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Essentials of a contract
a)
it should be lawful
b)
possible of performance
c)
d)
e)
f)
g)
requirement.
-
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 an
acceptance by the other person called the offeree.
Case law
Green Acres Farm (Pvt) Ltd v Haddon Motors (Pvt) 1983(1) ZLR 17 (SC)
In this case the defendant sent a truck to the plaintiff with a note requesting the
plaintiff to check over the truck. The plaintiff did the checks over the truck and
proceeded to effect repairs. Upon presentation of the invoice the Defendant
refused to pay arguing that they had not requested the plaintiff to effect any
repairs. The plaintiff took the matter to the courts. The Court held that there
Case law
Bloom v American Swiss Watch Company 1914 AD 100. It was 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. See also Lee v American
Swiss Watch Company 1914 AD 121.
4
The offeror must take reasonable steps to find and inform the
offeree of the revocation Bryne and Co v Lean van Tienhoven
and Co 1880 KB.
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.
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 bus seat and tending
his fare.
Case law
Ferguson v Merensky 1903 TS 657 Transvaal Supreme Court) where F was
anxious to buy Ms first two farms. F wrote a letter to M in the following terms:
If you still desire to dispose of your two farms, I shall be pleased to have
your price 2nd terms.
M replied and said:
I have no objection to sell the two farms in question and as there are
coals on the farm and a railway line I will be passing near them, I ask 30
shilling per acre.
In that letter on the referred F to his lawyer with reference to the terms of the
contract. When F sued M saying that the latter had sold the farms to him, the
Court held that Ms reply to Fs letter did not constitute a firm offer from which he
could not withdraw and which F was entitled to accept Ms lawyer had written to
F declining the offer made by the plaintiff and at the same time making new
proposals. On behalf of the defendant M which the plaintiff had refused to
accept.
that a tradesman advertises the price of the goods he sells does not mean offer
to any member of the public. It does not mean the right to enter the shop and
purchase at the displayed price. The court also held in the case that: A contract
is not constituted when any member of the public comes in and tenders the price
mentioned in the advertisement. In summary therefore display of goods at a
certain price is not a firm offer but only an invitation to treat. On the contrary, it is
the customer who makes the firm offer by presenting goods at the till and when
the shop owner accepts the offer to buy, a contract then comes into being.
Case
Carlill v Carbolic Smoke Ball Company
Where the company inserted an advertisement in the newspaper offering to pay
100 pounds to anyone who contracts the increasing epidemic of influenza or any
disease caused by taking cold after having used their smoke balls 3 times daily
for two weeks according to the printed directions supplied on each ball the
advertisement went on to say that 1000 pounds had been deposited with the
certain bank showing its commitment in the matter. During the last epidemic of
influenza many thousands carbolic smoke balls were sold as preventives
against the disease but in no ascertained case was the disease contracted by
those using the smoke balls. The plaintiff alleged, on the faith/strength of an
advertisement bought one of the balls at chemist and used it as directed three
times a day for 2 weeks but she was attacked by the influenza and she claimed
the 100 pounds reward price the court of first instance held and she was entitled
to the 100 pounds but the defendants appealed but their appeal was dismissed.
In point of law the advertisement in this case was an offer to pay 100 pounds to
any member of the public who would have performed at those conditions set out
in the newspaper. Performance of those conditions was held to constitute
acceptance of the offer. The court held further and the offer was a continuing
offer which was not important.
Case
See further Lee v American Swiss Watch Company 1914 AD 12 Dietrichsen v
Dietrichsen 1911 TPD 486.
Q.
TERMINATION OF AN OFFER
Firstly an offer can be terminated by rejection by the offeree. It can lapse on the
expiration of fixed period within which it was meant to be accepted. If there is no
such fixed period within which an offer should be accepted an offer lapse after
the expiry of some (reasonable time).
Case
Blew v Snoxell 1931 TPD 226
Blew wrote to Richard Curle Ltd offering to buy a certain piece of land of a
certain piece. The land was owned by Richard Curle Ltd but by Snoxell who
indicated to Richard Curle in writing that he accepted the offer. Richard Curle
Ltd thereupon notified Blew that the owner of the land had accepted his offer.
When Snowxell later sued Blew for damages for alleged breach of contract Blew
excepted to the summons on the ground that there was no valid agreement
between him and Snoxell. The court held that, Now it is trite law (i.e. simple
legal principle), and an offer made by one person to another can not be
accepted by a third party for the simple reason that there was no intention on the
part of the one person to contract with the other.
Whatever the subject matter of the contract maybe:
-The Court held further that it was perfectly clear and the offer was made to
Richard Curle Ltd and that the plaintiff purported to have accepted that offer but
there was nothing to show any acceptance by Richard Curle Ltd. That being the
case, there was no contract on which the plaintiff was entitled to come to court
as the offer was never made to him.
Case
In the case of Bird v Sumerville and Anor, Bird signed an offer to sell land
accordingly not to open for acceptance by Sumerville and another but could be
accepted by Sumerville alone.
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When an option is to sell for cash the offeree may cede that
option to the third party because the optional holder has a
contractual right which is regarded as property. In this regard i.e.
when the option is to sell for cash as long as cash is paid. It
does not make a difference to the offeror whether A is B, C or D
who pays the cash.
If the offeror gives credit to the offeree then that option may not
be ceded. The giving of credit involves an element of direct
personal dealing.
Case
Hersh v Nel 1948(3) SA 686(A) where Nel owned two farms and he gave Mr
West an option to purchase the two farms and the together with another person
ceded the option to Hersh who then accepted Nels offer before its expiry. When
Hersh accepted the offer Nel refused to sell the farms. When sued, the rule
made in the case of Blue v Snoxell was applied i.e. an offer made by A to B may
not be accepted by C.
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Case
Madan v Macedo Heirs and Anor 1991(1) ZLR 295(SC)
Acceptance:
-
further
negotiations.
An
acceptance
must
be
Case:
Boerne v Harris 1949(1) SA 793(A)
In which the Appellant was the lessee at premises owned and leased by the
respondent. The contract lease agreement contained an option under which the
appellant could renew the lease agreement for a longer period of 5 years, the
period was to be recognised from 15 April 1947 and the option was to be
exercised by October 15 1946.
Case:
Orlon Investments P/c v Ujama Investment and Ors
If an acceptance has a condition attached to it when A is not an acceptance at
all it becomes a counter offer. If the offer is not prepared to accept the counter
offer from the offeree the later can not go back and accept the original offer
originally made to him and thus there would be nothing left to accept.
Case
Water Mayer v Murry 1911 (AD) 61
Water Mayer owned the farm which Murry wished to buy. Murry wrote a letter to
Water Mayer offering to buy his farm for 1 700 pounds. Water Mayer wrote back
and said, I accept the offer to sell the farm at 1 700 provided you pay all the
expenses and 1 000 pounds is paid at the time of signing the agreement. Murry
wrote back and said, Fine, but the price is not payable at the time of signing
Water Mayer wrote back and said he was no longer interested in selling the
farm. When Murry sued Water Mayer the court ruled that Murry had no case
because he had made counter offer therefore no contract had been concluded
between the parties.
