Within the development and engineering sector time-barring provisions usually are included as part of the conventional terms and conditions in building legal agreements. These conditions often involve "strict" compliance with time intervals and hold substantial sanction which might impact negatively on claims and other entitlements under such contracts. Contracting parties often query the fairness and reasonableness of these provisions once they face the consequences of being time-barred.
Our Courts have solved the legal position in accordance of clauses from this nature when it comes to Barkhuizen v Napier. The brief facts of the case are:
1. Two years after Napier turned down Barkhuizen's insurance claim, Barkhuizen issued a summons for settlement in respect of what he considered "an insured event";
2. Napier stated in its defence that it was not at fault as Barkhuizen had neglected to issue the summons timeously. Napier argued that the contract included a particular provision that required Barkhuizen to issue a summons inside of 90 days from the date where Napier rejected Barkhuizen's insurance claim and that his failure to do so effectively time-barred him from implementing any thought of entitlements;
3. Barkhuizen's counter discussion was that the time-barring clause had been unconstitutional and unenforceable because it violated his right under the Constitution of the Republic of South Africa to get the matter determined by a Courtroom.
Initial Ruling
The High Court to begin with upheld Barkhuizen's argument and reported the time-limitation clause to be inconsistent along with the Constitution and sacked the Napier's defence.
Court of Appeal
However, the Supreme Court of Appeal ruled that Section 34 of the Constitution failed to prevent time-limitation provisions in agreements that have been applied for freely. Though it discovered that, on the data, it could not decide if the clause under consideration had been entered into openly and voluntarily, the Court nevertheless upheld Napier's argument and let off the insurer of all liability.
Constitutional Court
Our Courts have solved the legal position in accordance of clauses from this nature when it comes to Barkhuizen v Napier. The brief facts of the case are:
1. Two years after Napier turned down Barkhuizen's insurance claim, Barkhuizen issued a summons for settlement in respect of what he considered "an insured event";
2. Napier stated in its defence that it was not at fault as Barkhuizen had neglected to issue the summons timeously. Napier argued that the contract included a particular provision that required Barkhuizen to issue a summons inside of 90 days from the date where Napier rejected Barkhuizen's insurance claim and that his failure to do so effectively time-barred him from implementing any thought of entitlements;
3. Barkhuizen's counter discussion was that the time-barring clause had been unconstitutional and unenforceable because it violated his right under the Constitution of the Republic of South Africa to get the matter determined by a Courtroom.
Initial Ruling
The High Court to begin with upheld Barkhuizen's argument and reported the time-limitation clause to be inconsistent along with the Constitution and sacked the Napier's defence.
Court of Appeal
However, the Supreme Court of Appeal ruled that Section 34 of the Constitution failed to prevent time-limitation provisions in agreements that have been applied for freely. Though it discovered that, on the data, it could not decide if the clause under consideration had been entered into openly and voluntarily, the Court nevertheless upheld Napier's argument and let off the insurer of all liability.
Constitutional Court
Barkhuizen then neared the Constitutional Court for leave to appeal against the decision of the Supreme Court of Appeal. In reply, Napier's arguments included that the provisions of Section 34 of the Constitution could not be applied to constitutional difficulties launched against agreed contractual conditions.
The Constitutional Court held that public policy considerations should be assessed to determine whether a contractual term which goes against the Constitution and, as such, is in contrast to public policy and thus unenforceable. The Court held the fact that the right procedure for constitutional challenges of this nature was to evaluate if the term itself was contrary to public policy and South Africa's constitutional beliefs, in particular, those found in the Bill of Rights. The Court held that Section 34 not only reflected the basic values that underlie the constitutional order, but that it also constituted a manifestation of public policy. The best approach to the present matter was therefore to find out if the time-limitation clause violated Section 34 from the Constitution and was thus contrary to public policy.
The Court held that, as a matter of public policy (governed by considerations of reasonableness and fairness) time-limitation clauses in contracts truly are constitutionally permitted. The Court held further that the right to seek judicial redress (as guaranteed by Section 34) may be limited in instances where:
1. It is allowed by a law of general application; and
2. Such a limitation will be realistic and sensible.
Reasonableness
The examination for reasonableness, the Court found, was the way in which clause afforded the claimant a satisfactory and fair possibility to seek judicial redress. In case a contractual term provides, as an example, for an impossibly short time for a argument to get referred to forum where it may possibly be resolved, it can be in contrast to public policy and unenforceable.
Fairness
The Court put down a two-pronged test to be applied in order to gauge such provisions in accordance of justness. The first was if the clause itself was unreasonable. This consists of a weighing-up of the principle of pacta sunt servanda and the privilege of the persons to find judicial redress. If the clause was found not to be irrational, then the further requirement is examined.
