Constitution and contract: human dignity, the theory of capabilities and Existenzgrundlage in South Africa

Abstract

The dominant paradigms within contract law range from a freedom orientated approach to a fairness orientated approach. The guiding principle of the freedom orientated approach is freedom and sanctity of contract which are the contractual expressions of autonomy and human dignity. Against the backdrop of individual liberty and formal equality the role of fairness is limited. This contract regime denies the judiciary any power to intervene in the bargain in order to foster substantive justice. The introduction of substantive equality and a concept of fairness by the South African Constitutional Court constituted a major paradigm shift within the South African law of contract. The impetus for this drive has been serious recognition of human rights. Today the state is both tasked to respect as well as to realise human dignity and courts, legislators and legal theorists are confronted by this dualism. In this paper I will argue that in order to concretize the constitutional values in the law of contract it is necessary to understand the interconnectedness between the modern constitutional state and contract. In addition it is also necessary to connect this understanding to the concept of human dignity defined within the ambit of Martha Nussbaum's capabilities theory and interpreted to make provision for an existence minimum. Enforcement of contracts which would result in a contracting party being denied an existence below a subsistence minimum should be unenforceable because enforcement is contrary to public policy since it compromises the contracting party's human dignity.