The Law of Contract - Midlands State Universitymsu.ac.zw/elearning/material/1201526561The Law of... · Web view2017-09-27 · [Crawley v Rex, 1909 &Boots v Pharmaceutical Society

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The general principles of the law of contract form an indispensable foundation for business law in Zimbabwe.

Definitions:Bampton & Drury: A contract is an agreement which creates and defines and which intends to create and define legal obligations between parties to it.Madhuku & Manase: An agreement between parties which is recognised and enforced by lawPireyi: A contract is an agreement between two or more parties which makes and defines legal obligations. The parties must intend to be bound by law and their agreement to be enforced at law.Christie: A serious and deliberate intention to create a legal obligation or animus contrahendi.Christie “An agreement which is, or is intended to be, enforceable at law.”

These definitions apply to all contracts though special contracts incorporate additional requirements e.g. in Gwisai “a contract of employment comes into existence when one person, the employee, enters into an agreement with another, the employer, to render personal services to and under the control of the employer, in return for remuneration.”

Agreement is clearly necessary for the existence of a contract – “A meeting of the minds, a coincidence of the wills, consensus ad idem”. However to determine whether a agreement took place, “the court is not interested in the state of mind of the parties … it must decide the issue on the state of mind of the parties as manifested by word or deed” (Levy v Banket Holdings (Pvt) Ltd 1956) Any mental reservations or unspoken qualifications will not count. The court makes an objective inquiry.

Kerr AJ: “ In contract the legal bond, iuris vinculum is formed by the parties themselves, and, within the limits laid down by law, the nature of the obligations is determinable by them. In some cases their agreement is actual, in others apparent, and in yet others partly actual and partly apparent.”

To establish a contractual bond, the parties must communicate with each other. In some cases however parties do not negotiate from a position of equality e.g. for water/electricity with the municipality, or when the law compels a car owner to obtain 3rd party insurance.

“every agreement……… made deliberately and seriously, by a person capable of contracting, and having a ground or reason which is not immoral or forbidden by law, may be enforced by action.” [Innes CJ in Rood v Wallach. 1904. TS]

The definitions above highlight that A contract involves agreement between two or more parties. It must be enforceable at law The parties must intend to be bound: a serious and deliberate intention to

be bound.

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Subjective Consensual Theory. Enforceability depends on consensus ad idem or the concurrence of subjective wills of the contracting parties. In the Objective Declaratory Theory, enforceability depends on concurrence of the declared intentions of the parties. Under the Reliance Theory, enforceability depends on reasonable expectation conveyed to the mind of each party by word or conduct.

Consensus ad idem involves: a union of wills; a meeting of minds in one and the same intention comes about when an offer from one party is accepted by another. There can be no agreement without an offer by one party or an acceptance by another. In addition, every contract is created through an agreement. Thus in a contract:

Agreement = Offer + Acceptance.

Quasi-mutual Assent. An offer is not what the offeror thought he meant but what a reasonable third party, knowing the facts, would interpret him to mean. For example when a party means to do one thing but acts in a manner indicating something quite different. Here the first party is bound to what a reasonable person would understand from his own conduct – even though he intended a different thing. This is quasi- mutual assent. Apparent contracts of this nature are based on a fiction that there is consensus when in fact there is not. The law does not concern itself with the working of the minds of the parties but with the external manifestation of their minds – by their acts their minds seem to have met.

In Quasi-mutual assent it is accepted that there is no true consensus ad idem. One party says: But I never agreed.The court replies: Quite so, but your conduct led the other party reasonably to

believe you agreed, so you will be treated as if you had agreed.

If one party’s words or actions give one reasonably to understand that their minds had met, then a contract was concluded even if in truth their minds did not meet. This is so because there is an expectation of good faith, by a reasonable person relying on the words/actions of another who leads a reasonable man to believe that he was binding himself.

A person’s state of mind is evidenced by words/actions. However such words/actions may be ambiguous or be misunderstood or may lead others to conclude that the speaker/actor has a certain intention which in fact he does not have. In such cases agreement is reached to all appearances. This principle is summed up in Smith v Hughes 1871

“ If whatever a man’s real intention may be, he so conducts himself that a reasonable person would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into a contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.”

The principle was adopted in Zimbabwe by Blackburn, J’s words in Diamond v Kernick, 1947 SA and by Innes J in Pieters & Co v Salomon, 1911 AD.

The matter thus focuses on the effect of a party's conduct on the other as reasonable person.


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Diamond & Kernick 1947 SA: An estate agent who had the sole right to sell certain properties gave a mandate to another [who became his agent] to sell the properties, the amount of remuneration being “7.5 per cent”

[Benoni Produce & Coal Co. ltd v Gundelfinger, 1918: BPC ordered matches from Gundelfinger through a broker for immediate delivery. But G had no stocks. He therefore was dealing subject to arrival. He had a duty to speak but he did not. Qui tacet cum loqui potuit et debuit, consentire videtur- he who remains silent when he could and ought to speak is regarded as consenting.