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Case
R v Nel 1921 AD 339
In this case the Respondent Nel had licence to sell liquor in Transvaal. He
received an order form Armstrong who was resident in Cape Town the order was
delivered to Nel in the Transvaal (is the written order) and the bottles of liquor
were then allocated to the purchaser in Cape Town. Nel was prosecuted for
selling liquor in Cape Town without licence as it was necessary for court 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.
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.
Case
McKenzie v Farmers Coop Meat Industries Ltd 1922 AD 16
McKenzie applied for shares in the cooperative company the application form
read in part, I agree to accept the above number of shares or any lesser
number and may be allotted to me. McKenzie was making the offer to buy the
shares and concurrently dispensed with the need for communication of
acceptance in that he had expressed the intention that the cooperative should
on receiving his application forthwith proceed to allot shares to him. A contract
would come into existence as soon as the share transfer secretaries sing a
share certificate giving McKenzie any number of shares.
Case
In the Ujamaa Investment case the Appellant company was buying shares from
the respondents company. The parties engaged in negotiations and there were
a number of drafts exchange by the parties and the forth draft was signed by the
respondent on October 9 1984. They then sent two copies of that draft to the
Appellant under cover of a letter which read in part as follows, If it is not
The
appellant/purchaser signed both copies of the agreement and kept them in his
drawers. After some time the purchaser sued for the transfer of the share but
the Respondent alleged that they had not agreed on anything.
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The court held that the respondent had not dispensed with the
need for communication of acceptance and because acceptance
had not been communicated it held there was no contract.
The rationale behind this theory is that the offeror must suffer the
risk consequences of choosing a specific method of acceptance
(is communicated acceptance).
Cape Explosive Works v SA Oil & Fat Industry 1921(4) CPD 244 where the first
defendant wrote a letter on the 10 th of July 1916 and sent it by post from
Delmore in Transvaal to the plaintiff in Sommerset in Cape Town. The letter
contained an offer to sell certain quantities of glycerine oil. On the 14 th of July
1916 the plaintiff replied accepting the offer. Then on 11 September 1916 the
second defendant of Durban sent a letter by post to the plaintiff in Cape Town
containing another offer to sell a certain quantity of glycerine oil. The letter of
acceptance was the posted on 16 September by the plaintiffs in Cape Town. In
an action of the the defendants took exception to the jurisdiction of the
court on the ground that they were not entered into in the Cape but in the
Transvaal and Natal respectively where the defendants had received the letters
of acceptance. This argument did not find favour with the court which held that
the contracts had been concluded in Cape Town where the letters of acceptance
had been posted.
-
If the offeror does not make this special provision the expedition
theory will be applied without any exception. The basis of the
rule is that by using the post first the offeror by implication
authorises the offeree to use the same method of
communication.
Case
Smeiman v Volkersz 1954(4) SA 170
The Applicant and the respondent made an option to sell some shares to the
applicant. The option was verbal and it was to remain open till 15 February
1954. On the 15th of February a lawyer acting for the applicant phoned the
respondents office in the Cape only to be told that the respondent was not in the
Cape but somewhere in OFS.
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authorized the use of the post? Looking at the facts and what
was the appropriate method of replying? The court held that the
mere fact that parties reside at a distance does not per se
warrant the use of post, the expedition theory therefore did not
apply.
Case
A to Z Bazaars (Pvt) Ltd v Ministry of Agriculture1975(3) SA 468
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This Section provided that the owner of the property in question should
deliver or cause to be delivered a statement indicating whether or not he
was accepting. Court interpreted this Section to mean that the owner was
required to physically deliver to the Ministry concerned a written
acceptance for a contract to come into existence.
There was accordingly no room for the applicant of the expedition theory.
Jansen JA said, But even under the law the question whether the alleged
agreement has been conducted by posting must depend upon particular
circumstance of each case. The Expedition Theory does not hold without
exceptions.
Thus the judge emphasized that it is not clear that all whether
the Expedition Theory, mainly condemned for the protection of
the offeree, should necessarily produce the possibility of a
neutralization of the posted acceptance before it is received by
the offeror.
Case
Jordan v Trollip (1960) (1) PH 825
-In a Robert AJ reiterated Wessels train/trial of thought that in order to determine
the existence/otherwise of a contract. It is the manifestation of the parties wills
(b)
-Courts have often asked this question, Is there any difference between Quasi
Mutual Assent and Estoppel?
-Before addressing the question it is imperative to define what estoppel is.
-Estoppel is a general principle of law whereby, if a person either negligently or
fraudulently misrepresents facts and another relies on the misrepresentation to
his detriment the person making the misrepresentation is prevented from
ascertaining and providing that the true state of affairs is different.
-For a person to establish estoppel he has to prove the following four factors:
(i)
(ii)
That there was fault on the party of the representor either in the form of
negligence.
(iii)
(iv)
That there was detriment which was caused by a reliance upon such
misrepresentation.
Estoppel can only be relied upon as a defence and not a cause of action
whereas quasi mutual assent can found a cause of action
2.
Quasi mutual assent does not require fault, fraud and detriment to found a
claim. Instead there should only by misrepresentation and a reliance on
misrepresentation which reliance need not be detrimental.
Case
Stanbik Finance Zimbabwe Ltd v Chivhungwa 1999(1) 262 HC
Spesbona Bank Ltd v Portals Water Ltd SAPDY Ltd (1983)1978
NB
Not only does the courts confine themselves to the four corners of the
contract but at times they go further in looking at the particular conduct of the
parties as they/at the time they entered into the contract (i.e. objective approach
of which may include either representation by one party)
NB
3.
-It is the yardstick (i.e. AC) that usually distinguishes a contract from social
agreement. It is important to note that our courts have derived agreements into
two categories in order to ascertain legal effects, these are commercial
transactions and social arrangement.
Social arrangements: It is true that social arrangements are not meant to be
legally binding unless there are special arrangements which allows for that.
Case
Balfour v Balfour
The plaintiff was the wife of the defendant. The defendant was employed in
Ceylon. When the plaintiff went there she decided that she did not want the
weather there and opted to stay in England instead. The defendant offered to
pay her 100 pounds as maintenance periodically. The defendant then flouted
the promise and plaintiff sued him for maintenance on the basis of the
arrangement they had made. The courts dismissed the claim on the ground that
by holding that this was a social arrangement which did not create an intention
to be legally bound.
Case
Jones v Padabaton 1969 2 ALL ER 166
Commercial transactions: these are presumed to create legally binding
obligations. However, some commercial transactions can specifically exclude
animus contrahend by what are called honorp clauses.
An honor clause specifies that an agreement is only supposed to be binding in
honor and not give rise to any legally enforceable obligation. This position was
confirmed in the case of Electronic Building Elements v Huang (1992) 2 SA 384
of 387 where Levy AJ held that if the parties choose to exclude from legal
enforceability any arrangements arrived at between them, it can then become no
more that a moral obligation or an obligation of honor but unforceable in court of
law.
