature cannot render an unlawful provision enforceable or exempt the parties from the operation of the law.
First Limitation: A Contract Cannot Authorise Unlawful Conduct
The first limitation to the freedom to contract is that parties cannot lawfully agree to conduct that is prohibited by the law. They cannot, for example, conclude an enforceable agreement to hide income from SARS, pay a bribe, falsify records or mislead a regulator.
An agreement between the parties cannot convert unlawful conduct into lawful conduct. This remains the position, irrespective of how clearly the provision is drafted or whether the parties agreed to it freely.
The same principle applies to provisions intended to circumvent legislation. Merely recording that a particular law does not apply will have no effect if that legislation, properly interpreted, applies to the transaction.
In our South African law some statutory rights have been created primarily for the benefit of an individual and may, in appropriate circumstances, be waived however conversely other statutory rights constitute compulsory protections that cannot be removed by agreement.
A supplier cannot, for example, require a consumer to waive the protections afforded by the Consumer Protection Act 68 of 2008 (“the CPA”). Section 51 of the CPA prohibits certain contractual terms, including provisions intended to avoid a supplier’s statutory obligations, deprive a consumer of rights under the Act or exclude liability for gross negligence.
Similarly, a credit provider cannot avoid the application of the National Credit Act 34 of 2005 (“the NCA”) merely by inserting a provision stating that the NCA does not apply. An employer also cannot use an employment agreement to remove minimum statutory protections relating to leave, working conditions, unfair dismissal or unfair discrimination.
The relevant question is whether the legislature intended the particular protection to be compulsory. If so, the parties cannot contract out of it.
Second Limitation: Provisions Contrary to Public Policy
A contractual provision may be unenforceable even if it does not directly contravene legislation as set out above. This is the second limitation to the general rule and may occur where the provision in an agreement is contrary to the public policy or “contra bonos mores”, meaning that it is contrary to what is considered by the community as morally “good” or the legal convictions of the community.
Public policy is informed by the values underlying the Constitution, including dignity, equality, freedom, fairness and justice. A court may therefore refuse to enforce a provision that is fundamentally inconsistent with those values.
In Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A), the Court considered an agreement that gave one party extensive and oppressive control over the other party’s financial affairs. The Court confirmed that agreements which are clearly harmful to the interests of the community, contrary to law or morality, or otherwise inconsistent with public policy will not be enforced.
The threshold is, however, a high one. A provision is not contrary to public policy merely because it is strict, one-sided or commercially disadvantageous. Courts exercise this power cautiously and will intervene only where there is a sufficiently serious conflict with public policy.
An important note on the limitations - An Unfavourable Provision Is Not Necessarily Unenforceable
It is important to note however that an unfavourable provision in an agreement is not automatically an invalid one.
In the case of Beadica 231 CC v Trustees for the Time Being of the Oregon Trust 2020 (5) SA 247 (CC), the Constitutional Court confirmed that fairness, reasonableness and good faith do not, on their own, permit a court to disregard a contract. Judicial intervention is justified only where the provision, or its enforcement in the particular circumstances, is so unfair, unreasonable or unjust that it is contrary to public policy.
A court will therefore not rewrite an agreement merely because one party later regrets the transaction or finds its terms commercially onerous. Relevant considerations may nevertheless include the parties’ relative bargaining positions, whether the provision was adequately brought to the affected party’s attention, the purpose of the provision and the consequences that would follow from its enforcement.
Examples of common clauses that fall under scrutiny:
a. Exclusion and Limitation of Liability Provisions
Exclusion and limitation of liability provisions are common in commercial agreements. They are not inherently objectionable and may serve the legitimate purpose of allocating risk between the parties however their operation is nevertheless subject to legal limits.
For example, where the CPA applies, a supplier may not exclude or limit liability for gross negligence. Similarly, a notice stating that visitors enter a premises “entirely at their own risk” will not necessarily protect a business against every claim instituted against them and its effect and enforceability against a claim will depend on its precise wording, whether it was adequately brought to the affected person’s attention, the nature of the conduct concerned and the legislation applicable to the relationship.
b. Restraints of Trade
Restraints of trade are frequently misunderstood. Under South African law, a restraint is generally enforceable unless the party resisting it establishes that its enforcement would be unreasonable and contrary to public policy.
A restraint should protect a legitimate commercial interest, such as confidential information, trade secrets, customer connections or business goodwill. It should not be used merely to prevent ordinary competition.
For example, a reasonably limited restraint that prohibits a senior employee from using confidential information or approaching key customers may be enforceable. By contrast, a provision preventing a junior employee with no access to sensitive information from working anywhere in South Africa for several years will be difficult to justify and subsequently enforce.
Enforceability will ultimately depend on the scope, duration and geographical reach of the restraint, the interest it seeks to protect and the circumstances existing when enforcement is sought.
c. Provisions Limiting Access to the Courts
Parties may agree to resolve disputes through arbitration or another recognised dispute resolution process. They may also consent to the jurisdiction of a particular court, provided that the chosen court has jurisdiction under the applicable law.
The parties cannot, however, confer jurisdiction on a court that does not otherwise possess it, nor can they entirely exclude the courts’ inherent, statutory or constitutional powers.
A provision stating that one party’s decision is “final and unchallengeable” will therefore not necessarily prevent judicial intervention. A court may still intervene where the decision or process was fraudulent, unlawful or contrary to public policy.
What Happens When a Provision Is Unenforceable?
An unlawful or unenforceable provision does not necessarily invalidate the agreement as whole.
If the unenforceable provision can be severed from the remainder of the agreement without changing the essential nature of the transaction as a whole, a court may decline to enforce that specific provision while still allowing the remainder of the agreement to continue to be of effect and enforceability. Where the provision however is central to the transaction and cannot sensibly be separated from the remainder of the agreement, the validity of the entire agreement may be affected.
The outcome will depend on the wording and structure of the agreement, the nature of the possibly unenforceable provision, the intention of the parties and the applicable legislation or public policy considerations.
Conclusion
As South African law places considerable value on contractual certainty parties should generally expect to be held to the obligations and duties that they have freely and voluntarily accepted when entering into the agreement and thus parties should never sign an agreement on the assumption that an unfavourable provision will simply be set aside at a later stage.
At the same time however, freedom of contract has definite legal limits. A party’s signature to an agreement cannot validate a provision that requires unlawful conduct, removes compulsory statutory protection or is fundamentally contrary to public policy.
This is particularly important where an agreement contains broad waivers of rights, exclusions or limitations of liability, restraints of trade or provisions granting one party extensive discretionary powers. Identifying and addressing these provisions during the negotiation process is ordinarily more effective and considerably less costly than challenging their enforceability after a dispute has arisen.
