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n Tydskrif vir die Suid-Afrikaanse Reg - Pre-contractual duties of disclosure in the South African common law (part 1)
Non-disclosure may give rise to various remedies in the South African common law, the most important being avoidance of a contract induced by the non-disclosure, a claim for delictual damages or a defence of estoppel. As a form of liability for omission, the major issue in relation to non-disclosure is whether the failure to speak was wrongful, in other words whether there was a legal duty to speak. The overriding test in the common law is the legal convictions of the community. However, there is still some uncertainty about the circumstances and factors which would justify the imposition of a duty of disclosure. This contribution will critically evaluate a number of different approaches to the issue.
Although the overriding test is the same, the policy considerations that are relevant to the "legal convictions of the community" test may vary depending on context. For example, it has been argued that considerations such as good faith, or, conversely, the "right" to strike the best possible bargain applies only in contractual settings. By contrast, the risk of indeterminate liability and the policy factors militating against liability for pure economic loss come into play in non-contractual settings, but they are largely irrelevant in contractual settings. On the other hand, where parties are already in a contractual relationship, the terms of the contract may have an impact on the ambit of duties of disclosure.
In order to keep the discussion within manageable limits, this contribution will focus on pre-contractual duties of disclosure, although reference may be made to such duties in different contexts where appropriate. Moreover, the discussion will be confined to non-disclosure inducing mistakes in motive only. Although mistakes excluding consensus have in the past been dealt with on the basis of misrepresentation by non-disclosure of terms, the supreme court of appeal rejected such an approach in Constantia Insurance Co Ltd v Compusource (Pty) Ltd, holding that such issues were better dealt with by way of the rules applying to mistake. Statutory duties of disclosure will be left outside of this discussion, since they are premised on very context-specific policy considerations.
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