GREAT ZIMBABWE UNIVERSITY

ROBERT MUGABE SCHOOL OF EDUCATION

DEPARTMENT OF TEACHER DEVELOPMENT

TDSBS201 COMMERCIAL LAW MODULE

ADOPTED BY

MAIREVA C
 THE NATURE OF LAW

The meaning of Law

Law refers to the rules and regulations that govern human conduct or other societal relations and are
enforceable by the state. Bampton and Drury (1997) define law as, “that body of written rules
governing human conduct which is recognised as binding among those persons who constitute a
community or state, so that the rules will be enforced among those persons by appropriate
sanctions”. In other words, the law is a body of rules that prescribes, “what we must, what we may
and what we may not do” (Christie, 2003).
From these definitions, we can deduce that:
 The law is an instrument made to regulate human behaviour so as to achieve peace and
order in society
 The law is regarded as binding by the state
 A breach of the law attracts punishment in the form of imprisonment, a fine or
compensation associated with punishment.

The Purpose of Law

The traditional approach to the role and function of law is that it has four main purposes namely:

a. To do justice
The main purpose of the law is to preserve order and to do justice. In order to ensure that justice is
done then the law should try to implement the community’s feelings of what is right and wrong. In
fact, the concept of justice is fundamental in the general application of law in the society. If the law
is unjust, then members of the society at large can rebel against such law. Secondly, unjust laws are
economically unviable as they need expensive agencies of enforcement. For any law to serve the
ends of justice, then the law itself must be just. There are certain criteria which the law should
comply if it is considered just. It must be:
 Reasonable
 Of general application
 Applied equally
 Certain

Reasonable – awkward, arbitrary and senseless laws tend to be disobeyed. If the law expects those
to whom it applies to behave reasonably, then the law itself must be reasonable

Uniformity/Generality – for any law to be just, it is essential that the law should apply uniformly
to all people of the same class and circumstances. Thus, rules that apply to any given fact must be
applied consistently without regard to the personal whims of the person trying the case. This legal
requirement overlaps the legal need for equal treatment for all persons. Thus, law should have
general application to all people throughout the country.

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Authority – law should be derived from proper authority. In Zimbabwe, the main laws are made by
legislature of Zimbabwe but certain other statutory bodies, for example, the Municipality have the
legislative powers delegated to them.

Certainty – in order for the law to be just, it should be certain. Certainty is derived if the law is clear
and unambiguous and is known to everyone. In Zimbabwe, the general population is expected to
know of a law by publishing it in the official State organ, the Government Gazette. Since the law has
been published, no-one is permitted to argue that he did not in fact know the law. The legal maxim,
ignorantia juris neminem excusat (ignorance of law excuses no-one) will apply

b. To preserve peace and order

According to Hahlo and Kahn,
“the first and foremost purpose of law is to maintain peace and order in the community. Man must
live in society if he has to achieve his full development. Society, however, cannot exist without law, for
without rules of conduct there cannot be order and without order there cannot be peace and progress”.

The preservation of peace and order must be sought with due regard to justice and respect for
fundamental human rights. It is unacceptable for law to be justified solely by reference to ‘peace and
order’. Indeed, in the majority of cases, law must seek to attain peace and order by conforming to
acceptable notions of justice. A just law is more likely to be observed than an unjust one. An unjust
law invites disobedience and may ultimately lead to disorder.

c. To enforce morality
This purpose of the law is separate from that of promoting justice in one respect: justice is merely
one component of morality. There are other components of morality that the concept of justice
does not embrace and it is these other components that are covered here. Hart (1992:167-8)
describes the relationship between justice and morality as follows:
Justice constitutes one segment of morality primarily concerned not with individual conduct but with
the ways in which classes of individuals are treated. It is this which gives justice its special relevance
in the criticism of law and of other public or social institutions. It is the most public and the most
legal of the virtues. But principles of justice do not exhaust the idea of morality, and not all criticism
of law made on moral grounds is made in the name of justice. Laws may be condemned as morally
bad simply because they require men to do particular actions which morality forbids individuals to
do, or because they require men to abstain from doing those which are morally obligatory. It is
therefore necessary to characterize, in general terms, those principles, rules, and standards relating to
the conduct of individuals which belong to morality and make conduct morally obligatory.

Morality that is not covered by the concept of justice may be enforced by law. The main difficulty
remains that alluded to in the above passage, which is, establishing the nature of morality. The issue
here is whether or not law should be used to enforce morality, whatever the nature of morality. The
dominant view is that law has a legitimate purpose to enforce morality. Differences arise as to the

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extent of the use of law in this regard, it being clear that not every moral rule needs to be enforced
by law. Some have argued for a very minimal role for law, while others have gone for the maximum
possible under the legal system. The law must only enforce morality to prevent harm to others, but
where an immoral act harms no one but oneself, the law must not be involved. According to Devlin,
every society has a right to punish any kind of act that is grossly immoral. The test is not whether or
not the act in question harms any person. The test of what is grossly immoral is that of ‘the right-
minded man’ and his/her socially moral opinion. According to him, the reason for using law to
enforce morality is to achieve ‘social cohesion’ rather than endorse its degradation.

d. To protect the interests of the ruling class

According to the Marxist theory of law, law has one main purpose, to protect and promote the
interests of the ruling class. The theory is founded on the notion that it is the material conditions of
society that determine everything else in human institutions. As the ruling class owns the means of
economic production, it controls the base and uses the law to protect its interests. The ruling class
suppresses other classes in order to remain in control of the economic means of production. Under
capitalism, the ruling class suppresses and exploits the working class. In this regard, it deploys the
law as an instrument of suppression and exploitation.

Public Law and Private Law

The law is often distinguished between public and private law.
Public Law – regulates relations between individuals and the state. It affects the interests of the
public or the welfare of the state.
Private Law – refers to the law that regulates relations between ‘private persons’. It affects the
interests of individual citizens. This distinction is what lays the groundwork for distinction between
criminal and civil law.

Criminal Law
Is that division of the law which deals with cases brought usually against an accused person by the
state. A crime is a wrong punishable by the state, and the main object of criminal law is punishment
of the offender(s). Although a crime is a wrong against an individual, it is considered a wrong against
the state and it is the latter which has the prerogative of prosecuting. In exceptional cases, a private
prosecution is permitted. Criminal law, on the other hand, is an aspect of public law and relates to
conduct which the state considers with disapproval and which it seeks to control and/or involves
the enforcement of particular forms of behaviour, and the state, as the representative of society, acts
positively to ensure compliance.
 It aims at punishment by the state
 Action brought by the state
 Falls under public law
 Aims at prosecution
 Action is brought in a criminal law

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  The state must prove its case beyond any reasonable doubt, that is, 100% proof is required
before one is found guilty.
 The accused is either convicted or acquitted

Civil Law
A civil wrong is a wrong against another person, and the main object of civil law is to compensate
the victim for the harm suffered. Is the division of the law which deals with cases brought by
individuals – claimants or plaintiffs – against other people – defendants. Civil law is a form of
private law and involves the relationship between individual citizens. It is the legal mechanism
through which individuals can assert claims against others and have those rights adjudicated and
enforced. The purpose of civil law is to settle disputes between individuals and to provide remedies;
it is not concerned with punishment as such. The role of the state in relation to civil law is to
establish the general framework of legal rules and to provide the legal institutions to operate those
rights, but the activation of the civil law is strictly a matter for the individuals concerned. Contract,
tort and property law are generally aspects of civil law.
 It aims at compensation or redress
 Action brought about by individuals
 Falls under private law
 Aims at suing
 The defendant would be found to be liable or not
 The one defending is called defendant
 The aim is to compensate the injured party
 The balance of probabilities is considered in reaching a verdict. This means that a person
who may not be proved guilty beyond a reasonable doubt may still be found liable on a
balance of probabilities.

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 SOURCES OF LAW IN ZIMBABWE

1. Legislation
Legislation is also referred to as statutory law and covers those rules of law made directly by the
legislature. The legislative authorities of the state promulgate law in various statutory forms such as
Acts of Parliament, presidential decrees and ministerial regulations. In Zimbabwe, the legislative
authority is defined in Section 32 (1) of the Constitution as:

The legislative authority of Zimbabwe shall vest in the legislature which shall consist of the President
and Parliament.

Legislation by Parliament is embodied in a specialized legal document called an Act of Parliament. It

is only through these Acts that Parliament can make law. Statutes are the most authoritative/binding
source of law since their provisions override all provision of other laws that may be inconsistent
with the Acts of Parliament. Parliament is entitled to delegate its law-making powers to the
president, his/her ministers, local authorities and other state institutions. When these authorities
exercise this delegated power, they create what is called ‘delegated legislation’ (subsidiary legislation)
that is embodied in specialized legal documents called ‘statutory instruments’. Accordingly, there are
two recognized forms of legislation in Zimbabwe: Acts of Parliament and statutory instruments.

A statutory instrument has the same legal status as an Act of Parliament, except that it must be
consistent with the relevant Act of Parliament delegating the authority to make that statutory
instrument. When it is consistent with the relevant Act, it is said to be intra vires. The relevant Act is
called the ‘parent Act’ or the ‘enabling Act’. A statutory instrument that is inconsistent with the
enabling Act is said to be ultra vires and, for that reason, is void. For a statutory instrument to be intra
vires, it must meet two requirements. First, it must be within the powers of the delegated authority.
Second, it must not be grossly unreasonable.

Under Zimbabwean law, there is one piece of legislation that is supreme and overrides all other laws
to the contrary. This is the Constitution of Zimbabwe. The Constitution is itself an Act of
Parliament but it is superior to all other Acts of Parliament. Section 3 of the Constitution says that

‘[t]his Constitution shall be the supreme law of Zimbabwe and any law which is inconsistent with it
shall be void to the extent of the inconsistency’.

Accordingly, even an Act of Parliament that has been duly passed and signed into law by the
president is void if it is contrary to the Constitution. The reason why any Constitution is given this
special place in the hierarchy of laws is that, in principle, it is considered to be the word of the
people themselves. In other words, it is legislated by the people. In many democratic systems of
government, constitution-making involves the direct participation of the people through a

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referendum, thus reducing the role of the legislature to the mere formality of ‘enacting the
Constitution as approved by the people’.

2. Common Law
Manase and Madhuku (1997) define common law as that which is not derived from legislation and
which has been defined by the courts from case to case. The term ‘common law’ has been used in
three different senses, namely:
1. The law applicable to all people of a given society regardless of race, tribe and sex.
2. As part of a classification of legal systems which have the influence of the English common
law as distinct from those which have been termed civil law systems with a Roman law basis.
3. As that portion of the law which is not derived from legislation and emanates from a
collection of principles made by judges in the course of resolving issues brought before the
courts.

Under Zimbabwean and South African law, the common law is made up of two components of
non-statutory law, namely,
i. a collection of rules and principles made by judges in previous cases, and
ii. rules and principles contained in that portion of the body of law called ‘Roman Dutch law’
that is not reflected in any previous court decision.
The common law of Zimbabwe is based on judge-made law and what have been called judicial
precedents as well as Roman-Dutch Law. This was and is the situation in Zimbabwe. Section 89 of
the Constitution of Zimbabwe states:
Subject to the provisions of any law for the time being in force in Zimbabwe relating to the application of
African customary law, the law to be administered by the Supreme Court, the High Court and by any courts
in Zimbabwe subordinate to the High Court shall be the law in force in the Colony of the Cape of Good
Hope on 10th June, 1891, as modified by subsequent legislation having in Zimbabwe the force of law.

Brief History of Roman-Dutch Law

The law applying at the Cape of Good Hope on 10 June 1891 was largely based on Roman Dutch
law. Roman Dutch law is a fusion of Roman law and medieval Dutch law. This fusion occurred in
Holland (now part of the Netherlands) over a considerable period of time and was completed by the
end of the sixteenth century. The term ‘Roman Dutch law’ (Roomsch– Hollandsch Recht) appears
to have been coined by a seventeenth-century Dutch jurist, Simon Van Leeuwen, who used it as the
title of his main book, Roomsch Hollandsch Recht, which was published in 1664. Holland, whose
inhabitants were mainly tribes of Germanic origin, was conquered and occupied by the Romans
under the Emperor, Julius Caesar. Although this foreign occupation lasted for approximately five
hundred years, the people living in Holland were allowed to follow their own customs and way of
life, except in situations that the Romans regarded as either criminal or unacceptable. However, it
was inevitable that the culture and laws of the Romans would come to exert a great deal of influence
upon them. Roman Dutch law is a product of this fusion of Dutch customs and Roman law. By the
end of the sixteenth century, it was this special brand of law that was the law of Holland.

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In 1652, Jan van Riebeeck and his group of Dutch settlers took charge of the Cape of Good Hope.
They brought with them, and introduced, the law as it applied at that time in Holland, which was
Roman Dutch law, and all legislation in force at the time. Roman Dutch law was contained in
judicial decisions and published treatises on law written by Dutch jurists. From 1652 onwards, and
indeed up to this day, the nucleus of the law of Zimbabwe and South Africa, as well as that of
Botswana, Lesotho, Namibia and Swaziland, has remained Roman Dutch.

In 1795, the British took over the Cape from the Dutch. They did not replace Roman Dutch law,
but English law began to influence some legal aspects. By 10 June 1891, the law applicable at the
Cape was Roman Dutch law with substantial English law graftings. This is why Section 89 of the
Constitution of Zimbabwe refers to ‘the law in force in the colony of the Cape of Good Hope’ and
not ‘the Roman Dutch law in force’. Nevertheless, it is accurate to say that the basis of our common
law is Roman Dutch law as long as it is borne in mind that some considerable aspects of our
common law are derived from English law.

There are two main sources of Roman Dutch law: judicial decisions and the writings of the old
Dutch jurists (so-called legal treatises). Ever since 10 June 1891 there have been countless judicial
decisions explaining our common law. These and the pre-10 June 1891 judicial decisions, together
with the writings of the old Dutch jurists, constitute the common law of Zimbabwe. In ascertaining
the common law, one has to look for relevant judicial decisions. If there are none, one must turn to
the treatises of the old Dutch jurists. Of these men, there are several who set out the principles of
Roman Dutch law. The most important are
(i) Hugo Grotius (Hugo de Groot) (1583–1645), who wrote Inleiding;
(ii) Johannes Voet (1647–1713), who wrote Commentarius ad Pandectas (1698);
(iii) Simon van Leeuwen (1625–1682), who wrote Censura Forensis (1662) and Het Roomsch
Hollandsch Reich (1664);
(iv) Dionysius Godefried van der Keessel (1738–1816), who wrote Theses Selectae; and
(v) Johannes van der Linden (1756–1835), who wrote the Practical Handbook (1806).

Judicial Precedent/case law

In law, a precedent is a previous judicial decision which serves as a rule or guide for similar cases to
be heard in future. In other words, once a court has given a ruling concerning the legal position
applicable in a particular set of circumstances, this ruling becomes the law for the future. Other
courts will thereafter apply law as stated in the original case. This principle is known as the, “Stare
Decisis et non quita movere” doctrine which means, “stand by the decision and not disturb
any settled points”.

In Zimbabwe the decisions of the Superior Courts (High Court and Supreme Court) are binding on
all the lower courts. Where a case is applicable the lower courts do not have any discretion in this
respect. The decisions of the Supreme Court are binding on all other courts including the High

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Court. The Supreme Court is not bound to follow its own previous decisions although generally it
will only depart from its previous decisions if convinced that it was clearly wrong.

The doctrine of Stare Decisis is considered important in law because it:

Brings certainty, predictability, reliability, equality, uniformity and convenience in the application of
law

Advantages of the Doctrine of Stare Decisis

The doctrine of precedent has several advantages:
a. The advantages of a principle of stare decisis are many. It enables the citizen, if necessary with
the aid of practicing lawyers, to plan his private and professional activities with some degree
of assurance as to their legal effects;
b. it prevents the dislocation of rights, particularly contractual and proprietary ones, created in
the belief of an existing rule of law;
c. it cuts down the prospect of litigation, it keeps the weaker judge along right and rational
paths, drastically limiting the play allowed to partiality, caprice or prejudice, thereby not only
securing justice in the instance but also retaining public confidence in the judicial machine
through like being dealt with alike, and
d. it conserves the time of the courts and reduces the cost of law suits.
e. The idea of precedent suggests the resolution of questions today in the same manner as they
were decided yesterday either because it is convenient to do so or because it is intended to
profit from the accumulated wisdom of the past, or because one can assure certainty or for
honouring traditions. Adherence to precedents is characteristic of all developed systems.

Disadvantages of the Stare Decisis

a. Lack of adequate flexibility to change the law to meet changing times and situations.
b. Once a hierarchy of binding precedents has been established, a certain amount of rigidity
and inflexibility is introduced
c. It perpetuates bad law having been described as a petrified forest of erroneous notions.
d. A legal rule may be formulated before sufficient experiments have been gathered thus a bad
decision may divert the law into wrong paths.

Given that the common law develops through previous judicial decisions, some critical points need
to be made about this process. It is not everything in a previous case that is binding on a future
court. For a proposition to be binding, it must meet the following requirements:
• It should be a proposition of law and not a proposition of fact.
• The proposition must be part of the ratio decidendi (reason for the decision). The ratio decidendi
is the principle of law upon which the decision is based. However, in a judgment, it is
common for a judge to make statements of law in passing which do not form part of the
reason for the decision. A statement of such a nature is called obiter dictum [plural form being
obiter dicta]. The distinction between the ratio decidendi and obiter dictum is central to the

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 operation of the common law. If the other requirements are satisfied, it is only the ratio
decidendi that is binding on a future court, while an obiter dictum has no binding status but only
what may be termed ‘persuasive value’.
• There must be no material differences between the previous case and the case in question.
Where there is a material difference between the two cases, the previous case is
‘distinguished’ and the precedent made not binding. Whether or not a difference is ‘material’
depends upon the circumstances of each situation and no test can be formulated.

Ratio Decidendi
It means ‘reason for the decision’ or ‘material facts of the case plus the decision thereon’. According
to the principle, material facts are facts necessary to the decision of the case, the omission of which
could either lead to a different or no decision at all. At arriving at a certain decision, the judge would
have taken into consideration various other aspects such as the credibility of witnesses in addition to
the material facts. The sum total of the material used in reaching a certain decision is what is called
the ratio decidendi. It is the legal principle which led to the conclusion arrived at. In the case of Collet
v Priest (1931), Lord De Villiers said,
“whatever the reason for the decision maybe. It is the legal principle to be extracted from the case
which is binding and not necessarily the reasons for giving it”.

Bampton uses the following formula to illustrate the issue: in a certain case, the court find facts A, B
and C exist. The court concludes that fact A is immaterial and on the facts B and C the court
reaches the decision X. The two principles from this formula are:
a. In any future case in which facts A, B and C are present, the court must reach decision X
b. In any future case in which facts B and C are present the court must reach decision X as fact
A being considered immaterial does not affect the result of the decision

Obiter Dicta
It is a remark made passing which does not form part of the decision or judgment made in passing
in the course of a judgment which are incidental to the central issue and has no binding force but
may be used for guidance in a case where this particular questions crops up. It is just an observation
made concerning a fact or point. Such statements are not binding on future cases but may be
accorded great weight and respect by subsequent courts depending on the eminence of the judge
and the circumstances in which the remark was made.

An example of an obiter dictum in one case forming the basis of a judgment occurred in the case of
Petersen v Jacobs (1940) where judgment relied on an obiter dictum in the case of Jajbhay v Cassim
(1939). Obiter dicta are persuasive and the degree of persuasion will depend on the circumstances of
the case. If made by an eminent judge, they are most valuable as seasoned statements and they may
very well influence courts on a latter occasion.

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3. Custom
Customs are rules that become binding in the course of time through observance by the community
in question. They are not necessarily written down. In other words, the community becomes
accustomed to regulating its relationship in a particular way, with many of its members regarding
that particular way of doing things as legally binding.
There are two types of custom:
1. General custom, which applies in such fields of law as banking, commercial law,
international trade law and so on.
2. African customary law, which regulates the life of indigenous Africans.

General custom
As regards general custom, a custom is legally binding if it satisfies four requirements:
1. It is reasonable.
2. It is long-binding, i.e., clearly established.
3. It is uniformly observed.
4. It is certain.

