Professional Documents
Culture Documents
CONTRACT OF SALE
4
In Kovi v Ashanti Goldfields Zimbabwe Ltd & Another, the court
highlighted the following:
From the above, a contract of sale can be defined as an agreement with all
the essential elements of a valid contract where a seller undertakes to
exchange property with the purchaser for an agreed price.
A few key issues are worth noting. First, once the seller and the purchaser
agree on the above three essentials of a contract of sale, a contract of sale
comes into existence or becomes perfecta. If the contract is subject to
1
(1883) 3 App, Cas 309. See also Clarinhan Brothers v Wessels Trustee 1927 AD 27 at 282 and H v L
2
R.H Christie, Business Law in Zimbabwe, Juta & Co. Ltd (1998 reprinted 2012), 141.
3
General Principles of Commercial Law, Juta & Co. Ltd (2010) Seventh edition 151.
4
2007 (2) ZLR 354 (H).
Second, the payment of the purchase price and delivery are not essential
elements of an agreement of sale. They are duties that parties have to
perform under a contract of sale.
A contract of sale may be made orally, without it being put in writing. The
parties may agree, however, that the oral contract will not be legally
binding until it is drawn up in a written agreement. Where the parties to an
oral agreement mention that the contract should be reduced to writing, the
question is whether the parties intended that the contract would not be
binding until the written agreement had been signed or simply that the
contract should be binding immediately but should subsequently be put in
writing to facilitate proof of the terms of the contract. The onus of proof is
on the party who asserts that an oral contract was not intended to be
binding until reduced to writing and signed. In the present case it was clear
that the parties had intended the oral contract to be binding and its
reduction to writing was intended only to aid the proof of the terms of the
contract.8
5
Like in Muranda v Todzaniso & Another 1988 (2) ZLR 325, X-Trend-a-Home (Pvt) Ltd v Hoselaw
Investments (Pvt) Ltd 2000 (2) 348 (S) and Lincoln Investments (Pvt) Ltd v Sarbah 2000 (2) 297 (S). For
a further discussion of how Zimbabwean courts have dealt with conditions see I Maja, The Law of
Contract in Zimbabwe, (2015) The Maja Foundation, 86-90.
6
Kovi v Ashanti Goldfields Zimbabwe Ltd & Another 2007 (2) ZLR 354 (H).
7
Mhute v Chifamba 1999 (2) ZLR 155.
8
1999 (2) ZLR 155.
9
See Juta & Co Ltd v Rorich 1924 TPD 730 where the court held that one of the essentials of a
contract of sale that distinguishes it from a contract of agency is that there be an agreement by one
party to sell and the other to buy.
10
See Margate Estate v Moore 1943 TPD 54 & Commissioner of Inland Revenue v Saner 1927 TPD
162
It is also important to note that the agreement should satisfy the following
requirements:
a) The consent must be rational and should be given by a person with
the mental capacity to do so. It therefore follows that consent cannot
exist in cases of intoxication or insanity.
b) The consent must be given freely and voluntarily. It should not be
induced by fraud, duress or undue influence.11
c) The parties must mutually communicate their intention to buy and
sale.
A number of legal principles are worth noting concerning the merx. First,
the merx must be clearly defined and must be ascertainable. Put differently,
the property sold must be defined with sufficient clarity and certainty that it
must be clear what exactly is being sold.13 Whether or not a merx is clearly
defined is usually a question of interpretation by the courts and depends on
the circumstances of each case. In Hilliard & Wenborne v Tabor Frost,14 the
addition of etc to the description of the property was held to be acceptable.
A sale of ‘up to two hundred head of breeding stock at eighty dollars per
head’ was enforced in Clapham v Struckel.15
Second, the law permits the sale of property not yet in existence but
expected to come into existence at a future date.16 Such property can either
be made with specifications or without specification. Property made without
specifications is referred to as a ‘spes’ or hope of a thing where it is not clear
whether the thing will come into existence and if so, the quality and quantity
is unknown.
13
See Munro v John & Fletcher 1916 SR 57.
14
1938 SR 89.
15
1979 RLR 521.
16
Rhodesia Wire Industries (pvt) Ltd v A & J Constructions 1964 RLR 456.
