Towards an Integrated Model for the Judicial Regulation of State Contracts in South Africa

How should South African law conceptualise and regulate contracts involving state bodies, given their distinctive features and hybrid public–private character? At the core of this question lies an understanding of the state under the 1996 Constitution – a state that is constitutionally constituted and defined, and therefore normatively distinct from private actors, even when those actors perform public functions. This distinction has important implications for how state contracts are conceived, the methods by which courts regulate them, and the duties of both state actors and private parties within these contractual relationships. The prevailing functional approach classifies conduct as either public or private, and then applies the corresponding legal regime to the exclusion of the other. This binary method uses five factors: (i) statutory source of power; (ii) superior or coercive powers of the state; (iii) duty to act in the public interest; (iv) public impact of the action; and (v) identity of the functionary as the state. That approach has proved to be unstable, unduly formalistic and conceptually flawed, since all state action is public in nature. The courts thus require a new conceptual and methodological model to guide judicial regulation of this field – one that reflects the state’s unalterable constitutional character. To this end, the five factors are repositioned as substantive organising principles, rather than classificatory tools: first, to develop a constitutional conception of the South African “state”, and second, to inform a legal understanding of a “state contract”. Within this framework, the traditional organising principles of contract law – self-regulation, presumptive equality, self-interest and contractual privity – are reordered to reflect the distinctive features of state contracts. The reorganised principles are: (i) mixed regulation; (ii) presumptive inequality; (iii) the public interest; and (iv) external impact. Factor (v), identity of the functionary as the state, is positioned differently. It defines the character of the action (“state action”) and the category of contract (“state contract”), triggering public-law regulation to both concepts. The central contention is that South African law should recognise a distinct concept of a “state contract”, automatically subject to both public and private law (factor (i), mixed regulation). Yet, the concurrent application of these regimes cannot alone guarantee effective judicial regulation. Courts should also aim for integration – both formally, in the framing and litigation of state disputes, and substantively, in the development of state-contract doctrine. Within this integrated model, factor (i) frames the overarching approach, while the remaining factors orientate courts to the key regulatory issues: abuse of state power (factor (ii)); supporting and competing public-interest concerns (factor (iii)); and the direct and indirect impact on third parties (factor (iv)). Succinctly, through a state-centred, integrated model, this study advances a structured basis for regulating state contracts within the normative framework of the South African Constitution. The approach calls for an adjudicative method that is both responsive, attuned to the distinctive features and special regulatory concerns of state contracting and disciplined, grounded in structured and rigorous rule-based reasoning, and the principled application or adaptation of existing doctrine.

Grantor dc:publisher

Stellenbosch : Stellenbosch University

Year dc:date.issued

2026

Author dc:creator

• Cachalia, Raisa Nonsikelelu

Advisor dc:contributor.advisor

• Quinot, Geo

Language dc:language.iso

en

Repository record dc:identifier.uri

https://scholar.sun.ac.za/handle/10019.1/135661

OAI identifier oai:identifier

oai:scholar.sun.ac.za:10019.1/135661