ISSN 2039-2117 (online) ISSN 2039-9340 (print) Mediterranean Journal of Social Sciences MCSER Publishing, Rome-Italy Vol 5 No 9 May 2014 164 The Current Status of Exemption Clauses in the South African Law of Contract Jean Chrysostome Kanamugire Lecturer, Faculty of Law, Mafikeng Campus, North-West University Email: jean.kanamugire@nwu.ac.za Terence Vincent Chimuka Legal Adviser, KwaZulu-Natal Department of Economic Development and Tourism, South Africa Email: chimukat@kznded.gov.za Doi:10.5901/mjss.2014.v5n9p164 Abstract Exemption clauses are used in contracts to exclude liability that ascribes to a contractant under normal circumstances. They are often incorporated in the standard form contracts by the service providers to the detriment of the other contracting party. As a general principle, exemption clauses are enforceable as they reflect an agreement between contracting parties. Exemption clauses that are contrary to public policy are invalid and unenforceable. They are often struck down by a court. Public policy nullifies agreements that are offensive in themselves. It is now rooted in the Constitution and the fundamental values it enshrines. They include human dignity, the achievement of equality, the advancement of human right, freedoms, non-racialism and non-sexism. Both Consumer Protection Act and National Credit Act have exclusion clauses in certain agreements to achieve fairness between contracting parties. Consumer Protection Act creates a general standard of fairness by listing a variety of prohibited terms and terms which are presumed to be unfair for the benefit of the consumers. National Credit Act also controls the exemption clauses in order to ensure or facilitate the fair, reasonable and valid conclusion of contracts. Exemption clauses are no longer the prerogative of the contracting parties. Sometimes, the exemption clauses in a contract need to be pointed out to the other party or consumer. The principles of fairness, reasonableness and constitutional values have to be considered when courts decide on the validity of exemption clauses. Consumer Protection Act, National Credit Act and Constitution have altered the use of exemption clauses in the law of contract to ensure fairness between contracting parties. Keywords: Exemption clauses, standard form contracts, public policy, contractants, unequal bargaining power. 1. Introduction Exemption clauses are used on a large scale in South Africa to exclude liability which attaches to a contractant under normal circumstances. 1 They are not a modern creation and have been historically used under Roman-Dutch law. 2 Exemption clauses are terms which are normally incorporated into standard form contracts to exclude a duty or liability which the law would otherwise attach to such a person. 3 The use of exemption clauses has been historically frowned upon because they are excessively one sided and more often than not unfair on the other contracting party. Exemption clauses are in principle enforceable if they have been agreed upon by both contracting parties. An exemption clause, just like any other clause in a contract, can be struck down by a court if it is contrary to public policy. 4 The courts have often employed different techniques of interpretation in dealing with exemption clauses. 5 They have however not been able to deal with the problems posed by exemption clauses effectively and exemption clauses have continued to flourish at an alarming rate. The legislature has intervened by enacting the Consumer Protection Act 6 to deal with the unfairness which usually 1 See Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) 42 Brand JA, remarked that, in South Africa exemption clauses in standard contracts are the rule rather than the exception. 2 See De Groot Inl 3.14.12; Voet 21.1.10. 3 S, Van Der Merwe. Contract: General Principles 3ed (2007) 297; PN Stoop “The current status of the enforceability of contractual exemption clauses for the exclusion liability in the South African law of contract” (2008) 20 Merc LJ 496; L Steyn “The inclusion of ‘additional’ terms or ‘standard terms and conditions’ in a contract: the significance of the ‘ticket’ cases, caveat subscriptor and the application of the reliance theory” (2004) 16 SA Merc LJ 106. 4 Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) at 34 the Supreme Court of Appeal held that a contract that is unfair to such an extent that it is contrary to public policy will not be enforced. See also S. Van Der Merwe. Contract: General Principles. 3 rd ed. (2007) 298; Brisley v Drotsky 2002 4 SA 1 (SCA), paragraph 91. 5 See First National Bank of SA Ltd v Rosenblum 2001 (4) SA 189 (SCA); Johannesburg Country Club v Stott 2004 (5) SA 511 (SCA). 6 Consumer Protection Act 68 of 2008.