ESSENTIAL

ELEMENTS OF
A VALID
CONTRACT-
PART 2
Dr Innocent Maja/Walter
Makhuyana
 7. CONTRACTUAL CAPACITY
 This refers to the legal capability to form a binding
contract.
 Both parties must have the mental capacity to
understand the nature and consequences
(ramifications) of a contract.
 The rules on contractual capacity are designed to
protect people that have insufficient understanding
in the eyes of the law to protect themselves in the
marketplace
 The law recognizes two categories of legal persons
that potentially have contractual capacity
 A. ARTIFICIAL PERSONS
 These are business entities (with distinct
identity and legal personality) recognized by
law for purposes of entering into contracts
 They have the legal capacity to enter into
binding contracts through human agents
1. Corporations – refer to registered Companies,
Private Business Corporations and statutory
corporations. Their contractual capacity is
usually found in the company documents
(memorandum and articles of association), the
Companies Act or an enabling statute.
2. Partnerships – the Partnership Deed details who
can contract on behalf of the partnership. As a
general rule, any partner can enter into a
contract on behalf of the partnership if the
contract furthers the interests of the partnership.
3. Trusts – In Wilsa v Mandaza and Others 2003 (1)
ZLR 500 (H), the court held that a trust is not a
legal person and cannot institute legal
proceedings. But individual trustees can institute
legal proceedings on behalf of the trust.
4. Voluntary organisations (common law
universitas) – eg clubs, churches, co-operative
societies, etc. Their constitutions mention who
can contract on behalf of the organisation
5. The state – section 2 of the State
Liabilities Act (Chapter 8:14) affords
the state the capacity to contract as a
natural person. The state can enter into
contracts through natural persons
provided for by the relevant statute.
6. Universities and parastatals –
contractual capacity is provided for in
the enabling statute as read with the
State Liabilities Act.
 B. NATURAL PERSONS
Natural persons need to have reached the legal age of
majority (18) for them to have capacity to contract. The
following persons are disqualified from contracting:
1. Minors – a minor is a person below the age of 18. they
do not have capacity to contract unless they are assisted
by a guardian. Assistance means knowledge and lack of
objection.
 When a major enters into a contract with a minor, the
major is bound and the minor is not. The contract is
called a limping contract.
 Mujaji v Mushoriwa - below 7 years, no capacity at
all. Guardian must enter on minor’s behalf. Above 7,
they can enter with assistance of a guardian.
An unassisted minor can be bound in the following
circumstances:
 If the minor is tacitly emancipated – no longer
under the control of parents and either earns his or
her own living or maintains a separate household or
both (Dickens v Daley)
 If the minor misrepresents his or her age
 If a minor is unjustly enriched
 If the minor ratifies the contract upon reaching the
legal age of majority.
2. Insolvents – those who accrue more
liabilities than their assets can pay for.
They can only enter into contracts with
the assistance of a trustee.
3. Prodigals – declared by a court to be
incapable of managing their affairs due to
a propensity to squander. They can only
contract with the assistance of a curator.
4. Insane or mentally ill persons – they
have no capacity to contract because they
lack mental capacity to appreciate the
nature ad consequences of a contract.
5. Intoxicated persons – an intoxicated person has
no contractual capacity when they are intoxicated
because they lack the mental capacity to contract.
6. Married women – their contractual capacity is
determined by the type of contract they enter into.
In Zimbabwe, marriages are either
a. In community of property – husband and wife have
a joint estate. The husband as administrator can
enter into a contract without wife’s consent. Wife
cannot enter into a contract without husband’s
consent except for basic necessities.
b. Out of community of property - parties husband
and wife own property separately. Wife can
contract without the consent of the husband.