Rose and Frank Co v JR Crompton and Brothers Ltd and Anor 1923 2 KB 261
Possibility to person: An agreement cannot be deemed to be a contract if the
performance of the obligation is impossible . This position was captured in the
case of: Peters, Flamman and Co v Kokstad Municipalities where the court held
that by the civil law a contract is void if at the time of its inspection its
performance was impossible. This rule/principle is however subject to the
following qualifications.
a)
b)
c)
The impossibility must not be fault of one of the parties to the contract
NB
Parties should not agree upon anything unlawful nor outside human
capabilities
Formalities
In Zimbabwe contracts need not be reduced into writing unless there is a statute
that specifically provides so e.g. section 5 of Hire Purchase Act provides that a
hire purchase agreement must be reduced into writing.
Similarly Section 7 of the Contractual Penalties Act provides that an installment
sale of land must be reduced into writing.
Section 47 of the Companies Act provides that a pre-incorporation contract must
be reduced into writing.
NB
The reason why there is such emphasis for reducing contracts into writing
is for evidential purposes and it is also easy to decide on any case involving
contracts put into writing (i.e. any document speaks for itself and thus it will be
easy to see what is/want is not included in the terms of the contract).
5.
Contractual Capacity
Partnership
As regards a partnership the capacity to contract is found in the partnership
deep. However, it is generally accepted that any partner can enter into a
contract on behalf of the partnership if the contract furthers the interests of the
partnership.
Natural Persons
In Zimbabwe the legal age of majority is 18 years and any person who has
reached that age can enter into a binding contract. The following people are
disqualified from contracting:
a)
Manors: this refers to people who have not reached the age of legal
majority and are not tacitly emancipated.
b)
contract which he enters without the assistance of the guardian. The minor that
can be bound are follows:
a)
Tacitly emancipated minor i.e. refers to one that is either living apart
from his parents or living with them but paying for their upkeep.
Carrying out his own trade or generating his own account.
b)
The Marriages Act provides that when a minor gets married she can be
allowed to enter into binding contracts without the assistance of the
guardian. In this respect such a minor can be referred to as a tacitly
emancipated minor see case: Dickens v Daley (1956) 2 SA11.
c)
d)
Tacit emancipation is usually relied upon for children between the ages
of 14 and 18 and marriage as for girls is recognised at law as from the
age of 16 years.
e)
understood in the Edelstern case where the court held that the other exception
is that a minor is under an obligation/is obliged to make restitution to the other
party to the extent to which he has been enriched. However the minor is not
obliged to restore whatever he has received pursuant to the contract but only so
much as still remains in his possession at the time of the action or the
surrogates of such residue.
a)
When he ratifies the contract upon majority/when his guardian ratifies the
contract and the minor entered into the effect of such a ratification is to
render the contract valid and effective from the time of the purported
agreement.
The building effect is ratification will have a retrospective effect that is from
Married women
b)
Their capacity depends on the type of marriage that they enter into. There
are basically two types of marriages namely:
(i)
Marriage in community of property: here the husband and the wife own
the property jointly and is referred to as a joint estate. The husband is the
administrator of the marriage estate and he can enter into any contract in
respect of that estate without the consent of the wife but the wife cannot enter
into a contract in respect of that particular estate without the consent of the
husband, the only exception is when the wife enters contracts in respect of
necessacive and (i.e. day to day basic necessities e.g. food.
Amendment No.17 of the Administration of Estate Acts come with the ruling in
Magaya v Magaya of which did away with the concept of perpetual minority of
the women.
(ii)
and the wife own the property separately and the wife can enter into any
contract without the consent of the husband.
In H v H it was held that a husband can not at law rape his wife. In Zimbabwe
marriages are presumed to be out of community of property unless parties enter
into an Ante-nuptial contract.
However, there has been a question of whether or not customary marriage are
in/out of community of property. This issue was however addressed in the case
of:
Jena v Nyemba 1996(1) ZLR 138 where the court held that, even though the
very nature of a customary marriage reveals that it is in community of property,
the promulgation or enactment of the Legal Age of Majority Act (i.e. LAMA)
conferred majority status on women that are married customarily.
What this means is that such women enter into a valid contract without the
consent/assistance of the husband.
c)
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. This position was captured in the case of Lange v
Lange (1945) AD 33 of 341 where the court held that, It is clear of course, that
if, owing to a mental disease, a contracting party does not understand or
appreciate the nature of the matter the contract will be void of the inquiry of the
court usually makes in case of insanity was crystalised in the case of: P v Warne
1922 AD 481 at 488 where the court held that, A court of law that is called upon
to decide a question of contractual liability depending upon mental capacity must
determine whether the person concerned was or was not at the time of
managing the particular affairs in question is whether his mind was such that he
could understand and appreciate the transaction into which he purported to
enter.
d)
Intoxicated Persons
Insolvents
Prodigals
6.
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.
Where detail/content is lacking such a contract can be deemed void for
vagueness. The requirement of certainty is reflected in the rule of offer and
acceptance must result in certain terms. Uncertainty may rise in a number of
different ways. It is often extremely difficult to establish whether or not the
uncertainty is such as to vitiate the transaction.
At the end of the day each case depends on its own facts.
In Levenstein v Levenstein 1955(3) SA 615 where in an answer to the plaintiffs
claim for an ejectment order the defendant pleaded that, In or about April 1946
a verbal agreement was concluded that Salisbury between plaintiff and
defendant in terms of which the plaintiff undertook, in consideration of/for the
understanding by the defendant hereinafter mentioned to give; and transfer to
the defendant the said number 977 and the said business. The defendant in
turn understood to maintain the plaintiff to the best of his ability during the
remainder of her life, and further undertook to maintain and educate, till such
a time as she was capable of maintaining herself. The plaintiff excepted to this
plea on the grounds that the agreement was void for vagueness and was
unenforceable. The word business was ambiguous and the words to maintain
the plaintiff to the best of his ability were uncertain to be capable of precise
definition. In the same case, it divided contracts void for vagueness into four
categories:
(i)
Contrast with Blundell v Bloom 1950 2 SA 629 it was involved with a contract
of sale which had many blank spaces e.g. A provided, I agree to pay the sum of
., as deposit immediately on signing the agreement. When the plaintiff sud
the defendant argued that the contract was void for vagueness because it was
incomplete but the court however thought otherwise and held that the deposit
was a term which could be waived by the seller as long as the purchase price
was agreed.
It was well established that an agreement which is incomplete because the party
or parties did not reach an agreement/consensus on an essential/material
aspect for vagueness and incapable of being enforced.
Schneider and London Ltd v Bennett 1927 TPD 346 where the Respondent had
been employed by the Appellant as the manager of their timber company. They
agreed on a monthly salary of 49 pounds and a small commission to be agreed
between the parties but never agreed on the quantum of the commission. When
Bennett was dismissed, he sued for the commission arguing that he was entitled
to a fifth of the turnover of the company because this was reasonable. The court
however rejected his argument and held that the phrase small commission was
not sufficient to give rise to a contract in Bennetts situation. There was of cause
an agreement but the court was not in a position to enforce the agreement.
Contracts which give unlimited discretion to the persons bound thereby e.g.
Scaurnel v Ostern 1941 AC 257 where the Respondent bought a van from the
Appellant. A deposit was paid and the outstanding balance was to be paid over
a period of 2 years.
