It often transpires that commercial lease agreements are the product of the landlord and the end result of various combined templates. In some instances these templates are sourced from the internet and may contain provisions not recognised by South African law. A tenant, mostly, is faced with the option of either accepting whatever intimidating terms are recorded in the lease agreement or seek rental space elsewhere. If you are a landlord to such an agreement, you must carefully consider before taking steps in accordance with such terms. If you are a tenant to such an agreement, all is not lost because despite the signed written contract being in place, it may not be enforceable.
Whether you are a landlord or a tenant, you must ensure that the contents of your lease agreements are enforceable. If acting on invalid contractual terms, landlords may suffer the consequences of an unkind court order with a concomitant order of costs. In turn, if tenants are not aware of the invalidity of such terms, they may suffer damages due to unlawful conduct of landlords by not utilising the legal remedies available to them.
There are various statutory and common law provisions applicable to contracts. s How , do you probably ask, would a person not educated in the intricacies of law be able to identify invalid contract terms?
A good starting point would be to identify terms which one would think normally requires a court’s interference. Such terms would normally be associated with the right of action of a party recorded in a contract subsequent to a breach thereof by the other party. Such terms would include phrases like “summarily”, “without notice” and “in its own discretion”. This being said, not all contractual terms containing the aforesaid phrases are not enforceable.
It must always be kept in mind that it is a fundamental principal of our legal system that no person is allowed to take the law into his or her own hands. This principal is also true in the law of contract and is recorded in case law as far back as the early nineteen hundreds (Nino Bonino v De Lange 1906 TS 120). If a contract allows a party thereto to take the law into his or her own hands, in other words to do that which only a court is allowed to do, the contravening provision is invalid. A contract cannot allow one party to be the judge of whether a breach of contract has been committed and to, after having decided in his own favour, allow him to commit an action which would normally first require the green light from a court of law.
Staying with the example of a commercial lease – a lease agreement cannot allow the landlord to, without being authorised by a court order, dispossess the tenant of property being leased or of a right incidental to the tenant’s lease of the property. The court will not accept such a provision and a deprived tenant will in all probability be successful should he or she approach a court for an order that his or her possession be restored. The correct course for the landlord would be to rather approach a court himself for relief whether with a claim for damages, specific performance or eviction.
In some instances, the Consumer Protection Act 68 of 2008 will also apply to commercial lease agreements. The tenant and landlord need to familiarise themselves with the provisions of the act that may have an impact on their lease agreements. A “consumer” in terms of this act includes small to medium size businesses and excludes juristic persons whose asset value or annual turnover, at the time of entering into the lease agreement, equals or exceeds two million rand. A “supplier” is a person who markets any goods or services. In terms of the act a landlord falls within the definition of a supplier. Sections 48 and 49 deal with unfair, unreasonable and unjust contractual terms. Standard clauses in commercial lease agreements which limit the liability of landlords in damages claims by tenants, or any other terms which are exceptionally favourable to the landlord could be deemed to be unfair, unreasonable or unjust.
It is therefore advisable that both landlords and tenants understand the content of the contracts and the relevant acts pertaining to the contracts that they enter into and educate themselves of the consequences should they act in accordance with invalid provisions recorded in the contract.
Eloise Cilliers is an attorney at Barnard Incorporated, attorneys in Centurion.
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