Vodacom / Makate – application of the Institutes of Justinian

Until recently, I firmly thought:

• South African case law was clear: a contract of “sale” required the asset and price to be “certain”;
• South African court judgements have repeatedly confirmed that, where a price is “uncertain”, the court will not “determine the price”, leaving the clause “unenforceable”; and
• that the commitment by Vodacom to pay Makate an “amount to be agreed upon” was therefore unenforceable. Full stop.

Well, erase the full stop and substitute it with a semi-colon.

Last week I was overjoyed to find a copy of “The Institutes of Justinian published by Cambridge: Macmillan & Co in 1855. Justinian’s Institutes formed part of the 528AD codification of Roman law … the origins of South African law. Why is this relevant? Well, where there’s a “gap” in the South African law, the South African Courts must have regard to Roman Law (i.e. the Institutes).

The Vodacom / Makate case revolves around such a “gap”, and Justinian’s Institutes includes an interesting statement that may well enable the Courts to rule in favour of Makate without ostensibly upsetting hundreds of years of South African judicial precedent.

In “TITLE 23 – of bargains and sales” at section I, Justinian’s Institutes reads:

“It is always essential that a price be fixed upon; for if there be no price, there is no sale. And such price must be certain. Formerly, it was a question much mooted by the ancient jurists, as to whether the sale be valid or not when the contracting parties agree that the thing shall be sold at the sum “at which Titius shall value it.” We, however, have settled the point by enacting, that whensoever a sale is agreed to be made at a price to be settled by a third party, the contract shall be held binding under the condition that, if such third person do fix the price, then in accordance with this valuation, the said price shall be paid, the thing delivered, and the sale completed: and that if either purchaser or seller shall then draw back, he will be liable to an action at the suit of the other party. If, however, the third party named be either unable, or unwilling, to fix the price, the sale is void, as having been made without of agreement as to price. And, as we have made this regulation with reference to contracts of sale, it seems only reasonable to extend it also to contracts of letting and hiring.”

[Note: references to Titius in the Institutes are intended to refer to “a third party”]

So far, Justinian’s institutes appear to indicate that the “transaction” is null and void. However, this isn’t the end of the matter!

In “TITLE 24 – of letting and hiring” at section I, Justinian’s Institutes reads further:

What we have above said of the case of a sale wherein the price is to be determined by a third party, may be understood also of a letting and hiring, where the amount of hire is left to the decision of a third party. If, therefore, a man have sent clothes to a fuller to be scoured, or to a tailor to be mended, and have made no previous stipulation as to the sum to be paid for their work, purposing only to give what afterwards they may determine on, no strict contract of letting and hiring can be said to have been made; still, however, either is at liberty to bring an action on the case.

“STILL, HOWEVER, EITHER IS AT LIBERTY TO BRING AN ACTION ON THE CASE”! This paragraph confirms that no contract of letting and hiring was concluded, but that an action remains. And, if an action remains, not everything’s “unenforceable”! Sure, the Court will shy away from determining the terms of the agreement between the parties. But, an action is potentially available. What action? Well, Justinian’s Institutes does not clarify this. But, Roman law was based on the fundamental principles of equity and fairness. Throughout the Institutes, where the “standard remedy” is unavailable, resulting in unfairness, the Institutes refers to an available “action of fraud”. However, fraud requires the claimant to have acted to his detriment. Makate did not do so. Could the action be based on “unjustified enrichment”? More probably, albeit that this action requires “enrichment” of one party at the “expense” of (and, not necessarily the “lack of participation” by) the other party. That’s why this is so complicated.

So, although the: the “agreement” is likely void; and the Courts will not determine the “amount to be agreed upon”, the Courts are free to remedy any unfairness. The bottom line is that: Makate was not obliged to disclose his “Please call me” idea to Vodacom; the “please call me idea” does not fall into any category of “intellectual property” (so don’t even refer to intellectual property laws); Vodacom used the idea and made a small fortune; Vodacom undertook to compensate Makate an agreed amount; and the parties are deadlocked at what the amount is. Makate didn’t act to his detriment, but Vodacom was enriched.

In short:

• the Courts will not “determine the amount that the parties should have agreed upon”; and
• Makate should not ask the Courts to enforce a clause that is clearly unenforceable,

BUT:

• Makate is at liberty to bring an action to the Courts based on the fundamental principle of “fairness”*; and
• the Courts have the power to decide on such an action (whatever it is).

Go for it Makate! Reminiscent of Solomon Linda’s (“The Lion Sleeps Tonight”) slaying of Disney brandishing a long forgotten section in the 1911 Imperial Copyright Act, you could vanquish Vodacom by dusting-off Title 24 section I of Justinian’s Institutes of 528AD. Now, that’s exciting!

* In TITLE 20 – of legacies, at section XXXVI, the law regarding penalties in testaments was simply overwritten due to the “moral principle of the age”: “But this over-scrupulous nicety accorded not with our views, and we, therefore, have ordained that, as a general rule, things by testament, left, revoked, or transferred, shall be treated, in all respects, as other legacies; with the exception, however, of such as are impossible, forbidden by law, or likely to cause scandal; for the moral principle of the age in which we live will not endure testamentary dispositions of such a character.”