Court held that the time period for payment of the outstanding amount was
unnecessary long and the contract was therefore void for vagueness.
In Kantor v Knator 1962(3) SA 202 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.
Court held that the husband was not bound to do anything because there was
unlimited discretion.
Courts have devised the 4th class of cases where the unspecified details of the
contract are questions of fact which are capable of determination by evidence.
Angath v Munckunlal Estate 1954 (4) SA 695 where the plaintiff was the
Defendants nephew. Defendant had invited plaintiff to assist in his shop and
plaintiff was supposed to be paid something sometime. This meant that there
was no agreement on plaintiffs salary. However the defendant died before
paying the plaintiffs anything and plaintiff sued Defendants estate. The court
held that the plaintiff was to be awarded what the court considered as
reasonable remuneration for his services..
Contrast with Ellite Electrical Contractors v The Coveed Wagon Restaurant
1975(1) SA where the Respondent had hired the service of the Appellant.
Parties had not agreed on a particular price and when the Respondent received
a bill from the Appellant he ignored it. The Appellant then sued for payment.
Court held that although there was no agreement on the price there was an
implied agreement to pay a reasonable amount of money for the work done.
The court was to rely on the reasonable element to give content to the contract.
Court also looked for characteristic evidence in determining the price that was
payable.
It is clear from the above cases that when courts are faced with contracts that
are purportedly void for vagueness they have a tendency of leaning towards
enforcing a contract rather than striking it down. This is in a bid to try it down.
This is in a bid to try as much as possible to preserve, sanctity of contract.
Whilst this approach is commendable it can be argued that the Supreme Court
stretched it too far in the case of Labin and Anor v Associated Packing Company
1996(1) ZLR where the third Respondent owned shares in the first and 2 nd
Respondents companies which he sold to the Appellant. The parties started
negotiating and finally made a draft agreement which stated that it was subject
to the signature of both parties. They agreed on the price and method of
payment. It was stated that the money had to be paid in a way that was tax
advantageous to the seller. It was then left to the accountant to do his work.
The document was sent to the third Respondent for his signature who then
refused to sign it and the contract could not go further. The High Court was not
vague at all even the parties had not agreed on an amount that was tax
advantageous to the seller.
7.
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:
(i)
statutory illegality
(ii)
(i)
The court must interpret the statute in the ordinary way not during
violence to it to the extent its meaning to cover its supposed intention.
(ii)
The courts must then determine whether or not the contract in question
falls within the armpit of the statute.
(iii)
(iv)
Then if it falls without the armpit of the statute, then out the court
should proceed to inquire whether or not the said contract has been
craftly designed to circumvent statute.
fundamental doctrine of the law regards, the substance rather than the form of
things.
when it is remembered that public policy is a question of fact and not a question
of law and it always changes with the general sense of the justice of the
community or the ban mores manifested in public opinion.
Professor Christie convincingly argues that a distinction must always be drawn
between superficial public opinion which can swing like a weather and seriously
considered public opinion on the general sense of justice and good morals of the
community. It is the later and not the former to which the courts should direct
their attention and this limitation coupled with criteria (i) and (iii) above maintains
the stability of the law of contract by ensuring that contracts are not at the mercy
of jickle public opinion. Words like clearly detrimental to the interests of the
community and runs counter to social/economic expedience must be relied on
sparingly and only in the clearest of cases.
NB
At the end of the day what determines the public policy of the day is the
philosophical outlook of judges presiding over the matter and this overstretches
the position/power of the judges.
The following contracts have come to be accepted contrary to public policy.
a)
Roman-Dutch law did not permit any contract in the nature of a bribe to a public
official or which bound him of corruption and intrique or which corruptly secured
a promise of advancement, employment, office or any other advantage the main
(i)
(iii)
Collusion this was defined in Bevin v Bevin. Court held that ordinarily
speaking collusion in our law is a keen consiance and means that an
agreement or mutual understanding between the parties that the one
shall commit/pretend to commit an act in order that the other may
obtain a remedy at law as for a real injury. Such agreements are
illegal and unenforceable.
(iv)
(v)
(vi)
(vii)
his goodwill
(ii)
his client
(iii)
his business
In the case of Magua and Research (SA) Pty Ltd v Ellis is the locus classicus on
covenants in restraint of trade.
Principles draw from this case are:
(i)
(ii)
(iii)
Void Contracts
Are of no legal force at all. 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.
Restitutio in intergrum i.e. restitutution 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 the innocent party to the contract has the right to set aside
the contract if he so chooses.
MISREPRESENTATION
Is a factual statement concerning a certain state of affairs but is not true (it
however must be material). A misrepresentation is a statement made by one
party to the other before the time of contracting; the statement must be material
i.e. of much importance), 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)
(ii)
(iii)
(ii)
it must be material
(iii)
that the innocent party entered into the contract in the faith of
representation.
The innocent party who establishes the three elements set out above is entitled
to rescind the contract whether or not the misrepresentation is innocent,
fraudulent or negligent. Rescission leads to restitution in integrum. Through
rescission one would be taking the contract to the state of being void and thus
restitution in integrum will be automatic and then finally leading to damages i.e.
with
voidable
contracts
but
such
damages
differ
with
negligent/fraudulent/innocent misrepresentation.
The law defines misrepresentation with some care in order to fit in which the
realities of life. People do not usually assume that somebody elses opinion is
unquestionable and the law does not treat an expression of an opinion that
tends out to be untrue as misrepresentation.
But as will be noted in the case of Feinsten v Nigglian the expression of opinion
by a party knowing it to be false amounts to misrepresentation in that the opinion
is a false statement of his state of mind.
Feinstein Niggli where the court held that fraudulent misrepresentation in the
form of an opinion/forecast of future success of a business may amount to/rather
is actionable.
Misrepresentation by Silence
In Speight v Flass (161)(1) SA 778 it was said:
there is in our law no general duty upon contracting parties to disclose to each
other any circumstances/facts known to them which may influence the other
party in deciding whether to conclude the contract. In particular circumstances
the law requires the truth to be revealed. In those circumstances silence will
amount to misrepresentation. In contracts such as insurance; partnership and
agency (contracts uberrima fide (i.e. utmost good faith).
Apart from those particular contracts an attempt to lay down a broader duty to
disclose was made in the case of Pretorious v Natal South Sea Investments
Trust (1965)(3) SA 410 where P successfully applied for shares in the
company in ignorance of the fact that the directors had bound the company to a
very burdensome contract (oppressive contract). He sought to rescind the
contract on the basis that the directors had not disclosed the burdensome
contract. The court held that there was a fraudulent misrepresentation by
silence in that the directors had failed to disclose a material fact which was in
their exclusive knowledge.
Thus every case is determined on its facts and circumstances (i.e. in
determining whether there existed an obligation to disclose).
MISTAKE
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)
accepted that a mistake of law does not excuse a party from a contract. 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).
Miller and Others v Belliville Municipality 1973(1) SA 914
This point was emphasized in the case of Sampson v Union and Rhodesia
Wholesale Ltd 1929 AD 481 where the court held that a general proposition of
the law is that if you think the meaning of a clause is such and such, you cannot
get rid of your liability when you discover that the legal meaning is different from
what you thought for you cannot be heard to say that you did not know the law.