OFFERS. An offer is a proposal made by one person [the offeror] to another the offeree. It must be accompanied by animus contrahendi, the intention of putting the conclusion of the negotiations out of one’s further power, allowing the offeree by mere acceptance to create the contract. There may be an offer and acceptance without a contract e.g. social or family arrangements. A gratuitous promise is enforceable if there is a serious and deliberate intention to create a contract [redelijke oorzaak or justa causa] “The only element our law requires for a valid contract is consensus [De Villiers. AJA in Conradie v Rossouw, 1919 AD]

Offers may be addressed to a particular individual, a particular group of people or the public at large. A contract comes into being when a valid offer is accepted by the intended offeree. However the following do not constitute offers:

An advertisement does not constitute an offer and so an advertiser cannot be compelled to enter into a contract on the basis of his advertisement, except in reward cases [Carlill v Carbolic Smoke Ball Co, 1893 Bloom v American Swiss Watch Co, 1915]. It is merely an invitation to treat or do business. Where a contract arises from an advertisement, the terms of that advertisement must be adhered to. [Shepherd v Farrel Estate Agency, 1921- Our Motto: no sale, no charge]

A statement that goods are for sale at a particular price is not an offer. [Crawley v Rex, 1909 &Boots v Pharmaceutical Society of Great Britain, 1953 QB].

An offer to the whole world may be accepted by anyone provided the offer reached him and he accepted it. E.g. advertisements for reward. Offer and acceptance must be made freely and voluntarily [Bloom v American Swiss Watch Co.].

A call for tenders is not an invitation to submit offers. At an auction without reserve the auctioneer makes an offer by calling for bids. This offer is accepted by the highest bona fide bidder. In other cases the auctioneer is inviting offers.

A statement of the lowest price is not an offer. [Efroiken v Simon, 1921] Even in response to a specific inquiry. [Harvey & Another v Facey &Others, 1893- “Will you sell us Bumper Hall Pen?”]

A firm offer must be distinguished from an offer to open negotiations or do business known as an offer to treat or "offer to chaffer", mere puffing, or commendations [Naude v Harrison-A house was advertised as well built]. The same principle generally applies to tenders and auction sales- they are not firm offers but invitations by persons who conduct them to do business.


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Offers not accepted lapse or expire in the following ways:o Effluxion or expiry of fixed time. Laws v Rutherford, 1924 AD is

the leading case: Mrs. Rutherford offered Laws a contact to cut wood on her farm; acceptance to be registered letter by 26 July. Laws moved on to the farm and started work but omitted to send the necessary registered letter. Innes CJ: Laws was interdicted from remaining on the farm. "Speaking generally, when the acceptance of an offer is conditioned to be made within a time or a manner prescribed by the offeror, then the prescribed time limit and manner should be adhered to".

o No time limit set by offeror – The offer lapses after expiry of reasonable time. Reasonable time is a matter of fact ascertained from surrounding circumstances. [Dietrichsen v Dietrichsen 1911 TPD].

o Death. Normally death of offeror or offeree terminates offer. De Kock v Executors of Van de Wall [1899] 16 SC 463 - offer of donation could not be accepted after death of offeror.

o Loss of contractual capacity. Contractual capacity lost through insanity, insolvency, etc.

o Rejection terminates the offer.o Counter offer. Destroys the original offer. Hyde v Wrench [1840]

49 ER 132 - W offered to sell his farm to H for £1000. H counter-offered £950 - W rejected. H purported to accept the previous offer. However W was no longer keen to sell the farm. H sued W. It was held that the counter-offer amounted to rejection of offer - therefore no longer open to acceptance.

o Withdrawal or revocation of offer. As a general rule the offeror can withdraw/revoke his offer at any time before acceptance unless specific time was given for acceptance. Withdrawal/revocation must be communicated to offeree. [Yates v Dalton]

Option This is an offer to enter into the main contract together with a concluded subsidiary contract [the option] binding the offeror to keep the main contract open for a certain period. The Offeror is then bound to keep the option open for the period agreed. Failure to keep the option open amounts to breach for which offeror can be sued. An option to buy obliges the seller to sell. A right of pre-emption [or first refusal] allows the holder first opportunity to buy if the seller decides to sell. - Van Pletzen v Henning 1913 AD: An offer to sell with agreement to keep offer open for certain time & Boyd v Nel 1922 AD [gave an option to purchase an farm but then allowed prospecting as a result the Government declared the farm an alluvial digging. The buyer Boyd unaware of this had arranged to cut the farm into plots and sell them. Held: An option is a separate contract binding on the offeror

Acceptance. To achieve agreement an offer must be accepted –even if it is a donation. An offer made to a specific person can be accepted by that person only. A person who gives information to the police in ignorance of an advertised offer is not entitled to claim reward. Acceptance must be unequivocal. A purported acceptance in the form ‘Yes but…..” will not do.


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Methods of Acceptance. If the offeror specifies a particular method of acceptance, this must be adhered to [Laws v Rutherford 1924 AD]. [Eliason v Henshaw][Laws However silence is not acceptance. “Quiescence is not acquiescence.” [Gonese v Mufudza 1977 RLR]

Communication of Acceptance. For true agreement, each party must be aware that the other party is in agreement with him. The general rule is that communication of acceptance must reach the offeror who may prescribe a method of acceptance. Equally he may allow a contract to be created before acceptance is communicated to him e.g. expressly when companies allot shares.

Contracts by Post. An offeror may send his offer by post and specify the method of acceptance. If he does not, the presumption is that acceptance by post is authorized. Then [as in English & American law] the contract is created upon postage of the letter of acceptance.

