Relational theory, context and commercial common sense: views on contract interpretation and adjudication

Authors Andrew Hutchison

ISSN: 1996-2177
Affiliations: Associate Professor in the Department of Commercial Law, University of Cape Town
Source: South African Law Journal, Volume 134 Issue 2, 2017, p. 296 – 326


One of the key insights of relational contract theory is that context matters — in all contracts, but particularly in long-term commercial ones. The use of context in the interpretation of contracts appears to be on the rise in South Africa, in line with increased subjectivity in contract adjudication. Interesting parallels can be drawn with the shifting sands of contract interpretation in the UK, where contextualism is on the rise, but remains controversial. Indeed, even the concept of good faith is under discussion in English law, particularly with regard to relational contracts. Appropriate construction of the agreement seems to be the favoured approach to achieve results which make ‘commercial common sense’. This article will also draw on the English reception of relational contract theory. These comparative insights will then be applied in a discussion of the proper approach to South African contract adjudication, using a case study of the Everfresh case, which is a leading example of a post-constitutional relational contract dispute.