Non-variation clauses: Academic error should not become erroneous legal precedent

May 1st, 2021

Counsel: ‘My Lord, authority for my argument is Professor Smith’s commentary … .’

Judge: ‘Does Professor Smith sit on the SCA bench?’

The above courtroom exchange is a humorous reminder of the pitfalls of counsel’s bare reliance on academic commentary, and not on the law itself. Legal academics perform an invaluable service for legal practitioners by accurately recording the development of the law, allowing for efficient legal research. I am only too grateful for the help of academic commentary in my commercial practise at the Johannesburg Bar, without which, court preparation and drafting would be far more onerous.

A problem, however, arises when respected academic commentators draw erroneous conclusions from landmark case law, posing the risk that these mistakes find their way into court judgments, thereby becoming law. Of particular concern, is a view expressed by RH Christie and GB Bradfield on SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere 1964 (4) SA 760 (A) having implied that Shifren confirmed as law that unprotected non-variation clauses are themselves vulnerable to non-written variation, thereby exposing the rest of the agreement to oral variation.

Shifren is a landmark decision. It confirmed the enforceability of non-variation clauses amidst oral amendment, and was constitutionally approved in Brisley v Drotsky 2002 (4) SA 1 (SCA) and Barkhuizen v Napier 2007 (5) SA 323 (CC).

Non-variation clauses generally hold that all subsequent variations must be in writing, lest they be unenforceable in court, achieving much needed certainty as to rights and obligations.

A practical example of a non-variation clause that does not protect itself against non-written variation is:

‘In order to be enforceable, variations to this agreement must be recorded in writing and signed by both parties’.

A practical example of a non-variation clause that does protect itself against non-written variation is: ‘In order to be enforceable, variations to this agreement and this clause must be recorded in writing and signed by both parties’.

Graham Bradfield states in ch 12.2.2 of Christie’s Law of Contract in South Africa 7ed (Durban: LexisNexis 2016) at p 519:

‘A non-variation clause that does not entrench itself against variation may itself be cancelled or varied by express agreement, and this agreement may be informal. This proposition was accepted in Shifren by Steyn CJ and is supported by subsequent authority’.

The excerpt above implies that the Appellate Division in Shifren confirmed, as part of South African law, that a non-variation clause that is not itself ‘entrenched’ (protected) from non-written variation can be varied by non-written means, thereby exposing the rest of the contract to non-written variation.

The Law of Contract in South Africa textbook is deservedly venerated in legal circles as an exceptional resource. I was thus astonished, after forensically dissecting Shifren, to discover what I believe to be glaring factual and legal inaccuracies in the above commentary.

In my view, Steyn CJ’s Shifren majority judgment does not ‘accept’, create or confirm existing law in terms of an unprotected non-variation clause being vulnerable to non-written variation. The footnote referenced ‘subsequent authority’ does not either support their position (Impala Distributors v Taunus Chemical Manufacturing Co (Pty) Ltd 1975 (3) SA 273 (T) at 278A and Clemans v Russon Brothers (Pty) Ltd 1970 (3) SA 686 (E) at 689F).

In the Shifren case, the non-variation clause in the lease was unprotected (see 764A-C) and the appeal was dismissed in favour of the enforcement of said unprotected non-variation clause. The appellant pleaded, as a defence a quo, that the subsequent oral agreement had included a tacit term whereby the landlord had waived its right to require all cessions to be in writing, and that the landlord had waived its right to have all variations to the written agreement be in writing (see 764A-C). The dismissal of the appeal, faced with an unprotected non-variation clause and an attempt to vary the non-variation clause itself, suggests the antithesis of what the authors propagate: Shifren more likely implies that a non-variation clause need not protect itself. Were the commentary accurate, the appeal should have succeeded, because the unprotected non-variation clause would have been ruled to be validly amended by waiver, allowing for the subsequent oral agreement of cession to be binding.

The Shifren judgment does admittedly include reference to the utility of a protected non-variation clause, it being the ultimate indication that the parties intended that the agreement could not be verbally amended (see 766G – 767A). It is, however, a stretch to conclude from this passage that Steyn CJ ‘accepted’ that unprotected non-variation clauses are vulnerable to non-written variation. These remarks were in any event obiter (not part of the ratio decidendi), and thus not binding precedent.

Logically speaking, it makes no sense for a non-variation clause itself to require protection, this is because the non-variation clause obviously forms part of the written agreement, it already expressly protects the entire written agreement from non-written variation.

You may be asking: Why the fuss? Non-variation clauses protect significant personal and commercial interests, and are found in virtually every written agreement. The majority of contracts I come across contain unprotected non-variation clauses, and parties often ignore the formal requirements, a recipe for unnecessary dispute if the offending commentary is blindly followed. Shifren is also written in Afrikaans, which most legal practitioners and judges do not understand, and are thus prone to rely on the commentary without interrogating the decision.

Legal practitioners must assist the court in ensuring that an academic error does not become an erroneous legal precedent, particularly where key authorities are scribed in Afrikaans. Academic opinion should be a starting point only during litigation, as should this article, because I could be wrong on Shifren or the commentary excerpt. Always scrutinise and consider every angle and make up your own mind. Avoid the temptation to blindly rely on commentary at all costs, worse still … never robotically regurgitate the views of an opinionated advocate, who once wrote an article in De Rebus.

Stuart Hayward BCom LLB (Stell) is a legal practitioner at Advocates Group 21 in Johannesburg.       

This article was first published in De Rebus in 2021 (May) DR 44.

De Rebus