The general rule is that acceptance must be communicated to the offeror. The English House of Lords laid down in Dunlop v Higgins 1848 that a contract registered through the post is concluded by the posting of the letter of acceptance. This matter was settled in our law in Cape Explosive Works Ltd v SA Oil & Fats Industries Ltd 1921 & CEW v Lever Brothers (SA)]. The letter of acceptance must be properly addressed but a minor error e.g. of spelling does not invalidate the acceptance. [Levben Products (Pvt) Ltd v Alexander Films (SA) (Pvt) Ltd 1959 SA. The letter, which never arrived, was correctly addressed except that it read 'Sinola Street' instead of 'Sinoia Street'. The difference was held to be immaterial. The same principles apply for telegrams as well.

When the offeror expressly or impliedly agrees to the use of post or telegraph. However a letter of withdrawal becomes affective the moment it reaches the offeree; if acceptance has taken place the withdrawal is ineffective. This rule is called the expedition theory.

Telephone - Tel Peda Investigations Bureau Pty Ltd v Van Zyl

Contracts by telephone are inter praesentes and are virtually instantaneous and the court in Tel Peda decided that the general rule applies

Tacit Contract. Offer and acceptance may take the form of actions e.g. between a bus company and a passenger or in sending a machine for repairs.

Agreements which cannot in law be Contracts.Some agreements are not contracts until some other act is carried out e.g. marriage. These are only steps in the creation of a different legal relationship. This occurs in the following circumstances:

Initial impossibility. No legal obligation arises if an agreement is impossible of performance at the time the contract is made–lex non cogit ad impossibilia. However the impossibility must be absolute not relative; and not a business risk and the real object of the contract cannot be fulfilled. [Hersman v Shapiro 7 Co, 1926. Here Shapiro bought top grade


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corn from Hersman. He subsequently sold these ‘futures’ on the London market. Hersman then failed to deliver when the time came. The parties were assumed to have taken a business risk.

o Impossibility may be legal/physical. A promise made for an illegal/immoral purpose is void. S v Nkambala, 1980,SA. Accused gave R10 to a prostitute in payment for R5 “due”. But she had no change. Nkambala snatched the R10 from her. He was convicted of theft: but the reviewing judge ruled that the “disgraceful and invalid” agreement could not give the woman a lawful right to the money.

Agreements void for vagueness or uncertainty. E.g. contracts giving an unlimited option to the promissor/offeror [Kantor v Kantor, 1962 SA & Finestone v Hamburg, 1907 where terms were incomplete]; where vague and uncertain language is used; where negotiations are still incomplete.

Initial Impossibility Physical impossibility renders the contract void ab initio. The

impossibility must exist at the time the contract is concluded, provided one party did not warrant its possibility expressly/implicitly.

Legal impossibility –Here the object is illegal, immoral or contrary to public policy. Illegality may arise from statute or common law. Such contracts are void.

Contracts in restraint of trade – e.g. sale of goodwill; employers and employees. The principle that such contracts are void for impossibility is expressed in the maxim ex turpi causa non oritur actio – from a base cause no action arises. So neither party can claim performance nor can damages be claimed for non-performance. This rule is different from the in pari delicto or par delictum rule where both parties are guilty of illegal conduct. Ex turpi causa rule is absolute and there are no exceptions, but the par

delictum rule may be relaxed at the discretion of the judge in order to do “simple justice between man and man”.

Ex turpi causa prohibits enforcement of immoral/illegal contracts but par delictum limits the rights of delinquents to escape the consequences of their performance. Thus, ex turpi rules apply if

o Neither party has performed his side of the bargaino Both have performed

Par delictum arises if in the course of an illegal agreement only one side has performed.

Ex turpi causa is used as a defense where one side seeks to enforce an illegal contract by relying on the illegal contract itself. Par delictum is a defence to an action for unjust enrichment.

Subsequent Impossibility.If a person is prevented from performing his obligations under a contract through vis major or casus fortuitus he is discharged from liability (lex non cogit ad impossibila) – Peter Flamman & Co. v Kokstad Municipality 1919. Such a contract is thus similar to one which was impossible from the beginning. But the impossibility must not have been forseen [Hersman v Shapiro] and it must be insuperabl

Formalities: Written Contracts In our common law, in general no formalities are required and so an oral/tacit contract is valid. However a written contract facilitates


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proof and reduces the scope for argument. [Wood v Davies: The parties entered into an agreement for the lease of land, a furnished house and other buildings. Woods argued that he was not bound because the contract had not been reduced to writing as had been agreed. The court ruled that Woods was bound to lease the property to Walters because the parties were clearly ad idem and there was no evidence that they should not be bound until the written lease had been done/executed.

Innes CJ: The “broad rule is that writing is not essential [except in certain cases] to the validity of a contract. But the mere mention of a written document during the negotiation will be assumed to have been made … with the view of convenience of record and facility of proof.” Thus when a signed written document is agreed to be a precondition of a contract such a contract is void without it. The courts assume that the written document is not a pre-condition to the validity of the contract.]

In early Rome every contract had to meet very strict formalities to be valid. However, these formalities were discarded and today Roman-Dutch law looks instead to the intention of the parties. Thus, a mere verbal agreement is sufficient and in some cases a contract arises from the conduct of the parties without a single word spoken as long as the parties clearly intended to bind themselves in a contract. Thus, formalities are the exception except by:

Agreement that there will be no contract until agreement is reduced to a written document. In such cases the contract must be signed [Goldblatt v Freemantle 1920. F agreed to sell Lucerne to G. They agreed that their agreement was to be reduced to writing and signed by each of them and that the signed contract was to be the basis of their agreement. G sued on the verbal agreement but the court dismissed his case.].

