Can a breaching party hide behind contract clauses?

Disputes often arise in commercial partnerships, and repudiation can end agreements abruptly. But a crucial question remains, can the repudiating party still rely on limitation clauses in the terminated agreement? The Supreme Court of Appeal (SCA) in 2025 provided clear guidance in Twenty-Third Century Systems (Pty) Ltd and another v SAP Africa Region (Pty) Ltd.

In May 2016, SAP Africa Region (SAP) concluded a suite of agreements with Twenty-Third Century Systems Global (Global), a subsidiary of Twenty-Third Century Systems (Systems / together referred to as Twenty-Third Century), appointing Global as a service provider to sell SAP’s IT products in various sub-Saharan territories. When SAP notified termination for good cause on 1 July 2019, Global accepted it as repudiation on 15 July 2019.

On 30 November 2020, Twenty-Third Century instituted action for loss of profit. SAP raised special pleas relying on an exclusion of damages clause and a one-year time-bar clause. In the SCA, the parties agreed that, for the purposes of the appeal, it must be accepted that the High Court had determined the special pleas on the assumption that SAP had repudiated the agreement, and the appeal was argued on that same basis.

Issues before the court

The SCA was asked to decide whether SAP could rely on the exclusion of damages and time-bar clauses despite repudiating the agreement.

Twenty-Third Century’s position

Twenty-Third Century argued that:

• SAP approbates and reprobates by repudiating the agreement and then using the same agreement for their protection.
• The clauses relied on by SAP do not survive repudiation; they apply only to terminations for good cause.
• They did not know, and could not reasonably have known, the facts giving rise to their claim earlier than a year before issuing summons.

SAP’s position

SAP countered that:

• Its relied upon clauses survive any termination as secondary obligations that activate after primary duties end. The survival provision expressly states that limitation of liability survives “any termination”.
• It did not approbate and reprobate; it relies on surviving obligations, not the whole contract.
• The claims are time-barred as Twenty-Third Century knew the facts more than one year before instituting action.

The Court’s ruling

Drawing on established authorities, the Court confirmed that certain contractual provisions survive repudiation.

• • In Heyman v Darwins Ltd, the House of Lords held that although the contract’s main purposes fail upon breach, clauses like arbitration “survives for the purpose of measuring the claims arising out of the breach, and … determining the mode of their settlement”.
  • Scriven Bros v Rhodesian Hides & Produce Co Ltd confirmed that repudiation does not destroy such clauses, as they provide machinery for dispute resolution.
  • Photo Production Ltd v Securicor Transport Ltd clarified that primary obligations relate to performance, while secondary obligations are remedies for breach.
  • Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA) confirmed that accepting repudiation terminates primary obligations and activates secondary ones.

• Applying these principles, the SCA held that Global’s acceptance of SAP’s repudiation ended the parties’ primary obligations but activated their secondary obligations, including the exclusion of damages and time-bar clauses.
• These clauses therefore survived termination and continued to regulate the parties’ post-termination rights and remedies.
• The Court dismissed the appeal and upheld SAP’s entitlement to rely on both clauses.

Commentary

This case underscores the enduring importance of survival clauses in commercial contracts, even after repudiation. The SCA adopted a broad interpretation, echoing precedents like Photo Production Ltd v Securicor Transport Ltd.

The decision supports the principle that secondary obligations survive to provide certainty in resolving

disputes, which benefits both parties. It also serves as a reminder to commercial stakeholders: agreements must be drafted with precision. If parties intend to exclude or alter the scope of limitation provisions for certain terminations, this must be made clear. Otherwise, survival clauses under the original agreement will still apply.

Contact Nikita Lalla, Ricardo Pillay, Danielle Giannico, or Msizi Zungu to mitigate risks and minimise disputes when planning, negotiating, or delivering infrastructure projects.