Written by Roy Bregman, an admitted attorney with over 51 years’ experience in commercial and property law
Last updated: June 2026
Key Takeaways
What Is an “Agreement to Agree” and Why Is It Risky?
A promise to renew a lease is only legally binding in South Africa if the renewal terms are clear and certain. Many tenants invest heavily in their rented premises, relying on a clause that gives them the “option to renew.” However, if that clause simply states that the new rent will be “agreed upon” later, it may be an unenforceable “agreement to agree”, offering little to no legal protection if the landlord decides not to renew.
An “agreement to agree” is a clause where parties promise to negotiate and finalise a key term (such as the rental amount for a renewal period) at a future date. These clauses are legally risky because they can be too vague for a court to enforce if the parties later disagree. The law requires contracts to be certain. If a fundamental term like the price is left undetermined, the contract may be considered void for vagueness.
The primary risk is that one party can simply refuse to agree, leading to a deadlock. Without a pre-agreed method to break that deadlock, the original promise to negotiate becomes legally meaningless, and the option to renew fails, leaving the tenant with no right to remain in the property once the initial lease expires.
This crucial issue was clarified by the Supreme Court of Appeal, which confirmed that without clear terms or a mechanism to resolve disputes, a court cannot force a party to enter into a new agreement. At BMA, with over 51 years of experience in commercial and property law, we have seen first-hand how poorly worded renewal clauses can cost businesses dearly. Careful, precise drafting is not a luxury; it is essential.
When Can a Court Enforce a Duty to Negotiate in Good Faith?
A court can only enforce a duty to negotiate in good faith if the contract provides a clear framework for those negotiations, including a deadlock-breaking mechanism. While our law expects parties to act in good faith, this general principle cannot be used to compel a party to agree to something against their will where the contract terms are uncertain.
The general rule is that an agreement to negotiate is not enforceable. This is because the outcome is entirely dependent on the parties’ future consent. A court cannot step in and determine what the rental should be; doing so would amount to creating a new contract for the parties, which violates the fundamental principle of freedom of contract.
The legal maxim pacta sunt servanda (“agreements must be kept”) applies to agreements that have been concluded, not to negotiations that have yet to result in an agreement.
The Exception: Deadlock-Breaking Mechanisms
The crucial exception to this rule is the presence of a “deadlock-breaking mechanism”, a specific provision in the contract that dictates what happens if the parties cannot agree. If such a mechanism exists, the duty to negotiate becomes legally meaningful and enforceable because there is a certain path to resolution.
Examples of effective deadlock-breaking mechanisms include:
| Feature | Enforceable Clause (Good Example) | Unenforceable Clause (Risky Example) |
| Renewal Rental | “The monthly rental shall be determined by agreement, failing which it shall be determined by an independent property valuer appointed by the President of the South African Institute of Valuers.” | “The monthly rental for the renewal period shall be agreed upon between the Landlord and Tenant at the time of renewal.” |
| Deadlock Mechanism | Present and clear (third-party determination). | Absent. Relies solely on future agreement. |
| Legal Certainty | High. A final rental can be reached even if parties disagree. | Low. If parties disagree, the clause fails and the option is void. |
The Roazar Case: How the Supreme Court of Appeal Ruled
The Supreme Court of Appeal (SCA) in Roazar CC v The Falls Supermarket CC provided a clear and definitive ruling on this issue, confirming that a landlord is not obliged to renew a lease where the renewal clause lacks a deadlock-breaking mechanism. The court upheld the landlord’s eviction application, reinforcing the principle that courts will not force parties into a contract.
Background
The Falls Supermarket (the tenant) leased premises from Roazar CC (the landlord) to operate a Spar. The lease contained a renewal clause stating that the renewal period was “to be negotiated and discussed.” When the initial lease was about to expire, the tenant indicated its wish to renew. However, negotiations stalled, partly due to a separate dispute over alleged arrear rentals.
Roazar argued that since no renewal agreement was reached, the lease reverted to month-to-month and could be terminated on one month’s notice. When the tenant refused to vacate, Roazar applied for an eviction order. The tenant countered that the landlord had a contractual duty to negotiate in good faith and could not terminate until those negotiations had taken place.
The Court’s Decisive Ruling
The SCA sided firmly with the landlord. The clause provided no deadlock-breaking mechanism; it merely stated that if negotiations failed, the lease would continue on a month-to-month basis terminable on notice. That was the only agreed outcome in the event of a deadlock.
The court noted the practical difficulties of enforcing a vague duty to negotiate: How long must the parties negotiate? What criteria would a court use to assess “good faith”? The court concluded it was not its role to oversee negotiations or create contract terms for the parties.
Significantly, the court also rejected the argument that the constitutional value of ubuntu (humaneness and fairness) could be used to force a landlord to maintain a relationship with a tenant against its will. In purely commercial transactions, ubuntu cannot be used to import a term the parties never intended.
Practical Steps Before Signing or Renewing a Lease
In our 51 years of practice, we have consistently advised clients to take the following steps to ensure that a right to renew is secure and legally enforceable:
Conclusion: Certainty Is King in Contract Law
The key lesson from the courts is that certainty is paramount in contract law. While good faith negotiation is an important part of our legal fabric, it cannot cure a fatally flawed contract clause. An “agreement to agree” is a gamble that tenants simply cannot afford to take.
By ensuring your lease contains a clear, unambiguous renewal clause with a robust deadlock-breaking mechanism, you transform a hopeful expectation into a legally enforceable right — protecting your investment, securing your business’s future, and giving you the peace of mind that comes from a well-drafted contract.
At BMA, we have spent over 51 years helping clients navigate the complexities of commercial property law. Whether you are a landlord or a tenant, we are here to make sure your agreements protect your interests. Bee at ease — let us handle the details.
Frequently Asked Questions
What makes a lease renewal clause valid in South Africa?
A lease renewal clause is valid if it is certain. The essential terms — especially the rental for the new period — must be clearly stated or determinable through an agreed formula or deadlock-breaking mechanism, such as the appointment of an independent expert.
Can a landlord refuse to negotiate a lease renewal?
Yes. If the clause is merely an “agreement to agree” without a deadlock-breaking mechanism, a landlord can refuse to negotiate or agree to new terms. The court will not compel them to do so, as confirmed in the Roazar case.
Is an agreement to negotiate legally binding?
Generally, no. An agreement to negotiate is not a binding contract in itself because its terms are uncertain and depend on future consent. It only becomes enforceable if the original agreement contains a clear process for resolving any deadlock.
Can ubuntu force my landlord to renew my lease?
No. The SCA has confirmed that while ubuntu is a key constitutional value, it cannot be used to import a term into a commercial contract that the parties never intended, nor to override clear contractual provisions allowing termination.
What happens if my lease expires during renewal negotiations?
If your lease expires with no new agreement signed, your occupation may revert to month-to-month depending on the original lease terms — as in Roazar, which allowed the landlord to terminate on one month’s notice even while discussions were ongoing.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult a qualified attorney for advice specific to your situation. Bregman Moodley Attorneys Inc is a registered law firm regulated by the Legal Practice Council.