Statute Apprenticeship. HP including specific particulars set out in the Act. Bill of Exchange and Promissory Notes.

Normally the written contract comes about when it is signed by both parties. But some written contract do not require signature by both parties- cheques, mortgage bonds etc are valid upon signature by one party only, while tickets are valid even though unsigned by any party. In our law, unlike South Africa, the sale of land does not require a written contract. In the case of land, the contract of sale obliges the seller to pass transfer which is regulated by the Deeds Registries Act and must be carried out by a registered legal practitioner.

Donations may be remuneratory [as reward for services rendered], stem from pure liberality or are done in contemplation of death. They may be executory [I promise to give you $x.] or executed [I give you $x] or consist of a release from a debt or obligation. A donation in contemplation of death [donatio mortis causa] must conform to the formalities of the Wills & Attesting Witnesses Act. The doctrine of consideration was dropped from our law in 1919 [Conradie v Rossouw]. Acceptance is however necessary.

Contracts of long lease and apprenticeships must be in writing.

Where a signed written document is agreed upon between the parties to be a precondition of a contract, such contract is void without it. However where writing is simply mentioned as desirable for the record, the lack of a written


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agreement does not void the contract. [Wood v Walters 1921 AD-here mention of writing was not a precondition to the contract of lease. Unless induced by fraud or misrepresentation, one is bound to one’s signature even if the material has not been pointed out or read. [George v Fairmead (Pvt) Ltd, 1958].

“When a man is asked to put his signature to a document he cannot fail to realize that he is called upon to signify, by so doing, his assent to whatever words appear above his signature. …If he chose not to read,..he was with his open eyes, taking the risk of being bound by it.”

One is also bound by the signature of one’s agent. [Burger v CSAR, 1903; or where the words are in a language you do not understand [Bhikagee v Southern Aviation (Pvt) Ltd, 1949]. Here Bhikagee, an experienced businessman, in the company of a friend, signed a document to hire a plane. The agreement was subject to an exemption clause that even if the trip was prevented by bad weather the company would not be liable. Subsequently bad weather prevented the trip. Bhikagee was sued for the fare when he refused to pay.

Terms of the contract. Terms may be express/implied. A term is defined as a provision in a contract. A condition is a future uncertain event. A past/present fact unknown to the parties at the time of the contract is not a condition.

Impossible conditions –physically or legally- render the contract void ab initio. But the impossibility must be absolute not relative.

Conditions precedent [suspensive] this has the effect of suspending the contract or some part of it until the fulfillment of the condition.

Resolutive condition [condition subsequent] –terminates the contract or part of it on the fulfillment of the condition.

Implied terms. These apply to some contracts in which the common-law has evolved special terms. Parties may however vary such terms. In some cases however the legislation may prohibit such exclusion e.g. HP Act.

Terms implied by trade usage in a particular market/trade. Terms implied from the facts [tacit]. This is an unexpressed provision

which derives from the common intention of the parties. This means that the parties agreed to the term but never expressed it. “Something so obvious it goes without saying.”

Caveat Subscriptor. A signature in a document binds the signatory to its term. A party is bound by his signature whether or not he read/understood the contract – except for fraud, misrepresentation etc. [Donner Motors v Kufinya, 1968] In a dispute the parties to a written agreement are not allowed to give evidence to vary/contradict the written contract. Watermeyer JS, 1941:

“Now the court has accepted the rule that when a contract has been reduced to writing, the writing is, in general, regarded as the exclusive memorial of the transaction and in a suit between the parties no evidence to prove its terms may be given save the document or secondary evidence of its contents, nor may the contents of such document be contradicted, altered, added to or varied by parol evidence.”

This is the Parol Evidence/Integration Rule. This is so except in the case of misrepresentation, fraud, undue influence, illegality or mistake. Golden Rule of Interpretation. Words of a contract are interpreted in accordance with Lord


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Wensleydale’s golden rule [Grey v Pearson, 1857 SA]: “the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity…..”

Unsigned Documents/Tickets usually contain an Exemption Clause which is inserted to protect one party against liability arising from common law. It purports to absolve a contracting party from liability to which that party would otherwise be subject. Liability may be either contractual or delictual. Illustration: A takes a suit worth $800 000 to B Dry Cleaners and is charged $15 000 for cleaning it. B gives A a receipt which states "In the event of damage or destruction of the goods left for cleaning arising from any cause whatsoever the liability of the dry cleaner shall be limited to ten times the cleaning charge." Assuming A's suit is damaged in the course of dry cleaning so as to render it worthless, what is the liability of B? Common exemption clause: "Goods left at owner's risk". In Essa v Divaris 1947 [1] SA 753 Plaintiff usually parked his lorry in defendant's garage close to notice in large block letters which read: "All cars garaged at owner's risk". Plaintiff spoke Italian but very little English. There was a fire at the garage, which destroyed plaintiff's lorry. He sued the owner of the garage blaming the garage's negligence for the destruction of his lorry. Held - The owner of the garage was not liable because of the exemption from liability contained in the notice.

. The rules were laid down in Parker v The South Eastern Railway Co., 1877. Tickets are unsigned documents containing waivers of liability. The rules are as follows:

The customer was unaware that the ticket included writing [e.g. where terms are at the back with no mention of that fact at the front.] Here one is not bound.

