ENGINEERING, MANAGEMENT AND

SOCIETY II

CIE:522, EGM 502

Industrial legal Aspects

Lecture Eleven
Definition of a Contract

 A contract may be defined simply as a legally binding

agreement.
 Alternatively, it may be defined as a promise or set of
promises which the law will enforce.
 All contracts are agreements – but not all agreements are
contracts
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Elements of a Contract

1. Agreement
2. Intention
3. Consideration
4. Capacity
5. Consent
6. Legality of form
7. Legality of purpose

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Definition of a Contract
Agreement is usually reached by a process of negotiation, which
will culminate in one party (called the offeror) making an offer
which the other party (called the offeree) accepts.
An important requirement of a contract is that: the terms must be
certain.

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The Offer : definition
Once an offer bas been accepted the parties will be bound by the terms of the
contract, as long as all the essential elements of a contract are present.
It is therefore necessary to know at what point in the negotiations the parties are
legally bound, so the process must be analysed in order to determine when an
offer was made and when it was accepted.
An offer, capable of being converted into an agreement by acceptance, must
consist of a definite promise to be bound provided that certain specified terms
are accepted"
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The Offer : definition
An offer is a statement by one party of a willingness to
enter into a contract on stated terms.
An offer has to be communicated to the offeree:

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Distinction between an offer and an invitation to treat

An invitation to treat is simply an expression of

willingness to enter into negotiations which may lead to
the conclusion of a contract.

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Common types of invitations to treat:
 Display of Goods
 Advertisements
 Auctions
 Tenders

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Methods of terminating an Offer

If the offer is revoked (withdrawn) before acceptance:

If the offer is rejected or a counter offer is made
On the lapse of set time or reasonable time
On the failure of a contingent condition precedent

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Parties to a contract

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 Consideration
Consideration is defined as, “Some right, interest, profit, or benefit accruing to one
party, or some forbearance, detriment, loss or responsibility given, suffered or
undertaken by the other” (per Lush J in Currie v Misa).
Consideration is needed for the formation and variation of a contract.
There are three forms of consideration:
Executory consideration: Consideration is called executory where there is an
exchange of promises to perform acts in the future. For example, a bilateral
contract for the sale of goods wherein A promises to deliver goods to B at a future
date and B promises to pay on delivery.
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Consideration cont’
 Executed consideration: This arises in unilateral contracts where the act of acceptance is
also the consideration.
 If one party makes a promise in exchange for an act by the other party, when that act is
completed, it is executed consideration.
 However, this label is also used to describe the situation where, in a bilateral contract, one
party has performed as per his promise – in the above example it would be when A delivers
the good to B.
 Past consideration: Consideration that comes before the promise.
 If one party voluntarily performs an act and the other party then makes a promise, the
consideration for the promise is said to be in the past. Past consideration is not a valid form
of consideration. 12
Capacity

Persons entering into a contract must have the legal

ability to do so
Exceptions:
◦ Under 18s
◦ Persons under the influence of drugs or alcohol
◦ Bankruptcy
◦ Company director who is acting “ultra vires”
◦ Diplomat can claim diplomatic immunity

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Consent
The contract must be made voluntarily
It must not be entered into under duress
Both parties must agree to what is in the contract

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Legality of form

 This refers to the manner in which the contract is drawn up, e.g. oral, in

writing or implied by conduct

 Certain contracts must be in writing, e.g. sale of property, insurance policy

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Legality of purpose

The contract must not break any laws

Legally binding contracts must be for legal transactions
Agreements to commit a crime will not be upheld in
court

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Terminating a Contract

A contract can be terminated or ended in any one of four

ways:
1. Performance
2. Agreement
3. Frustration
4. Breach

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Mechanisms of Dispute Resolution
Apart from the normal legal process, emphasis here is on the alternative dispute
resolution mechanisms generally available in construction contracts.
Such mechanisms could include
 Negotiation
 Mediation
 Conciliation
 Arbitration

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Formalities

The general rule is that a contract may be made in any form: in

writing, orally or by conduct.

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 Contracts which must be made in writing
Contracts for the sale or other disposition of land, regulated consumer credit
agreements.
These contracts must be made in writing and that all the terms of the contract
must be included in the written agreement.
Further, the contract must be signed by the debtor and by or on behalf of the
creditor.
If the contract is not 'properly executed', then it will not be enforceable against
the debtor

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Contracts which must be evidenced in writing
In these cases, it is not necessary for the actual contract to be in writing, but
there must be written evidence of the contract otherwise it will not be
enforceable by the courts.