A good illustration of the use of custom as a source of law is the case of Van Breda v Jacobs (1921)
Case Van Breda v Jacobs (1921)
Facts: there was a custom among fisherman at False Bay in the Cape. In terms of this custom, once
a party of fishermen had commenced netting a shoal of fish between Cape Point and Fish Hoek no
other group of fishermen could target the same shoal. The custom was known as ‘First-come, first
pull’. A group of fishermen broke the custom and the matter ended up before the courts. It became
necessary for the courts to make a determination whether or not this custom of the fisherman had
become law. The court proceeded to lay down the following requirements which must be met before a
custom can become law and in giving judgment in favour of the first party the court held that:
 The custom was reasonable, because it was designed to prevent disputes among fishermen
and was eminently fair to all parties
 It was well-established as it had been strictly observed for a period of 45 years
 It was uniformly observed and known by all fishermen in the Cape and thus was certain,
clear and consistent with the South African legislation.
The court concluded that, this custom had become law and the offending group of fishermen was
found liable and was ordered to pay the value of the catch they had intercepted in violation of the
custom.

African customary law

African customary law is a specialized form of law in Zimbabwe. Zimbabwe has what is termed a
dual legal system, being comprised of general law (common law and statute) and African customary
law. This means that in certain matters, there is a potential application of two different systems of
law with different legal consequences. A person may or may not be governed by African customary
law. Thus, X may be governed by customary law and thereby subjected to the consequences of that

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law while Y may be governed by general law with different consequences. This is what a dual legal
system entails. There are also matters over which some questions are governed by customary law
and not general law.

Section 89 of the Constitution of Zimbabwe sanctions the existence of this dual legal system.
Whether or not customary law applies in a particular case is governed by the provisions of the
Customary Law and Local Courts Act (Chapter 7:05). In terms of this Act, customary law applies
under two circumstances, namely:
1. Where the provisions of a relevant statute say so.
2. In the absence of a relevant statute, by applying the ‘choice of law formula’ in Section 3 of
the Act.

A statute may specifically provide that customary law shall apply in a given set of circumstances.

4. Authoritative Texts
Authoritative texts refer to writings by leading authorities in the field of law. As already noted,
treatises written by Roman Dutch jurists are authoritative sources of Roman Dutch law and are
treated as such in the courts. They are regarded as sources under the heading of common law
because of their special nature. Reference must also be made to modern textbooks and scholarly
articles or publications. Though these have no inherent authority of their own, they may be regarded
as very persuasive sources of law where neither legislation nor case law is in point, or where they are
explaining a legal point which is not clearly covered in legislation or case law. The persuasive nature
of an opinion of an author depends, inter alia, on the standing of the author in the field of law in
question, the reputation of the author among judges, the scholarly level of the piece of work
involved and the degree to which the nature of the presentation is convincing.

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 THE LAW-MAKING PROCESS

a. State organs and their powers

The starting point to understanding state organs and their powers is to recall an oft-quoted
statement from the opening paragraphs of the 1776 American Declaration of Independence:

We hold these truths to be self evident, that all men are created equal, that they are endowed by their
creator with certain inalienable rights, that among these are life, liberty and the pursuit of happiness.
That to secure these rights, governments are instituted among men, deriving their just powers from the
consent of the governed, that … it is the right of the people … to institute new government, laying its
foundation on such principles, and organising its power in such form, as to them seem most likely to
effect their safety and happiness.

This statement emphasizes the fact that the power of governmental organs is necessarily limited and
defined by the society that creates the government. There is thus no magic in the powers of state
organs; their power is given and defined by the people. Every society has rules that define the
structures of the state and spell out their powers. These rules may be written or unwritten, or a
combination of both. A totality of these rules makes up what is called the Constitution of a country.

Indeed, in most countries, including Zimbabwe, the rules defining the structure and powers of
governmental organs are embodied in its Constitution. It is mainly to these documented rules that
reference should be made in order to understand the powers of state organs. Constitutional law
utilizes the principle of separation of powers. In its classical sense, this principle of separation of powers
requires that, as a guarantee for the liberty of the individual, political power should not be
concentrated in one individual or organ of government. It requires that governmental functions be
separated into three different groups and each be performed by different persons. This is thought to
be a way of creating ‘checks and balances’ by one organ against another. The three main organs of
the state are the legislature, the executive and the judiciary. The organ that makes law (the legislature)
should be different from the arm of the state which implements it (the executive) and should both
be different from the organ which interprets it in the event of a dispute (the judiciary).

The legislature (the law-makers)

A principal function of the state is that of making laws for the proper ordering of society. The
popular conception of governance is that of making laws to be observed in and by the community.
This important function of the state is allocated to the legislature, which in Zimbabwe consists of
Parliament and the president. Parliament itself is composed of two chambers: the House of
Assembly (Lower House) and the Senate (Upper House). For a law to be said to be a law made by
the legislature in Zimbabwe, it must pass through two stages. First, it must be passed by the requisite
majority in both houses of Parliament. Second, once it has been passed by Parliament, it should be
assented to by the president before it becomes law. This second stage makes the president very
much part of the legislature in Zimbabwe. The president is a separate organ from Parliament, but he

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has the power to accept or reject laws that it has passed. This is so, even though the president is also
head of the executive, which implements the law.

Apart from its law-making functions, Parliament also has the power to supervise the executive arm
of government by, among other things, criticizing government policies. Through this role,
Parliament has the power to institute investigations into any activity of the state and to publicize its
findings. This power can be used to ensure accountability on the part of government ministers.

The executive
The executive arm of government is composed of the president, the Cabinet, and all law
enforcement agencies of the state, namely, the police, the military and the prison service. The
ultimate authority of the executive functions of the state is vested in the president, who exercises
most of his functions through the Cabinet. The role of the executive arm of government is to
implement laws made by Parliament and to run the affairs of the state. The executive also has the
responsibility to initiate policy, and in that regard it is empowered to propose laws for consideration
by Parliament.

Judiciary
The judiciary is an arm of the state. However, judges are required to be independent in the discharge
of their duties. This independence of the judiciary from the other two arms of the state is the
cornerstone of the theory of ‘separation of powers’. The function of the judiciary is to interpret the
law, something that the two other organs cannot do. If the executive and/or the legislature is/are
not happy with a certain interpretation of the law by the courts, the only way out is to seek a change
to the law rather than disregard the interpretation and argue that it is wrong. The prerogative to
interpret the law lies only with the judiciary.

b. law making process by Parliament

Stage 1 – First Reading
After a bill has been gazetted, the member responsible must serve notice of a motion that leave be
granted by the House to bring in the bill. On the day specified in the notice, the motion for leave is
moved and, if granted, the member must bring a copy of the bill to the clerks at the table, who read
the title of the bill. It is the bringing of the copy to the clerks and the subsequent reading of the title
thereof which is regarded as the first reading.

Stage 2 – Reference to the Parliamentary Legal Committee (PLC)

The house in which the bill originates refers it to the Parliamentary Legal Committee (PLC). This
committee is set up in terms of Section 40A of the Constitution and its functions are spelt out in
Section 40B. Its purpose is to examine all bills and statutory instruments and determine whether or
not they are in conformity with the Bill of Rights and any other provisions of the Constitution. If
the committee makes an adverse report, i.e., finding that the provisions of the bill contravene the

14
Bill of Rights and/or some Sections of the Constitution, it is referred to the House of Assembly or
the Senate, as the case may be.

Stage 3 – Second reading

This third stage is opened by the sponsoring minister, who makes a speech outlining the purpose of
the bill and the principles upon which it is based. This is followed by debate on these principles. No
discussion on individual clauses is permissible, although reference may be made to these clauses as
part of the debate. Following recent reforms to Zimbabwe’s parliamentary system, it is at this stage
that the relevant Parliamentary Portfolio Committee (PPC) will present its report on the bill. PPCs
are appointed for every government department and one of their functions is to scrutinize proposed
bills, which includes conducting public hearings and presenting a report to Parliament. It is expected
that the chairperson of the PPC will contribute to the debate on principles based on the committee’s
findings.

Stage 4 – Consideration by committee

Next, the bill is considered clause by clause, either by a special committee set up for the purpose or a
committee of the whole house. The practice in Zimbabwe is to use a committee of the whole house.
At this stage, amendments to individual clauses are proposed and debated. Amendments are not
usually successful if they run against the wishes of the Government.

Stage 5 – Reporting
This stage involves making a report of the bill, as amended, to the whole house. If the bill was
considered by a committee of the whole house, the report stage is a mere formality. If it was
considered by a special committee, this stage allows other members of the house to propose
amendments. Government may also use this stage to reverse amendments made at committee stage
or to add new clauses arising from any subsequent deliberations.

Stage 6 – Referall to the PLC

If the bill is amended at the committee and/or report stages, it is referred to the PLC, which will
scrutinize any amendments according to the procedures outlined in Stage 2.

Stage 7 – Third reading

This is the stage at which the bill is put to a vote for either approval or rejection. No reading per se
takes place and, unless some members have given notice that they wish to do so, there is no debate.
The quorum, i.e., the minimum number of people required to constitute a valid meeting of the
House of Assembly is 25 members. For the Senate it is 11. For an ordinary bill to pass, there must
be a majority from those present and voting. However, for a Constitutional Bill to pass, there must
be at least a two-thirds majority from the total membership of each house.

15
Stage 8 – Transmission to the other house
As soon as the bill has been passed by the house in which it originated, an authenticated copy of it is
transmitted to the other house. The second house may reject the bill or pass it with or without
amendments. Where the second house passes the bill with amendments, it returns the bill to the
house of origin. The house of origin may reject, agree to, or incorporate the amendments made to
the bill by the second house.

Stage 9 – Presidential assent

A bill becomes law only after being assented to by the president. After a bill has been passed by
both houses, or after the House of Assembly has overridden the Senate, it is presented to the
president for assent. The president is not obliged to assent to a bill; he/she has unlimited discretion
in this regard. Again, if the president rejects the bill in question, but the House of Assembly
subsequently secures the relevant two-thirds majority and returns the bill to the president, he/she is
given two options: either assent to the bill within 21 days or dissolve Parliament and call for fresh
elections.

c. Delegated legislation
Parliament may delegate its law-making powers to a variety of public authorities, particularly the
president, Ministers and Local Authorities. Legislation emanating from these authorities in exercise
of the powers granted to them by Parliament is called ‘delegated legislation’. The extent of the power
to make law in this way is regulated in each case by the relevant Act of Parliament (the ‘enabling Act’
or ‘parent Act’). Section 32 (2) of the Constitution of Zimbabwe allows Parliament to delegate its
law-making powers. It makes it clear that the legislature is empowered to confer legislative functions
on any person or authority. The system of delegated legislation is subject to two controls, namely:
1. Delegated legislation, like any other legislation, must be consistent with the Constitution, i.e.,
it must be intra vires the Constitution.
2. It must be consistent with the parent Act, i.e., not ultra vires the enabling Act.

The system of delegated legislation has been criticized for giving the executive too much power,
something that is contrary to the principle of separation of powers. In the absence of effective
safeguards, delegated legislation may be an avenue of undermining the fundamental rights of
persons. The system of delegated legislation may be defended on the following grounds:
 Pressure on parliamentary time – if all legislation were passed by Parliament, it would be in
continuous session.
 The technicality of the subject matter of particular legislation, for example, the statutory
instrument on hazardous drugs. In such areas, it makes sense to leave legislation to the
experts.
 The difficulty of working out all necessary administrative details before a bill is presented to
Parliament.

16
 The need to maintain flexibility so that legislation can be easily adapted to unknown future
conditions without needing to seek approval for such amendments, for example, the
prescription of interest rates.
 The need, from time to time, to deal with an emergency situation.

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 STRUCTURE AND HIERARCHY OF COURTS IN ZIMBABWE

Courts are classified into two broad categories, namely, criminal courts and civil courts. Civil courts in
turn are divided into two groups: ordinary civil courts and specialized courts. In examining each
court, two questions arise, namely, what is its composition? and what is its jurisdiction? To answer
both, reference must be made to the Constitution of Zimbabwe and the relevant Act of Parliament
regulating the operations of the court in question. In Zimbabwe, there is specific legislation that
prescribes the composition and jurisdiction of each court.

The composition of a court refers to its judicial officers, i.e., whether a judge or a magistrate
presides; the number of presiding judicial officers required to constitute the court; the qualifications
the presiding officers must have; whether there is provision for assessors; and if so, the manner in
which they are selected. The jurisdiction of the court refers to its powers and the matters over which
it has competence and also determines its position in the structure of the courts, particularly how it
relates to other courts.

1. Local Courts
Customary law disputes may be referred to special courts that have been established to preserve the
application of customary law in civil disputes. There are two types of local courts, namely (i) a
primary court that is presided over by a headman or other person appointed by the Minister of
Justice and (ii) a community court, which is presided over by a Chief or other person appointed by
the Minister of Justice. Both courts are established in terms of the Customary Law and Local Courts
Act (Chapter 7:05).

The main reason for the existence of these customary law courts is to provide ordinary people in
rural areas with a justice system that is consistent with African custom and values. A large number of
ordinary Zimbabweans regulate their lives in accordance with customary law. For that reason, the
legal system has preserved the authority of traditional leaders to adjudicate in civil disputes governed
by customary law. The following points must be noted:
• The court can only apply customary law and nothing else.
• The local court is not permitted to adjudicate particular disputes, even though such disputes
are governed by customary law. For example, it is not permitted to adjudicate matters
involving the dissolution of a customary law marriage solemnized in terms of the Customary
Marriage Act (Chapter 5:07); the determination of custody or guardianship of minors; the
determination of maintenance claims; and determination of any rights in respect of land.
• A local court has jurisdiction to hear a case only if either the defendant is resident in the
local area of the court or the case took place within the local area (that is, the cause of action
arose in the local area) or the defendant has agreed that the court should have jurisdiction.
• A party wishing to take a case to a local court simply has to approach the Clerk of Court
concerned and be assisted with sending a summons.

18
 • The summons may be served on the other party by either the Messenger of Court or the
Police.
• The procedure adopted in local courts is very informal and is determined by customary law.
Lawyers are not permitted in local courts.
• A judgment given by a local court is enforceable by first registering it with a Magistrates
Court and thereafter enforcing it like any other Magistrates Court judgment. This means that
it can be enforced by execution of property, contempt of court proceedings, garnishee order
or civil imprisonment.
• An appeal from the primary court presided over by a headman goes to the community court
presided over by a Chief. A further appeal may be made to a Magistrates Court and
thereafter to the High Court and Supreme Court of Zimbabwe. A case involving the
payment of damages can either start in the primary court or in the community court
depending on the amount claimed.
• The value of a claim before a local court should not exceed specified amounts.
• Where the amount claimed is more than the specified amount, local courts have no
jurisdiction and the case has to be initiated in a Magistrates Court.

2. Small Claims Court

A person who has a small claim to make against another is saved the inconvenience and delay of
approaching the ordinary courts by being able to approach the Small Claims Courts. These courts
are established in terms of the Small Claims Court Act (Chapter 7:12). The power to establish a
Small Claims Court in any province is given to the Minister of Justice, Legal and Parliamentary
Affairs. The most important points about a Small Claims Court are as follows:
• A claim that may be referred to a Small Claims Court should not exceed the specified
amount prescribed from time to time.
• A Small Claims Court has no jurisdiction whatsoever to hear certain matters, namely, claims
involving customary law; claims for divorce or custody of a minor; maintenance claims
(although it may hear a claim for arrears maintenance); the interpretation of wills; and claims
for defamation, adultery or seduction.
• Only individuals can bring proceedings before Small Claims Courts. Companies or other
bodies can only be sued but cannot sue in a Small Claims Court.
• Lawyers are not allowed to represent litigants in a Small Claims Court.
• For a Small Claims Court to have jurisdiction, the defendant has to be either a resident or be
running a business in the province. Outside the two situations, the court can only have
jurisdiction if the defendant does not object to jurisdiction.
• To commence proceedings, the person wishing to institute proceedings (the plaintiff) should
first send a letter of demand to the defendant giving the latter 14 days to settle the claim. It is
only if his/her demand is not honoured that the plaintiff may request the Clerk of the Small
Claims Court to issue summons against the defendant. The summons shall specify the claim
and the date of the hearing and may be served on the defendant personally by the plaintiff,
or if the plaintiff pays a fee, by the Messenger of Court.

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 • Any person bringing or defending proceedings before a Small Claims Court is entitled to
assistance in the preparation of his/her documents by a legal assistant attached to the Small
Claims Court.
• A judgment given by the Small Claims Court is final and cannot be appealed against, except
to take the proceedings on review to the High Court.
• Where the defendant has failed to satisfy the judgment given by the Small Claims Court, the
plaintiff (now judgment creditor) may apply to the Clerk of Court for the issue of a writ of
execution against property. This is the only way of enforcing the judgment of a Small Claims
Court.

3. Magistrate’s Court
This is the lowest criminal court in Zimbabwe. Two pieces of legislation govern its operations.
These are the Magistrates Court Act (Chapter 7:10) and the Criminal Procedure and Evidence Act
(Chapter 9:07). A Magistrates Court is presided over by a magistrate. In criminal matters, magistrates
can be divided into four classes:
 ordinary magistrates,
 senior magistrates,
 provincial magistrates and
 Regional magistrates.

A Magistrate’s Court may be presided over by any of these four. In theory, there is no minimum
qualification for a person to be appointed as an ordinary magistrate – any ‘fit and proper person’
may be so appointed. In practice, however, only persons who have undergone some legal training
are appointed as magistrates. In a criminal trial, a magistrate may either sit alone or preside with the
assistance of one or two assessors. The role of assessors is limited to matters of fact. Any matter of
law arising for decision at the trial is decided by the magistrate and assessors have no say over such a
decision.

The jurisdiction of a Magistrates Court is determined by three aspects; the territory where the crime
takes place; the nature of the crime and the punishment that may be imposed. Regarding territory, a
Magistrates Court has no jurisdiction over common law crimes committed outside Zimbabwe. For
crimes committed in Zimbabwe, the general rule is that a Magistrates Court only has jurisdiction
over offences occurring in the region or province in which it is established. Exceptions to this
general rule include:
(i) A court may have jurisdiction for an offence committed within five kilometres beyond its
boundary,
(ii) Where any element of the offence takes place in a given province or region, the court
therein may have jurisdiction even though the other elements of the offence have taken
place outside the province or region and
(iii) The Attorney General, with the consent of the accused, may direct that the trial be held
in the court of any province.

20
A Magistrates Court has jurisdiction over all crimes except:
 treason,
 murder and
 any statutory offence for which the death sentence is mandatory.
 Marriage dissolution
 Validity and interpretation of wills
 Status of persons (whether a person is sane or insane)
 Orders of specific performance

Only regional magistrates have jurisdiction to try cases of rape, except where the Attorney General
has authorized trial or sentencing before a magistrate who is not a regional magistrate. For purposes
of civil cases, the Magistrates Court has the same jurisdiction regardless of the seniority of the
magistrate presiding over the matter. In other words, in civil matters, unlike criminal cases, there is
no division of magistrates into the four classes of ordinary magistrate, senior magistrate, provincial
magistrate and regional magistrate. A Magistrate’s Court has jurisdiction to apply both customary
law and general law in its determination of civil cases. The general rule is that a Magistrates Court
only has jurisdiction in a civil case if:
(i) the amount claimed does not exceed its prescribed monetary limit of jurisdiction and
(ii) either the defendant resides, carries on business, or is employed within the province
where the court is situated, or the cause of action arose wholly within the province.

4. The High Court

The High Court is a superior court of record and its jurisdiction, powers and practice, procedure and
regulations are provided for in terms of the High Court are the Constitution of Zimbabwe and the
High Court Act. Under Section 81 (3) of the Constitution, the High Court consists of the Chief
Justice, the Judge-president of the High Court, and such other judges as may be appointed. The
qualifications for appointment as a judge of the High Court are set out in Section 82 of the
Constitution. In a criminal trial, the High Court is considered duly constituted if composed of one
judge and two assessors. In civil cases, the judge sits alone. When reviewing any criminal
proceedings of an inferior court, one or more judges are required, while in an appeal it is mandatory
that it be constituted by at least two judges.

Section 23 of the High Court Act makes it clear that the High Court has ‘full original criminal
jurisdiction over all persons and over all matters in Zimbabwe’. This means that there is no limit to
its jurisdiction regarding the nature of the crime, the possible punishment and the place within
Zimbabwe where the crime is committed. Its jurisdiction over persons is limited by Section 30 of
the Constitution, which grants the president (while in office) immunity from any ‘criminal
proceedings whatsoever in any court’. The High Court’s extra-territorial jurisdiction is limited. With
statutory crimes, this depends on the provisions of the relevant statute. It does not have extra-
territorial jurisdiction over all common law offences. It has this jurisdiction only in respect of the

21
crime of treason and offences where the harmful effect is felt in Zimbabwe. The leading case on the
latter point is S v Mharapara, where it was held that the High Court had jurisdiction to try a
Zimbabwean diplomat who, while in a foreign country, stole money belonging to the Zimbabwean
government. The High Court also has automatic jurisdiction to review criminal proceedings in the
Magistrates Courts wherever any person has been imprisoned for any period in excess of 12 months.
It also hears appeals in criminal matters from the Magistrates Court against conviction and/or
sentence.