The customer knows that the ticket has writing which includes terms. Here he is bound.

The customer knows that the ticket contains writing; but not that it contains conditions:

o If the document is such that it would be expected to contain terms e.g. Bill of Lading in accordance with commercial practices.

o Documents e.g. cloakroom tickets which would not be expected to contain such terms. The customer is not bound unless the supplier did everything reasonably necessary to draw the terms to the customer’s attention [Central South African Railways v McLaren, 1903 TS]

Thus if the customer read and understood the ticket at the time of the contract, the terms are binding. CSAR v McLaren, 1903 established that a left luggage receipt is not a ticket that would normally contain terms.

Contractual Capacity.In law, persons may be natural or legal

A human being becomes a person at birth, but natural persons at law may also include unborn persons e.g. for the purposes of an inheritance.Legal persons are also called juristic, artificial or fictitious. These include all entities capable of acquiring legal rights or being subjects to legal duties. Their


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personality is distinct from the natural persons who comprise them. They arise by:

o Act of Parliament through a special Act or under a general Act e.g. Companies Act. Before independence they could be established by Royal Charter e.g. BSAC or University of Rhodesia & Nyasaland.

o Voluntary act of its members under common law e.g. voluntary associations such as clubs. They must not be established for the acquisition of gain or profit.

The state is also a legal person. Thus the State Liabilities Act provides for actions by and against the state in both contract and delict.

Companies. Any contract beyond the powers conferred by the object clause of the memorandum of association is ultra vires. The memorandum and articles are public documents open for inspection by members of the public. Thus a contracting party has the burden of checking except as alleviated by Royal British Bank v Turquand, 1856. a person contracting with a company is allowed to assume that the company has complied with requirements of its articles.

The married Persons Property Act, 1929 abolished marital power and community of property [January 1929]. Thus married women have full contractual capacity.

Minors.

Legal Age of Majority Act [1982 [ [3] “.. a person shall attain the legal age of majority on attaining eighteen years of age.” This clause also reduced the age from 21 to 18.

Guardianship of Minors Act [Chap 5:08] Sect 3: “…the rights of guardianship of the father shall be exercise in consultation with the mother.” She may appeal to a judge if she thinks this is proper to seek redress. This may also arise if the parents are divorced or separated. The parent who has guardianship/custody may appoint any person to be the sole testamentary guardian/custodian. The HC is the upper guardian of all minor children and the Master may apply through the juvenile court for the appointment of a proper and fit person to be the guardian where a minor has no natural guardian or tutor testamentary.

The general is that a contract authorised by a guardian is valid and effective in every respect, but an unauthorised contract is void as far as the minor is concerned. He cannot be compelled to fulfil his obligations. But the minor, on attaining majority or by ratification by the guardian, can adopt the contract.

Minors – natural persons under the age of 18 in Zimbabwe are of two types: Infants under 7 years of age Pupilli – between 7 & 18.

Infants are in all cases doli incapax [incapable of distinguishing right from wrong] they are therefore presumed incapable of committing a crime or delict. For children 7-14 the presumption may be rebutted on clear and strong evidence showing that the child was actuated by evil motives.


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Their incapacity is due to nature and not their own fault. So law protects their interest by limiting their capacity to incur liabilities but not for acquiring benefits. A guardian takes care of him as he is incapable of managing his affairs. A minor can enter into a contract if assisted by his guardian, if the contract is for his interest. If not for his interest he can repudiate it at majority.

For marriage the age is 18 for boys and 16 for girls. Between 16 and 18 a girl requires the consent of her guardian. Minority ends on attaining age of majority, or marriage for a girl-16 to 18. Tacit emancipation arises if permitted by legal guardian to carry on a trade or occupation. He or she acquires full legal capacity in respect to that trade. Chapman- “Young men think old men are fools, but old men know young men are fools”

Subject to some exceptions, all persons in Zimbabwe, male/female over the age of 18 have full contractual capacity and can enter into a binding agreement with another of similar capacity [Legal Age of Majority Act, 1982]. For a minor the rule is that if the minor is authorized by his guardian the contract is valid. If it is not authorized then it is void as far as the minor is concerned: the minor cannot be compelled to perform under the contract. However on attaining majority, he can ratify or adopt the contract. Then the minor becomes bound as well. The father is the natural guardian or in his absence, the Master of the High Court takes over.

Minority ends at Age 18 –majority age Marriage if celebrated before 18 [in the case of a girl]. If the marriage ends by

death/divorce before 18 full contractual capacity is retained.

A minor is fully bound by his contracts where: Authorized by the guardian unless the contract is seriously prejudicial to him.

He can then set it aside on attaining majority.o Wood v Davies, 1934 CPD- Here a guardian bought a house for the

minor by installment at a price above the market rate. The court rescinded the contract. The installment had continued beyond majority.

o The guardian however has the right to administer property belonging to the minor however a mortgage of a minor’s property would require consent of the High Court.

Emancipation occurs when a minor is allowed to carry on some business on his own account. He is then emancipated in respect of those business matters. [Dama v Bera & Tanne v Foggit.

