The appellant borrowed money in terms of a loan agreement which entitled the lender to pay any rates, taxes, water and electricity on behalf of the borrower and to recover the amount, failing which to execute the debt against the property. When this happened the borrower said that the provision was unenforceable because it was unconscionable and contrary to public policy. The borrower said it had a dispute with the municipality about the municipal debt. This argument was not sustainable on the facts.
In general, public policy requires contracting parties to honour obligations that have been freely and voluntarily undertaken. A party seeking to avoid the enforcement of a contractual term is required to demonstrate good reason for failing to comply with the term. In the present matter, the borrower was unable to show how the implementation of the loan agreement would be unconscionable and contrary to public policy. There was no suggestion that the enforcement clauses in the loan agreement were out of the ordinary or imposed any undue hardship on the borrower.
The courts have said over and over that legal certainty and the enforceability of contracts are central values to the law of contract which will be honoured and enforced by the courts. It is not the function of the courts to protect equal contracting parties from bad bargains.
[68 Wolmarans Street Johannesburg (Pty) Ltd v Tufh Limited [2024] ZASCA 48 (15 April 2024)]