The propositions upheld in the Zimbabwe case of Ncube v Ndlovu 1985(2) ZLR
281(SC) where the appellant seduced the respondents 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 seduction in respect of a daughter who had reached the legal
age of majority while relying on the Katekwe v Muchabayiwa case His appeal
was dismissed on the basis that a mistake of law does not invalidate a contract.
In South Africa the courts have departed on some occasions from the general
principle that a mistake of law does not vitiate a contract. The courts have come
to accept that not everybody knows the law and if they knew the law there would
not be any point in training lawyers. The courts have in essence set aside some
contracts on the basis of mistake of law.
Willis Faber Enthoven Properietary Ltd v Re Inland Revenue (1992)(4) 2002
p224 (b) where the court held that, In my judgment our law is to be adopted in
such a manner as to allow no distinction to be drawn between mistake in law
and a mistake of fact.
However, it is important to note that the Zimbabwean judiciary has not yet
departed from the proposition that a mistake of law does not vitiate a contract.
The mistake must be of a material fact or term. This simply means that the
mistake must refer to one of the essential terms of a contract itself.
In this regard two categories of mistake have evolved.
a)
b)
error with regard to the identity of the other contracting party (i.e.
his name) e.g. where A employs John (whom he wants to employ
but mistakenly thinks that his name is Peter, a contract which
cannot be entered void due to error. This kind of mistake does
not affect consensus and does not invalidate the contract
between A and John.
(iii)
(iv)
(v)
TYPES OF MISTAKES
There are generally 3 types of mistakes:
(i)
Unilateral mistake
(ii)
Mutual mistake
(iii)
Common mistake
Unilateral mistake
This occurs where one party is mistaken and the other is not as a general rule
the mistaken party must be bound by the contract on the basis of quasi mutual
asset because, by his conduct he led the other party as a reasonable mean to
believe that he was binding himself as was held in the case of George v
Fairmead at 471 (supra).
However there are instances where a unilateral mistake can vitiate a contract,
these were spelt out in the case of National and Overseas Distributors
Cooperation Pty Ltd v Potato Board 1958(2) SA 473 at 479(g)-(h) where the
court hold as follows:
Our law allows a party to set up his own mistake, in certain circumstances in
order to escape liability under a contract into which he has entered but where
the other party has not made any misrepresentation and has not appreciated at
the time of acceptance that his offer was being accepted under a
misapprehension, the scope for a degree of unilateral mistake is very narrow, if it
exist at all. At least the mistake would have to be reasonable and it would have
to be pleaded.
From this passage 3 possibilities emerge where a unilateral mistake can vitiate a
contract mainly:
(a)
where the other party knew of the mistake at the time of contracting
(b)
(c)
However this (c) position was varied in the case of Lamdsbergen v Van der Walt
1972(2) SA 667 where the court held that even a reasonable mistake will not
release the mistaken party from the contract unless the mistake is material in the
sense that he would not have contracted if he had known the truth.
Mutual mistake
This occurs when each party is mistaken about the others intention so that the
parties are at cross-purposes. In solving this problem the court usually applies
the doctrine of quasi mutual assent. Courts have adopted two approaches
namely:
a)
b)
Maritz v Pratley (1894) 11 SC 345 where M, was an auctioneer, called for bids
lot 1208 which was the successful bidder but he refused to pay because he
thought he had bought the mantel piece together with a mirror which was
standing on it. The mirror was infact a separate lot 1209. The court held that
Pratleys mistake in thinking that Maritz intended to sell the Mantel piece and
mirror together was held to be reasonable and Maritzs mistake in thinking that
Pratley was bidding for the mantel piece only was obviously reasonable. The
court held this to be a case of mutual mistake and there was no contract.
Common mistake
Both parties will be mistaken concerning a particular thing. It occurs where both
parties are labouring under the same mistake. In dealing with this problem the
b)
Dickinson Motors (Pty) Ltd v Obahozer 1952(1) SA 448(A) where Obahozer paid
291 pounds which was the amount that his son owed on a car he had bought
from the company. In return the company released to Obahozer a car with both
the company and Obahozer mistakenly thought was the car concerned. When
the true owner of the car successfully claimed it. Obahozer relied on common
mistake to justify claiming the repayment of 291 pounds. This is what the court
had to say, The 291 pounds was paid under a common mistake in regard to a
matter which was vital to the transaction and if either of them had been aware of
the position, the transaction would not have gone through
As such the company was ordered to repay Obahozer the 291 pounds paid.
Rectification
It refers to the correction of errors with a contract (in most cases these are
typing errors)
It can only be granted by the court when the written contract contains the exact
wording that the parties intended but the wording produces an effect that the
parties did not intend. This point was underscored in Tesben v SA Bank of
Athens (1994) 4 AII SA 396 p401 where the court held as follows to allow the
words that the parties actually used in the documents to override the prior
agreement or the common intention that they intended to record is to enforce
what was not agreed and so overthrow the basis on which contracts rest in our
law.
DURESS
It occurs when a person is forced into a contract by fear induced through either
actual violent or threats of violence either on his person/family or property.
A contract obtained this way is voidable at the option of the innocent party i.e.
innocent party can elect to set aside the contract.
White Brothers v Treasurer General (1883) 2 SC 337, at p35 the court had this
to say:
where a man is forced by menaces to his person to make payments which he is
not legally bound to make it cannot be said that there is a total absence of
consent but in as much as his consent is forced and not free, the payment is
treated as involuntary and therefore subjected to restitution.
In the same vain Sabbides v Sabbides (1986) 2 SA 321, 325 The court
adopted Van der Linderns observation and held as follows:
(ii)
his legal rights, payments so made can be recovered as had been exerted under
duress of goods.
The onus of showing that the payment has been made in voluntarily and that
there has been abandonment of rights would of course be upon the person
seeking to recover and hence the importance of a protect or an unequivocal
statement of objection made at the time. Without such protest it is difficult to see
how the plaintiffs state of mind could be established to the satisfaction of the
court.
(iii)
(iv)
(v)
The threat must have caused damage i.e. the threat must have
induced the party into a contract to his detriment. See Freedman v
Kruger 1906 TS 817, p821 and 822. It has come to be accepted that
duress by a third party can vitiate a contract the essential elements for
duress are satisfied. See Broodryk v Smuts. The effects of duress on
a contract is that such a contract is voidable at the option of the
innocent party.
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 weakened his powers of resistance and
made his will probable and used this influence in an unscrupulous manner to
persuade him to consent to a transaction which is to his detriment end with
which normal free will he would not have entered into.
Preller v Jordan 1956(1) SA 485 . The court held that a party leading undue
influence should meet the following five things:
(1)
That the other party obtained an undue influence over the other. In this
regard the law recognises that such an undue influence is more likely
going to exist where there is a special relationship between the parties
e.g. doctor and patient lawyer- client; guardian minor, religious
advisor-disciple relationships.
