Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others

The applicants were four close corporations operating Sale’s Hire franchise businesses under 10-year franchise agreements. Their businesses formed part of a black economic empowerment initiative financed by the National Empowerment Fund. They leased their business premises from the Oregon Trust under five-year lease agreements with an option to renew for a further five years, provided written notice was given six months before expiry. The applicants failed to exercise the renewal options timeously. The Trust demanded that they vacate the premises, which would trigger termination of the franchise agreements and cause the collapse of the applicants’ businesses. The applicants sought to prevent eviction, arguing that strict enforcement of the renewal clauses would be contrary to public policy and constitutional values, particularly substantive equality.

Leave to appeal was granted, but the appeal was dismissed with costs, including the costs of two counsel. The Supreme Court of Appeal’s order permitting eviction stood.

This case is a leading authority on the constitutional limits of judicial intervention in contract enforcement. It clarified that fairness, reasonableness and good faith do not constitute independent bases to refuse enforcement of contracts, thereby restoring certainty in South African contract law and aligning Constitutional Court jurisprudence with that of the Supreme Court of Appeal.