Auby and Pastellides (Pty) Ltd v Glen Anil Investments 1960 (4) SA 865 (A)

Auby and Pastellides (Pty) Ltd v Glen Anil Investments 1960 (4) SA 865 (A)

Issue: Whether a clause in a contract that limits the liability of one party for breach of contract is valid and enforceable.

Facts:

The plaintiff, Auby and Pastellides, entered into a contract with the defendant, Glen Anil Investments, for the construction of a block of flats. The contract included a clause that limited Glen Anil Investments' liability for any breach of contract to R100.

After the block of flats was constructed, Auby and Pastellides discovered that it was defective. Auby and Pastellides claimed that Glen Anil Investments had breached the contract and sought to recover damages for the cost of repairing the defects.

Glen Anil Investments argued that its liability for breach of contract was limited to R100 by the clause in the contract. Auby and Pastellides argued that the clause was invalid and unenforceable because it was contrary to public policy.

Held:

The court held that the clause in the contract was valid and enforceable. The court reasoned that the parties had freely agreed to the clause, and that the clause was not contrary to public policy.

The court noted that the parties were both commercial entities and that they had had the opportunity to negotiate the terms of the contract. The court also noted that the clause was not hidden in the fine print, but was instead prominently displayed in the contract.

The court also found that the clause was not contrary to public policy. The court reasoned that the law does not prohibit parties from entering into contracts that limit their liability. The court also noted that the clause was not intended to encourage breaches of contract.

Key Facts:

• The parties entered into a contract for the construction of a block of flats.
• The contract included a clause that limited the defendant's liability for breach of contract to R100.
• The block of flats was defective.
• The plaintiff sought to recover damages for the cost of repairing the defects.
• The defendant argued that its liability was limited to R100 by the clause in the contract.
• The court held that the clause was valid and enforceable.

Reasons:

• The parties had freely agreed to the clause.
• The clause was not hidden in the fine print.
• The clause was not contrary to public policy.

Conclusion:

The court's decision in Auby and Pastellides (Pty) Ltd v Glen Anil Investments 1960 (4) SA 865 (A) is a significant case in South African law. The court's decision clarified the law of exemption clauses and made it clear that parties are free to agree to clauses that limit their liability. However, the court also noted that exemption clauses must be fair and reasonable, and that they will not be upheld if they are contrary to public policy.