Is A Term Undertaking To Agree Legally Enforceable?

In some agreements, most specifically lease agreement (as in a case in point) terms are usually included which state that specific terms shall be negotiated and agreed to between the parties (at a later stage). The question that the Supreme Court Appeal was faced with was whether the specific performance of such a term (to agree) is possible and if so, whether tacit terms flowing from there are similarly enforceable?

Shepherd Real Estate Investments (Pty) Ltd v Roux Le Roux Motors CC (1318/2018) [2019] ZASCA 178

The facts of the case and issues are briefly as follows:

The agreement was concluded on 7 November 2007 between Shepherd Industrial Commercial Real Estate CC (Shepherd Industrial) and the respondent, Roux Le Roux Motors CC, pursuant to which, the former let to the latter, a commercial property situated at the corner of Jan van Riebeek Drive and Wamkelekile Street, Paarl (the property) for the purpose of conducting the business of a petrol station. The commencement date of the lease was 1 December 2007. It was to endure for an initial term of five years, with a renewal period of '5 plus 5 years'. The rental at commencement was R 18 000 per month, escalating at 8 per cent per annum over the initial term.

Clause 6 of the lease agreement, headed 'Renewal Period', provided:

'The Tenant shall have the option to...