Section 13 of the High Court Act states that the High Court ‘shall have full original civil jurisdiction
over all persons and over all matters within Zimbabwe’. This means that its original jurisdiction is
unlimited; there are no monetary limits to claims that may be brought; and it can hear any civil
dispute, whatever the nature of the claim. It enjoys what is called ‘inherent jurisdiction’, which
means that the High Court is deemed to have jurisdiction unless so prohibited by some law. This
kind of jurisdiction is superior to that of any other court because all other courts can only exercise
the jurisdiction specifically granted by the enabling statute. The fact that the High Court’s original
jurisdiction is unlimited means that all matters which may be heard by the Magistrates Court can
also, at first instance, be heard by the High Court. A litigant is entitled to sue in the High Court,
even in matters within the monetary limit of the Magistrates Court. The High Court can only refuse
to entertain a case if there is a law that prohibits it from exercising jurisdiction. The choice of court
may be dictated by costs; it is more expensive to sue in the High Court than in the Magistrates
Court.

The High Court also has ‘appellate jurisdiction’ in civil cases. An appeal only goes to the High Court
if there is a specific provision in a statute granting a right of appeal to the High Court. Appeals from
the Magistrates Court go to the High Court. Apart from being an appellate court, the High Court
has inherent review powers over the proceedings of all inferior courts and tribunals. A review is not
concerned with the merits of the decision but with the decision-making process. In exercising its
review powers, the High Court may set aside proceedings of an inferior court or tribunal.

5. The Supreme Court

The relevant pieces of legislation governing operations of the Supreme Court are the Constitution of
Zimbabwe and the Supreme Court Act. Under Section 80 of the Constitution, the Supreme Court
consists of the Chief Justice, not less than two other judges and any acting judges who may be
appointed. The qualifications and manner of appointment of Supreme Court judges are the same as
those for the High Court. For exercising its jurisdiction, the Supreme Court is duly constituted if it
consists of not less than three judges, one of whom must either be the Chief Justice or a permanent
judge of the court. In matters involving the question of the application, enforcement or
interpretation or an infringement of the Constitution, the Chief Justice or Minister of Justice may
direct that the court be constituted by not less than five judges. In the absence of such a directive,
even a matter involving the interpretation of the Constitution may be heard by three judges.

22
The Supreme Court is the final court of appeal in Zimbabwe. It has jurisdiction to hear appeals in
criminal cases from any court or tribunal from which, in terms of any Act of Parliament, an appeal
lies to it. Under current law, it hears appeals from the High Court and it is no longer permissible to
make any direct appeals from the Magistrates Court to the Supreme Court. The Supreme Court only
sits as an appellate court and does not have original jurisdiction. There is one exception to this,
namely, that it may sit as a first and final court under Section 24 of the Constitution in matters
where it is alleged that the Bill of Rights has been or is being infringed. In criminal matters, this
could arise where the accused person challenges the constitutionality of his/her arrest and/or
prosecution.

The Supreme Court has appellate jurisdiction only in civil matters, except where the issue is brought
under Section 24 of the Constitution. An appeal only lies with the Supreme Court where the
provisions of the relevant statute say so. In respect of appeals from the High Court, there is a right
of appeal to the Supreme Court from any judgment, even if it arises from the High Court’s exercise
of its original or appellate jurisdiction. The only circumstance where an appeal from the High Court
is barred is where the judgment in question was obtained with the consent of the parties.

6. Specialised Courts
Specialist courts only deal with areas that have been deemed by Parliament to require a ‘special
court’. In other words, a specialist court deals with a specific issue.

a. The Labour Court

The law that governs employment of workers in Zimbabwe is largely contained in the Labour Act
(Chapter 28:01). It is this Act that enables the creation of a special court known as the Labour
Court, whose main function is to administer justice that is sensitive to the plight of workers. This
court only deals with labour disputes. The jurisdiction of the Labour Court is specified in Section 89
of the Labour Act. In general, it is an appeal court for a variety of labour disputes. In a few cases, it
is a court of ‘first instance’.

An example of the latter is where a dispute may arise in relation to the extent or description of any
undertaking or industry represented by a trade union. Such a dispute may be referred directly to the
Labour Court for determination. As an appeal court, the Labour Court is involved in two main
situations. An appeal from any decision of the Labour Court lies to the Supreme Court, but only on
a question of law.

b. The Administrative Court

The Administrative Court is a specialist court that deals with a number of issues allocated to it by
various pieces of legislation. It is set up in terms of the Administrative Court Act (Chapter 7:01) and
consists of a president of the Court, who, once again, is either a former judge of the High Court or

23
Supreme Court, a person qualified for appointment as such, or a person who has been a magistrate
for at least seven years, and assessors.

c. Courts-martial
These are established in terms of Section 45 of the Defence Act. The jurisdiction of a court-martial
is to try members of the defence forces for any offences in terms of the Act. Some of the offences
specified by the Act are common law crimes.

d. Police board of officers

The Police Act allows for a board of officers to try members of the police force who commit
offences under the Defence Act. However, the offences may be tried by either an ordinary court or
a board of officers, and a member of the police force is entitled to elect to be tried by a Magistrates
Court instead of a board of officers.

e. Prison courts
An officer in the prison service may be tried for some offences by a board appointed by the
Commissioner of Prisons. This board cannot impose a sentence of imprisonment, but it may order
the dismissal of the officer from employment. Prisoners may also be tried for prison offences by the
Commissioner (or his/her delegate), but this is only in respect of minor offences and no sentence of
imprisonment may be imposed. In all other respects, prisoners who commit prison offences are
tried by either a visiting magistrate (called a ‘visiting justice’) or the ordinary Magistrates Court.

f. Children’s Courts
Children’s courts are established in terms of Section 3 of the Children’s Act (Chapter 5:06). These
courts used to be called ‘juvenile courts’ and were renamed in 2001, after the enactment of the
Children’s Protection and Adoption Amendment Act, 2001 (Act No. 23 of 2001). This Amendment
Act also changed the title of the Act from ‘Children’s Protection and Adoption Act’ to ‘Children’s
Act’. The children’s court does not try children for criminal offences but may deal with a child who
has been convicted by another court. Where no specific children’s court has been established by the
Minister of Justice, a Magistrates Court serves as a children’s court for its area of jurisdiction. In
dealing with a convicted child, the children’s court has several options. It may order him/her to be
placed in a training institute or be placed in the custody of any suitable person, or to attend a
specified centre at specified days and for specified hours.

g. Parliament sitting as a Court over breach of parliamentary privileges

Parliament enjoys what are called ‘privileges’ for purposes of enabling it to carry out its
constitutional duties effectively. In Zimbabwe, these privileges are regulated by the Privileges,
Immunities and Powers of Parliament Act that was passed pursuant to Section 49 of the
Constitution of Zimbabwe. Among these privileges are:
(i) freedom of speech and debate,
(ii) exemption from attendance at court whilst in attendance in Parliament and

24
 (iii) the right to punish for breach of privilege and contempt of Parliament.
In exercising its right to punish for breach of privilege, Parliament is entitled to sit as a court.

25
 LAW OF CONTRACT
DEFINITION:
A CONTRACT is a legal enforceable agreement entered into by two or more different persons with
legal capacity.

 “An agreement (arising from either true or quasi-mutual assent) which is, or is intended to
be, enforceable at law”.
 The parties should have serious intention to create legally binding obligations.
 A contract arise at the moment when and at the place where consensus is reached.

Essentials of a contract
1. Agreement between the parties, union of minds of parties, coincidence of wills – consensus
ad idem. The presence of an agreement is generally determined by there being an offer and
an acceptance.
2. Intention to contract – animus contrahendi
3. Capacity
4. Lawful – it must be legally possible i.e. the rights and duties that are created must be
permitted by law.
5. Performance/Certainty - agreement must be physically possible and performance must be
certain – it should not be vague
6. If formalities are prescribed they must be followed

Formation of Contract
A contract consists of an invitation to consent (by means of an offer by one party called the offerer)
to the creation of obligations between two or more parties and an acceptance is required (by the
other party called the offeree). There should be consensus between the parties that, is, there must be
meeting of minds of the parties, there must be consensus ad idem.

Offer
Definition: A statement by a person, called the offeror, indicating his willingness to contract which
statement is made in the awareness that it shall become binding on acceptance by the other person
called the offeree.

Elements of a valid offer

1. There must be intention.
2. All material and essential terms of the envisaged contract must be set out. Therefore it must not
be vague.
3. It must be firm and unambiguous.
4. It must be addressed to some person or another.

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5. There are no formalities, however if the law prescribes special formalities for the conclusion of a
particular type of contract, an offer to conclude such contract must comply with those
formalities.

An offer must have the following requirements

1. It must be consistent with all the essentials of the contract, otherwise it is void.
2. It must be communicated to the offeree. The offeree must have knowledge of the offer if his
acceptance is to constitute a valid contract.
Case: Bloom v American Swiss Watch Company
Facts: The American Swiss Watch Company placed an advert in the press offering a reward of
GBP500 to any person giving information leading to the arrest of thieves who had robbed the company
and recovery of the stolen jewellery. Bloom supplied the information in ignorance of the reward and
afterwards, having heard of it, he claimed the reward and he was unsuccessful. He subsequently
approached the courts for relief.
Held: The court ruled that Bloom was not entitled to the reward because he had not known of the
reward when he passed the information to police.
Principle: A person acting or giving information as required by a reward advert will receive that
reward only if he was aware of that reward when he so acted.

Contrary to the general rule, an advert can amount to an offer where a ‘general offer’ has been made
to do business with whoever shall perform certain acts.
Case: Carlill v Carbolic Smokeball Company (1893)
Facts: The Carbolic Smokeball Company placed an advert in a local newspaper which stated that
anyone who used its product in a particular manner would not catch/contract influenza and that if
this happens the company would pay £100. Meanwhile, the company deposited £1000 ith its
bankers to meet any potential claims. Carlill bought the smoke ball and used it as prescribed but
nonetheless caught influenza. When she sued for the £100, the Carbolic Smokeball Company
claimed that the advertisement was not an offer, but simply an invitation to treat directed at no-one in
particular.
Held: the advertisement was an offer or a unilateral contract. The claimant had accepted this offer
by using the smoke ball in the correct way and catching flu. She was therefore entitled to the £100
reward. If the advertisement had been held not to have been an offer, this would unfairly have allowed
the Carbolic Smokeball Company to break its promise. In reaching their decision, the court
considered what the reasonable person would have made of the advertisement.
Principle: Contrary to the general rule, reward adverts are offers and therefore binding on the
offerer if accepted by anyone acting as required in which case notification of acceptance is unnecessary.
In the Carlill case, the offer was made to the whole world. Offers are more usually made to just one
person or a limited number of persons. Only a person to whom an offer was made, an offeree, can
accept an offer.

27
***NB Reward cases represent the only contractual situation where an advert does amount to an
offer. It should be noted that no reward can be claimed by anyone who fulfilled the requirements
not knowing of the reward (Bloom v America Swiss Watch Company). Also note that in the event
that where just one reward is offered, only the first person doing what is required is entitled to that
reward.
Case: Lee v American Swiss Watch Company (1914)
Facts: this case arose from the same robbery in the Bloom case. After Bloom had been ruled
ineligible for a reward, the question arose whether Lee could claim the reward after he also provided
the needed information, albeit after Bloom
Held: it was held that the reward could only be paid to the first person giving information. Since
Lee did not fall into the class of such persons, she could not claim the reward.
Principle: where only one reward is offered, only the first person acting as required by the reward
advertisement (provided he also knew of the reward) will receive that reward.

3. It must be made with serious intention to create legal relations intention of being accepted. This
means. This embraces the following:
 It must not be mere social arrangement or offers made in gest which lacks the animus
contrahendi.
 It must not be binding in honour of gentlemen’s agreements i.e. excluding the jurisdiction of
the courts (where the offer) it cannot constitute a legally binding contract. (Rose and Frank
Company v Crompton and Brothers Ltd (1922) (2) KB 261.
It must not be an offer to negotiate or treat i.e. it must be an offer to enter into a binding contract
and not merely an invitation to do business or receives offers (i.e. tenders) - An offer should be
distinguished from an invitation to treat. An invitation to treat is merely an invitation to discuss the
possibility of entering into a contract between the two parties or an invitation to the other party to
make an offer.
A response to an invitation to treat, however, cannot result in a binding contract. It is quite safe for
me to ask you how much you would give me for my car. You might name a price (thereby making
an offer) but I would have no obligation to agreed to the deal.
Advertisements can amount either to offers or to invitation to treat. If an advertisement is an offer,
then a person who accepts it the offer makes a contract with the person who advertised. If an
advertisement is only an invitation to treat then it cannot be accepted in such a way that a contract is
thereby formed.
NB the following are not offers:
 Invitation to tender (Spencer v Haarding, 1870
 Newspaper adverts in general (Shepherd v Farell Estate Agents
 Displays on self-service counters (Pharmaceutical Society of Great Britian v Boots Cash
Chemists
 Statements of lowest price in response to a specific enquiry

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  Adverts by transport companies of their prices
It may be to one definite person, or to the world. If the offer is made to a definite person or to a
number of definite persons, acceptance should be by that person or those persons only. If it is
made to the public anyone else may accept.
Case: Crawley v Rex (1909)
Facts: A shopkeeper in Johannesburg advertised a particular brand of tobacco at a cheap price. The
advertisement was in the form of placard placed outside the shop on which the price was indicated.
Crawley entered the shop, bought a pound of tobacco and left. He then re-entered the shop asked for
another pound. This time the shopkeeper refused to sell and Crawley refused to leave the shop without
the tobacco. He was subsequently arrested and when he was brought before the court, he claimed that
he had every right to be in the shop since he and the shopkeeper had a contract which had not yet been
carried out.
Held: the court ruled that there was no contract since advertisements are not offers. Such adverts
merely indicate the price at which the shopkeeper intends to sell his products and does not place him
under any obligation to sell the product. Instead Crawley was convicted under a Transvaal ordinance
for not leaving the premises when asked to do so.
Principle: Shopkeeper’s advertised prices are not offers but are merely invitations to do business.
Shopkeepers are therefore not obliged to sell. Rather, it is the potential buyer who responds with an
offer which may be accepted or rejected by the shopkeeper.

4. The offer must not have been revoked or lapsed. An offer is revoked if it is withdrawn by the
offeror. The following should be noted:
 Revocation is not effective until the offeree is aware of it.
 An offer can be revoked at any stage before it is accepted;
 The offeror must take reasonable steps to find and inform the offeree of the revocation
Case: Bryne and Co v Lean van Tienhoven and Co 1880 KB
Facts: the defendant Van Tienhoven & Co posted a letter from their office in Cardiff to Byrne
& Co in New York, offering 1000 boxes of tinplates for sale on 1 October. Byrne and Co got
the letter on 11 October. They telegraphed acceptance on the same day. But on 8 October Van
Tienhoven had sent another letter withdrawing their offer, because tinplate prices had just risen
25%. They refused to go through with the sale. Advice Bryne & Co. The court held that the
revocation would only become effective when it was received by the plaintiffs, by which time, the
contract had been made.
Held: that the withdrawal of the offer was not effective until it was communicated.

5. Where an offer was accompanied by an option, the latter must not have expired. An option is a
separate contract to keep the contract open for a specific period. The offer must be accepted within
the stipulated period Boyd v Nel 1922 AD 414.
Facts: Nel gave Boyd an option of 4 months to purchase his farm. Immediately after making
the offer, Nel permitted other persons to prospect on the farm and as a result of this the

29
 government issued an intention to proclaim the farm as an alluvial digging. Meanwhile, in
ignorance of all this, Boyd made arrangements for dividing the farm into plots for sale. Because of
Nel’s action, Boyd had to abandon his plans and suffered damages. The case was brought to
court.
Held: The court held that Boyd had the full period of action (4 months) for considering whether
he would buy the farm and as Nel had broken this agreement, he was found liable
Principle: an option or time limit given to consider an offer is a separate contract binding on
the offerer. If the offerer before the option expires, makes acceptance of the offer impossible, then
he is liable
6. The offer may be verbal, written or implied. Thus if a person boards a bus, the owner of a bus
impliedly makes an offer to the person to ride in the bus and the passenger accepts the offer by
taking a bus seat and tending his fare.

Legal consequences of an offer

For an offer to be valid, it has to be accepted by the offeree. An ordinary contractual offer does not
in itself create rights and duties between offeror and offeree.
Termination of an offer
1. An offer can be terminated by rejection by the offeree. The rejection of the offer may be:
 An express rejection of the offer
 By making a counter offer
 By not following the conditional laid down for acceptance of the offer
Case: Watermeyer v Murray (1911)
Facts: Watermeyer offered to sell his farm to Murray on condition that Murray paid all expenses
plus £1,000 soon after signing the agreement. Murray initially agreed but later through his attorneys
drew up and signed an agreement stipulating that the £1,000 was to be paid only after the current
lease on the farm had expired. Watermeyer rejected this arrangement and Murray attempted to revert
to the original offer and Watermeyer refused to sell. Murray then sued Watermeyer for specific
performance or alternatively £1,000 as compensation for breach of contract.
Held: the court ruled there was no contract and therefore no breach
Principle: where an offer has been revoked by a counter-offer and the original offerer has rejected
the counter-offer he cannot be bound by any subsequent acceptance of the original offer unless he so
wishes

2. Where the offer stipulates a period for acceptance, it lapses if acceptance does not take place
within that period (effluxion of time). Even where time is not specified, the offer must be
accepted within a reasonable period of time otherwise it lapses
Case: Ramsgate Victoria Hotel v Montefiore (1966)
Facts: Montefiore applied for shares in a hotel company on June 8 but no allotment was made until 23 rd
November. However, by then he had withdrawn his application on the 8th November

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 Held: it was held that the allotment must have been made within a reasonable period of time and hence the offer
had lapsed
Principle: An offer lapses after a reasonable time, if not accepted within the prescribed time

Case: Laws v Rutherford (1924)

Facts: Rutherford gave Laws 6 months option to enter a contract to cut timber on her farm which expired on 26
July. Having heard nothing, Rutherford on 27 July asked Laws to remove/leave her farm. Laws responded by
suing her for breach of contract
Held: As Laws had not notified his acceptance within the fixed time, there was no contract binding them.
Principle: if there has been no acceptance by the fixed time, no contract is formed and it is too late afterwards for
the offeree to accept unless the offerer so agrees.
3. If it is rejected by the offeree, and a counter-offer by the latter is regarded as tantamount to a
rejection.
4. When it is revoked by the offeror however, such revocation must be communicated to the
offeree.
The offerer may withdraw/revoke his offer at any time before acceptance has taken place but it
is important that such revocation be communicated to the offeree so that the offeree does not
act to his detriment. An offer cannot be withdrawn after it has been accepted.
Case: Greenberg v Wheatcroft (1950)
Facts: On 6 June 1950 Wheatcroft signed a written offer to buy cetain land from Greenberg. On 7 June,
Wheatcroft telephoned Greenberg’s agent revoking the offer. On 8 June Greenberg signed an acceptance unaware
that Wheatcroft had revoked the offer. The matter was brought to court for a hearing
Held: The court ruled that the offer had been effectively revoked on 7 June and was no longer open for acceptance
Principle: Revocation is ineffective until brought to the knowledge of the offeree, that is, it is effective when
received

Case: Byne & Co v Leon van Tiehoven & Co (1880)

Facts: in a letter posted on 1 October, Leon van Tiehoven & Co in Cardiff offered to sell Byne & Co in New
York 1000 boxes of tinplates. This offer was accepted by Byne & Co in a telegram on 11 October. Meanwhile,
on 8 October Leon van Tiehoven & Co had posted a letter to Byne & Co withdrawing their offer but this letter
only arrived on the 20th
Held: the court upheld the contract on the basis that: any revocation of an offer must be communicated to the
offeree since ‘an uncommunicated revocation is for all practical purposes and in point of law no revocation at all’.
Such communication requires that the revocation be actually received before it becomes effective
Principle: Revocation of an offer is only valid when communicated and this meant actually received by the offerer

5. Death of the offeror – if either of the parties should meet their demise before acceptance then
the offer will as a general rule, terminate. However, there are circumstances where the offer
persists beyond the grave. This is when the offeror had the intention that his executor should
continue with the offer after his death and so enter into the contract on his behalf (Constain &
Partner v Godden, 1960)

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6. Loss of contractual capacity – if either party loses contractual capacity then the offer will
automatically terminate
7. If the intended performance becomes illegal or impossible

Acceptance:
Acceptance is a declaration of will which indicates assent to the proposal contained in the offer.