This point was emphasized in the case of Armstrong v Magid and Anor 1937 AD
276. where the court held as follows, wherever two persons stand in such a
relation that while it continues confidence is necessarily repossessed by one
and the influence which naturally grows out of that confidence is possessed by
the other and this confidence is abused or the influence is exerted to obtain an
advantage at the expense of the confiding party, the person so availing himself
will not be permitted to retain the advantage although the transaction could not
(ii)
(iii)
(iv)
(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
These are promises agreed upon by the parties which together make up the
contract. A term must be distinguished from other statements which may have
been made only to induce one of the parties to enter into the contract. Such
statements may be mere puffs or representations which unlike terms cannot
grant an action for breach of contract in the event of them turning out to be
untrue.
This position was emphasized in the case of Petit v Abramson 1946 NPD 673 at
679 where the court held as follows:
It is notorious that statements made by parties when negotiating a contract may
conceivably take the status of either:
(i)
mere puffing/commendation
(ii)
representations
(iii)
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. As regards contractual terms in a verbal
agreement.
Small v Smith (1954) 35 ALR 434, 437 held as follows:
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.
The usual challenge is to prove the existence of such terms
Regarding written contracts terms are easy to prove because they are reduced
into writing. Judges tend to uphold the position that,
documents speak for themselves What this means is that judges prima facie
(i.e. on the fact of it) rely on a written contract unless a justifiable reason is
presented to prove otherwise.
Effects of a signature on a written contract (caveat subscripto).
This was well captured 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.
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 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.
George v Fairmead (Pty) Ltd (1958) 2 SA 468
Mathde v Mathde (1951)(1) SA 256
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.
National Grindlays Bank Ltd v Yelvireturn (1972) (4) SA 114.
But if the signatory has in any way indicated how he wishes the blank spaces to
be filled in the other party must of cause comply with the wishes.
Commercial Bank of Namibia Ltd v Trans Continental Trading (Namibia) (1992)
2 SA 66, 75, 77.
However the caveat subscripto principle is not rigid Courts will not apply it
where there is misrepresentation, fraud, illegality, duress, undue influence and
influence.
Spindufter (Pty) Ltd v Lester Donorvan (Pty_ Ltd (1896) (1) SA 303
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.
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.
An argument in favour of the exemption clauses is that by shading some of his
responsibility which would otherwise fall on him.
An argument in favour of the exemption clauses is that by shading some of his
responsibility the user of the standard form contract will be able to obtain
insurance at a cheaper rate and therefore charge less for the service he
provides for the benefit of all his customers. However courts have not been
impressed by this argument and have placed limits on the effectiveness of
exemption clauses.
Courts have developed a two pronged approach namely:
(i)
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)
It is important to note that courts have held that a party who wishes to exempt
himself/itself form liability caused by his own negligence should clearly state so
in the exemption clause.
Cotton Marketing Board v National Railway of Zimbabwe 1988(1) ZLR 304
However the above mentioned principle does not apply where the other partys
negligence amounts to breach that goes to the root of the contract.
Transport and Crane Hire (Pvt) Ltd v Hubert Davies and Co (Pvt) Ltd 1991(1)
ZLR 190
However this dispute has been settled by the promulgation of the Consumer
Contracts Act (Chapter 8:03).
In terms of the said Act a consumer contract is defined as a contract for the sale
or supply of goods or services or both in which the seller or supplier is dealing in
(ii)
those that exclude/limit liability in the event that goods do not conform
with any description or sample given in respect of the goods
(iii)
(iv)
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.
However the parole evidence rule is not a hard and fast rule (i.e. rigid rule). In a
bid to enhance justice between the parties courts have developed the following
exceptions to the application of the parole evidence rule:
(i)
If the parties did not intend the written agreement to be the exclusive
embodiment of their contract the parole evidence rule will not apply.
This normally occurs where a contract is partly written and partly oral.
Baldachin 1920 AD 312
(ii)
Extrinsic evidence can be allowed to show that the written contract was
contradicted, altered, added to or varied by a subsequent oral contract.
See Johnson v Neil case
(iii)
general rule.
(iv)
2.
See Oerseput v Avis(1) 943 AD 331 where the court took the view that this was
the situation that the parties had intended that their contract should partly be in
writing or oral. Held that the oral agreement would be given effect to (that the
oral agreement would be given effect to) or will be valid.
Harting Properties and Other v Los Angeles Hotel 1962(3) SA 143 where a
contract was held by the court to be constituted by the lease agreement and a
letter. To counter this problem when drafting a contract one would have to
include an integration clause or a whole contract clause. This will be a term to
the effect that the document will be entire contract between the parties and all
terms, conditions, warranties or representations, not the included will be
expressly excluded.
This means that one would be entrenching the Parole evidence rule into the
contract. See the case of Mhere v Tubbs 1986(2) ZLR 179. The Parole
evidence rule is designed to promote certainty, it reduces the costs should
litigation arises, i.e. instead of leading many witnesses, the contract document
just serve all the purposes. However the exceptions to the Parole evidence rule
makes the written document uncertain and ultimately the court had to balance
the conflicting parties interests. The Parole evidence rule does not apply where
the validity of the contract itself is being challenged by the parties.
Kok v Osborn 1993(4) SA 788 where the court ruled one could not exclude
Parole evidence to establish the ground of invalidity the contract e.g. mistake,
thus courts are prepared to disregard the intergration clause as it did in Mhene v
Tubbs (supra). An intergrational clause is often coupled with non-variation
clause. If the parties intend to vary the terms of the contract it must be in writing
and signed. In such purported and evidence to vary the terms of the contract
the oral agreement constituted a waiver by AFC of its rights in terms of contract.
P further tried to argue that the AFC should be estopped from denying the
existence of the oral agreement with its general manager. Ps argument were
reflected by the court which ruled in favour of the AFC.
employees. The employees no matter how efficacy was the wording of the
clause could not derive benefits from a contract to which they were not parties.
The ship in which Mrs Adler was traveling was called Himalaya and the
exemption clause at issue in that case became commonly known as Himalaya
Clause. After the Adler case company went back to the drawing board and
came up with an embracing clause which protected its workers. The issue then
came up again for decision in the case of Scruttons v Midlands Silicons Ltd
1962 AC 446, 1961(2) LLR 365. In this case Lord Raids speech made it clear
that it is possible for exemption clause between A and B to adequately protect C
on condition that (1) the exemption clause must expressly make reference to C
the employee. The one in the Himalaya did not. (2) The company in entering
into contract with the customer must have acted both in its own rights and as an
agent for its employee.
Having considered the speeches in the Midlands case appropriate clause was
now drawn by the company.
Principles of interpretation
The following principles have evolved in interpreting written contracts.
(i)
(b)
If it is clear from the contract itself or from evidence that the words
have been used in some special and technical sense:
Rand Reitfontein Estates Ltd v Cohn 1937 AD, 517, 318, where the
court held that Again if the words on the contract have been used
in a peculiar sense evidence of the sense in which the parties used
the words may be given.
(ii)
b)
c)
d)
e)
f)
g)
h)
Implied Terms
These are terms that are imposed into a contract from its context. They come in
three forms namely:
(i)
b)
whether the proposed implied fact has been written in the contract if
not then the court will ask itself the following question:
b)
c)
whether it can be competently that of that time the contract was being
negotiated someone had said to the parties, of course so and so will
happen.
