A Constitutionally invalid agreement is void from inception and does not confer any rights under the contract

The dispute concerned a lease for a hotel in Coffee Bay, Transkei for a period of 20 years that was held to be constitutionally invalid because the lease had been signed contrary to the laws relating to public procurement.  Consequently the claim for rights under the lease agreement was incompetent.  In these circumstances a possible claim may arise under the law of unjust enrichment.

Section 172(1)(b) of the Constitution empowers a court, which declares law or conduct inconsistent with the Constitution invalid, to make an order which is “just and equitable”.  That does not mean that the courts have the power to enforce a contract which has been declared unlawful or void.  The law does recognise that performance or part-performance of a void contract may give rise to a claim for unjust enrichment.  For instance if a building has been constructed by the time the contract is declared void, the court has a discretion to permit the constructing party to recover the value of what was performed by the time the contract is declared invalid to the extent the other party was enriched.

BW Brightwater Way Props (Pty) Ltd v Eastern Cape Development Corporation [2021] ZASCA 47 (19 April 2021)