The legal nature of preference contracts

[摘要] ENGLISH ABSTRACT:The various constructions of rights of pre-emption encountered in South African caselaw all have some merit. This is confirmed by the multiplicity of types of preferencecontracts encountered in German law especially. The tendency of South African courtsand writers to portray one approach as the only correct one to the exclusion of all otherviews, results in tension and confusion, all the more because of the failure to investigatethe relevant policy considerations comprehensively. The confusion is compounded bywhat amounts to a breakdown of the system of precedents with judgments being basedon incorrect interpretations of previous decisions and with scant regard for contrarydecisions.No certainty exists regarding the construction of the contractual right of pre-emption inRoman and Roman-Dutch law, nor is it clear what figure or figures were received intoSouth African law. The Germanic concept of tiered ownership that forms the historicalbasis for the Oryx remedy, does not form part of our law. This accounts for thedifficulty that courts and writers have in explaining this remedy in terms of Romanistterminology, and the resort to the language of fiction.German law and English law, relied upon in South African case law, do not support auniform construction of all rights of pre-emption as creating an enforceable duty tomake an offer upon manifestation of a desire to sell. The almost unanimous support ofUS courts for a remedy by which the holder can ultimately obtain performance of themain contract upon conclusion of a contract with a third party, challenges thehypothesis suggested by German law that the default construction of preferencecontracts should be the bare preference contract which only creates a negativeobligation.The very cryptic way in which rights of pre-emption are normally drafted, makes itdifficult to even identify the main purpose of the parties. It is therefore not easy toclassify preference contracts into the different types identified in this study as notionalpossibilities. A default regime is therefore highly desirable in the interest of legal certainty. The choice of a default regime should be made on the basis of recognisedpolicy considerations, particularly on the basis of an equitable balancing of typicalparties' interests and in view of communal interests balanced against the demand forlegal certainty. The choice of default regime cannot be based merely on historicalauthority or precedent (which is in any event unclear in the present context) orunsubstantiated claims that one model is more logical or commercially useful thananother. When rules are chosen as the default regime, these rules must, as far aspossible, be reconciled with the existing conceptual structure of our law to preventcontradictions and inconsistencies.A policy analysis reveals that three default types of preference contract should berecognised, each with a clearly delineated field of application. Firstly, where theagreement allows the grantor to contract with a third party, the holder has the right tocontract with the grantor at the terms agreed with the third party. Such a preferencecontract can therefore be regarded as an option conditional upon conclusion of acontract with a third party. Such contracts are rare in South Africa. In other cases, thedefault rule should be that the grantor must first give the holder an opportunity tocontract before he contracts with a third party. The default construction of this lattertype of preference contracts depends on whether the preference contract itselfpredetermines the main contract price. If so, the holder has a right or option tocontract at that price upon any manifestation of a desire to conclude the relevant type ofcontract. However, where the preference contract does not predetermine the price, orrefers to a price that the grantor would accept from third parties, any manifestation of adesire to sell should not be sufficient to trigger the holder's right. The grantor andsociety have an interest in having her freedom to negotiate with third parties to obtainthe best possible price curtailed as little as possible. In such cases, the default ruleshould be that the holder is only entitled to conclusion of the main contract upon breachin the form of a contract with or offer to a third party. The default rule should also bethat such preference contracts - which will be treated as ordinary preference contracts -only terminate upon the grantor actually contracting with and performing to a thirdparty within a reasonable time after the holder declined the opportunity to match thoseterms, and provided the identity of the third party was disclosed to the holder onrequest. The holder therefore cannot lose his preferential right by a rejection of anoutrageously high offer by the grantor.Options and preference contracts are closely related and overlapping concepts. Thetype of preference contract that grants a conditional right to contract can often beunderstood as a conditional option (or at least as a conditional option subject to aresolutive condition that the grantor does not want to contract anymore). Thetraditional distinction between options and rights of first refusal can only be maintainedin respect of some types of preference contracts. These are negative or bare preferencecontracts which only give rise to remedies aimed at restoring the status quo ante thebreach, as well as those preference contracts creating conditional rights to contractwhich courts refuse to treat as conditional options because their wording implies a dutyto make or accept an offer, or because the requirement of certainty precludes them frombeing options.

[发布机构] Stellenbosch University