An agreement to negotiate a contract or further terms of a new contract in the future that is vague, illusory or unacceptably uncertain will not be enforceable in South African Law. For example, a promise in a purchase of land contract stating that should the purchase of land not be realised, the purchaser and seller will negotiate and conclude a lease agreement in respect of the land may be too vague and uncertain. This may be despite the intention of the parties for it to be a binding legal obligation to which the parties should be held.
According to South African case law, where the parties agreed that they would enter into an agreement ''to be negotiated between the parties in good faith'' or where the agreement states that certain terms and conditions will be determined by a third independent party, such agreement to negotiate may be enforced by our courts. As example, in the case of Letaba Sawmills (Pty) Ltd. v Majovi (Pty) Ltd. the rental of a future lease agreement to be negotiated between the parties in good faith was to be determined by arbitrators, obliged to take into consideration the limits of market related prices for property rental payable.
Beware that should your agreement to negotiate a contract not be supported by a deadlockbreaking mechanism, such as the final decisions of an arbitrator, your agreement to negotiate may only be an agreement to disagree and not be enforceable in law.