Can you rely on a contract you’ve repudiated? South Africa's SCA says yes - sometimes

In a world where commercial relationships increasingly span jurisdictions, the question of what survives when a contract ends is a focal point of litigation. The recent South African Supreme Court of Appeal (SCA) decision in Twenty-Third Century Systems (Pty) Ltd and Another v SAP Africa Region (Pty) Ltd 2025 JDR 1811 (SCA) offers a compelling analysis of this issue, with implications that resonate far beyond South Africa’s borders.

At its core, the case addresses whether a party that repudiates a contract can still rely on limitation of liability and time bar clauses contained in that contract. The SCA’s answer that it does, under certain conditions, aligns with evolving jurisprudence in the UK and US, and provides valuable guidance for solicitors advising clients engaged in cross-border commercial agreements.

The Facts: A Partnership Unravels

The appellants, Twenty-Third Century Systems (Zimbabwe) and its Botswana-based subsidiary, were long-standing partners of SAP Africa Region (Pty) Ltd, a South African arm of the global software giant.  Under a suite of agreements concluded in 2016, the appellants were authorised to sell and service SAP products across Sub-Saharan Africa (excluding South Africa).

In July 2019, SAP terminated the agreements, citing “good cause.”  The appellants responded by treating SAP’s conduct as a repudiation and accepted it, thereby terminating the contract.  They later sued SAP for over USD 68 million in lost profits.

SAP raised two special pleas: first, that the contract expressly excluded liability for consequential damages, including loss of profits; and second, that the claim was time-barred under a clause requiring claims to be brought within one year of the claimant becoming aware of the cause of action.

The Legal Issue: Can You Have Your Cake and Eat It?

The appellants argued that SAP could not rely on the very contract it had repudiated. To do so, they claimed, would amount to “approbation and reprobation” which is a doctrine that prevents a party from both accepting and rejecting the same contract.

The SCA disagreed. Drawing on both domestic and international jurisprudence, the court held that certain contractual provisions particularly those governing dispute resolution, liability, and post-termination obligations can survive the termination of a contract, even where that termination results from repudiation.

The Doctrine of Survival: Primary vs Secondary Obligations

The court’s reasoning hinged on a distinction between primary and secondary obligations. Primary obligations are those that relate to the performance of the contract such as delivering goods or paying for services. Secondary obligations, by contrast, are those that arise upon breach such as paying damages or adhering to dispute resolution mechanisms.

This distinction is not new. In Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, the House of Lords held that a limitation of liability clause survived the deliberate destruction of a client’s premises by a security guard. Lord Diplock famously observed that repudiation does not necessarily extinguish the entire contract; rather, it ends the primary obligations and activates secondary ones.

Similarly, in Heyman v Darwins Ltd [1942] AC 356, the House of Lords upheld the survival of an arbitration clause after a contract was repudiated. Lord Macmillan noted that such clauses are not part of the performance obligations but are instead mechanisms for resolving disputes arising from the contract’s failure.  In principle, repudiation does not abrogate the contract however, certain clauses survive for purposes of measuring claims arising from the breach and determining the mode of settlement.

The SCA in Twenty-Third Century followed this reasoning.  It held that the limitation and time bar clauses were secondary obligations and were expressly stated in the contract to survive termination. Article 17(13) of the agreement listed these clauses among those that would “survive any termination of any part of this Agreement”. This is a phrase the court interpreted to include termination by repudiation.

Appropriation and Reprobation: A Misapplied Doctrine?

The appellants’ reliance on the doctrine of approbation and reprobation was also rejected. The court noted that this doctrine, while rooted in equity, does not prevent a party from relying on surviving contractual provisions after termination. Citing Hlatshwayo v Mare and Deas 1912 AD 242, the court reaffirmed that the doctrine applies only where a party seeks to benefit from inconsistent positions.

In this case, SAP was not seeking to enforce the contract’s performance obligations while denying its existence. Rather, it was relying on clauses that were designed to operate after the contract’s end. As such, there was no inconsistency in SAP’s position.

Comparative Insights: UK and US Perspectives

The SCA’s decision aligns closely with UK and US jurisprudence.

In the UK, courts have consistently upheld the survival of exclusion and arbitration clauses post-termination, provided the contract supports such an interpretation.  In Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, the House of Lords emphasized the commercial presumption that parties intend arbitration clauses to survive the end of their contractual relationship.

Similarly, the High Court in C&S Associates UK Ltd v Enterprise Insurance Co Plc [2015] EWHC 3757 (Comm) confirmed that a party may rely on a different ground for termination than the one originally asserted, if that ground existed at the time of termination. While the case did not directly address the survival of limitation clauses, it reinforces the broader principle that post-termination reliance on contractual terms is permissible where the contract allows it, and the party’s conduct is consistent with that reliance.  This supports the SCA’s approach in Twenty-Third Century, where SAP was permitted to invoke limitation and time-bar clauses post-repudiation, as those clauses were expressly stated to survive termination.

In the US, the doctrine of “severability” in arbitration law supports the survival of dispute resolution clauses. In Buckeye Check Cashing, Inc. v Cardegna, 546 U.S. 440 (2006), the US Supreme Court held that an arbitration clause is severable from the rest of the contract and can survive even if the contract is found to be void. 

Additionally, in GRT, Inc. v. Marathon GTF Technology, Ltd., C.A. No. 5571-CS (Del. Ch. June 21, 2012), the Delaware Chancery Court upheld a survival clause limiting the duration of representations and warranties, treating it as a contractual statute of limitations.  These US decisions reinforce the principle that certain contractual provisions particularly those governing dispute resolution and liability can remain operative post-termination, echoing the SCA’s findings in Twenty-Third Century Systems.

Practical Implications for Solicitors

For solicitors advising clients in cross-border transactions, the Twenty-Third Century case offers several key takeaways:

• Draft with precision: Ensure that survival clauses are clearly worded and explicitly state which provisions will continue post-termination.
• Distinguish obligations: Understand the difference between primary and secondary obligations and advise clients accordingly.
• Manage expectations: Clients may assume that repudiation nullifies all contractual obligations. It does not. Solicitors must explain the legal consequences of termination, especially in relation to limitation and dispute resolution clauses.
• Consider governing law: Different jurisdictions may interpret survival clauses differently. Where possible, harmonise contractual language with international best practices.

Conclusion: A Global Lesson In Contractual Continuity

The Twenty-Third Century decision is more than a domestic ruling.  It is a reaffirmation of a global legal principle that contractual obligations do not cease upon termination.  Instead, they evolve.  Certain clauses, particularly those designed to manage risk and resolve disputes, are built to endure.

For solicitors operating in an increasingly interconnected legal landscape, this case is a timely reminder that the end of a contract is not the end of the story. It is, in many ways, just the beginning of a new chapter, one that is governed by the very clauses that were designed to survive the storm.