Requirements for a valid acceptance

1. There must be an intention to contract, that is, acceptance should be by way of conscious
reaction to the offer and that for acceptance to be effective it should correspond with the terms
set out in the offer.
2. Acceptance must be unambiguous – The offer must be accepted as it stands and any conditional
acceptance which makes specific alterations is a counter-offer which cancel the original offer. In
this case, the original offerer may accept the counter-offer but if he does not, the counter-offerer
cannot insist on reverting to the original offer unless the original offerer agrees. A mere request
for consideration of the offer or for some variation in the manner of the contract’s performance,
for example, asking for credit provided the offerer has not specified cash does not constitute a
counter-offer.
3. It must conform strictly to the terms of the offer.
Case: Eiason v Henshaw
Facts: an offer by Eliason to buy flour from Henshaw was brought to Henshaw by wagon. In terms of the
offer, Henshaw was required to send his acceptance by means of the wagon. Henshaw thinking that he could
reach Eliason quicker, sent his acceptance by post which arrived later than the wagon.
Held: An offer may specify the manner of acceptance and such acceptance is void if made in any other way
Principle: Although he may dictate the manner of refusal, an offerer may dictate the manner of acceptance
and if such manner is not followed, any purported acceptance even if received is void
4. It can only be accepted validly by the person with whom the offeror intended to contract.
5. A failure to respond to an offer cannot ordinarily be taken as acceptance. However where
circumstances such as the business relationship of the parties and their previous course of
dealing create a duty to speak for an offeree who wishes to reject the offer, failure to respond
may well amount to acceptance.
6. An acceptance must comply with any formalities prescribed by law for the contract envisaged by
the offer, same where the offeror has prescribed a particular form of acceptance
Case: R v Nel 1921 AD 339
Facts: Nel had licence to sell liquor in Transvaal. He received an order from Armstrong who was resident in
Cape Town. The written purchase order was delivered to Nel in the Transvaal and the bottles of liquor were then
allocated to the purchaser in Cape Town. Nel was prosecuted for selling liquor in Cape Town without a licence.
The court was to make a finding as to when and where the contract of sale had been concluded. The offeror was in
the Cape and the offeree in the Transvaal.

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 Held: The nature of the transaction was that the offeror had dispensed with the need for communication of
acceptance and the court concluded that the sale agreement/contract had been sealed in the Transvaal, the moment
Nel decided to sell the liquor and he was not guilty.
7. The offeree must know of the offer when accepting (In Bloom v American Swiss Watch Company
1914 AD 100) The claimant (Bloom) gave evidence which led to some jewel thieves. He then
discovered that the defendant had previously advertised a reward for such information. The
defendant refused payment. The court held that there was no offer made to the plaintiff when
he volunteered the information and did not know that there was an offer of reward money.

Quasi-Mutual Assent
First there must be offer and acceptance in the formulation of a contract. The second requirement
that ought to be present is that of agreement, which can either be actual or apparent. As regards
actual agreement there has to be a meeting of minds of the parties involved in a coincidence of wills.
This is referred to as a consensus ad idem.
Case: In Jordan v Trollip (1960) (1) PH 825, - the court stated that in order to determine the existence or
otherwise of a contract, it is the manifestation of the parties wills and not the unexpressed will which is of
importance.
Therefore as regards apparent agreement it has come to be accepted that a contract can also come
into existence in the absence of actual agreement. If one of the parties conducts himself in a
manner that make the other party believe that he is agreeing to a proposed term of contract. This is
referred to as Quasi Mutual Assent or the objective theory of contract.
The doctrine of Quasi Mutual Assent was clearly articulated in the case of Smith v Hughes (1871)
where the court said, “If whatever a man’s real intention maybe if he so conducts himself and
reasonable men would believe that he was assenting to the terms proposed by the other parties
terms”. It dictates that a valid offer or acceptance can be made by conduct or action when a party to
a contract acts as if he is assenting to it. A valid contract can come into effect even in the absence of
express words to that effect. This is sometimes referred to as Agreement by conduct.
The following relevant factors must be taken into consideration when dealing with matters relating
to Quasi Mutual Assent:
(a) has A led B into believing that he is prepared to contract on terms a, b, c if the answer is
no then the court should consider the following question
(b) Was B’s belief reasonable? If the answer is Yes then there is a contract as understood by
B on the basis of Quasi Mutual Assent.
In the case of Springvale v Edwards (1969), a parent who received a prospectus containing the terms of
a contract of enrolment at a private school was said to have accepted them when he did not raise
any objection to them in due time and proceeded to act as if he was assenting to them. His act of
receipt and failure to object to terms or attempt to vary or discharge them was held as valid
acceptance of the terms contained in it.
In the absence of vitiating factors such as fraud, illegality, mistake, duress and undue influence, all
things being constant, a valid and legal contract shall be regarded as formed and shall be given effect

33
to. Both parties to that contract shall be bound at law to perform their duties or side of the
agreement in fulfillment of the terms of the contract. (George v Fairmead (1958), Levy v Banket Holdings
Pvt Ltd (1956) and SA Railways and Harbours v National Bank of SA Lt (1924))
2. Intention to contract – animus contrahendi
The parties to the contract must have the intention to be bound by the terms of the contract.
3. Contractual Capacity
In general, every person has the legal powers to contract freely within the limits of the law. Certain
categories of persons however are of limited contractual capacity. Their powers to enter into
contracts are subject to special rules. For an agreement to be valid, the parties to a contract must be
legally entitled to enter into such agreements. In Zimbabwe the law has divided persons into
artificial persons and natural persons.

a. Minors
Generally, children under the age of 7 have no contractual capacity. Every contract must be made
for him by his guardian. A child remains a minor until he reaches 18, or is tacitly emancipated.
During the term of his minority, he is under the custody and lawful authority of a guardian whose
duty is to maintain the minor until he can maintain oneself, administer his property and assist him in
contracting. Contracts made by the minor can be assisted and unassisted.
i. Unassisted contracts
These are contracts that a minor can enter without the assistance of the guardian. In general, if a
minor is not assisted by his guardian when contracting then such a contract will be void as far as the
minor is concerned by valid as far as the other party is concerned. Thus, the other party cannot hold
the minor to the contract but the minor can hold the other party to the contract.
Exception – Although an assisted minor cannot be held liable contractually, he can be held liable
on the following grounds
1. Unjust enrichment – when a minor is unjustly enriched in terms of an unassisted contract,
the contract remains void but the minor is liable to the extent enriched only, that is, only
what was actually received
Case: Tanne v Foggit (1938)
Facts: a minor, Foggit, without his guardian’s consent entered into an oral contract with the principal of a
business college to attend a typing class for the remaining two weeks of March plus the whole of April at a fee
to be paid in advance. He paid for the March lessons which he attended and then dropped out and refused to
pay the balance.
Held: in favour of Foggit that he was liable for not more than 2 weeks already paid, because the test of
liability was not – as had been argued on behalf of Tanne – ‘whether the contract as a whole was beneficial’
rather the extent of the benefits actually enjoyed
Principle: when an unassisted minor has not been fraudulent but has received a benefit, such a minor will
be liable only to the extent enriched and therefore to pay only for those services actually received

2. Fraudulent misrepresentation – where a minor fraudulently misrepresent his age or

pretends that he has been emancipated and by so doing, deceives another person who is

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 induced to contract with the minor believing him to be emancipated, the minor incurs an
obligation (delictual obligation). The minor is bound to make good to the other party the
loss he has suffered as a result of the fraud. It is essential to prove that the other person was
misled, otherwise there can be no loss as a result of the fraud. It also follows that the minor
must be of such an age that it is possible for an innocent person to be misled.

3. Tacit emancipation – also called implied freedom. Where a minor is tacitly emancipated he
can a binding contractual obligation within the field of his emancipation. Tacit emancipation
occurs where a minor is allowed by his guardian to carry on business or any other
occupation on his own behalf. In such circumstances the minor may himself validly contract
in regard to that business. A minor who is self-supporting and staying alone, may be
regarded as an emancipated minor who can enter into unassisted contracts
Case: Dama v Bera (1910)
Facts: Bera (21) and a minor according to South African law earned her own livelihood as a domestic
servant for almost 5 years. She independently controlled her income and paid part of her salary to parents for
board and lodging. Her stepfather disclaimed any responsibility for her. Bera sued Dama, her employer for
wages due to which Dama raised a defence that Bera being a minor had no locus standi judicio
Held: that Bera was tacitly emancipated and could sue her employer for wages due
Principle: it is possible, dependent on circumstances – but particularly that a minor should be financially
independent and contribute to the joint household – for such a minor to be tacitly emancipated even though
living at home

4. Ratification – a minor may upon attaining majority ratify a contract entered into during
minority. This ratification may be expressed or implied from his conduct. Any contract that
has been ratified is as binding as if the minor had entered into it after attaining majority age
Case: Stuttaford & Co v Oberholzer (1921)
Facts: Oberholzer whilst still a minor, bought a motor cycle from Stuttaford & Co on installments. Shortly
afterwards, he attained majority and continued to use the motorcycle but when sued for installments due, he
pleaded his minority at the time of the contract as a defence
Held: Oberholzer was bound by the contract because he had ratified the contract by using the motorcycle
after he had reached majority
Principle: a minor upon attaining majority may ratify a contract not only by word also by deed and
conduct. Consequently, where a minor remains silent, but nevertheless knowing the legal implications
continues to use the subject matter of a contract made during his minority after he attains majority, he is
bound.

5. Statutory exceptions – in Zimbabwe, a minor is entitled to contract on his own behalf

 In terms of the POSB Act

under the following statutes:

 In terms of the Building Societies Act which states that a minor over 16 years may be

 A minor 16 years and older may open a current account with a bank without a
a member or a depositor with a building society

guardian’s consent. The minor may borrow without the guardian’s consent against
the funds in the account. The minor would need a guardian’s consent to borrow
funds exceeding what is in his account.

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  A minor 16 years and above may also execute a will without the guardian’s consent
 A minor 16 years and over may without the consent of the guardian effect a life
policy on his own life in terms of the Insurance Act

ii. Assisted contracts

a minor is bound by all contracts entered with the assistance of his guardian. Such assistance may be
given at the time of the contract or beforehand or even afterwards. A minor would also be bound by
contracts entered on his behalf by his guardian
Exception- if such contract is to the minor’s disadvantage or prejudice, the contract can be set aside
and the guardian held liable
Case: Wood v Davies (1934)
Facts: Wood’s father bought a house on behalf of his son for £1,750 yet the house was worth £1,550 on
instalments. When Wood reached majority he sought to cancel the sale plus a refund of the instalments
already paid with interests.
Held: the contract was declared void because the contract was to the minor’s prejudice
Principle: assisted contracts that are detrimental to minor especially those extending beyond his minority
may be set aside by a court upon application by a minor when he reaches majority

Married women
Their capacity depends on the type of marriage that they enter into.
(i) Marriage in community of property,
(ii) Marriages out of community of property:
b. Insane Persons
Sometimes referred to as imbeciles. The general rule is that any party who suffers from a mental
illness or incapacity at the time of contracting has no contractual capacity at all.
c. Intoxicated Persons
As a general rule an intoxicated person lacks contractual capacity. As with insanity, the question is
whether the party in question was so intoxicated as to be unable to reach consensus and not merely
whether his judgment was affected.

d. Insolvents
An insolvent is a debtor whose estate is subject to a sequestration order issued by the High Court
owing to his inability to pay debts. As a general rule insolvents can only contract through their
trustees. The Insolvent Act places the following restrictions on an insolvent person’s contractual
capacity:
 He may not dispose of any property
 He cannot be a director of a company
 He cannot hold a liquor licence

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  He may not enter into any contract that is likely to affect the estate adversely unless he
obtains his trustee’s written consent

e. Prodigals
A prodigal is a person who is declared by the court to be incapable of managing his affairs as a result
of a propensity to squander his property e.g. a spend-thriff is not allowed at law to enter into a
contract in respect of his property without the assistance of a curator.

4. Legality
For an agreement to be binding it should comply with the law. However there were instances when
a contract violates the law. Such a contract is deemed to be illegal and unenforceable. Illegality
comes in two forms:
In Schlerhant v Minister of Justice 196 AD 99 at 109 the court stated that “It is a fundamental principle
of law that a thing done contrary to the direct prohibition of the law is void and of no effect”.
A person who has lost money or property in an illegal contract cannot run to the courts for mercy.
If his hands are not clean, the loss will lie where it falls. This is called the first law of equity.
Contracts in fraudem legis- these are contracts to avoid the law. The courts do not enforce such
contracts.
Contracts in restraint of trade
These are contracts where the parties agree that one of them will not engage in trade in competition
with the other party. The other party may be restrained from trading in close proximity with the
other for a certain period of time or within a certain limit of distance from where the other party
carries out business.
In enquiring whether the contract is reasonable to the parties or the public, the court applies the
blue pencil test until it is not harsh and oppressive. The Blue Pencil Test is used to allow the "good
bits" in a contract to be kept and the "bad bits" to be deleted without changing the meaning and
intentions of the contract.

Blue pencil Test (3 condition test)

for a contract to remain effective after severance of the provision:
1. the unenforceable provision must be capable of being removed without the necessity of adding
to or modifying the wording that remains,
2. the remaining terms must continue to be supported by adequate consideration and
3. Removal of the unenforceable provision must not so change the character of the contract that it
becomes “not the sort of contract the parties had entered into at all”.

Contracts in restraint of trade are prima facie void under the common law, but can be
enforceable if:
1. the party imposing the restraint has a legitimate interest to protect; and
2. the restraint is reasonable in the context of protecting that interest; and

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3. the restraint is not otherwise contrary to the public interest.

The reasonableness of a restraint will be assessed in relation to:

1. the length of time for which it will operate;
2. the geographical area which it will cover;
3. the scope of the restraint (that is, the range of activities covered).

The situations where these rules tend to apply are in relation to:
1. Contracts of employment –in the form of restrictions on the employment that the employee can
undertake once leaving the employment of the party imposing the restraint. Such restrictions
may be justified to protect trade secrets, or connections with clients;
2. Contracts for the sale of a business –the buyer of a business is entitled to impose restraints on
the seller, to prevent the seller setting up in competition with the buyer.

Other types of restraint that need consideration are as follows:

 Contracts of exclusive dealing. Agreements to take all supplies of goods (for example, petrol,
beer) from one supplier may be enforceable if reasonable.
 Restraints on songwriters and entertainers. This is another type of contract of exclusive
dealing, where the artist agrees to work only for one publisher, record company, etc. Such
restrictive contracts may be enforceable if they are reasonable.
 Trade associations. Agreements between companies not to compete in certain areas will be
unenforceable at common law unless reasonable in protecting a legitimate interest. Such
agreements may also be struck down by legislative controls against anti-competitive
practices.
In some situations the courts will be prepared to ‘sever’ an unreasonable part of the restraint,
and enforce the remainder.

5. CERTAINTY
For a contract to be valid it must be certain and where it lacks certainty such a contract is referred to
as a contract void for vagueness and it does not constitute a contract at all. When parties enter into
a contract there must be sufficient content for the court to enforce a particular contract. The
requirement of certainty is reflected in the rule that offer and acceptance must result in certain
terms.
Case: Kantor v Kantor 1962(3) SA 202 –
Facts: Before the plaintiff and the defendant got married and they entered into an Ante nuptial contract.
The husband made an undertaking to buy his wife all such furniture, linen and domestic effects as may then
or thereafter acquire at such time or such quantity … Upon marriage, the husband failed to fulfill this and
the wife brought a legal action against him.
Held: that the husband was not bound to do anything because there was unlimited discretion.

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6. POSSIBILITY OF PERFORMANCE
The parties who intend to creating contractual obligations must ensure that the performance agreed
upon is objectively possible. An agreement will therefore not create obligations if performance is
impossible. Performance may be subjectively or objectively impossible.

 Subjective impossibility means, that although someone else may be able to render the
particular performance, the debtor cannot do so.
 Objective impossible involves a general inability to perform. In the eyes of the law no one is
able to render the performance for example, an agreement to sell a non-existent thing.

(a) Effects of Impossibility

Subjective impossibility of performance does not prevent the creation of an obligation. If the debtor
eventually does not perform, he may be liable for breach of contract. If performance is objectively
impossible when the agreement is concluded, no obligation arises in respect of that performance.
7. Formalities
This relates to a particular outward form that an agreement must be manifested to constitute a
contract. They are laid down by a statute for the creation of a contract or the contractants
themselves may agree to make compliance with formalities a prerequisite for the creation of
obligations.
Advantages of a written contract
 The preparation of the contract gives the parties time to consider their positions before
committing themselves by their signatures,
 The onus of proof is simplified:
 The scope for subsequent disagreement about the terms of the contract is very much
narrowed, since the terms are in writing for all to see.

In Zimbabwe, a contract does not necessarily have to be in writing unless there is a specific statutory
requirement that it be in writing.
 E.g. section 5 of Hire Purchase Act provides that a hire purchase agreement must be
reduced into writing.
 Section 7 of the Contractual Penalties Act provides that an installment sale of land must be
reduced into writing.

VOID AND VOIDABLE CONTRACTS

 The absence of one or more of the requirements of a valid contract means that the contract
is void.
 A voidable contract is whereby a contract is valid because it has all the requirements of a
valid contract but one of the parties may dispute the contracts on any one of the additional
points i.e. misrepresentation, duress, undue influence and mistake.

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Void Contracts
It is a contract which lacks any one or more of the essentials of the valid contract. In the eyes of the
law the contract is a nullity and it has no legal force at all. There is Restitutio in intergrum i.e. restitution
remedy. This simply means in both parties return to their original positions.
Voidable Contracts
It is a valid contract in that it satisfies all the requirements of a valid contract serve for the fact that
there is a defect in consensus. This can be absence or improperly obtained, consensus. The innocent
party to the contract has the right to set aside the contract if he so chooses.

a. Misrepresentation
A misrepresentation is a statement made by one party to the other before the time of contracting;
the statement must be material, factual and relates to the subject matter of the contract. Further the
statement must induce the other party into a contract (i.e. must have relied upon it). A contract
which is induced by misrepresentation is voidable. There are 3 types of misrepresentation:
(i) Innocent misrepresentation – i.e. misrepresentation made in honest belief that a
statement is true.
(ii) Fraudulent misrepresentation – the statement made by a party knowing fully that it is
untrue or are made recklessly
(iii) Negligent misrepresentation – a statement made in belief that it is true but the
circumstances of the contract demonstrate that it is untrue.

Case: Bayer SA v Frost (1991) 4 SA

Facts: Frost was a farmer with vineyards intermingled with onions and wheat. The agents of Bayer South
Africa negligently misrepresented to Frost that its herbicide could be sprayed in the vineyards by helicopter without
damaging the onions and the wheat. Frost was induced into the contract on the basis of those representations. The
vineyard was sprayed and which resulted in the onions and the wheat being damaged to the extent of R55 000.
Held: The court allowed Frost to recover the R55 000 as delictual damages.

b. Mistake (Justus Error)

This refers to an error of a material fact made by either one/both parties to enter into a contract
which they could not have entered into had it not been for the mistake. For a mistake to vitiate a
contract the following have to be satisfied:
(i) it must be a mistake of fact and not a mistake of law. The main basis of such a proposition is
found in the max ignorantia juris neminen excusat. (i.e. ignorance of the law excuses no one/rather is no
excuse).
Case: Ncube v Ndlovu 1985(2) ZLR 281(SC) where
Facts: the appellant seduced the respondent’s major daughter. The appellant then signed an agreement
undertaking to pay the respondent damages for seduction. He latter on sought to avoid the contract on the
basis of mistake of law (he was mistaken as to the legal position that a father has no right to sue for

40
 seduction in respect of a daughter who had reached the legal age of majority while relying on the Katekwe v
Muchabayiwa case).
Held: the appeal was dismissed on the basis that a mistake of law does not invalidate a contract.

It can also make a contract void ab initio only if the influence induced in the mind of the party
seeking relief such a fundamental mistake that apparent assent to the contract is in truth not assent
at all.
c. Duress
It occurs when a person is forced into a contract by fear induced through either actual violence or
threats of violence either on his person/family or property. The effect of duress on a contract is that
such a contract is voidable at the option of the innocent party.

d. Undue influence
A party to a contract may rescind it if he can prove that the other party had acquired an influence
over him when his powers of resistance were weakened. The other then used this influence in an
unscrupulous manner to persuade him to consent to a transaction which is to his detriment and
which with normal free will, he would not have entered into.
In Preller v Jordan 1956(1) the court held that a party leading undue influence should meet the
following five conditions:
(1) That the other party obtained an undue influence over the other. E.g. doctor and patient –
lawyer- client; guardian – minor, religious advisor-disciple relationships.
(2) The influence must have weakened his powers of resistance and rendered his will compliant.
(3) The other party must have used his influence in an unscrupulous manner
(4) The influence must have induced the conclusion of the contract
(5) The contract must be prejudicial to the influenced party

Effects of Undue Influence

(i) Undue influence makes a contract voidable at the instance of the influenced party
(ii) It can also make a contract void ab initio only if the influence induced in the mind of the
party seeking relief such a fundamental mistake that apparent assent to the contract is in
truth not assent at all.

TERMS OF A CONTRACT
The terms of a contract may be classified as essentialia, naturalia and incidentalia (or accidentalia).
i. Essentialia – are terms which are essential for the classification of a contract as belonging to a
particular class of contract. The essentialia of a contract serve to identify a particular class or a
category of contract. Such identification is important inter alia because the class of contract
determines the naturalia of a particular contract.

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ii. Naturalia – are terms which are, as a rule, attached by the law (hence, ex lege terms) to every
contract of a particular class. Naturalia help to determine the rights and duties of contracting parties
and the effects and consequences of their contracts.
iii. Incidentalia – parties to the contract often have special requirements for which the essentialia
and naturalia of their contract do not provide, but in a manner different from that which the
contractants would prefer. In such circumstances contractants may in principle insert additional
(supplementary) terms to achieve their common goal. Such additional terms are called incidentalia or
accidentalia.
Terms v Representations
Representations are often made at the pre-contractual stage and are usually meant to induce the
contract. They do not form part of the contract but are mere attestations as to the attributes of a
product, which is the subject of the contract. It was held in Mazza v Jones (1973), that it is accepted
that sellers are in the habit of praising their wares. This amounts to mere sales talk and does not
amount to terms of the contract and therefore has no legal significance. On the other hand, terms
effectively constitute the substance of the contract or agreement. According to Holmes JA in Phame
(Pvt) Ltd v Paizes (1973), terms are material statements, which go beyond mere commendation or
praise and amount to actual essentialia of the contract. The other major difference between terms and
representations is that representations or their breach is not actionable at law unless they misled or
induced the other party to enter into the contract. Terms on the other hand are enforceable at law as
they constitute the contract per se. breach of the terms therefore amounts to breach of contract and
an aggrieved party can seek recourse from the courts in such a case.

Classes of contractual terms

Contractual terms can be classified into two namely:
(i) express terms
(ii) implied terms

Express terms
This refers to contractual terms that are gathered from what was actually said by the parties either
orally or in writing.
In Small v Smith (1954) 35 ALR 434, 437 the court held that “A statement made seriously and
deliberately during the negotiation of a verbal contract becomes a term of the contract if the parties by mutual
intention either expressed or implied intended it to be a term of the contract.”
Effects of a signature on a written contract (caveat subscripto).
Where signed documents are concerned the caveat subscripto (let the signer be aware) rule will apply.
This effects of a signature are highlighted in the case of:
Burger v Central African Railways 903TS, 571, 578 where the court held that “It is a sound principle of
law that when a man signs a contract he is taken to be bound by the ordinary meaning and effect of the words
which appear over his signature.”

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This principle is referred to as caveat subscripto (i.e. let the signatory beware i.e. the signor should
be weary). This principle applies to the doctrine of quasi mutual assent but in essence says that a
reasonable person is entitled to assume that a person who signs a contract intends to be bound by it,
so he is bound even if that was not his true intention. It is important to note that a person who signs
a contract containing blank spaces is prepared to be bound by that contract when the blank spaces
are filled in by the other party.
Case: George v Fairmead (1958)
Facts: George as a hotel guest signed a hotel register which contained contractual terms some of which he
completed by filling in blank spaces but the rest of which he did not read. One clause exempted the hotel
proprietor from liability for loss caused by theft. When clothes were subsequently from his room, George sued
the hotel, claiming a mistake through ignorance based on Justus error in that he had believed himself to
signing merely a hotel register and not a contract and that in any event his attention had not been drawn to a
written term not included in the oral agreement
Held: George was bound on the contract by his signature
Principle: unless induced by misrepresentation or fraud, one is bound under the doctrine of caveat
subscriptor by one’s signature even if the material to which it is attached has neither been pointed out nor
read.

The general rule does not apply where the person signing the document has been misled as
to the contents
Case: Curtis v Chemical Cleaning & Dyeing Co. Ltd (1952)
Facts: Curtis when delivering a wedding dress for dry cleaning was asked to sign a document which
contained a clause that the company was not liable for any damages whatsoever arising. Curtis asked for
explanation and the answer was, ‘to protect cleaners from liability for damages to beads and sequins on the
dress’. She thereafter signed without reading the whole document. When she returned to collect her dress, she
discovered it had been damaged and she sued the dry cleaning company
Held: it was held that the company’s representative had misrepresented facts to Mrs Curtis and therefore
misled her as to the contents of the document. Curtis was therefore not bound by her signature on the wider
indemnity contained in the document. The defence is called ‘non est factum’ which means ‘it is not my deed’

In the case of a mistake, the general caveat subscripto rule does not apply where the contract is illegal
or contains a mistake. Thus, where a person signs a contract in the mistaken belief that it is a totally
different document, he can escape liability by pleading non est factum
Case: Foster v Macknon (1869)
Facts: Macknnon an old man of feeble sight was induced to endorse a bill of exchange for £3,000 on the
assurance that it was a guarantee. When he later discovered the error he sought to revoke the bill and Foster
sued him
Held: Macknnon pleaded non est factum and he was found not liable.
Principle: the general bill rule does not apply when the signature was obtained through fraud or reasonable
mistake

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Unsigned Contracts/Ticket Cases
It refers predominantly to notices, tickets and other unsigned documents. Unsigned documents such
as tickets or receipts contain a waiving liability clause (exemption clauses) on the part of the contracting
Part A which are unknown to the other Part B. A customer will be bound by what is contained in
the document if it can be shown that the supplier or the other party did what is reasonably necessary
to bring to the attention of the customer to the contents of the documents. However, sometimes the
print on the documents is so small especially with exemption clauses on dry cleaning tickets. In
dealing with these courts have adopted a three pronged approach summarized in
Kings Car Hire (Pty) Ltd v Wakeling (1970)(4) SA 640, 643 d-f
“The approach of the court is to enquire whether:
1. the person who received a ticket knew that there was printing/writing on it.
2. Secondly if so, “Did the person who received the ticket know that the printing or writing contained provisions
or references relating to the provisions of the contract in question.”
3. If yes to the above 2 questions, then the provisions in questions are part of the contract. If No to the above 2
questions, then a third question becomes relevant namely, Did the person, giving the ticket do what was
reasonably sufficient to give the other party notice of the conditions?

If the answer to such last mentioned question is in affirmative then also the provisions or
conditions are part of the contract. If not then the conditions form no part of the contract. A
customer is not bound by unreasonable terms printed on an unsigned written contract such as a
ticket.
Case: Central South African Railways v McLaren (1903)
Facts: McLaren deposited a hold-all at the Pretoria Station and received a ticket with the following
statement partly obscured by the railway clerk’s writing, ‘The department is not responsible for any
article exceeding the value of £5’ bought a railway ticket. McLaren though aware of the printing on the
ticket did not realize that it contained a condition nor was it pointed out to him. When the package was
lost, McLaren sued for its value but the railway company offered to compensate him not more than £5
Held: in favour of McLaren. The railway company did not do what was sufficiently reasonable to bring
to McLaren’s attention to the conditions
Principle: if there are conditions on them, then these conditions should be brought to one’s attention
either specifically or through a notice

Case: Dyer v Melrose Laundry (1912)

Facts: Dyer was in the habit of sending articles for laundry. On each occasion when the laundry
returned the articles, they attached a printed list of the prices charged for each item and the number of
articles returned. The list had a notice at the foot stating that articles were subject to conditions printed
on the back. On the back of the receipt, one condition limited liability for the loss of articles. The list was
used by Dyer to check the articles returned with the number sent she never read the notice/conditions. On
one action articles were lost.
Held: in the absence of proof by the laundry that Dyer knew of the conditions, and that they had not
done what was reasonably sufficient to bring the conditions to her notice and she was not bound by them.

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 Principle: an offeree should be aware of special terms printed on tickets if the person giving the ticket
has done what was reasonably sufficient to give the other notice of those terms. If such notice has been
given, the offeree is bound

Exemption Clauses
An exemption clause is a term of a contract which exempts one party from some specified liability
or responsibility which would otherwise fall on him. Courts have developed a two pronged approach
namely:
(i) Is the exemption clause part of the contract? If it is not part of the contract then the
stay ends there. The other party would not be bound. But if it is a part of the contract
the courts will apply the caveat subscripto principle and raise the following question:
(ii) What does the clause mean?
Here the court usually adopts a strict interpretation. In the event of either doubt or ambiguity, the
court will interpret an exemption clause against the drafter of the clause. This is referred to as the
contra proferentem rule.
Shubwa Ranch (Pvt) Ltd v Shield of Zimbabwe Insurance (Pvt) Ltd 1988(2) ZLR 306

Interpretation of Express Terms

It has generally been accepted that when a contract is reduced into writing the courts must rely on
the provisions of the written contract (not extrinsic evidence) to deal with any dispute arising
therefrom. This is referred to as the Parole Evidence Rule and was underscored in the case of
Johnson v Lean 1980(3) SA 927, 937, where the court held as follows:
“When a contract has been reduced to writing, the writing is regarded as the exclusive embodiment or
memorial of the transaction and no extrinsic evidence may be given of other utterances or oral acts by the
parties which will have the effect of contradicting, altering, adding to or varying the written contract.”
The rational for this is that if parties to a written contract are permitted to give you
extrinsic/external evidence written contracts will lose much of their value.
Implied Terms
These are terms that are imposed into a contract from its context. They come in three forms namely:
i. terms implied by law
These refer to terms that are imported into a contract by operation of either common law or statute
law regardless of the intentions of the parties. e.g.
a. The sale of land has to be in writing.
b. The Labour Act imposes a number of minimum conditions on an employment contract.
c. Every contract of sale has implied warranties against latent defects.
ii. Terms Implied by Trade Usage
These arise where a specific trade has developed its own universally and uniformly observed rules
which apply in contracts of that trade or profession. The requirements for implying a contractual

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term by trade usage were laid down in the case of Golden Cape Fruits Pty Ltd v Footplate 1973(2) SA
602 as that the term should have universal, uniform, notorious, reasonable, certainty and should not
conflict with other provisions of the contract.

iii. Terms implied from facts

This refers to terms that become patently clear when regard is given to the language used in the
contract and surrounding circumstances.

Suspensive Conditions
It is a contractual term which suspends the operation of the contractual obligations in terms of the
contract until the condition has been fulfilled.
 A contract becomes into existence and a binding contractual relationship exists from which
the parties cannot resile.
 The operation of the contractual rights and duties are suspended until the condition has
been fulfilled.

Resolutive conditions
It is a contractual term which renders the continued existence of the contract dependent on the
occurrence (or non-occurrence) of a specified uncertain future event. A contract becomes into
existence and the contractual rights and duties become operative and are immediately enforceable. If
the condition is fulfilled when the specified future uncertain event takes place, the contract is
dissolved and the contractual rights and duties cease to exist.

TRANSFER OF CONTRACTUAL RIGHTS

The rights flowing from a contract are personal rights. They are rights to claim performance by the
other party to the contract.
Contractual rights can be transferred through:
a) cession
b) delegation
c) novation

1. Cession
The contractual obligations are transferred to another party known as a cedent. Cession is
sometimes described as some kind of novation. Notice of cession to the debtor, is not necessarily
required but it is legally advisable. Cession differs from novation in that novation requires consensus
of the debtor and the consequent of the novation will be that there will be a new contract to replace
the old contract.

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2. Delegation
It requires the agreement of all the parties concerned that a third party be substituted for the original
debtor and the later become discharged from the obligation of the debtor. The creditor has to agree
to the older debtor being replaced by the new one.
3. Novation
It means the replacement of existing contractual obligation by new obligations. Novation discharges
the old obligation and a completely new contract is created. There are 2 types of novation:
 Voluntary novation (novatio voluntaria) - where 2 parties to a contract mutually agree to enter
into a new contract to replace an existing contract.
 Compulsory novation (novatio necessaria) – where an existing contract is superseded by events
e.g. by a judgment of a court of law.

TERMINATION OF CONTRACTUAL OBLIGATION

A contract is terminated after being performed. Performance means that each party must perform
its own obligations as envisaged by the contract. There comes a time in the life of a contract when
all is said and done. That time is the end of the contract and the release of the parties from their
obligations in terms of the contract.

The methods of discharge/termination of a contract are:

1. Performance
2. Agreement
3. Novation
4. Settlement (transactio) - Compromise
5. Delegation
6. Cession
7. Assignment
8. Supervening impossibility
9. Set-off
10. Prescription- time elapses
11. Death
12. Merger (confusio)

(1) Performance
The commonest way for the discharge of contract is through performance. When the parties have
duly performed their respective obligations they will be released and the contract accordingly
discharged.
(2) Agreement
A contract can be terminated by mutual agreement where the parties by mutual agreement agree to
discharge the contract.

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(3) Novation
Occurs an existing contract is replaced by a new one. The original contract will accordingly be
discharged .in this situation the parties remain the same but the terms are varied e.g. ’A’ had
contracted to supply “b” with 100 books per month but the parties have agreed to increase the
books to 500 per month.
(4) Settlement (transactio) - Compromise
This is a form of novation. The parties, may after a disagreement have reached a settlement and
replaced the disputed obligation with one reached by compromise.
(5) Delegation
This is also a form of novation. In this case, the original debtor is substituted by a third party who
steps into the shoes of the original debtor. As the original contract is concerned, it will be discharged
and he will be freed from all the obligation in terms of the contract. This is where a third party is
introduced as debtor in substitution for the original debtor, who is then discharged. Old finished
and new arises with a different party.
(6) Cession
This is yet another form of novation where the original creditor is replaced by a third party who
steps into the original creditor. The consent of the debtor is not required.
(7) Assignment
This is a combination of delegation and cession in that both rights and obligations are transferred at
once e.g. if purchaser purchases a house where there are tenants already and the seller owed the
Municipality. It would mean that the new owner/purchaser becomes the new creditor to tenants and
he also becomes a new debtor to the Municipality.
(8) Supervening impossibility
Performance may become impossible owing to a multitude of factors. It could be that the
performance becomes illegal. The subject matter of the contract may be destroyed. It could be that
the other party has become insane, or is suffering from some disability, physical or legal. It could be
vis major or an act of God such a storm, flood or an earthquake. The parties to the contract should
not have foreseen that performance will become impossible. It could be an act of the state such as
legislation or declaration of war. This is referred to as causus fortuitous.
Case: Pieters, Flamman & Co. v Kokstad Municipality 1919 AD 422
Facts: the Municipality contracted a company to provide streets lights for ten years. During the substance of the
contract, the partners became enemy aliens and their business was wound up under the relevant legislation. The
municipality claimed damages for breach of contract and forfeiture of the firm’s plant under the contract.
Held: The Appellate Division dismissed the action and held that if a person is prevented from performing his contract
by a vis major causus fortuituous under which falls an act of state i.e. person is discharged from liability.
Principle: A contract is void where the contract becomes impossible for performance.

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(9) Set off – Compansatio
This occurs where the parties to the contract are reciprocally indebted to each other and there will
be no need to exchange what they owe each other. They are automatically released from their
respective rights and duties in terms of the contract on condition that both debts are due.
10. Prescription
Debts prescribe or expire after a certain period of time. The following are the prescription periods
for various kinds of debt. E.g. a debt arising from a contract prescribes after 3 years, judgement
debt prescribes in 30 years.
11. Death- where a contract does not bind the executor of the deceased person to perform the
obligation undertaken in the contract; the contract is terminated upon the death of the other person.

12. Merger (confusio) - occurs where a person becomes creditor and debtor in respect of the same
obligation. The debt is extinguished by operation of the law.

BREACH OF CONTRACT
Although breach can be classified as the method of termination or discharge, it does not of itself
automatically terminates a contract. It has the effect of entitling the innocent party to cancel the
contract.

Breach of Contract is divided into five main categories, namely:

(a) Default by the debtor - (mora debitoris)
This amounts to a failure to perform timeously or defective performance due to the debtor’s fault. A
debtor who fails to perform or performs out of time is said to be in mora. If a debtor fails to pay in
time, the mora arises ex RE. If he fails to perform on demand for payment, this will be regarded as
mora ex persona.
Broderick Properties v Rood 1962 (4) SA 447 (1)
see Laws v Rutherford 1924 AD 173 and Smart v Rhodesian Machine Tods 1949 SR 226
In the presence of a forfeiture clause, the creditor will cancel the contract.
Requirements for mora debitoris
1. The debtor fails to perform on time
2. The debt must be due
3. The delay must be deliberate

(b) Default by the creditor - (mora creditoris)

This arises where the creditor causes the debtor’s performance to be delayed. It occurs where the
discharge of the debtor’s obligation requires the creditor’s cooperation. The debtor tenders
performance but the creditor fails to give his cooperation and thereby delays performance.

49
If the creditor refuses to accept payment when it is tendered, he places himself in mora creditoris
and the debtor will be relieved of the duty to pay.
Requirements for mora creditoris
1. Creditor fails to accept performance
2. Debt must be due
3. Performance must be proper
4. Failure to accept must be deliberate

(c) Positive Malperformance

This happens where the debtor commits an act which is contrary to the terms of the contract. E.g.
the debtor tenders defective or improper performance.
Sweet v Ragerguhara and Others 1978 (1) SA 131 (D).
(d) Repudiation
Repudiation is where one party to a contract evinces (discloses) an intention no longer to be bound
by that contract, that repudiation can be express or by conduct. This should lead a reasonable
person in the position of the innocent party to conclude that the first party does not intend to
comply with the terms of the agreement or denies the existence of the contract.
Case: Tuckers Land Development Corporation v Holves 1980(1) SA 645,
Facts: the appellant drew a plan of a township which appeared on 2 stands, which were then sold to the
respondent Holves. The appellant came up with a new plan in which the two stands did not appear.
Held: The court held that the drawing up of the new plan meant that the appellant have repudiated the old
plan contract.

Where somebody expresses an intention no longer to bound by his contract, that is fine. The
innocent party has an election whether to accept the repudiation thereby terminating the contract, or
rejecting the repudiation/in which event the contract remains in force, such an election however
must be made within a reasonable time.

(e) Prevention of Performance

It consists of conduct after the conclusion of the contract by which the debtor makes it impossible
for himself to perform. The conduct may be a positive act or a failure to act and the resulting
impossibility may be total or partial. Prevention of performance is a form of anticipatory breach of
contract. It can therefore occur before, on or after the date set for performance, but by virtue of its
nature prevention of performance take place before actual performance.

(f) Material breach

This is sometimes called fundamental breach. This is a breach that goes to the root of the contract,
the analysis i.e. is a factual one. Is the breach that had occurred is so serious that it undermines the
contract and the innocent party is not reasonably expected to continue with the contract. It
amounts to non-performance.

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Remedies for breach of contract
A remedy is a legal procedure provided to protect a right against infringement or to control the
effects of an unlawful act or situation. There are five remedies of breach of contract:
1 order for specific performance
2 cancellation and damages
3 interdict
4 declaratory order
5 Exceptio non adimpleti contracts (I cannot perform because you had not performed your
part)

1. Specific performance (informa specifia) - This is an order directing the defaulting party to do
what they had agreed to do under the contract. The court’s decision whether or not to order specific
performance will be guided by judicious principles. For this reason, this remedy is regarded as a
discretionary remedy.

EXCEPTIONS the court would not readily grant it.

1. Where performance is impossible
2. where it would cause hardship on the wrong party, or
3. where it would cause hardship TO the public in general
In Intercontinental (Pvt) Ltd v Nestle Zimbabwe 1993(1) ZLR 21. Nestle had undertaken to deliver
certain quantities of milk and they failed to deliver the milk, then Intercontinental went to the court
for an application for specific performance.

In Winterton Holmes and Hill v Paterson SC 115/95 where the Supreme Court accepted that it will not
order reinstatement specific performance where there has been a bitter relationship between the
employer and employee.
Patel v Greek Films 1973 (1) RLR 180
2. Cancellation and Damages
Rescission or cancellation of a contract is a unilateral juristic act in terms of which certain
consequences of a valid contract are terminated. Cancellation is an extraordinary remedy, which is
available where the breach of contract is material or serious, or where the contract provided for a
right to resile.
The innocent party need not cancel the contract, but he must elect what he wishes to do within a
reasonable period of time. He must elect whether to cancel or enforce the contract. If the breach is
so fundamental and so material that it goes to the root of the contract, then the contract will have to
be cancelled. The purpose of damages is to try and place the innocent party in the position he would
have enjoyed had the contract been duly performed. The damages are only for actual and not
sentimental loss. Damages also provide solace to the wronged party. Cancellation is available where:-
1. An essential is breached i.e. breach goes to the root of the contract
2. Where there is positive malperformance.
3. Where repudiation has been accepted by the creditor

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4. Where time is of the essence to the contract.
5. Where there is the lex commissoria or right to resile in the event of a breach.

3. Interdict
An interdict is an order stopping the one party from the doing of something, which will jeopardize
the other party’s rights under the contract. A person who threatens to breach the contract may be
estopped or interdicted from doing so. An interdict may also be granted to maintain the status quo
that is for the parties to remain in their positions until the Court has made a determination.
Gideon v Ngumo 1975 (2) RLR 197
A peremptory interdict orders a person to behave in a certain way.
A prohibitive interdict prohibits a person from behaving in a certain way.
An interdict is granted only as a last remedy when all others have been exhausted.

In Flame lily v Zimbabwe Salvage (Pvt) Ltd and Another 1980 ZLR 378 where the interdict being sought
was to stop the respondent from destroying a mining dump it until litigation pertaining therefrom
had been finalized.

4. Declaratory order
In our jurisdiction, the high Court has power to declare the parties rights in terms of their contract.
It is important that the parties know exactly where they stand instead of wondering in the dark.

5. Exceptio non adimpleti contractus

Exception non adimpleti – is not a remedy but a defence. It consists in the contractant’s right to
withhold performance. A party to a reciprocal contract may withhold his own performance until the
other contractant performs. A defendant is therefore entitled to withhold performance in order to
secure counter-performance. The essence of this remedy is, simply stated, that my obligation to
perform has not arisen because you have not performed your own obligation.

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 CONTRACT OF SALE

Sale is a contract whereby one party (the seller or vendor) undertakes to transfer a thing (the res
vendita or merx) or the possession thereof to the other party (the purchaser) in return for payment
of a price. Resvendita- refers to goods/services (corporeal/incorporeal).

There are two different types of transactions involved, namely;

1. Where the merx/good/belonging/ property is transferred from the seller to the buyer
the contract is called a sale.
2. Where the transfer of the property is to take place at a future time or subject to some
condition later to be fulfilled the contract is called an agreement to sell (res vendita).

ESSENTIAL ELEMENTS OF A CONTRACT OF SALE

To determine whether a contract of sale exist/has been concluded the following must be present;
1. Consent to agreement of sale – consent that the contract is of sale. concluding an agreement
to sale does not in itself transfer the real right of ownership from the seller to the buyer
2. Agreement on the merx – Parties must agree on the thing being sold. The merx is the subject
matter of the sale and it must be defined and ascertainable.
3. Agreement on the particular price – Parties must be in agreement about the pretium (price)
to be paid. It must be certain and ascertainable.

PRICE (Pretium)
The agreement must have monetary component for the contract to quality as a sale. The price
need not be entirely in money, also the price must be fixed amount or the parties must have agreed
upon some external method or standard by reference to which the price can be ascertained. If the
parties leave the agreement of a price to a third party and he refuses or is unable to fix a price then
there is no sale.

Duties of the Seller

1. To take care of the think (merx) until it is delivered
2. Duty to deliver the merx to the buyer.
3. To guarantee undisturbed possession of the goods (vacua possessio)- the seller guarantees
the buyer that no one with a greater title will disturb the buyer.
4. To guarantee against latent defects
5. Receive the purchase price

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Duties of the Buyer
1. To pay the purchase price
2. To pay the seller’s necessary expenses in maintaining the merx until delivery.
3. To accept delivery of the merx

Transfer of ownership
To find that ownership has passed in a contract of sale, the following elements must be proved;
1. Seller must have been owner at the time of delivery
2. Seller must have intended to pass ownership to the buyer on delivery.
3. Buyer must have intended to acquire ownership at the time of delivery.

Delivery (Traditio)
A valid contract of sale will transfer ownership to the purchaser.Upon the agreement of the parties,
the contract becomes perfecta. Agreement alone suffices because consideration is not a requirement
in Roman-Dutch law.

Immovable property – delivery is made upon the acquisition of title deeds. It is called
conveyancing and is done only by registered conveyancers.

Movable property – delivery takes place in different ways.

1. Actual delivery – involves the actual handing over of the property to the buyer. E.g. buy a
radio
2. Constructive/fictitious delivery- actual delivery is not possible so the goods are symbolically
delivery. E.g. handing over keys.
3. Attornment – an agent who has control of the goods on behalf of the seller will henceforth
continue with the control, but this time on behalf of the buyer.
4. Delivery by long hand (traditio longa manu) – the goods are pointed to the buyer so that he can
collect them in his good time.
5. Delivery by short hand (traditio brevi manu) – the buyer already has possession of the goods
and he becomes the owner thereof.
6. Constitutum possessorium – the seller retains possession of the goods but contracts the goods as
the agent of the buyer.

DEFECTS
1. A latent defect is a hidden defect which could not be uncovered during a routine inspection
process.
2. A patent defect is a defect which is visible during a successfully conducted inspection.
3. Latent defects can become a point of contention in liability law.

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4. Since people can't find these problems until after they buy a product, they can be a problem for
the buyer.

When people buy new products, the understanding is that they buy with an awareness of any
existing defects or problems. This is based on the assumption that if the product had patent
defects, the buyer had the opportunity to refuse the purchase. In the case of latents, the buyer had
no way of knowing about the defect because testing techniques might have been needed to
uncover it. Protection against latent defects is often written into sales contracts, spelling out the
situations in which the seller will be obligated to replace or repair the damaged object (warranty).

Voeststoots
The word voetstootsused to describe the action of buying something as is, that is just as it
stands in whatever condition it is. If a property is sold voetstoots the Seller shall not be liable for
any defects, patent, latent or otherwise in the property nor for any damage occasioned to or
suffered by the Purchaser by reason of such defect. The Purchaser admits having inspected the
property to his satisfaction and that no guarantees or warranties of any nature were made by the
Seller or his agent regarding the condition or quality of the property

The Seller shall not be responsible for any defects latent or patent or any damage resulting
thereof and the Purchaser hereby agrees to accept the (goods) as they stand with all faults.

The Passing of risk

Risk is damage or harm that may befall the property or the fruits of the merx. Upon conclusion
of the contract, the risk of accidental damage to or loss of the merx passes to the buyer despite
that the buyer has not assumed possession of the property. Risk passes from seller to buyer as
soon as the contract of sale is perfecta even before payment has been done or delivery has been
effected.

Exceptions to this rule.

1. If the seller is negligent or by his own free will destroys the property.
2. Agreement of the parties
3. Where the sale is subject to a Suspensive condition.
4. If the seller fails to deliver the merx timeously, the risk will revert to the seller.
5. In a hire purchase sale risk will only pass to purchaser upon full payment of the purchase
price.

REMEDIES FOE BREACH OF CONTRACT OF SALE

1. Rescission
2. Damages
3. Specific performance

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Rescission
• Rescission is the abrogation or revocation of a contract.
• It is a remedy provided by a court order cancelling the contract.
• The court will then also make orders aimed at restoring the parties to the position they
were in prior to the contract.
• This means that any money or goods, etc. which passed from one party to the other will
be returned.
• The basis for rescission is generally the breach of a condition of the contract.
• Where the breach relates to a warranty, rescission will not normally be available and the
wronged party will only receive damages

Damages
• Is remedy for breach of contract through payment of money, called damages.
• The amount of damages to be paid is the loss that the wronged party could be expected to
suffer as a reasonable consequence of the breach.
• The sum of money is calculated to compensate the wronged party for the loss caused by
the breach of contract.
• The award of damages is to place the wronged party in the same position as they would
have been in if the contract had been properly performed.
• So, all reasonable steps to ensure that the loss suffered is as small as possible must be
taken by the wronged party.

Specific performance
Is action whereby a party to a contract may want to insist that the other party complies strictly
with the contract that has been made. This is called requiring specific performance.
• Where a party is guilty of some "sharp" practice.
• The remedy requires the court to supervise and see that the services were properly
performed
• This is of particular relevance to contracts for the sale of goods.
• Where the goods are rare or have some special quality the court will order specific
performance.

DAMAGES AVAILABLE TO THE BUYER

A buyer who wishes to institute a claim arising from latent defects in the merx must prove that:
1. There was a material defect in the merx.
2. The defect was present when the contract of sale was concluded.
3. The defect was latent
4. He was unaware of the defect at the time of the conclusion of the contract.

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The remedies available to the consumers/buyer are;
1. Aedilitian actions is remedy for breach of an implied warranty against latent defects or
misrepresentation.
(a) Actio redhibitoria
It arises if the defect is so material as to render the article useless and the buyer would not have
bought it otherwise.The buyer may sue for:
i. return of the purchase price.
ii. Repayment of expenses incurred
iii. Reimbursement for improvements to the merx
(b) Actio quanti-minoris:
It arises if the defect is not so material that the buyer would have refused to buy it. The buyer sues
for a reduction in the purchase price, to the true value of the damaged merx in the condition at
delivery. That is the difference between the price paid and the value.

2.The Actio empti

It is a common law remedy available to the buyer to enforce his rights against the seller. It can be
used in the following circumstances:
(a) Defective performance – where the merx is delivered without the good qualities guaranteed
by the seller
(b) Misrepresentation-where the seller is aware of defects in the merx but does not disclose to
the buyer or if the seller induces the contract by making false representations about the good
qualities of the merx.
(c) Breach of warranty against eviction – arises due to the seller’s undertaking that the buyer will
not be disturbed in his enjoyment and possession of the merx by someone with a better title
to the merx.
(d) Manufacturer’s liability – arise when the merx is found to be defective in cases where the
manufacturer of the merx publicly claims to have expertise regarding the merx.

DAMAGES AVAILABLE TO THE SELLER

Where the buyer does not accept delivery (mora creditoris) the seller has the following options:
1. Specific performance, whereby the buyer is compelled by the court to accept delivery of the
merx.
2. Cancellation: the seller may give notice of rescission for non-payment of price.
3. Damages, In the case of both two remedies above, the seller can claim damages to recover
money spend in maintaining the merx.

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 LAW OF AGENCY
Introduction
An Agent is ‘any person who happens to act on behalf of another. An agency relationship is formed
between two parties when one party (the agent) agrees to represent another party (the principal). A
principal-agent relationship is fiduciary, meaning it is based on trust. Normally, all employees who
deal with third parties are considered agents. As such, an agency relationship is governed by
employment law.

If P (the principal) instructs A (the agent) to act in the purchase of goods from T (the third party
seller) in the sale of those goods, the contract of sale that is made by A is enforceable between P and
T. In general, A has no liability to either P or T on that contract: where a person contracts as agent
for a principal the contract is the contract of the principal, and not that of the agent; and, prima
facie, at common law the only person who may sue is the principal, and the only person who can be
sued is the principal.

Three Relationships
There are three parties: P, A and T, and three relationships:

A T
 the relationship between P and A
 the relationship between A and T
 the relationship between P and T.

An agent who acts outside the authority granted by the principal will be in breach of the contract (if
there was one) by which the principal appointed the agent, but, in spite of this, the principal may be
bound to the third party.

This is because the authority with which the agent has been clothed by the principal determines the
relationship between the principal and the third party. That is, the principal will be liable to the third
party if the principal represented that the agent was acting within their authority (apparent
authority).

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This means that the question of whether or not the principal is bound to a third party does not
depend on the actual authority granted by the principal to the agent. It depends on the apparent
authority of the agent (also known as the ostensible authority of the agent). The apparent authority
is that authority which the agent appears to possess because of representations made by the principal
to the third party.

If the third party knows the limits of the agent’s actual authority, there is no difficulty and the
apparent authority will be the same as the actual authority of the agent. However, the third party
will, usually, not know the terms of appointment of the agent and must rely on the apparent
authority.

Key characteristics of an agency:

1. the agent acts on behalf of another (the principal) so
2. that the principal is bound and can sue or be sued by
3. the third party on the contract made by the agent
4. the agent is not liable on the contract between the
5. Principal and the third party.

TYPES OF AGENT
1. General agent and special agent
A general agent acts for a principal in the ordinary course of that agent’s business; a special agent has
authority only for a particular purpose that is not part of the ordinary course of business for such an
agent. A solicitor would be a general agent if authorised to undertake a range of legal work for a
client, but a special agent if only authorised by the client to sell a house.
2. Factor and mercantile agent
A factor is an agent who is entrusted with the possession of goods or documents of title to goods
and who is allowed to sell them in the factor’s own name as a or in the principal’s name. The factor
has generally been superseded by the mercantile agent. A mercantile agent is an agent who, in the
customary course of business, has authority to sell or to consign goods for sale, or to buy goods, or
to raise money on the security of goods
The general rule is that handing over goods or documents of title to another does not give that person authority to
sell, so that anyone buying the goods will not acquire good title: handing over a car to a mechanic for repair does not
constitute an authority to sell the car. A disposition by a mercantile agent is an important exception to this general
rule.
3. Broker
A broker negotiates contracts between a buyer and a seller without having possession of the goods
or the documents of title. Produce brokers are key players in the commodity markets and exchanges.
Some act for both buyers and sellers.

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4. Commission agent
A commission agent buys or sells goods on behalf of the owner, but does not establish a contractual
relationship between the owner and the third party. The commission agent acts as principal in the
contract with the third party. Nevertheless, this agent owes to the owner all the duties of an agent to
a principal. In a sale the agent is liable to the third party (the buyer) for breach of the implied terms
as to quality. In a purchase of goods, the agent is liable to the third party (the seller) for the price,
but is not liable to the principal for the quality of the goods.

5. Del credere agent

A del credere agent indemnifies the principal against loss incurred by the third party’s breach of
contract in respect of payment, although not in respect of any other breach.
An exporter, who is uncertain about the financial status of a foreign buyer, might find such a
guarantee attractive, although the modern tendency is to obtain a confirmation from a confirming
house or to rely either on a documentary credit, under which a bank pays the seller on the
presentation of certain documents, or on credit guarantees, which provide that in the event of the
buyer failing to pay the guarantor will be liable.

CREATION OF AGENCY
An agency may be created by Express or implied agreement. The parties can create the agency by
a written agreement (for example, power of attorney), but it is also possible to imply the existence of
the agency from the spoken words or the conduct of the parties.

1. By agreement as usual there should be offer and acceptance leading to a contract of agency.
Express authority is given in a written contract that defines positions, duties, and expectations of
parties.
2. Implied agreement between the principal and agent where there is a representation by the
principal to the third party that the agent has authority. Implied authority is the agent's right to
act where it is customary or the norm in the specific business context. Ostensible" agency is
when actions cause a third party to assume someone is an agent.
3. Agency by estoppel is created when an agent's unauthorized activity causes a third party to
believe the agent has that authority.
4. Ratification - where the principal ratifies an act by someone who, without authorisation,
purported to undertake an act as an agent of the principal. Agency by ratification occurs when
the unauthorized action of the agent is accepted by the principal after the fact.
5. Agency implied by Law - where the agency arises under statute, such as, when an unpaid seller
exercises the right to resell under Sale of Goods. for example; upon being declared insolvent, the
trustee automatically has power confirmed upon him by law to act on behalf of the insolvent.
6. Negotiorum gestor - where there is an agency of necessity

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The appointment may be made orally or inferred from conduct of the principal showing consent to
the agency. The agent’s acceptance can be express or may be inferred, as where actions on behalf of
the principal can only be explained by the existence of an agency.

Consent
Normally, an agency will be established by consent of both parties. The parties can create the agency
by a written agreement (for example, power of attorney), but it is also possible to imply the existence
of the agency from the spoken words or the conduct of the parties. The degree of control exercised
by one party (the alleged principal) over the other (the alleged agent) may suggest the existence of an
agency.

However, for example, much of the work of stockbrokers is determined by the rules of the
exchange within which they operate. So an alleged principal’s lack of total control does not
necessarily indicate that there is no agency relationship.

Liability of the parties of contracts entered into by the agent

If the agent has actual or apparent authority, the agent will not be liable for acts performed within
the scope of such authority, so long as the relationship of the agency and the identity of the principal
have been disclosed. When the agency is undisclosed or partially disclosed, however, both the agent
and the principal are liable. Where the principal is not bound because the agent has no actual or
apparent authority, the purported agent is liable to the third party for breach of the implied warranty
of authority

RIGHTS, DUTIES, AND LIABILITIES BETWEEN PRINCIPALAND AGENT

An agent owes certain duties towards his/her principal and a principal owes certain duties towards
his/her agent. The scope of an agent’s duty to the principal is determined by:
1. the terms of the agreement between the parties; and
2. Extent of the authority conferred and the obligations of loyalty to the interests of the
principal.

Duties of an Agent
1. act on behalf of and be subject to the control of the principal;
2. to take action only within the scope of the his/her actual authority (act within the scope of
authority or power delegated by the principal)
3. discharge his/her duties with UTMOST good faith AND appropriate care and diligence;
4. avoid conflict between his/her personal interests
5. Not to acquire any material benefit from a third party in connection with transactions conducted
or through the use of his/her positions as an agent.
6. to act with the care, competence, and diligence normally exercised by agents in similar
circumstances
7. to comply with all lawful instructions received from the principal and
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8. to act reasonably and to refrain from conduct that is likely to damage the principal’s enterprise.

An agent is liable to a principal when he/she acts without actual authority, but with apparent
authority. An agent is liable to indemnify a principal for loss or damage resulting from his/her act.

Duties of a Principal
A principal owes certain contractual duties to his/her agent. Correlative with the duties of an agent
to serve a principal loyally and obediently.
1. To compensate the agent as agreed
2. To indemnify and protect the agent against claims, liabilities, and expenses incurred in
discharging the duties assigned by the principal.
3. To reimburse the agent for any expenses properly incurred.

Because of the fiduciary relationship, a principal owes his/her agent a duty of good faith and fair
dealing. However, a principal can be relieved of contractual obligations by an agent’s prior breach of
contract. A principal has a duty to act in accordance with the express and implied terms of any
contract between a principal and an agent.

When an agent acts within the scope of actual authority, the principal is liable to indemnify the agent
for payments made during the course of the relationship irrespective of whether the expenditure was
expressly authorized or merely necessary in promoting the principal’s business.

AGENCY BY ESTOPPEL AND APPARENT AUTHORITY

In ordinary business dealings, a third party contractor at the time of entering into a contract can
hardly ever rely on the “actual” authority of the agent.’

This is simply because the third party will not have access to the terms on which the agent has been
appointed. The third party, therefore, relies on a perception as to the authority of the agent, that is,
the agent’s apparent authority. Apparent (or ostensible) authority is the authority of an agent as it
appears to others. It arises where:
1. The principal or someone acting with the actual authority of the principal) represents to the
third party that the agent is authorised to undertake the transaction which the agent and the
third party subsequently conclude.
2. the agent did not purport to make the agreement as principal
3. the third party was induced to enter into the transaction in reliance upon that representation
4. The third party altered their position to their detriment.

Where there has been such a representation, the principal will be prevented from denying the
existence of the agency (agency by estoppel) and will be bound in so far as the agent’s act came
within the authority that the agent was represented by the principal as possessing (the agent’s
apparent authority). The result is that the principal may be bound to a third party even though:

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 1. the agent does not have actual authority, or
2. the agency agreement has ceased, or
3. the agent acts beyond the actual authority granted by the principal.

In other words, the agency here is based on estoppel and not the consent of the principal.
Nevertheless, the third party can enforce the contract against the principal even though the agent
did not have actual authority.

Where someone has been represented by the principal as having authority to act as agent, that
person will possesses the usual authority of such agents in spite of any restrictions imposed by the
principal on the agent.

Representation by the principal

In order to be bound by the apparent authority of the agent, the principal must have represented to
the third party that the agent had the necessary authority to conclude the transaction on behalf of
the principal and the third party must have a reasonable belief that the agent had such authority. In
general, if the representation as to authority comes from the person purporting to be an agent, the
principal will not be bound to the third party, although the bogus agent may be liable to the third
party for breach of the warranty of authority.

The representation may be by words or by actions, including a course of dealings. Usually, silence or
inaction will not amount to a representation, unless there is a duty to say something.

For example; L said nothing after his wife entered into a contract for the sale of his house. The
buyers later incurred various expenses in contemplation of completion. L was estopped by his
silence from denying the authority of his wife to sell.

Representation by the agent

Another difficulty is that, because a company must act through agents, representations as to the
authority of those agents must come from one of the company’s agents. If the representation comes
from the same agent as later makes the transaction, then, generally, the principal is not bound. But
there is nothing to prevent the principal from endowing that agent with authority (actual or
apparent) to make representations about the agent’s own authority to act in the transaction for the
principal.

5.7 RATIFICATION
Requirements for ratification
The principal may be bound where they ratify a transaction entered into by someone who purported
to act as their agent. This is not apparent authority because the agent cannot represent their own
authority. If the third party decides to go ahead with the transaction, they take a risk that the
purported agent has authority or that the principal will ratify the transaction, because unless there is

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actual authority or ratification the principal will not be liable on the contract made by the purported
agent.

There are various reasons why a principal might ratify such a transaction: the principal may be happy
with the deal, or may be unhappy with the transaction but decide to ratify it to maintain commercial
reputation or to preserve the reputation of the agent. However, in determining if there has been
ratification, the motive of the principal is irrelevant.

Requirements for valid ratification.

1. At the time of the relevant act, the agent must have intended to act on behalf of the principal.
2. The purported agency must be revealed to the third party at the time of the transaction. There
can be no ratification where A makes the contract as principal.
3. The third party must believe that the person with whom they are dealing has authority to act
for another. Where the agent states that the ‘contract’ is subject to ratification, this does not fall
within the doctrine of ratification because it amounts to saying there will be no contract until the
principal has given approval.
4. The principal must be competent to enter the contract at the time it was made. For instance,
did the company have authority under its constitution to do this act?
5. The principal must be competent at the time of ratification.
6. No formalities need be observed for a valid ratification. The principal will only be held to
have ratified if they did so with full knowledge of the facts. Ratification can be express or implied
from conduct as long as the intention to ratify is clear and unequivocal.

Effect of ratification
Ratification puts the parties into the position they would have been in had the act been authorised
from the outset: ‘ratification when it exists is equivalent to a previous authority. The principal can
sue or be sued by the third party. The agent will not be liable to the principal for excess of authority
nor to the third party for breach of warranty of authority. The agent may be entitled to be
indemnified by the principal for any liability incurred.

Example; S accepted an offer from L on behalf of B but without B’s authority. L later withdrew the
offer and only then did B ratify. It was held that the contract was binding on L. No real reasoning
was provided for this other than that ratification meant ‘the agent is put in the same position as if he
had had authority to do the act at the time the act was done by him.

TERMINATION OF AGENT’S AUTHORITY

Once the relationship is terminated, the agent no longer has authority to act for the principal. The
principal is required to inform third parties that the agency relationship has been terminated. Ways
to terminate an agency relationship include:
1. Lapse of time: If the parties agree to set a time period for the agency relationship, the
agency relationship terminates when the time period passes.

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2. Purpose achieved: Some agents are hired to achieve a certain purpose. Once that purpose is
achieved, the agency relationship is automatically terminated (but you can extend it). A prime
example is when professional sports players hire an agent to only negotiate contracts.
3. Mutual agreement: Both parties can agree to terminate the relationship. If both parties
agree to part ways, the reason for the termination does not matter.
4. Certain events: An agency relationship will automatically terminate upon the
occurrence of certain events. Such events include death, insanity, or bankruptcy of
either the principal or agent. A court of law will usually step in and terminate the
agency relationship if one of the parties refuses to do so. Both parties may also
specify particular events that can cause termination.

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 LAW OF LEASE

A “contract of lease”is a contract whereby one part (the lessor) agrees to give the other (lessee) the
temporary use and enjoyment of a thing, wholly or in part, in return for remuneration (the rent)

A “contract of lease” is a reciprocal contract. That means that both parties have rights and duties in
terms of the contract. Sometimes the contract of lease is also referred to as a “rental agreement”
or contract of letting or hiring.

ESSENTIAL ELEMENTS OF THE CONTRACT OF LEASE

1. The use and enjoyment of a specified property
2. The rent
3. period or duration -Temporary use and enjoyment/

The Use and Enjoyment of a Thing (the res)

1. The contract should confer the full enjoyment of the object of the lease. a partial letting and
hiring is permissible.
E.g. A room in a house may be let or the surface of one wall may be let for advertising etc.
2. Parties must agree on what particular property is going to be let.
3. Contract of letting and hiring must confer on the lessee the power to enjoy the object that is to
be let.
If any of these things are diminished or does not happen the contract will not exist.

The Rent:
 The lessee must undertake to pay rent
 Rent must be a specified sum of money which is certain
 Parties can agree to a method of how rent is going to be determined or a third person can
determine the rent.

Exceptions to the General Rule

The exception to the rule that the rent must be in money is the rent of agricultural land, it may
consist of a definite quantity or an agreed proportion of the produce of the property let (e.g. I
lease my orchard to Jim for a certain portion of apples produced each season)

Temporary use and Enjoyment:

 The duration of the lease may be indefinite OR it may also be expressed to be at the will
of either the lessor or lessee.
 A contract may run periodically and can be terminated by either party on due notice.

THE FORMATION OF A CONTRACT OF LEASE

 Ordinary rules of contract apply.

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 No formalities are required for a valid contract of lease coming into being.
 Long leases of 10 years or more have to be in writing.

RIGHTS AND DUTIES OF PARTIES TO A LEASE CONTRACT

The lessor and lessee may not exclude any important elements from the contract. They must
agree at the time of the hiring the rent etc some common law elements may be left out, if there
is any breach of contract they can rely on the basic remedies to terminate or claim from the
contract.

DUTIES OF THE LESSOR

1. The Duty To Deliver the leased property (the res)
The lessor must put the use and occupation of the object leased at the disposal of the lessee in
such a manner that the lessee is able to enter into undisturbed occupation of it.

2. The Duty To Maintain The Thing Let In A Proper Condition

The property must be maintained in that state allowing for normal wear and tear.
 If the lessor fails to do this there is a breach of contract.
 The lessee may demand for a reduction in rent so they can enjoy the property.
 if the lessee takes it upon himself to repair the property s/he can claim the money
back from the lessor or demand a reduction in rent.

3. To Ensure The Lessee’s Undisturbed Use and Enjoyment:

The lessor must warrant that no one has the right in law to disturb the lessee's use and enjoyment
of the property. He or she must ensure that the lessee's use and enjoyment is not disturbed
during the period of lease.The disturbance of the lessee may be caused by the lessor or a third
party, for example, if a third party claims to have a superior title over the leased object.

4. To compensate the lessee for damage caused as a result of material defects in the
property.
The Landlord’s Tacit Hypothec for Unpaid Rent:
The lessor or landlord of immovable property (e.g., a house or a flat) acquires a hypothec over
all movables situated on the property as soon as the lessee falls into arrears with his rent. The
hypothec serves as security in respect of such rent. The lessor may rely on the hypothec only
when, and for as long as, the rent is in arrears.
1. Hypothec terminates on payment of the arrear rent by the lessee or any other party.
2. Termination of lease does not itself mean termination of hypothec

DUTIES OF THE LESSEE

1. Duty To Pay The Rent:

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The payment of rent is an essential element of a contract of lease and thereforemay not be
excluded even by agreement between the parties.The parties to the contract of lease may,
however, agree to alter the common-lawrules in respect of, for example, the time of payment.

The lessee can commit breach of duty to pay rent in two ways:
The lessee can default in payments
The lessee can refuse to pay or deny paying the rent. (Repudiate)

If the lessee defaults the lessor may:

Elect to uphold the contract and claim rent
May cancel on the contract on the grounds of the lessee’s refusal to pay rent
Lessor who cancels the lease may claim the rent that has been accrued up to the time of
cancellation.
Lessor may use the remedy under mora debitoris for repudiation.

2. Proper Use and Care of the Object of the Lease:

The thing let must be maintained in a good condition and may be used only for the purpose for
which it has been leased.

3. return the leased object or evacuate premises

Upon termination of the lease, the lessee must return the leased object or evacuate premises. The
leased property must be returned in the condition in which it was received except for
deterioration as a result of reasonable wear and tear. The lessee is under the obligation to restore
any damage to the property caused either by himself or herself or by anybody for whose actions
he or she bears responsibility.

THE LESSEE’S RELATIONSHIP WITH SUCCESSORS OF PROPERTY

The Maxim “Huur Gaat Voor Koop” –Lease Goes Before Sale
▪ The lease remains in force on the death of the lessor; the lessor’s estate is simply
substituted as lessor.
▪ If a lessor of immovable property sells the property the general rule is that the purchaser
is bound by the lease in accordance with the maxim “Huur gaat voor koop” which means
hire takes precedence over sale.
▪ The person to whom such property has been transferred to is bound by the contract of
lease existing in respect of the property. Thereforethe purchaser cannot evict the lessee
but is obliged to abide by the terms of the lease provided the lessee continues to pay rent
due under the lease.

TERMINATION OF THE LEASE

1. Performance
2. Termination By Effluxion Of Time:

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If a lease is for a fixed period or until the occurrence of a specified event, the obligations arising
from it automatically come to an end when the period ends or the event occurs.

3. Termination By Notice:
If a contract is indefinite and the rent is payable monthly the obligations flowing from it can be
terminated by notice given by the lessor or lessee. A reasonable notice is that when a lease is
going to expire, then give the lessor a reasonable time to re-let the premises or the lessee a
reasonable time to find premises. A notice of termination only becomes effective if it comes to
actual knowledge of the other party.

4. Extinction of the Lessor’s Title:

It is not a requirement for a contract of lease that the lessor should have a valid title to the object
of lease, therefore if the extinction of a title does not terminate the obligations created by the
contract of lease but it does end the lease if the parties had intended it to do so or if the lessor
cannot give the lessee undisturbed enjoyment of the thing because his title has ended the may
lead to termination of obligation by supervening impossibility of performance.

5. Death
Lease terminated by death of the lessor or lessee if the contract says so, in other cases the rights
and duties of the deceased lessor or lessee pass to heirs of that party on his death.

6. Termination By Insolvency
The liquidator may terminate a lease of movable or immovable property before a general
meeting is convened to obtain the sanction of the members or creditors of the company for
certain matters.

7. Destruction of the premises

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 LAW OF NEGOTIABLE INSTRUMENTS

Introduction
Exchange of goods and services is the basis of every business activity. Goods are bought and
sold for cash as well as on credit. All these transactions require flow of cash either immediately
or after a certain time. In modern business, large number of transactions involving huge
sums of money take place every day. It is quite inconvenient as well as risky for either party to
make and receive payments in cash. Therefore, it is a common practice for businessmen to make
use of negotiable instruments.

Meaning of negotiable instruments

A negotiable instrument means “promissory note, bill of exchange, or cheque, payable either to
order or to bearer”. It is atransferable, signed document that promises to paythe bearera sum of
moneyat a futuredate or ondemand. Examples include checks,billsof exchange,
andpromissorynotes.

Types of negotiable instruments

There are just three types of negotiable instruments:
 promissory note,
 bill of exchange and
 cheque.

However, there are other documents recognized as negotiable instruments on the basis of
custom and usage e.g. treasury bills, share warrants, etc., provided they possess the features of
negotiability

Promissory Note:
Promissory note is defined as ‘an instrument in writing (not being a bank note or a currency
note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of
money only to or to the order of a certain person or to the bearer of the instrument’.

Suppose you take a loan of Five Thousand Dollars from your friend Sibongile. You can make a document
stating that you will pay the money to Ramesh or the bearer on demand. Or you can mention in the document
that you would like to pay the amount after three months. This document, once signed by you, duly stamped
and handed over to Ramesh, becomes a negotiable instrument. Now Ramesh can personally present it before
you for payment or give this document to some other person to collect money on his behalf. He can endorse it in
somebody else’s name who in turn can endorse it further till the final payment is made by you to whosoever
presents it before you.

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Parties to a Promissory Note
There are primarily two parties involved in a promissory note. They are.
 The Maker or Drawer – the person who makes the note and promises to pay the
amount stated therein
 The Payee – the person to whom the amount is payable.
In the course of transfer of a promissory note by payee and others, the parties involved may be:
 The Endorser – the person who endorses the note in favour of another person.

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  The Endorsee – the person in whose favour the note is negotiated by endorsement.

Endorsement means transfer of any document or instrument to another person by signing on its
back or face or on a slip of paper attached to it.

Features of a promissory note

1. A promissory note must be in writing, duly signed by its maker and properly stamped.
2. It must contain an undertaking or promise to pay. Mere acknowledgement of indebtedness
is not enough. For example, if someone writes ‘I owe Rs. 5000/- to Satya Prakash’, it is not a
promissory note.
3. The promise to pay must not be conditional. For example, if it is written ‘I promise to pay
Suresh Rs 5,000/- after my sister’s marriage’, is not a promissory note.
4. It must contain a promise to pay money only. For example, if someone writes ‘I promise to
give Suresh a Maruti car’ it is not a promissory note.
5. The parties to a promissory note, i.e. the maker and the payee must be certain.
6. A promissory note may be payable on demand or after a certain date. For example, if it is
written ‘three months after date I promise to pay Santander or order a sum of Fifty Dollars.
7. The sum payable mentioned must be certain or capable of being made certain. It means that
the sum payable may be in figures or may be such that it can be calculated.

Bill of Exchange
A bill of exchange is an unconditional order in writing, addressed by one person to another,
signed by the person giving it requiring the person to whom it is addressed to pay on demand,
or at a fixed or determinable future time, a sum certain in money to a specified person or his
order, or to bearer.

Features or Characteristics of the bill.

The main characteristics or features of a bill of exchange are as follow.
1. A bill of exchange must be in writing.

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 2. It must contain an order to pay.
3. The order to pay must be unconditional. If it is subject to the happening of some events
it will not be a bill of exchange.
4. It must be signed by the drawer and properly stamped.
5. The parties to the bill are:
a. the drawer,
b. the drawee and
c. payee must be certain and definite individuals.
6. The amount payable must be certain.
7. The payment must be made in money and not in kind.
8. The bill payable may be either on demand or after a specified period.
9. The bill may be payable either to the bearer or to the order of payee.

Parties to the bill

According to the definition, there are three parties involved to a bill of exchange.
Drawer. The drawer is the person who draws the bill. He is the person who orders to pay a
certain sum of money. (In the specimen of bill of exchange given below Mr. Hamid Zafar is the
drawer of the bill).
Drawee. He is the person on whom the bill is drawn. He is the person who is ordered to make
the payment of the bill. (In the specimen of the bill. Mr. Rashid Ahmad is the drawee).
Payee. He is the person to whom the money is directed to be paid. He gets the payment of the
bill. (In the specimen of a bill, Mr. Kamal Akmal is the payee of the bill).

CHEQUES
Cheque is a very common form of negotiable instrument. If you have a savings bank account or
current account in a bank, you can issue a cheque in your own name or in favour of others,
thereby directing the bank to pay the specified amount to the person named in the cheque.
Therefore, a cheque may be regarded as a bill of exchange; the only difference is that the bank is
always the drawee in case of a cheque.

The Negotiable Instruments Act, defines a cheque as a bill of exchange drawn on a specified
banker and not expressed to be payable otherwise than on demand. Actually, a cheque is an
order by the account holder of the bank directing his banker to pay on demand, the specified
amount, to or to the order of the person named therein or to the bearer.

Features of a cheque
1. A cheque must be in writing and duly signed by the drawer.
2. It contains an unconditional order.
3. It is issued on a specified banker only.
4. The amount specified is always certain and must be clearly mentioned both in figures and
words.

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5. The payee is always certain.
6. It is always payable on demand.
7. The cheque must bear a date otherwise it is invalid and shall not be honoured by the bank.

Types of Cheque
Broadly speaking, cheques are of four types.
 Open cheque, and
 Crossed cheque.
 Bearer cheque
 Order cheque

Open cheque:
A cheque is called ‘Open’ when it is possible to get cash over the counter at the bank. The
holder of an open cheque can do the following:
i. Receive its payment over the counter at the bank,
ii. Deposit the cheque in his own account
iii. Pass it to someone else by signing on the back of a cheque.

Crossed cheque:
Since open cheque is subject to risk of theft, it is dangerous to issue such cheques. This risk can
be avoided by issuing another types of cheque called ‘Crossed cheque’. The payment of such
cheque is not made over the counter at the bank. It is only credited to the bank account of the
payee. A cheque can be crossed by drawing two transverse parallel lines across the
cheque, with or without the writing ‘Account payee’ or ‘Not Negotiable’.

Bearer cheque:
A cheque which is payable to any person who presents it for payment at the bank counter is
called a ‘Bearer cheque’. A bearer cheque can be transferred by mere delivery and requires no
endorsement.

Order cheque:
An order cheque is one which is payable to a particular person. In such a cheque the word
‘bearer’ may be cut out or cancelled and the word ‘order’ may be written. The payee can
transfer an order cheque to someone else by signing his or her name on the back of it.

There is another categorization of cheques which is discussed below:

Ante-dated cheques:- Cheque in which the drawer mentions the date earlier to the date of
presenting if for payment. For example, a cheque issued on 20th May 2010 may bear a date 5th
May 2010.

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Stale Cheque:- A cheque which is issued today must be presented before at bank for payment
within a stipulated period. After expiry of that period, no payment will be made and it is then
called ‘stale cheque’.

Mutilated Cheque:- In case a cheque is torn into two or more pieces and presented for
payment , such a cheque is called a mutilated cheque. The bank will not make payment against
such a cheque without getting confirmation of the drawer. But if a cheque is torn at the corners
and no material fact is erased or cancelled, the bank may make payment against such a cheque.

Post-dated Cheque:- Cheque on which drawer mentions a date which is subsequent to the date
on which it is presented, is called a post-dated cheque. For example, if a cheque presented on
8th May 2014 bears a date of 25th May 2014, it is a post-dated cheque. The bank will make
payment only on or after 25th May 2014.

FEATURES OF NEGOTIABLE INSTRUMENTS

1. A negotiable instrument is freely transferable. Usually, when we transfer any property to
somebody, we are required to make a transfer deed, get it registered, pay stamp duty, etc.
But, such formalities are not required while transferring a negotiable instrument. The
ownership is changed by mere delivery (when payable to the bearer) or by valid
endorsement and delivery (when payable to order).
2. Further, while transferring it is also not required to give a notice to the previous holder.
3. Negotiability confers absolute and good title on the transferee. It means that a person
who receives a negotiable instrument has a clear and undisputable title to the instrument.
However, the title of the receiver will be absolute, only if he has got the instrument in
good faith and for a consideration. Also the receiver should have no knowledge of the
previous holder having any defect in his title. Such a person is known as holder in due
course.
a. For example; Suppose Rajiv issued a bearer cheque payable to Sanjay. It was
stolen from Sanjay by a person, who passed it on to Girish. If Girish received it
in good faith and for value and without knowledge of cheque having been
stolen, he will be entitled to receive the amount of the cheque. Here Girish will
be regarded as ‘holder in due course’.
4. A negotiable instrument must be in writing. This includes handwriting, typing, computer
printout and engraving, etc.
5. In every negotiable instrument there must be an unconditional order or promise for
payment.
6. The instrument must involve payment of a certain sum of money only and nothing else.
For example, one cannot make a promissory note on assets, securities, or goods.
7. The time of payment must be certain. It means that the instrument must be payable at a
time which is certain to arrive. If the time is mentioned as ‘when convenient’ it is not a
negotiable instrument. However, if the time of payment is linked to the death of a

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 person, it is nevertheless a negotiable instrument as death is certain, though the time
thereof is not.
8. The payee must be a certain person. It means that the person in whose favour the
instrument is made must be named or described with reasonable certainty. The term
‘person’ includes individual, body corporate, trade unions, even secretary, director or
chairman of an institution. The payee can also be more than one person.
9. A negotiable instrument must bear the signature of its maker. Without the signature of
the drawer or the maker, the instrument shall not be a valid one.
10. Delivery of the instrument is essential. Any negotiable instrument like a cheque or a
promissory note is not complete till it is delivered to its payee. For example, you may
issue a cheque in your brother’s name but it is not a negotiable instrument till it is given
to your brother.
11. Stamping of Bills of Exchange and Promissory Notes is mandatory. The value of stamp
depends upon the value of the pronote or bill and the time of their payment.

DIFFERENCES BETWEEN BILL OF EXCHANGE, PROMISSORY NOTES AND

CHEQUES

Distinction between a Promissory Note and a Bill of Exchange

Promissory Note Bill of Exchange

It contains an unconditional promise. It contains an unconditional promise.

There are two parties – the maker and There are three parties – the drawer, the
payee. drawee and the payee.

It is made by the debtor. It is made by the creditor.

Acceptance is not required. Acceptance by the drawee is a must.

The liability of the maker/drawer is The liability of the maker/drawer is

primary and absolute secondary and conditional upon non-
payment by the drawee.

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 Distinction between a Cheque and a Bill of Exchange
Cheque Bill of Exchange

It is drawn only on a banker. It can be drawn on anybody including a

The amount is always payable on banker.
demand. The amount is payable on demand or
It can be crossed to end its negotiability. after a specified period.
Acceptance is not required. It cannot be crossed.
Acceptance is a must.

REVIEW QUESTIONS
a. Name any two types of commonly used negotiable instruments.
b. Write two points of distinction between a promissory note and a cheque.
c. “A cheque need not bear a date.” Do you agree? Give reason.
d. State any four essential features of a bill of exchange.
e. Write any four points of distinction between a promissory note and a bill of exchange.
f. “A bill of exchange must contain an unconditional promise to pay.” Do you agree with
this statement? Justify your answer.
g. State the three parties involved in a bill of exchange.
h. Define Promissory note and state its any four important features.
i. State the important features of a bill of exchange.
j. Give the definition of a ‘cheque’. How does it differ from a bill of exchange?

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 LAW OF PROPERTY
Classification of things
Before one can begin to understand the concepts of real rights, personal rights and other rights
associated with legal ownership and possession, it is important that there be an appreciation of how
things are classified. These classifications come from ancient Roman law and as such, the names
given to things are in Latin.
Things have traditionally been classified in two ways:
1) According to their nature
2) According to their relationship with mankind

According to their nature

1) Corporeal and incorporeal
2) Consumable and inconsumable
3) Movable and immovable
4) Fungible and non-fungible
5) Divisible and indivisible

According to their relationship with man

1) Res in commercio– thingscapable of being privately owned
2) Res extra commercium – things not capable of being privately owned.

ACQUSITION OF REAL RIGHTS

A real establishes a direct link between a person and a thing. The person consequently has the right
to control the thing within the limits of his rights. I t effectively becomes enforceable not in
consultation with any other person, but is enforceable against the whole world at large.
A personal right on the other hand, “a person becomes bound to holder of the right to render
particular performance; thatis, to door not to do something, the performance itself being the object
of the right. It never establishes a direct legal connection between its holder and the things, ifany, in
respect of which a performance has to be rendered”.(Silberg, 43)
ORIGINAL METHODS OF ACQUISITION
Under this topic, we are concerned with the ways in which a person can become the owner of a
thing originally. This means he becomes the very first person to own it without a predecessor in title.
He assumes ownership unilaterally.
The methods for original acquisition are:
1) Occupation
2) Accession
3) Specification
4) Commixio

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 5) Acquisitive prescription

Occupation
This refers to the unilateral taking of possession by a person of a corporeal thing which is a res
nullius (i.e becoming to no one), with the intention of becoming owner thereof. The most common
situations are the acquisition of wild birds and animals, although this is now rather difficult with
wildlife and environmental conversation. There is therefore the need that the acquisition be lawful
hence in the case of Dun v Bowyer, a person obtained a license to shoot hippo. He however asked
his brother to shoot the hippo. When the matter went to Court, it was held that the licence was not
transferrable hence the licencee never acquired ownership of the hippo.
In the case of R v Mafohla 1958 (2) SA 373, the complainant had wounded a Kudu.He chased it for
some time but eventually lost track of it. He resumed following the animal the following day.As he
looked for the Kudu he found Mafohla and his friendsalready skinning the animal.Mafohla and his
friends were the charged with theft of the Kudu. The question was whether the Kudu in fact
belonged to the complainant for purposes of the offence or theft. The court held that they were not
guilty of theft because when they captured the animal, it did not belong to the complainant sine he
had lost control of it. It was therefore a “res nullius”.
RES DERELICTA
Res direlicta refers to abandoned things. The person who seeks to establish ownership of “res derelicta”
must prove the following:-
1) That the property was abandoned
2) That the previous owner had the intention to abandon the property.

In the case of S .M Goldstone v Gerber1979 (4) SA 930,

A road roller was left by workers for several weeks to the elements. The owner failed to find it when
he came looking for it, only to find it a scrap siter.The Defendant had taken it in order to cut it up
for scrap. The defendant alleged that the roller had been abandoned. The court held that there was
no evidence of intention to abandon it hence the defendant was liable for damages.
Accession
This refers to an increase or addition to a thing whereby two or more things come together to form
one entitye.g, fruits of trees and offspring of domestic animals. Where two things are joined together
the greater part attracts the lesser hence the lesser loses its identity and the new thing belongs to the
owner of the greater part.
According to the principle of “Supercies solo credit set quid est Superficios”, everything which is attached to
an immovable, such as a piece of land, or everything built on land is attached to the land.
There are many forms of accession such as:
1) Natural accession e.g. birth of young animals. Owner of mother is the owner of the
offspring. A bona fide possessor is also entitled to ownership of the offspring.

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 2) Avulsio – where a piece of land is torn off by flooding water and is washed up against
another’s land, the owner of the land to which the torn piece of land is attached becomes the
owner of everything. This only happens if plant start to grow.
3) Specificatio – refersto the manufacture of new species from materials so that they lose their
original form.
4) Commixitio – Minglingof liquids etc so that they become inseparable.
5) Specification-creation of a new thing out of somebody else’s material which can no longer be
restored to its original form. It involves labour in creating a new thing and good faith since it
involves another’s property. An employee however cannot claim ownership of something he
creates during the course of his employment.
6) Acquisitive prescription-A person who is continuously in possession of another’s property as
if he was the owner for a period of thirty (30) years acquires ownership.Bona fides or mala
fides are irrelevant hence a squatter can acquire ownership though prescription. This is
because prescription always operates against the will of the true owner and the possession is
always unlawful. The rationale for this is historical: to punish people who through
carelessness throw injuries on the state by creating uncertainty about ownership of property.
If prescription is interrupted, it will either be suspended or it will start afresh(i.e de novo).

DERIVATIVE ACQUISITION OF REAL RIGHTS.

The acquisition of ownership here is dependent on whether the property is movable or immovable
for a person to transfer the real right ownership to another, he must be the owner of the property or
duly authorized agent. If the property is transferred without the consent of the owner, then
ownership does not pass as the true owner always has the right to follow up his property from
whoever took it, including bona fide possession or purchasers. This real right to follow up the
property is called the right of vindication or the “rei vindicatio”.
However, the owner may be prevented from exercising the right of vindication if he led a person to
act to his detriment through negligence. This is the operation of estoppel. The requirements for a
valid transfer of ownership are:-
1) Res in commercium – property must be capable of private ownership
2) Capacity – transfer must be legally competent to transfer ownership
3) Transfer must be effected by the holder of the real right or duly authorized agent i.e.
“nemodat qui non habet”: -you cannot transfer a right which you do not hold.
4) Transferee must have capacity to acquire ownership.
5) There must be intention to transfer and to accept transfer (the request animus)

DELIVERY OF IMMOVABLES
Since actual delivery is not possible, delivery is constituted when registration of title is made at the
Deeds Office. Registration involves the recording of the existence and description of a corporeal
thing and hence effectively gives notice of the rights of ownership. The register at the Deeds Offices
is a public document and is open for inspection by the public.

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DELIVERY OF MOVABLES (TRADITIO)
In this case, use is made either actual delivery or constructive /fictitious delivery. Transfer of
ownership is subject to certain conditions:
1) Cash sales
2) Suppositions

In cash sales, ownership passes immediately upon delivery whereas in suppositions the intention of
the seller may be subject to certain conditions such as suspensive conditions where notwithstanding
delivery ownership does not pass to the buyer.
ACTUAL DELIVERY (TRADITIO)
This is physical delivery and the intentions of the parties determine the real right which is being
passed. This is delivery de manu in manu i.e. from one hand to the other such as delivery of a ruler or
loafbread to another person.
CONSTRUCTIVE/FICTITIOUS DELIVERY
No physical handing over of the property takes place but the transferee is put in a position to
control the property question. The following are the various forms of fictitious delivery known in
our law of property and sale:-
1) Delivery by the Short hand (Traditio brevi manu)

Where the property is sold or donated to a transferee who already is in possession of it, it shall not
be necessary to physically deliver it.
2) Delivery by the Long Hand (Traditio longa manu)

This is suitable where the goods are bulky and difficult to move such as a heap of coal, timber
.stones etc.The property is thus placed at the disposal of the acquirer so that he can deal with it in
his own good time and at his pleasure. The property is usually pointed out to the acquirer as
happened in Xapa v Ntsoka where cattle intended to be payment for lobola were pointed to the
father in law and the court said delivery longa manu had in-fact taken place.
The determining factor here is whether a purchaser or acquirer is placed in control of the property
hence in Bithe v Mazeka 1981 (3) SA 191, some cattle were driven to a separate camp at the seller’s
premises but since the buyer was not in control of the cattle, delivery by the long hand had not taken
place at all.
Symbolic delivery (Traditio symbolica)
In this case, the transferor supplies the transferee with the means to deal with the property; e.g.
delivery of car keys or keys to a ware –house.
The transferee must acquire full control of the property. In C.I.F contracts delivery of the bill of
lading constitutes symbolical delivery of the property.
Constitutum Possessorium
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The transferor retains possession of the goods which he has agreed to transfer. Here, it is the
intention that matters- the mental attitude to transfer ownership. The seller of goods may keep the
goods on behalf of the buyer e.g. as a lessee. This clearly is the reverse of traditio brevi manu (although
people tend to assume wrongly that the opposite is traditio longa manu.
Attornment
The property to be transferred is not at the time of delivery in possession of either the transferor or
the transferee but is under the control of a third party who is an agent of the transferor calling upon
the third party to hold the property hence for the transferee.
Possession
Possession is said; to be the foundation of the law of property but it is not easy to define .It is
therefore a nebulous concept.
Generally, it involves physical control and the mental state to possess. This is a question of fact since
a person may possess something which he is not “physically possessing “such as your radio which
you left at home or your money in your drawer. Here clearly possession is not synonymous with
having the property on your person.
Alternatively, if a person drops a twist of “mbanje” in your pocket without your knowledge or
consent, are you in possession of “mbanje?”
Possession is a real right “sui generis” i.e. it is in a class of its own.
1) Possessor is protected from unlawful deprivation including against the owner the property.
If possessor loses property, the court can grant a Spoliation Order which is a remedy used to
summarily undo unlawful disturbance of existing control by restoring the possession. The
court restores possession without looking into the merits of the parties’ right of possessing,
the rationale being that people should not take the law into their own hands by depriving
others of their property without a court order. People should not resort to self- help.
Theoretically, a thief can utilize it, even though in practice the criminal law will step in.
2) The possessor is also entitled to fruits of the property during the period of possession.

The true owner can however claim the property through therevindication if the possessor cannot
show the basis for retaining such possession.
In Oglodinski v Oglodinski 1976 (4) SA 273,a spoliation order was held to be available in the
husband and wife situation as well. This is also similar to the case of Maria v Murimbika 1976 (1)
RLR 385 where the wife removed furniture from the matrimonial home which she claimed belonged
to her. The court ordered restoration of the property.
Consider also these two interesting cases:-
Council 1977 (3) SA 113- The council had unlawfully demolished the applicant’s squatter house
made of corrugated iron. The Council was supposed to have given the squatter Notice as required
by law. The court ordered the Council to re- erect the dwelling!

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Tshabalala v West Rand Admin Board 1980 1980 (2) SA 520
After a dispute, the applicant’s dwelling ceiling was summarily removed and his possessions were
thrown out into the streets. The court ordered restoration of the property.

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 THE LAW OF INSOLVENCY

(Insolvency Act Chapter 6:04)

INTRODUCTION
Insolvency means the inability to pay one's debts as they fall due. It is a determination by an
Insolvency/bankruptcy court that a person or business cannot raise the funds to pay all of
his/her debts. The court will then "discharge" (forgive) some or all of the debts, leaving
those creditors not getting what is owed them, a such business/individual will be liquidated.

Liquidation (or "winding up") is a process by which a company’s existence is

brought to an end and the assets and property of the company redistributed.

TYPES OF LIQUIDATION
The law classifies liquidations into two types:
 Compulsory (by a court order/ creditors' liquidation) or
 Voluntary (which is by a shareholders’ resolution)

COMPULSORY LIQUIDATION (BY COURT ORDER)

The parties who are entitled by law to petition for the compulsory liquidation of a company
are:
1. the company itself
2. any creditor who establishes a prima facie (show cause)(on its first appearance/at first sight)
give evidence
3. contributories
4. State etc

ACTS OF INSOLVENCY
1. The debtor leaves the country or remains absent with the intention to evade or delay
payment of his debts.
2. The debtor upon demand by the sheriff fails to satisfy a court judgement given against
him or her.
3. The debtor disposes of any of his property with the effect of prejudicing the creditors.
4. The debtor removes or attempts to remove property with the intent to prejudice the
creditors.
5. The debtor makes or offers to make any arrangement with any of the creditors for
releasing him or her wholly or partially from the debts.
6. The debtor gives written notice to any of the creditors that he is unable to pay any of the
debts.
7. The debtor being a trader and having given notice of the intended transfer of the
business, is unable to pay all its debts.

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 Grounds for Liquidation
This process starts with an application to the court alleging that one or more of the required
grounds exist. There grounds upon which one can apply for a compulsory liquidation to
enable an application to the court for an order to compulsorily wind-up the company are:
 the company has so resolved
 the company was incorporated as a public company, and has not been issued with a
trading certificate (or equivalent) within 12 months of registration
 it has not commenced business within the statutorily prescribed time (normally one
year) of its incorporation, or has not carried on business for a statutorily prescribed
amount of time
 the number of members has fallen below the minimum prescribed by statute
 the company is unable to pay its debts as they fall due
 it is just and equitable to wind up the company

NB: An order will not generally be made if the purpose of the application is to enforce
payment of a debt which is bona fide disputed.

The order
 Once liquidation (turning them into cash), commences dispositions of the company's
property are generally void, and litigation involving the company is generally
restrained.
 Upon hearing the application, the court may either dismiss the petition, or make the
order for winding-up.
 The court may dismiss the application if the petitioner unreasonably refrains from an
alternative course of action.
 The court may appoint an official receiver, and one or more liquidators, and has
general powers to enable rights and liabilities of claimants and contributories to be
settled.
 Separate meetings of creditors and contributories may decide to nominate a person
for the appointment of liquidator and possibly of supervisory liquidation committee.
Applications may be brought on a number of grounds, the most important being that the
company is unable to pay its debts. There are a number of factors that the court will take into
account when deciding whether or not to make a compulsory liquidation order. The court has
discretion as to whether or not to make the order.

The procedure for liquidation

The liquidation process is as follows:
 A liquidator is appointed, either by the company shareholders passing a resolution
(voluntary liquidation) or by the Court making an order (compulsory liquidation).
 The liquidator collects the assets of the company (including uncalled capital; that is, amounts
unpaid on shares) and pays the creditors in order of priority.

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 The liquidator distributes any surplus funds to the shareholders.
 The company is then formally dissolved.

THE CONSEQUENCES OF LIQUIDATING A COMPANY

The main consequences of the company being liquidated are as follows:
1. The company no longer has the power to dispose of its property.
2. The company may carry on business only for the limited purpose of completing the
liquidation process.
3. The powers of the company directors come to an end when a liquidator is appointed.
4. A liquidation order operates as a notice of dismissal to all of the company’s employees.
Note, however, that if an employee is on a fixed-term contract and is required under this
contract to be given a period of notice, then a liquidation order will breach this and the
employee will be entitled to damages.
5. When an application is made for a court-ordered liquidation, the court may stay or restrain
any proceedings against the company as the court sees fit. When a liquidator is appointed,
no person can begin or continue legal proceedings against the company or in relation to its
property, unless the liquidator agrees or the court permits it.

CONSEQUENCES OF SEQUESTRATION
As soon as a person’s estate is sequestrated, it affects his personal status, property and civil
proceedings instituted by or against him.
 Personal
 An insolvent may not hold certain positions e.g. director of a company or trade as a sole
trader.
 An insolvent may not conclude contracts without written consent of the trustee.
 Has no capacity to dispose of any property of the insolvent estate.
 Property of the insolvent
 Loss of ownership in the estate which vests with the trustee
 Civil proceedings
All civil proceedings by or against the insolvent and that relate to the estate are stayed until a
trustee has been appointed.
 Uncompleted contracts
 Sequestration does not terminate contracts concluded prior to sequestration except a
contract of mandate.
 The sequestration of an employer automatically suspends contracts of employment.

VOLUNTARY LIQUIDATION/Voluntary surrender

The insolvent approaches the court and applies for the acceptance of the voluntary surrender of
their estate. The court can accept the voluntary surrender if the following conditions are met:
1. The insolvent must comply with the prescribed formalities like notification of creditors and
other interested parties such as Zimra etc.
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2. The insolvent has to prove that he or she is indeed insolvent i.e. the estate’s liabilities exceed
its assets.
3. The surrender must be to the advantage of the creditors
4. There must be sufficient assets to cover the costs of sequestration

Voluntary liquidation refers to the process whereby the shareholders appoint a liquidator, who is
then answerable to the creditors or shareholders.
 It is not necessary to make any application to the court for this; however, the liquidator may
apply to the court for directions and the court has power to remove a liquidator.
 A voluntary liquidation may also by commenced by the board of directors if an event
specified in the company’s constitution has occurred.
 Voluntary liquidation may be in one of two forms, depending on whether or not the
company is solvent. If the company is solvent the shareholders can supervise the liquidation.

However, if the company is insolvent, the creditors may take control of the liquidation process
by applying to the court. The court will require proof of solvency or insolvency to determine
this matter.

Where a voluntary winding-up of a company has begun, a compulsory liquidation order is still
possible, but the petitioning contributory would need to satisfy the court that a voluntary
liquidation would prejudice the contributories.

In addition, the term liquidation is sometimes used when a company wishes to divest itself of
some of its assets. This is used, for instance, when a retail establishment wishes to close stores.
They will sell to a company that specializes in store liquidation instead of attempting to run a
store closure sale themselves.

MISCONDUCT
The liquidator will normally have a duty to ascertain whether any misconduct has been
conducted by those in control of the company which has caused prejudice to the general body
of creditors. In appropriate cases, the liquidator may be able to bring an action against errant
directors or shadow directors for either wrongful trading or fraudulent trading. The liquidator
may also have to determine whether any payments made by the company or transactions entered
into may be voidable as a transaction at an undervalue or an unfair preference.

PRIORITY OF CLAIMS
The main purpose of a liquidation where the company is insolvent is to collect in the company's
assets, determine the outstanding claims against the company, and satisfy those claims in the
manner and order prescribed by law.
 The liquidator must determine the company's title to property in its possession.

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 Property which is in the possession of the company, but which was supplied under a valid
retention of title clause will generally have to be returned to the supplier.
 Property which is held by the company on trust for third parties will not form part of the
company's assets available to pay creditors.
 Before the claims are met, secured creditors are entitled to enforce their claims against the
assets of the company to the extent that they are subject to a valid security interest.
 In most legal systems, only fixed security takes precedence over all claims

Claimants with non-monetary claims against the company may be able to enforce their rights
against the company. For example, a party who had a valid contract for the purchase of land
against the company may be able to obtain an order for specific performance, and compel the
liquidator to transfer title to the land to them, upon tender of the purchase price.

After the removal of all assets which are subject to retention of title arrangements, fixed security,
or are otherwise subject to proprietary claims of others, the liquidator will pay the claims against
the company's assets. Generally, the priority of claims on the company's assets will be
determined in the following order:
1. Liquidators costs
2. Creditors with fixed charge over assets
3. Costs incurred by an administrator
4. Amounts owing to employees for wages
5. Payments owing in respect of workers' injuries
6. Amounts owing to employees for leave
7. Retrenchment payments owing to employees
8. Creditors with floating charge over assets
9. Creditors without security over assets

DISSOLUTION
Having wound-up the company's affairs, the liquidator must call a final meeting of the members
(if it is a members' voluntary winding-up), creditors (if it is a compulsory winding-up) or both (if
it is a creditors' voluntary winding-up).
 The liquidator is then required to send final accounts to the Registrar and to notify the
court. The company is then dissolved.
 However, in most jurisdictions, the court has discretion for a period of time after
dissolution to declare the dissolution void to enable the completion of any unfinished
business.

REHABILITATION
The purposes of sequestration is to enable the debtor to overcome his financial difficulties and
make a fresh start. A partnership is not a person and cannot be rehabilitated. Rehabilitation

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means that an insolvent’s status is restored. A rehabilitation order can be granted by the court
upon application by the insolvent or it can take place automatically after a period of ten years.

Consequences of rehabilitation
1. The insolvent’s status is restored
2. All the insolvent’s debts arising before the sequestration are discharged except debts arising
out of fraud.
3. Property received after rehabilitation will vest on him and not in the trustee.
4. Property left in the insolvent estate does not revert to the insolvent unless all claims have
been paid in full

Cases
SOLE versus KAZI(2006)
MOYO v FRASER and Others (2006)
WFD NETWORK (Pvt) Ltd and J.W. JAGGER WHOLESALES (Pvt) Ltd (2010)
Croc Ostrich Breeders of Zimbabwe (Pvt) Ltd v Best of Zimbabwe (Pvt) Ltd (1999)
ABSA Bank Ltd vs Rhebos Kloof (Pty) Ltd and Others (1993)

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