This is called the official By-Stander Test
d)
whether the term is capable of clear and exact formulation. See also
Reigate v Union Manufacturing Co. 1918 (KB)(1 592, p605.
It should be noted that the courts are reluctant to imply terms into contract
because:
1
Note however that, there are certain implied terms which parties by
mutual assent contract out of.
Freedom of Contract
This essential means that one is free to enter a contract or not to and having
decided to enter the contract, to enter with whom he/she ever wants and to
decide upon which terms they want. The general law is that while it is formal
true, in practice it is very different, if you choose to contract in most cases
depends on the strength of your bargaining power one does not have a choice
especially in cases of standard forms contracts i.e. mortgage bonds.
If one chooses to contract with a building society to borrow money from them
there is no freedom to lent money on daily basis and they draft standard form
contracts, which the borrower may contract to or not. It must be noted however
that those standard form contracts, have merits for bankers who has to enter
into one contract with thousands of customers will reduce their costs.
Sanctity of contracts
This doctrine merely means that where parties had freely entered into the
contract it becomes sacro-sanctity and the courts cannot make another contract
for them. The statutes such as Consumer Contracts Act and Contractual
Penalties Act, seeks to aid interpretations of such contracts.
By making
exemptions clause the party concerned seeks to exempt itself from which it
should be ordinarily be liable. This is interpretation the courts should try to
uphold the doctrine of freedom of contract. The common law position is that the
court will not struck down the exemption clause on the basis of being harsh or
unreasonable against the other party. The court also looks at the liability to
which the proferens would be subject to where there is no exemption clause. At
common law if there is no strict liability the other party will have to prove
negligence CMB v NRZ 1990(1) SA 522, 1988(1) ZLR 304
a)
cession
b)
delegation or
c)
novation
Cession
In regard to cession the contractual obligations are transferred to the other party
known as a cedent. Cession is sometimes described as some kind of novation.
Cession brings in commercial convenient and facilitates commerce by enabling
the creditor to account his rights to account by selling them instead of enforcing
them himself.
Cession curtails circuit of litigation. Notice of cession to the debtor, is not
necessarily required but it is legally advisable that the debtor who pays the
ceded after the cession in good faith without notice of the faith, is considered as
legal have settled the debt. However a debtor who pays the ceded after notice
of cession still remains liable to discharge the debt to the cessionary.
He cannot reclaim the payment from the ceded.
Cession is sometimes
Delegation
It requires the agreement of the all parties concerned that a third party be
substituted for the original debtor and the later become discharged from the
obligation of the debtor.
replacement by the new one. The idea behind delegation is to transfer burden
to of the debtor i.e. irrecombly from the original to the new debtor. Accordingly
the creditor cannot sue the original debtor see the case of Van Acherbeck v
Walters 1950(3) SA 734. See also Jacobs v Faw 1982(2) SA 863. The common
intention of all the 3 parties that a delegation should take place may be express
it may be implied from surrounding circumstances including the contract of the
parties. See Metalbox of SA v Dustan (Pvt) Ltd 1974(2) 208. The introduction
of a third party to a transaction does not necessarily mean that there has been
delegation e.g. where a debtor requests a third party on his own initiative,
promises the creditors to discharge the credit on behalf of the debtor. This does
not realize the original debtor.
Novation
It means the replacement of existing contractual obligation by new obligations.
The concept of novation arose during Roman times, to alleviate the problems
caused by supervening or initial impossibility.
novation:
-
De Brain and Anor 1954(1) SA 188 where the court outlined the approach to the
adopted.
First and foremost the court must establish the parties intention, talking into
account the surrounding circumstances and everything which gives a due to that
mutual intention.
The court must seek to find, what the parties would have wished to had their
minds had been directed, whether the performance was to be specific and
equivalent.
Secondly should there be no clues as to the parties to mutual intention, the
presumption that the performance was to be specific.
This is a rebuttable presumption.
Thirdly the court will in case of doubt be more likely to have a favour of
equivalent performance.
If the manner of the act to be performed if it is immaterial or where performance,
informa specific is impossible through no fault of the promissor. See the case of
Peters Hammon v Koksrud 1999 AD 427
dealt with above all have one thing in common, they are initiated and are a
consequence of mutual agreement. If parties are free to enter into a contract on
any terms and conditions then it follows that they are at liberty to agree to
discharge the contract. Thus where the parties by mutual agreement agreed to
discharge the contract that is legal quite proper. For a contract to be discharged
by agreement, it is not problematic if the contract had not been performed, it is
still executed. Problems may arise where the contract had been partially
performed. If the parties have completely performed, then the question of
discharge by agreement does not arise as such a contract will be deemed to
have been discharged, through the first method dealt with i.e. discharge by
performance. It is submitted therefore, that discharge by mutual agreement is
different from discharge by performance. In general an agreement to discharge
the contract tacitly raises the presumption of restitution of whatever performance
have been rendered. See the case of Geldenhnys v Maree 1962(2) SA 571(O).
Once a contract is discharged by agreement a part cannot be heard to argue
that they seek to enforce the contract or some rights arising therefrom. Lastly
under this rubric, a contract can be discharged through waiver by the promisee.
What are the requirements of waiver. The promisee/or the person who was
supposed to receive the performance must have knowledge of his rights under
the contract and the party alleging waiver must proof the fact of waiver, whether
expressly or by conduct. If a party alleges waiver by conduct, the promisees
conduct must leave no reasonable doubt, as to his intention of abandoning his
rights in the issue. These requirements were underscored succinctly in the case
of Hepner v Roodepoort-Maraisburg Town Council 1962(4) SA 77(A), where the
court stated the requirements as follows:
The onus is on the appellant, (the promissor, he must show the respondent
(promisee) with the full knowledge of her right decided to abandon it, whether
expressly or by conduct, plainly inconsistent with the intention to enforce it.
In Ex Parte Sesseus 141 TPD 15 the need for full knowledge was justified on
the basis that waiver is a form of a contract, in which the promise i.e. taken
intentionally to have surrendered his rights. Intention to sole surrender can only
exist where the promisee has knowledge of the facts of legal ramification of his
consequences. See the case of Chidziva and Others v Ziscosteel SC/137/97.
See also the case of Patel v Controller of Customs and Excise 1982(II) ZLR 82.
Termination of discharge by operation of the law
How courts with supervening impossibility in Zimbabwe. Until the decision of
Pieters, Flamman & Co. v Kokstad Municipality 1919 AD 422, they used to be no
contract between English law and Roman-Dutch law on the effect of
supervening impossibility. English law starts from the general proposition, that
supervening does not excuse non-performance of the contract subject to several
exceptions which include the doctrine of frustration. In Pieters Flamman case
the Municipality contracted that company to provide streets lights for ten years.
During the substance of the contract, the partners were failed as enemy aliens
for imprisonment and their business was wound up under the relevance
legislation.
The municipality claimed damages for breach of contract and forefeiture of the
firms plant under the contract. The Appellate Division dismissed the action.
The court held that if a person is prevented from pertaining his contract by this
vis major casus fortuituous under which falls an act of state i.e. person is
discharged from liability. A contract is void if at the time of its inception its
performance is impossible. The same apply to where the contract became
impossible for performance.