Ratification on attaining majority either by conduct [expressly/impliedly] Statutory Building Society Act, POSB

Restitution. A void contract is nonexistent ab initio and no rights/obligations arise from it. Restitution arises in cases of:

Unjust Enrichment No person, even a minor may be unjustly enriched at the expense of another [Tanne v Foggit & Edelstein v Edelstein & Others 1952 SA]. The minor must then restore whatever still remains in his possession at the time of the action. He is not bound to pay what has been used/destroyed.


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Misrepresentation of majority where a minor has misled another into contracting. Here the minor is not bound in contract as there can be no contract; but is liable in delict. So no one can claim specific performance of the contract, as none exists.

An insane person [i.e. a lunatic] cannot enter into contracts, cannot be convicted and punished [a verdict of guilty but insane is given in a criminal trial], cannot be held liable for delicts. Prodigals spend their money extravagantly and are similar to lunatics but do not suffer the same extent of disabilities. They are interdicted by the court – declared incapable of managing their own affairs and a curator is appointed. [Prinsloo’s Curator Bonis v Crafford & Prinsloo. 1905]

A person’s status may change e.g. on attaining majority but it cannot be changed by the voluntary act of the individual concerned.

Liability in Contract. In a contract one party [the debtor] incurs obligations e.g. to pay money, deliver goods or perform in some manner for the benefit of another [the creditor]. Except for partners or cosignatories of negotiable instruments, co-debtors are presumed to be jointly liable unless the contract provides otherwise. Each is liable only for his share of the debt, all shares being presumed equal. Joint and several liability [liability in solidum] applies to partners and cosignatories of negotiable instruments and where the contract provides so. The creditor may then claim the full amount of the debt from any one debtor.

Co-creditors are presumed to be jointly entitled – so each may claim independently but only for his proportionate share.

Contracts for the benefit a 3rd party [stipulatio alteri]. A person who is not party to a contract may not be held liable or benefit from it. He is not privy to it. However an agent is able to contract on behalf of his principal. Roman Dutch law also allows an extension of privity of contract by permitting contracts for the benefit of 3rd parties. The contract is created without prior authorization or knowledge of the 3rd party – even if that 3rd party is not yet in existence e.g. a company not yet formed or an unborn child.

One may contract in an individual capacity for the benefit of a nonexistent 3rd party. The 3rd party, having come into existence, may ratify and assume liability. This would not be the case for an agent. If the 3rd party does not ratify, then the original party is bound. [McCullough v Fernwood Estate Ltd, 1920.] However for pre-incorporation contracts under the Companies Act an agent may contract for a company still to be formed. No liability is incurred.

A & B enter into a contract which C at his option may adopt. The contract must specify that C is to benefit. C acquires benefits as well as obligations. C must accept the offer and communicate this acceptance.

Reality of Consent. Void contracts are due to: Legal incompetence Lack of reasonable cause Lack of necessary formalities


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Initial impossibility

Voidable contracts arise where there is no true consent, e.g. example with error, fraud, duress etc. Where, however, the agreement is embodied in a written contract, presumption of caveat subscriptor arises. A voidable contract is valid but has a ‘flaw’ which entitles an aggrieved party to repudiate the contract. It is then not enforceable by either side. Misrepresentation. A sells a piece of art and claims it is by a famous Zimbabwean sculptor. A may have acted innocently believing that it was by the famous sculptor; or wilfully, knowing this to be false; or recklessly without caring to find out.

For fraudulent/wilful/reckless misrepresentation, the representation must be false, material and used to induce the contract and the other party must have acted upon that representation.

A misrepresentation is a false statement of fact; not law. If the misrepresentation is such that the victim does not realize he is entering into a contract or is unaware of its true nature, the contract is void i.e. the misrepresentation is fundamental.

Some statements have no legal significance e.g. sales talk or an averment that one cannot afford the asking price or an expression of opinion. Misrepresentation must be distinguished from what is known as "mere puffs" or simple commendation [i.e. praising ones own merchandise]. In Naude v Harrison 1925 CPD 84, defendant [D] who was selling a house told plaintiff [P] that the house in question was "well built". P bought the house and discovered that the walls were cracking and sued D for misrepresentation. Held- The statement that the house was "well built" was not a misrepresentation but a mere simplex commendatio. In a contract of sale, failure to disclose a latent defect in the merx, of which seller is aware amounts to misrepresentation.

Silence does not constitute misrepresentation except for:1) Contracts uberrimae fidei e.g. insurance, agency partnership etc2) Partial disclosure which creates misleading impression3) A true representation and then the facts change before the conclusion of

the contract4) Something has been done which conceals the facts.5) Where the seller is aware of a latent defect6) Situations of involuntary reliance.

Representation must be false; it must be material and must have been made with the intention of inducing the other party to enter into the contract. The misrepresentation must be one factor without which he would not have contracted i.e. he must have acted on the misrepresentation.

Remedies. The contract is voidable. The victim may stand by the contract or claim rescission. If the victim wants to claim damages as well this will depend on whether the misrepresentation was fundamental; whether fraudulent, negligent or innocent.

A. Fraudulent misrepresentation amounts to a deliberate lie, or is made without an honest belief in its truth. Damages are available- uphold/rescind the contract


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B. Negligent misrepresentation is failure to ascertain the truth. A statement is thus made without that degree of care expected of a reasonable man [diligens paterfamilias]. Damages are claimed to make good the loss suffered by the innocent party.