Fourth, the law allows the sale of another person’s property20 provided the
seller delivers to the buyer and guarantees against eviction or pays the
buyer damages if he fails to deliver and or guarantee against eviction.21
17
Scrutton v Ehrlich 1908 TS 300.
18
Theron Ltd v Gross 1929 CPD 345.
19
Inhambane Oil and Mineral Development Syndicate Ltd v Mears and Ford (1906) 23 SC 250. Note
that according to Stansfeld v Kuhn 1940 NPD 238 246-7, partial destruction of the merx without the
fault of either party and unknown to both parties, cannot invalidate an agreement of sale. What will
be affected is the purchase price that will be reduced to account for the partial destruction of the
merx.
20
Frye’s (Pty) Ltd v Kies 1957 (3) SA 575 (A) 581.
21
See Magwenzi v Chamunorwa and Another 1995 (2) ZLR 522 (S).
22
1998 (1) ZLR 541.
23
See Heiberg v Jeffares 1936 SR 6.
24
See Erasmus v Moore 1943 TPD 54.
25
See Calamas v R 1949 SR 22 26.
26
See Cassimjee v Cassimjee 1947 (3) SA 701.
27
1967 RLR 253.
Finally, at common law parties have the freedom to fix the price as high or
low as they wish and to determine how the price ought to be paid. This is
however subject to two exceptions. First, there may be price-control
legislation like the Control of Goods Act (Chapter 14:05) that can regulate
the pricing of certain categories of goods. Second, the common law
doctrine of laesio enormis allowed for rescission of contract if the price was
less than half or more than double the value of the merx. However, section
8 of the General Law Amendment Act [Chapter 8:07] abolished doctrine.
Despite the abolition, Walter v Lamb31 held that an extreme disproportion
between price and value might entitle one party to rescind on the basis of
implied fraud.
A. Passage of risk
Risk relates to the destruction, loss or damage of the merx as well as the
right to any potential benefit or profit accruing to the merx. Under Roman-
Dutch law risk generally passes to the purchaser when the contract of sale is
concluded (or is perfecta) or in contracts involving sale of unascertained
property, as soon as property of the contract description has been
1923 SR 130.
28
29
1920 CPD 333.
30
1972 (2) RLR 221 (A) 223.
31
1925 SR 81 90.
The rationale for the passage of risk rule is that there is often a delay
between the of concluding a contract and the time delivery to the
purchaser usually occurs.
B. Passage of ownership
Ownership refers to the sum total of rights over a thing. It includes the
rights of possession, use, enjoyment and disposal of the thing. Under
Roman Dutch Law, ownership of property sold under a contract of sale does
not automatically pass at the conclusion of the contract.37 At this stage the
rights by parties are personal rights. The following should be satisfied
before ownership is passed:
32
A handbook on commercial law in Zimbabwe (2002) 38.
33
Nel v Bornman 1968 (1) SA 4988
34
Schultz v Morton & Co 1918 TPD 343.
35
Page v Blieden & Kaplan 1916 TPD 606.
36
Fitwell Clothing v Quorn Hotel 1966 RLR 323 (A).
37
O’Callaghan’s Assignees v Cavanagh (1882) 2 SC 122
38
Havenga et al 157.
39
1920 AD 218.
40
R v Kotze 1936 SR 130 and Leal & Co v Williams 1906 TS 554.
The process of delivery is a legal concept that depends on the nature of the
property being sold. For instance, delivery of immovable property is in the
form of registration of a Deed of Transfer in the Deeds Office in the buyer’s
name.43 The buyer becomes a registered owner in terms of the Deeds
Registries Act [Chapter 20:05].
i) Symbolic delivery – the merx itself is not delivered but the seller
delivers some symbol of the merx which allows the purchaser to take
the delivery.44 For example, handing over the keys of the warehouse
where the merx is stored or handing over of a bill of lading.
ii) Delivery with the long hand (traditio longa manu) – this normally
occurs where actual delivery is impossible, due to the weight , bulk
or other special circumstances. The seller usually gives he buyer
effective control of the merx by pointing it out and authorizing the
buyer to effectively take possession of it at his own convenience.45
41
Ex Parte Smith 1955 SR 292.