The next demand was if the circumstances that averted compliance provided the defaulting party with a warranted excuse for its non-compliance with the time-barring provision. Satisfaction of this requirement calls for proof from the defaulting party that it has good reason for the failure to observe the requirements of the time-limitation clause. In that regard, the relative equality or inequality of the bargaining positions of the parties is a relevant consideration.
In Barkhuizen's case, the Court discovered that the ninety-day time restriction wasn't manifestly unreasonable. It was also held not to be manifestly unjust. There is no evidence that the agreement was not worked out freely between parties in equivalent negotiating positions. There is also no evidence that the clause had not been drawn to the applicant's consideration. Inside the circumstances, enforcement of the clause wouldn't be contrary to public policy.
One of several specific requirements that Barkhuizen failed to address (that the Court regarded as inexcusable) was his inability to describe and support his non-compliance with all the requirements on the time-limitation clause. His failure to take action placed the Court in a situation where it couldn't evaluate the way in which implementation of the clause would be unfair and, because of this in contrast to public policy.
Whilst the Constitutional Court, within this specific instance, fou
2. Such a limitation will be realistic and sensible.
Reasonableness
The examination for reasonableness, the Court found, was the way in which clause afforded the claimant a satisfactory and fair possibility to seek judicial redress. In case a contractual term provides, as an example, for an impossibly short time for a argument to get referred to forum where it may possibly be resolved, it can be in contrast to public policy and unenforceable.
Fairness
The Court put down a two-pronged test to be applied in order to gauge such provisions in accordance of justness. The first was if the clause itself was unreasonable. This consists of a weighing-up of the principle of pacta sunt servanda and the privilege of the persons to find judicial redress. If the clause was found not to be irrational, then the further requirement is examined.
The next demand was if the circumstances that averted compliance provided the defaulting party with a warranted excuse for its non-compliance with the time-barring provision. Satisfaction of this requirement calls for proof from the defaulting party that it has good reason for the failure to observe the requirements of the time-limitation clause. In that regard, the relative equality or inequality of the bargaining positions of the parties is a relevant consideration.
In Barkhuizen's case, the Court discovered that the ninety-day time restriction wasn't manifestly unreasonable. It was also held not to be manifestly unjust. There is no evidence that the agreement was not worked out freely between parties in equivalent negotiating positions. There is also no evidence that the clause had not been drawn to the applicant's consideration. Inside the circumstances, enforcement of the clause wouldn't be contrary to public policy.
One of several specific requirements that Barkhuizen failed to address (that the Court regarded as inexcusable) was his inability to describe and support his non-compliance with all the requirements on the time-limitation clause. His failure to take action placed the Court in a situation where it couldn't evaluate the way in which implementation of the clause would be unfair and, because of this in contrast to public policy.
Whilst the Constitutional Court, within this specific instance, found that the time-limiting clause has not been in conflict with public policy conditions and that it was vital to recognize the doctrine of pacta sunt servanda, the Court recognized that it may not allow the enforcement of a time-limitation clause if its usage would lead to unfairness or is going to be unreasonable for being contrary to public policy.
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Reasonableness
The examination for reasonableness, the Court found, was the way in which clause afforded the claimant a satisfactory and fair possibility to seek judicial redress. In case a contractual term provides, as an example, for an impossibly short time for a argument to get referred to forum where it may possibly be resolved, it can be in contrast to public policy and unenforceable.
Fairness
The Court put down a two-pronged test to be applied in order to gauge such provisions in accordance of justness. The first was if the clause itself was unreasonable. This consists of a weighing-up of the principle of pacta sunt servanda and the privilege of the persons to find judicial redress. If the clause was found not to be irrational, then the further requirement is examined.
The next demand was if the circumstances that averted compliance provided the defaulting party with a warranted excuse for its non-compliance with the time-barring provision. Satisfaction of this requirement calls for proof from the defaulting party that it has good reason for the failure to observe the requirements of the time-limitation clause. In that regard, the relative equality or inequality of the bargaining positions of the parties is a relevant consideration.
In Barkhuizen's case, the Court discovered that the ninety-day time restriction wasn't manifestly unreasonable. It was also held not to be manifestly unjust. There is no evidence that the agreement was not worked out freely between parties in equivalent negotiating positions. There is also no evidence that the clause had not been drawn to the applicant's consideration. Inside the circumstances, enforcement of the clause wouldn't be contrary to public policy.
One of several specific requirements that Barkhuizen failed to address (that the Court regarded as inexcusable) was his inability to describe and support his non-compliance with all the requirements on the time-limitation clause. His failure to take action placed the Court in a situation where it couldn't evaluate the way in which implementation of the clause would be unfair and, because of this in contrast to public policy.
Whilst the Constitutional Court, within this specific instance, found that the time-limiting clause has not been in conflict with public policy conditions and that it was vital to recognize the doctrine of pacta sunt servanda, the Court recognized that it may not allow the enforcement of a time-limitation clause if its usage would lead to unfairness or is going to be unreasonable for being contrary to public policy.
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