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Beadica 231 CC and others v Trustees for the Time Being of the Oregon Trust and others

Constitutional Court

June 17, 2020

Case No: CCT 109/19



  BY Theron J


  This application concerns the proper constitutional approach to the judicial enforcement of contractual terms and, in particular, the public policy grounds upon which a court may refuse to enforce these terms. The extent to which a court may refuse to enforce valid contractual terms on the basis that it considers that enforcement would be unfair, unreasonable or unduly harsh is a burning issue in the law of contract in our new constitutional era. 1 There is a widely held view that there is a growing divergence in the approaches to this issue adopted by this Court and the Supreme Court of Appeal. This perceived divergence has contributed to a great deal of undesirable uncertainty in our law of contract.


  The second respondent, Sale's Hire CC ("Sale's Hire"), is an operator and franchisor of Sale's Hire businesses - the main focus of which is the rental and sale of tools and equipment. The applicants are four close corporations that entered into franchise agreements with Sale's Hire to operate Sale's Hire franchised businesses for a period of 10 years. The applicants operate their businesses from premises leased from the first respondent, the Trustees for the time being of the Oregon Trust ("Trust"). Mr Shaun Sale, one of three trustees of the Trust, is also the sole member of Sale's Hire. The members of the applicants are former long-time senior employees of Sale's Hire. They acquired their businesses in terms of a black economic empowerment initiative financed by the third respondent, the National Empowerment Fund ("Fund"). 2   

  During 2011, Sale's Hire entered into a cooperation agreement with the Fund in terms of which the Fund would provide loans to black-owned entities to enable them to own and operate Sale's Hire franchised businesses as part of a black economic empowerment initiative. Sale's Hire was appointed as the coordinator of these funding transactions and was required to facilitate the financing process between the Fund and the black-owned franchisees. In terms of the cooperation agreement, Sale's Hire undertook to train the franchisees to operate their businesses and provide them with ongoing business support and mentorship. The applicants were not party to the cooperation agreement.

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Beadica 231 CC and others v Trustees for the Time Being of the Oregon Trust and others


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