42
Stein v Stein 1919 EDL 99.
43
Breytenbach v Van Wijk 1923 AD 541 547.
44
See Land Lease Finance (Private) Limited v C 1976 (4) SA 464.
45
Matabeleland Trading Association Limited v Bikkers 1927 SR 78
Two things are worth noting. First, if the buyer fails to take delivery the law
regards the buyer to be in mora. The seller will only be liable for gross
negligence (but not ordinary negligence) and intentional destruction of the
merx. Whenever there is extensive damage, Frumer v Maitland49 establishes
that the buyer is entitled to cancel the agreement and claim for damages. In
Schreiner JA’s words:
46
O’Callaghan’s Assignees v Cavanagh (1882) 2 SC 122.
47
Hearn & Co (Pty) Ltd v Bleiman 1950 (3) SA 617 (C).
48
See Exparte Smith 1965/6 SR 92; R v Burrell 1950 SR 278 and Credit Corporation of Rhodesia
Limited v Fifth Avenue Investments (Pvt) Ltd 1960 (4) SA 704 (SR) 708.
49
1954 (3) SA 840 843.
Second, if the seller fails to deliver on time the law regards the seller to be
in mora. The seller is therefore be liable for ordinary negligence, gross
negligence and intentional destruction of the merx.
At least seven legal principles are worth noting regarding delivery. First, the
seller must deliver the actual property sold as described in the agreement
of sale. If the seller fails to deliver, the buyer is entitled to approach the
courts and seek either an order for specific performance or claim damages
caused by non-delivery or delay in delivery. 50 The normal measure of
damages is the difference between the price and the value (the ruling
market price) on the date delivery ought to have been made.51
Second, the seller is obliged to deliver the merx within the time stipulated
in the agreement. However, if no time is stipulated, delivery must be
effected within a reasonable time. In cases where the time for delivery is not
stipulated, it is usually advisable for the buyer to place the seller in mora
through a letter of demand before instituting legal proceedings.52
Third, the seller must deliver the merx at the place stipulated in the
agreement of sale. The place of deliver may expressly agreed by the parties
or may be implied from trade usage. However, if the place of delivery is not
expressly provided for in the agreement of sale, the general rule is that
unascertained goods are to be delivered at the seller’s place of business or
residence;53 ascertained goods are to be delivered at the place they are
50
See Rhodesia Cold Storage & Trading Co Limited v Liquidator Beira Cold Storage Limited (1905) 2
Buch AC 253
51
see Novick v Benjamin 1972 (2) SA 842 (A).
52
See Breytenbach v Van Wijk 1023 AD 541.
53
Voet 46 3 12.
Fourth, the seller should deliver the merx using the method stipulated in
the agreement of sale. The time, method and place of delivery are usually
governed by the contract of sale between the parties. If the seller fails to
deliver in terms of the agreement of sale, the buyer is entitled to refuse to
accept delivery, seek an order compelling proper delivery and to either
cancel the agreement or sue for damages.58 Damages for failing to deliver
the merx are usually calculated using the market price of similar goods and
are calculated from the date delivery was due. 59 The essence of these
contractual damages is to put the innocent party to the position he would
have been had delivery been properly effected.60 If there is negligence in
the form of inordinate delay, delictual damages can be claimed.61
Fifth, it is permissible in a cash sale for a seller to refuse to deliver the merx
until payment has been made.62 This is called the principle of reciprocity. In
a cash or mortgage sale of land however, an acceptable guarantee suffices
as payment.63 Sixth, the seller’s duty to deliver the merx impliedly includes a
duty to deliver its appurtenances and accessories64 together with its fruits
accrued since the date of sale.65
54
Lewis v Elske 1921 AD 36 37.
55
Goldblatt v Merwe (1902) 19 SC 373.
56
Nel v South African Railways & Harbours 1924 AD 30.
57
See Stephen Fraser & Co v Clydesdale Transvaal Collieries Limited 1903 TH 121.
58
De Villiers v Maister and Shagam (1910) 27 SC 73.
59
See Slater & Son v deJongh 1922 TPD 327; Broughton v Darris 1921 TPD 409 and Hersman v
Shapiro 1926 TPD 567.