Void everything must be returned to original position status core. Supervening
impossibility discharge the contract provided the promissor proves that the
contract has absolutely become impossible of performance. This does not
mean that the promissor can escape from his obligation simply because
performance has become uneconomic/difficult.
impossibility. The creditor or promisee had the option to cancel the contract or
accept reduced performance. See Stanfeld v Kuhn 1940 NPD 84, See also the
case of Lupu v Lupu 2000(1) ZLR 120 and the case of Bobs Shoe Centre v
Heneways Freight Services 1995(2) SA 421. See also Minister of Industry and
Technology v Tanaka Powers SC 114/1990. In Stanfeld there was the contract
for the sale of land for 500 pounds per acre, thus major in the form of
expropriation of or a national road, made it impossible for the seller to transfer
more than 0,471 of an acre, the court held that the buyer was entitled to demand
transfer of 0,471 of an acre against a price of 47 pounds. If parties agree to the
performance of something which is risk impossible, then the court will enforce
the contract i.e. remedies of breach of contract. In the same light, impossibility
created by a party does not discharge the case of WireOHMS v Greenbalt
1939(3) SA. See also the case of Hershman v Shapiro and Co. 1926 TPD, 367
and Dickson Motors v Oberholzer 1952(1) SA 443. See Kok v Osborne 1993(4)
SA 788; Benjamin v Myers 1946 CPD @ 655; Bayley v Harwood 1954(3) SA
498. See Kell v Henry [1903] 2 KB 740.
Set off Compansatio
It denotes a situation where two parties to a contract or generally where a
creditor and a debtor have reciprocal obligations. If the debtor or obligation are
equal both are discharged and if they are unequal, the smaller debt is
discharged and the larger is reduced proportionally. See the case of Scheirant v
Union Government 1926 AD 256. See also Treasure General v Van Vuren 1905
TS 582 and Baine v Barclays Bank 1937 SR 191. Set off is the principle of
common law that is Roman-Dutch law not English law. It has to be pleaded and
proved. For set off to be effective the reciprocal debts or obligation and fully
due. Liquid means that the debt must be certain or capable of readily being
ascertain i.e. over draft v interest miscalculations by a bank.
The one debt extinguish the other as if performance or payment have been
rendered. Spurious defences based on bailey denial of the debt will not defend
set off. See the case of Bevcorp v Nyoni and Ors 1992(1) ZLR 352. See also
Roman Catholic Church v Southern Life Assurance Ass 1992(2) SA 807. See
also Central African Railways v Williams 1963 Rand Nyasaland 106/166. See
also Trinity Engineering (Pvt) Ltd v Anglo Shipping Ltd 1986(1) SA 700(25).
Breach of a Contract
It can be rightly be classified as the method of termination or discharge.
However although breach is said to be a mode of termination of contract.
Breach does not of itself automatically terminates a contract. Breach has the
effect of entitling the innocent party to cancel the contract besides to give such
entitlement the breach complained of must be either a major (material), or
fundamental breach, repudiation, or breach in circumstances where the contract
provides that breach will provide an effect of terminating the contracting. Breach
of contract is committed where one party who is bound to vendor performance at
a later date (future date) indicates that he/she will not tender performance when
the repudiation/in which event the contract remains in force, such an election
however must be made within a reasonable time. See White and Carter Council
v McGregor 1961(3) AIIER 1178, 1962 AC 413.
responsible for distributing litter bins and the defendant owned a garage, the city
council, will allow organizations and people to advertise on the bins. The initial
contract between the council and the defendant was duly performed. Later one
of the employees of the counternewed the contract for a further 3 years. The
employer did not have the authority to renew the contract. Defendant went to
the council that advised then that he had cancelled the contract.
The council decided not to accept the repudiation, thus the contract remained in
force from 1957-1960. The council later ratified what its employer had done
that is irrelevant in determining the outcome. The defendant did not take
advantage of advertisement places but the council claimed payment. The court
held that the contract remained in force for both parties and the council was
entitled to the 3 years of advertising. In that case the court did not take about
the mitigation rule. This rule means that any person who suffers loss or
damages should take reasonable steps to mitigate that loss). Mitigate to
reduce the detrimental. The council in his causa/case had not mitigated its loss.
The mitigation rule applies to damages and not to cases of specific
performance. And it is submitted that in the White and Carter case the court did
not apply the mitigation rule because the council was seeking specific
performance. It was fortuitous though that in that case the council was able to
declaratory order
interdict
Specific performance
law. The court will refuse specific performance where the damages are
adequate. (Note that this neglects the primary purpose of specific performance
in Roman-Dutch).
Where the thing being sought in terms of the contract can be easily be
found elsewhere. It is submitted that this is not a valid ground,
because like the first its nature is to undermine the nature of specific
performance. The SA courts have moved away from 3 and 1. See
Benson v SA Mutual Life Assurance Co. 1986(1) SA 776, where the
plaintiff was seeking specific performance of delivery of company
shares when some were available at the Jorburg Stock Exchange.
The court ordered specific performance. The first ground was also
rejected by court or the Intercontinental case where the court ordered
specific performance and also rejected by Zimbabwean courts.
A court will not order specific performance where that will entail
services of personal nature.
A court will not order specific performance where such performance will
operate unduly harshly over the defendant. Or where the performance
is impossible.
Services of a person nature will arise for instance in employment situations. The
court may not order a worker to go and resume work because one can not be
sure whether the performance will be rendered fully.
At common law a court will not order a specific performance of a contract, See
the case of Sheahood v Union Government 1926 AD 286. See also the case of
Commercial Careers Ltd v Jarvis 1989(1) ZLR 344; Winterton Holmes and Hills
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 of employee. In the case of Hama v National Railways of
Zimbabwe, the court said that a part who seeks specific performance must have
performed his part of the bargain or alternatively must tender performance and
indicate ability will to perform. The ratio of the Hama case is however the court
will
not
order
specific
performance
where
it
is
impossible
to
Interdict
There are 2 types of interdict temporary and final interdict. An interdict is an
order stopping the other party from the doing of something, which will jeopardize
ones rights under the contract. A final interdict is an equivalent of specific
performance, where the obligation sought to be enforced in character, i.e.
negative prestation i.e. in a Covenant Restraint of Trade, what the covenantor
undertake not to do something in Zimbabwe or Harare. The undertaking is
negative in character. One is not undertaking positively to do X. The only way
to enforce the covenant is order (final interdict), stopping the covenantor from
breaching the covenant. A temporary interdict (an interdict pendente lite). This
literally means to free a situation pending litigation i.e. where a purchaser wants
to stop the seller from transferring a disrupted property pending litigation (legal
action). Flamelilly v Zimbabwe Salvage (Pvt) Ltd and Anor 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. Christie indicates
that the requirements for a final interdict are the same of these specific
performance but are different to those of a final interdict. The requirements of
temporary interdict are:
1
The applicant or the person who seeks interdict must prove a clear
prima facie right i.e. in the sense that the right might be open to some
doubts, if the averments/submissions made by the applicant taken
together with averments made by the respondents are such that given
The