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Contracts which must be made by deed
Contracts witch are nor supported by valuable consideration (ex : a
promise of gift, the lease of land for more than three years).
A deed is a document which (a) bears the word ‘deed’, (b) is signed by the
maker of the deed, (c) is attested by at least one witness and (d) is delivered
i.e. some conduct that shows that the person executing the deed intends to
be bound by it.

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What is a Company?
A company may be defined as an association where two or more
persons come together for a common business goal.

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Benefits of registering or incorporating a company
1. Company legal status
2. A company exclusive rights to the use of the company name
3. Shareholders the pride of being honest entrepreneurs
4. A company has the right to enter with confidence into the competitive
business arena using its corporate identity
5. Accords shareholders the opportunity to contribute to national economic
development.

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Types of Companies obtainable in Zambia

1. Private Limited Companies

2. Public Limited Companies (PLC).

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 Private Limited Company

This is a registered company formed and owned by individuals other

than the Public.
Its name will always end with the word "limited
 The minimum number of Directors and Shareholders required for a
private company is two (2).
 Private Companies do not invite the public to buy their shares

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Public Limited Company
A Public Limited Company states in its articles of association that it is a"
Public Limited Company
Its name always ends with the words "Public Limited Company" mostly
abbreviated as "PLC".
It has a share capital and its authorised minimum capital is K1,000,000.00.
It has the capacity of entering into any business activity unless restricted by
its articles.
This type of Company can invite the public to buy its shares.
 It can therefore list its shares on the Stock Exchange.
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How to Incorporate a Company in Zambia

The first step towards incorporating or registering a company is to complete a Name

Clearance Form requesting for a particular proposed name to be cleared.
This service carries a fee of K86
Then registration begins by filling forms
Each year you have to submit the annual returns

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Minimum Authorized Share Capital for the various types of Companies?
K15,000
Private Company -Minimum Nominal Capital
1

2. Public Company - Minimum Capital K1,000,000

3. Bureau de Change - Minimum Capital K250,000

Financial Institution K500,000

Insurance Companies K1,000,000
4.
Insurance Broker K520,000
Re-insurance Company K5,000,000

Local Bank - Nominal Capital K104,000,000

5.
Foreign Bank - Nominal Capital K520,000,000

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What is an Annual Return?
This is a statutory form that every company must file with the Registrar within three
months after the end of the financial year.
The Annual Return should state the position of the company as at the date at which the
return was made or, if there was an annual general meeting, as at the date of such general
meeting.
Annual Returns filed by a public company should be accompanied by a balance sheet, profit
and loss account, group accounts, director’s reports and auditor’s report certified by directors
and the company secretary.
Annual Returns are important as they show that a company is still legally alive and
operational.
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ZRA Tax

Turnover Tax
Presumptive tax
Withholding Tax
Income Tax
Value Added Tax
Pay as you Earn

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Local Authority licenses
Fire Certificate
Business Levy
Health permit
Note: other type of licenses are dependant on the
kind of business one is dealing with

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Business and industry regulation laws in Zambia
The Business Regulatory Review Agency (BRRA) was established through an Act of
Parliament, the Business Regulatory Act, No. 3 of 2014 and became fully operational in
January 2016.
The mandate of BRRA is to review and approve proposed policies and laws that affect
business activity
The Business Regulatory Act applies to the regulation of business activity subject to the
terms and conditions for applying and issuing any license, permit, certificate or authorisation
under the relevant law regulating that business

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Registration of a construction company requirement

1. Register with Pacra – Company name

2. Register with NCC
 ZRA certificate
 Workers Compensation
 Napsa
 Bank account

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Labour Law
Mediates the relationship between workers (employees), employers, trade unions
and the government.
Collective labour law relates to the tripartite relationship between employee,
employer and union.
Individual labour law concerns employees' rights at work and through the
contract for work.
Employment standards are social norms (in some cases also technical standards)
for the minimum socially acceptable conditions under which employees or
contractors are allowed to work
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Purpose of Labour Laws
labour legislations contract of employment termination of the contract
working hours paid leave maternity leave and maternity protection other leave
entitlements minimum age and protection of young workers equality pay issues
worker’s representation in enterprise
trade union and employers association regulation freedom of association
registration of trade unions collective bargaining and agreements

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Purpose of Labour Laws cont’
collective labour disputes commencement of a dispute conciliation
arbitration
strike and lock-outs proceedings of strikes and lock-outs illegal
strikes and lock-outs settlement of individual labour disputes labour
courts

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Sources of employment law
1. The constitution of Republic Zambia
2. The employment Act Code No. 3 of 2019
3. The Industrial and Labour Relation Act , capture 269 volume 15
of the laws of Zambia
4. Common law
5. Judicial Precedent
6. International law

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THANK YOU

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