C. Innocent misrepresentation does not attract damages.

A fraudulent/negligent misrepresentation makes a contract voidable not void at the election of the party misled. He elects to stand by the contract or to cancel it. The two possibilities exclude each other. Motive is irrelevant to making the contract e.g. it does not matter whether I bought a horse because I liked its looks, or thought mine was dead or wanted to have two horses. Case: Dibley v Furtey, 1951. Fraudulent misrepresentation.

Mistake. Writers classify mistakes in different ways.o Unilateral. One party is mistaken but the other is not. The complainant

must show that his error is Justus- reasonable and justifiable on a material matter. Otherwise the party will be held to the contract on grounds of quasi-mutual assent because he allowed the other reasonably to understand they were in agreement. A mistake of motive or reason is not justus.

o Reciprocal [also called mutual]. Each is mistaken about the other’s state of mind and each thinks the other is in agreement with his version/interpretation. [Diamond v Kernick 1947 where each had a different interpretation of “7.5% straight commission”]. Such a contract is void ab initio. Example: X thinks he is selling one horse, Y thinks he is buying two.

o Joint mistake. Here parties are in full agreement but dwell under some misapprehension. The contract is void ab initio.

o For a common mistake both parties make the same mistake and the contract is void e.g. an agreement for the sale of a nonexistent article where both parties think the article exists.

Heatlie v Govt. h bought a plot from the Govt. on which there stood a house; a fact unknown to the Govt. the Govt. on discovering the error sought to cancel the sale on this basis. Held: The Govt was bound to the contract since they had been negligent.

Mistakes which are material. A contract is voidable for mistake provided the mistake is material. And it must not be a mistake of law.

Mistake as to the subject matter- The existence of the subject matter e.g. where it does not

exist or has ceased to exist at the time of the contract Its identity Essential property of the subject matter e.g. A lady from

Sandawana sells you a green stone which she thinks is a large emerald.

Mistake as to the nature of an agreement. Here there is no consensus ad idem thus the contract is void.

Mistake as to the person with whom the contract is made where the identity of the person is important

A mistake which is not material does not render the contract voidable.


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Mistake of motive Quantity where adjustment can be made in the price or the quantity

supplied.

Case: Maritz v Pratley, 1894.

Damages for breach of contract are calculated to put the innocent party in the position he would have occupied if the contract had been upheld. There are no damages for innocent misrepresentation – the law allows the loss to lie where it falls.

Duress. Such contracts are voidable not void because compelled consent is still consent, but it is equitable to grant an option to the aggrieved party.

This involves a contract obtained by the use of force or threat of force or inducing fear to the person or his family. The fear must be of a magnitude to overcome the resistance of a person of ordinary firmness [with regard to age, sex or standing e.g. whether a soldier, woman or old man]. The threat must be directed to the person or his family. It must be of imminent or inevitable evil. It must also be unlawful or contra bonos mores. Such a contract is voidable at the option of the victim. Cases; Broodryk v Smuts, 1942; Blackburn v Mitchell, 1897 SC. [concerns a ship that had run aground near Cape Town]

Undue Influence. A party can resile from a contract on grounds of undue influence if:

The other party exercised influence over him The influence weakened his powers of resistance and made his will pliable The influence was exercised in an unscrupulous manner. The contract is to his detriment. With normal free will he would not have

concluded it.

Generally undue influence occurs where a special relationship exists. Such a contract is voidable at the option of the victim

Preller v Jordan, 1956 AD. An elderly farmer claimed retransfer of 4 farms he had donated and transferred to P his medical doctor. He claimed he had done this when he was “old and ill and physically and mentally weak and exhausted.” He alleged that P had influenced him in an improper manner so that P would administer the property for the benefit of the farmer’s wife and his labourers. It was held that the farmer be granted his prayer.

Also Patel v Grobbellaar, 1974 SA: involving a belief that Patel had supernatural powers.

Performance of contracts.

Tender of performance. If the creditor refuses a valid tender of performance the debtor is then relieved of the consequences of nonperformance. There must be an actual attempt to perform not merely an offer to perform. Most contracts require performance by the parties themselves otherwise an agent may step in on behalf of the debtor. In general, performance must be exact [in forma specifica] and equivalent


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performance [per equipollens] will not do. Cash i.e. bank notes and coins constitute legal tender [RBZ Act]. An obligation to pay in forex is illegal in Zimbabwe except if RBZ authority is obtained [Exchange Control Regulations]

A creditor is entitled to refuse payment by cheque unless authorized, expressly/impliedly, by the contract. If a cheque is dishonored, its delivery did not amount to payment. The contract may specify the place for payment; otherwise the debtor must take the initiative and pay at any convenient place before payment is due.

The onus is on the debtor to prove his payment or performance of the contractual obligation. Thus a debtor is entitled to get a receipt and to withhold payment if no receipt is given. The creditor can refuse to take installments and demand all the money at once or refuse a cheque and demand cash.

Mutual Agreement.Release. The parties agree to end the contract even though it has not been carried out fully. This is a 2-way [bilateral] legal act. It is therefore itself an agreement/contract. The creditor offers to release the debtor and the debtor accepts the offer.