60
Landau v City Auction Mart 1940 AD 284.
61
See Young v Land Values Limited 1924 WLD 216.
62
Lendalease Finance (Pty) Ltd v Corporation de Marcadeo Agricola 1976 (4) SA 464 (A).
63
For a discussion, see Linton v Corser 1952 (3) SA 685 (A) 693-4; Makoni v Khatso HH-2-97; Hoffmann
v Bekker 1918 AD 366 and Botha v Que Que Municipality 1973 (1) RLR 118 or 1973 (2) SA 754.
64
See Scheepers v Robbertse 1973 (2) SA 508 (N) & Falch v Wessels 1983 (4) SA 172 (T).
65
Voet 19 1 8.
3. The seller has the duty to guarantee the buyer against eviction
Under common law, all contracts of sale have an implied warranty against
eviction (vacuo possession).69 Eviction is generally interpreted to mean the
total or partial loss of possession of the property consequent on the third
party’s right.70 It includes the seller’s inability to obtain possession from a 3rd
party. Eviction includes voluntary surrender of the goods to the owner who
has an incontestable claim to the goods. Eviction shouldn’t be due to faults,
acts or negligence of the purchaser.
Through this implied term, the seller undertakes that the buyer will not be
disturbed in his enjoyment and possession of the merx by another person
with a better title to the merx than that of the buyer. Put differently, where
the purchaser is disturbed in his possession and enjoyment of the merx by
someone claiming legal title to it, he should notify the seller. The notice
does not need to be in writing. Upon receiving such notice, the seller has an
obligation to come to the purchaser’s assistance after being notified by the
purchaser. If the seller fails to come to the purchaser’s assistance, the seller
is said to be in breach of the warranty against eviction. The buyer can either
enforce the contract and claim damages or cancel the contract of sale and
claim a return of the purchase price.71
66
Droomer v Cohen and Son 1921 OPD 66.
67
Nugget Footwear Mfrs Ltd v Pogson & Sons 1931 EDL 161.
68
See Plywood Products V Tropical Commercial & Industrial Limited 1955 SR 58.
69
York & Co v Jones 1961 R & N 490 494 or 1962 (1) SA 65 66-67 held that ‘… duty … to guarantee
the purchaser against eviction, i.e. subsequent dispossession, total or partial, by third parties claiming a
title superior to that which the purchaser has obtained from the seller.’
70
See Louis Botha Motors v James & Slabbert Motors (Pty) Ltd 1983 (3) SA 793 (A).
71
See General Finance Company (Pvt) Limited v Robertson 1980 (4) SA 122.
One issue that Zimbabwean courts have dealt with concerns double sales
where the seller cannot guarantee more than one buyer vacant possession.
The general rule is that where ownership has not passed, the first sale
should be regarded as a valid sale.77 In Chingwaru v Chirinda and Others,78
a first sale was held valid because the first buyer had occupied the land and
made some improvements. The second buyer had done very little to
possess the land or assert his right to land.
However, there are times when special circumstances exist from the facts
that can cause a court to declare the second, third or subsequent sale valid
ahead of the first sale. For example, in Guga v Moyo and Others,79 the court
deemed a second sale valid because at least three special circumstances
existed. First, the second buyer had made improvements on the house in
good faith and stood to substantially lose if the property was awarded to
the first buyer. Second, the first buyer had failed to register a caveat on the
72
Marimo v Brancos & Anor 2002 (2) ZLR 288 (H).
73
2000 (2) ZLR 41 (H).
74
Moyo v Jani 1985 (1) ZLR 112.
75
See Weber and Pretorius v Gavronsky Brothers 1920 AD 48 51-52.
76
Naested V Kia Ora Syndicate 1935 SR 117 124-125.
77
Mwayipaida Family Trust v Madoroba & Ors 2004 (1) ZLR 439 (S)
78
HH-152-91.
79
2000 (2) ZLR 458 (SC).
There are three further principles worth noting about double sales. First,
where transfer has passed to the first buyer, the first buyer acquires an
indefeasible right and the second or subsequent buyer’s remedy will be an
action against the seller. Second, if transfer has been passed to a bona fide
second or subsequent buyer, the said buyer acquires an indefeasible right.
