Take implementation, good faith and disclosure clauses seriously

0
44

Patrick Bracher | Partner | Norton Rose Fulbright South Africamail me |


In the case of Adhu Investments v Padayachee (1410:2016) [2019] ZASCA 63 (24 May 2019), one of the parties to a contract had secretly entered into agreements with third parties to gain an unfair advantage for itself, the court held that it was in breach of the good faith and non-disclosure provisions and liable for damages.

The implementation clause required the parties ‘to do all such things, perform all such acts and to take all steps to procure the doing of all such things and the performance of all such acts, as may be necessary or incidental to give or conducive to the giving of effect to the terms, conditions and import of this agreement’.

The good faith clause required the parties to ‘observe the principles of good faith towards one another in the performance of their obligations in this agreement … [and] make full disclosure to each other of any matter that may affect the execution of this agreement’.

The court held that both those clauses had been breached.

We tend to overlook these clauses as nice-to-have wording. They are enforceable clauses of a contract and can be usefully relied on where there is non-cooperation or bad faith.


 

Advertisement