Contract law and negotiations in South Africa

What should you know about South African business culture?

The language commonly used in South Africa while transacting business is English. However it can be influenced by a strong accent which can at times make it difficult to understand. A tactile nature is a common characteristic of South Africans. Lengthy, firm, handshakes and backslapping are frequent and in case a foreign visitor backs away or does not indulge in these actions he can be mistaken for being aloof.

Another common feature of business culture in South Africa is that humour is used very often to break the ice and in almost every type of circumstance.

It is always best to make a formal introduction in order to acquire access to decision makers in case your company does not have a public presence in South Africa.

What are the right negotiation tactics in South Africa?

As far as negotiations are concerned, development of a mutual trust is essential before the commencement of negotiations. Also one must take care not to interrupt when a South African is saying something. Decision making in South Africa can be a tedious process because subordinates are often consulted while making decisions.

What is a contract worth in South Africa?

The Law of Contract in South Africa is trying to adapt to the requirements of the new political changes in South Africa. Legislation has been enacted to provide protection to consumers. The foremost among these legislations are the National Credit Act 2005, and the Consumer Protection Act 2008. This has given rise to the question of fairness in contract law.

For a contract to be valid in South Africa it has to fulfill the following requirements:

There must be a consensus among the parties on all the various issues which their agreement intends to cover. The parties should fulfill the necessary requirements as to legal capacity required by law. The agreement should not violate any provisions of the law of contract.  The commitments which are required to be fulfilled must be completed once the contract has been entered into.

Pricing policy in South Africa

The general trend in South Africa has been to lower the tariff rates so that industries become more competitive and also for the reduction in cost structures.

What are the arbitration and litigation processes in South Africa?

As far as alternative dispute resolution in South Africa is concerned ‘The Arbitration Foundation of Southern Africa is the national leader. It was established in the year 1996 and is a joint venture between the three professions:

  1. Organised business
  2. Accounting
  3. Legal

However, the wisdom has prevailed that having a seat of International Commercial Arbitration in South Africa since it will prove detrimental to transformation of the judiciary in South Africa. Also the Blacks in South Africa have raised the concern that white corporate leaders and their lawyers misuse the process of arbitration to avoid going to courts where they may have to argue before a black judge.

Arbitration proceedings are regulated by the Arbitration Act of 1965. An application under this Act can be made by the party in writing asking for a court to stay legal proceedings regarding a subject matter that can be included in arbitration.

As far as conventional litigation is concerned, commercial disputes are adjudicated in the High Court of South Africa. The Magistrate’s court tackles proceedings and litigation.

South Africa offers a hospital environment to carry out successful negotiations in an open and professional market. Guidance on market entry however can offer the much needed edge.

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