The first buyer’s remedy will be a claim for damages from the seller. Third, if
the second or subsequent buyer is mala fide, the first buyer can claim the
property from the second and subsequent buyer who in turn can claim for
damages from the seller.81
80
1991 (2) ZLR 125 (H).
81
See Chansa v Leeds and Another HH-33-88.
82
Dibley v Furter 1951 (4) SA 73.
83
Knight v Hemming 1958 R & N 555 (FS) 559 or 1959 (1) SA 288 290.
84
Holmedene Brickworks (Pty) Ltd v Roberts Construction Co. Ltd 1977 (3) SA 670 (A).
85
Dibley v Furter 1951 (4) SA 73.
86
Rattham and Sons Ltd v Industrial Caterers Limited 1951 SR 9.
87
Muller v Hobbs (1904) 21 SC 669.
88
See Mackeurtan on Sale of Goods (5th Edition) paras 7 1 4-6.
89
Erasmus v Russell’s Executor 1904 TS 365.
90
See Reed Brothers v Bosch 1914 TPD 578.
91
1984 (2) ZLR 151 (S).
92
Deutschmann v Graham 1912 EDL 214.
93
Seboko v Soil 1949 (3) SA 337.
However, a voetstoots clause does not exempt the seller from liability for
latent defects in the following circumstances:
a. Where the seller knew of the defect and deliberately chose not to
disclose the defect at the time of sale, the seller will be held liable. Elston
v Dicker96 holds that in such circumstances, the seller is held liable for
latent defects even in the presence of a voetstoots clause on the basis of
fraudulent non-disclosure.
b. A voetstoots clause does not exempt the seller from liability for a
fraudulent or innocent misrepresentation unless parties agree
otherwise.97
c. A voetstoots clause does not limit the liability of a seller whose contract
falls within the ambit of the Consumer Contracts Act (Chapter 8:03).98
Section 2 of the Consumer Contracts Act essentially defines a consumer
contract as a contract for the sale or supply of movable goods or services
or both ‘in which the seller or supplier is dealing in the course of business
and the purchaser or user is not…’
e. A voetstoots clause does not limit the liability of a seller when a defect
manifests soon after the conclusion of a contract of sale. Such a defect is
deemed to have existed at the time of sale.100
4.3 Remedies available to the buyer where latent defects are found
There are two main remedies available to the buyer whenever latent defects
are found in the merx namely a) aedilitian actions and consequential
damages.
94
Claasens v Pretorius 1950 (1) SA 738 (O).
95
Estate Francis v Land Sales (Pty) Ltd & Ors 1940 NPD 441 461.
96
1995 (2) ZLR 375 (S). See also Matambo v Chakauya HB-23-92 & Truman v Leornard 1994 (4) SA 371.
97
Claasens v Pretorius 1950 (1) SA 738 (O) & Cockcroft v Baxter 1955 (4) SA 93 (C).
98
See section 4(1)(c) as read with the scheduled provision 1 of the Consumer Contracts Act.
99
Matambo v Chakauya HB-23-92.
100
See Norton v Johnston 1930 SR 93.
i. Actio Redhibitoria
This refers to rescission of contract coupled with restitution. At least five
legal issues are worth noting. First, the remedy is available if the buyer can
prove the following:
a. That the latent defect is so serious as to render the merx unfit for the
purpose for which it was bought103 or
b. That the buyer would not have bought the merx if he had known of
the latent defect.104
Action quanti minoris ia usually awarded if the merx fails to live up to the
material statement of quality made during negotiations112 or fails to live up
to a warranty. 113 Aestimatorian damages are normally measured by
assessing the difference between the purchase price and the market value
of the merx in its defective state at the time and the place where the merx
was when the defects were or ought to have been discovered. 114 Put
differently, the reduction in the purchase price is calculated by deducting
the value of the defective merx from the purchase price.
B. Consequential damages
This principle is equivalent to the Roman Law concept of actio empti or
actio ex empto. It provides that a buyer that suffers loss other than the
diminished value of the merx as a result of a latent defect is entitled to
damages as compensation for that loss in the following circumstances: