UNIVERSITY OF ZIMBABWE

LAW OF CONTRACT LB102

DECEMBER 2010 EXAMINATION
THREE (3) HOURS

INSTRUCTIONS

Candidates should answer FOUR (4) questions: Two questions from

Section A and from Section B answer question 5 and one other
question (either question 6 or 7)

Candidates are permitted to take into the examination room un-

annotated copies of the prescribed Statutes for the course.

-----------------------------------------------------------------------------------

SECTION A

Question 1

“The doctrines of freedom, privity and sanctity of contract no longer apply to

the current Zimbabwean contract law?” Discuss. (20 marks)

Question 2

Discuss the effect of misrepresentation, duress, undue influence and mistake to

the validity of a contract. (20 marks)

Question 3

With reference to Krell v Henry [1903] 2 KB 407, Cradwell v Taylor [1971]

(2) SA 184, and Lupu v Lupu 2000 (1) ZLR 120 at 125 assess the extent to
which supervening impossibility can terminate a contract. (20 marks)

Question 4

Explain the different forms of breach of contract? What remedies are available
to an innocent party in the event of breach of contract? (20 marks)

1
SECTION B

Question 5

On Monday April 1st, an advertisement, together with application forms, for

shares in Eldorado mines Ltd, at $10.00 per share appears in the Daily Echo.
Chancer saw the advertisement and on the same day, sent off an application for
2000 shares in Eldorado Mine Ltd, together with a cheque of $20 000.00. This
application was received by Eldorado Mines on the next day. It was processed
on Wednesday, 3rd April and the share certificates were posted to Chancer that
morning.

Meanwhile, Chancer had changed his mind. Early that day (April 3rd) Chancer
posted a letter to Eldorado Mines Ltd indicating that he no longer wished to
purchase the shares. He asked for a refund of $20 000.00.

Later that day it emerged that Eldorado Mines had found vast new reserves of
diamonds in Ngoda Communal lands. It contacted Chancer by telephone, early
in the evening to tell him that it was not accepting his application to purchase
shares and asking him to return the certificates when they arrived. Having heard
of the diamond finds in Ngoda, Chancer did not want to return the shares.

In the meantime, Chancer’s wife, Nyemudzai visited a big department store, Pick
and Pay to purchase a leather jacket. The jacket she wanted was on sale at
$200 but was being tried on by an elderly and valued client of the establishment,
Mrs Moneybags. As soon as the client put the jacket down, Nyemudzai picked it
up and took it to the front desk. On seeing this Mrs Moneybags quickly made up
her mind to purchase the jacket and demanded that Nyemudzai should give it
up so that she could purchase it. The proprietor of Pick and Pay department
store Mr Favours took the leather jacket from Nyemudzai and gave it to Mrs
Moneybags. Nyemudzai feels a deep sense of grievance and is now
contemplating the possibility of suing the departmental store for “breach of
contract”.

Required

In relation to the law of contract discuss the rights and obligations of the
following parties:
(a) Chancer
(b) Eldorado Mines
(c) Nyemudzai
(d) Pick and Pay department Store. (20 marks)

2
Question 6

Tinashe and Tendai own adjoining farms in Chegutu, an area, where all
agriculture requires irrigation. Tinashe bought a well-drilling rig and drilled a
400-foot well from which he drew drinking water. Tendai needed no additional
irrigation water, but in January 1985, she asked Tinashe on what terms he would
drill a well near her house to supply better tasting drinking water than the
Chagute water she has been using for years. Tinashe said that because he had
never before drilled a well for hire, he would charge Tendai only $10 per foot,
about $1 more than his expected cost. Tinashe said that he would drill to a
maximum depth of 600 feet, which is the deepest his rig could reach. Tenday
said, “OK, if you guarantee June 1 completion”. Tinashe agreed and asked for
$3,500 in advance, with an additional further payment or refund to be made on
completion. Tendai said, “OK”, and paid Tinashe $3500.

Tinashe started to drill on May 1. He had reached a depth of 200 feet on May 10
when his drill struck rock and broke, plugging the hole. The accident was
unavoidable. It had cost Tinashe $12 per foot to drill this 200 feet. Tinashe said
he would not charge Tendai for drilling the useless hole, but he would have to
start a new well close by, and could not promise its completion before July 1.

Tendai, annoyed by Tinashe’s failure, refused to let Tinashe start another well
and on June 1, she contracted with Tapiwa to drill a well. Tapiwa agreed to drill
to a maximum depth of 350 feet for $4500, which Tendai also paid in advance,
but Tapiwa could not start drilling until October 1. He completed drilling and
struck water at 300 feet on October 30.

In July, Tendai sued Tinashe seeking to recover her $3500, plus the $4500 paid
to Tapiwa.

On August 1, Chegutu’s dam failed, thus reducing the amount of water available
for irrigation. Tendai lost her apple crop worth $15,000. The loss could have
been avoided by pumping from Tendai’s well if it had been operational by August
1. Tendai amended her complaint to add the $15,000 loss.

In her suit against Tinashe, what are Tendai’s rights and what damages, if any,
will she recover? Discuss. (20
marks)

3
Question 7

Noma manufactures printing presses. John, a publisher of a local newspaper,

had decided to purchase new presses. Rep, a representative of Noma, met with
Theresa, the president of John, to describe the advantages of Noma’s new press.
Rep also drew rough plans of the alterations that would be required in the John
pressroom to accommodate the new presses, including additional floor space and
new electrical installations, and left the plans with Theresa.

On December 1, Theresa received a letter signed by Seller, a member of Noma’s

sales staff, offering to sell the required number of presses at a cost of $2.4
million. The offer contained provisions relating to the delivery schedule,
warranties, and payment terms, but did not specify a particular mode of
acceptance of the offer. Theresa immediately decided to accept the offer, and
telephoned Seller’s office. Seller was out of town, and Theresa left the following
message: “Looks good. I’m sold. Call me when you get back so we can discuss
details”.

Theresa next telephoned Paul and rejected an outstanding offer by Paul to sell
presses to John similar to those offered by Noma. Using the rough plans drawn
by Rep, Theresa also directed that work begin on the necessary pressroom
renovations. By December 4, a wall had been demolished in the pressroom and
a contract had been signed for the new electrical installations.

On December 5, the President of the United States announced a ban on imports

of foreign computerized heavy equipment. This removed from the American
market a foreign manufacturer that had been the only competitor of Noma and
Paul. That afternoon, Theresa received a telegram from Noma stating, “All
outstanding offers are withdrawn”. In a subsequent telephone conversation,
Seller told Theresa that Noma would not deliver the presses for less than $2.9
million. A telephone call by Theresa to Paul revealed that Paul’s entire output
had been sold to another buyer.

• Was Noma obligated to sell the presses to John for $2,4 million? Discuss
• Assume Noma was so obligated. What are John’s rights and remedies
against Noma? Discuss. (20 marks)

END OF PAPER