Waiver. The creditor may unilaterally abandon his claim.Cancellation. The parties agree to cancel a contract that has not been performed e.g. where each side has not performed under the contract.Novation. This is the replacement of an existing obligation with a new one, which is thereby extinguished.Compromise. This is the settlement of disputed obligations through agreement.Delegation. This is created when all 3 parties agree. A 3rd party is introduced as debtor in substitution for the original debtor who is thereby discharged.Cession. This is the opposite of delegation. It substitutes a new creditor [cessionary] for the old creditor [cedent]. The consent of the debtor is not necessary. Common law prohibits the cession of certain rights e.g. the right of maintenance is a strictly personal right. Statute also prohibits cession of civil service salaries/pensions. No formalities are required for a valid cession and notice to the debtor is also not necessary. However it is desirable to give notice. It is not permissible to cede part of a claim except with the consent of the debtor.

Example [M.Pireyi]. Mrs. Vengesa leases a flat to Mr. Khan. Such a contract of lease creates obligations and rights that can then be transferred to a 3rd party.

o Mr. Khan delegates to Miss Jones. Khan retains his right of occupation but Jones pays. All 3 parties must agree.

o Khan cedes to Miss Jones. The right to use the flat now falls on Miss Jones while Khan continues to pay the rent. Mrs. Vengesa’s consent is not necessary.

o Khan assigns to Miss Jones who now has the right to live in the flat and the obligation to pay. Mrs. Vengesa must agree.

Supervening Impossibility. By operation of law, this discharges a contract and releases the parties from their respective duties. Such impossibility arises from irresistible force [vis major] or inevitable accident [casus fortuitus]. This also includes legislation or act of state making performance illegal. However if parties have foreseen or made provision for or accepted the risk, then this does not amount to impossibility e.g. as speculation.


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Case: Peters, Flamman &Co. v Kokstad Municipality, 1919.,[supply of gas by enemy agents] Hersman v Shapiro, & Haynes v Kingwilliamstown, 1951 SA: concerns release of water to Mrs Haynes during a drought.

Set-off [compensatio]. Occurs when parties are reciprocally indebted to each other. Both debts must be liquidated i.e. either admitted or capable of easy proof. This also occurs when a tenant buys the property he is leasing.

Prescription. The Prescription Act provides varying periods. Contractual obligations generally are subject to the 3-year period. Prescription begins to run when the debt is due.

Cancellation/Repudiation. A breach going to the root of the contract is one whose seriousness justifies cancellation. A debtor may conduct himself such that it is plain that he no longer wishes to be bound by the contract. He is then said to repudiate the contract. Repudiation before performance is called anticipatory breach. Where one party repudiates a contract or is in breach of a material term thereof, the other party may treat the contract as cancelled and sue for damages. To avoid unnecessary disputes the parties may expressly agree that failure to perform certain obligations will amount to breach which will entitle the party to whom performance is due to cancel the contract. By so doing the parties make that term a material one. Stipulations of this nature usually fall into one of the following categories.

a] Forfeiture clause. These are often found in lease agreement. They entitle the landlord to cancel the lease and eject a tenant who is in breach or has committed a particular breach [no matter how trivial] without investigating the seriousness of the breach e.g. in payment of rent on the due date. b] Foreclosure clause - Normally found in mortgage bonds and debentures. These entitle mortgagor to call up the balance due in terms of the bond if the mortgagee [debtor] is in default. Normally entails disposal of mortgaged property.c] Lex commisoria. Such a clause makes time of payment of the essence. It entitles seller to cancel on the breach of one or more of the terms of the contract. Normally found in instalment sale and hire purchase agreements. It normally contains penalties such as authorising the seller to retain amounts paid including cancellation and recovery of the subject matter of the sale.

Mora and Breach of Contract. Breach by one party does not automatically discharge a contract. Where a debtor fails to perform or performs out of time, the debtor is said to be in mora in accordance with Roman-Dutch law. For mora, performance must be due and there must be no valid reason for failure to perform. Time for performance is ascertained from the time fixed in the contract [mora ex re] or whether a demand [interpellatio] by the creditor is made [mora ex persona].

With Mora ex re a date for performance is fixed [Laws v Rutherford, 1924]. Here dies interpellat pro homine. The creditor does not make a demand. Where no time for performance is fixed, demand is necessary to place the debtor in mora.

Where no date is fixed, after the expiry of reasonable time, the creditor must place a demand for performance. This is Mora ex persona. Further reasonable time must be given for compliance. The demand must indicate what action might follow noncompliance e.g. cancellation of the contract in which case demand must incorporate a warning to that effect.


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Consequences of Mora. Where there is forfeiture clause that allows for canceling the contract on failure to perform on time, the creditor may cancel as soon as the debtor is in mora. In the absence of a forfeiture clause, the creditor may cancel if the debtor’s mora amounts to repudiation. A clause that time is of the essence has the same effect as a forfeiture clause. The same results if the surrounding circumstances/nature and wording of the contract suggest so . The creditor can make time of the essence by giving notice. Damages will often take the form of interest on unpaid money.

Remedies for Breach. The plaintiff must choose his preferred remedies provided they are not inconsistent. For threatened breach remedies include:

Specific performance will not be granted where compliance would be impossible or where it causes undue hardship, or the court would not be able to supervise performance.

Damages may be claimed in place of performance but they must be proved and should not be punitive as an inducement for performance. Damages are intended to place the innocent party in the position he would be had the contract been performed as far as this can be achieved by payment of money. Damages must not cause undue hardship to the defaulting party. So the plaintiff must not sit back and allow damages to multiply /escalate. He must take reasonable steps to mitigate his loss. The plaintiff must not be overcompensated. A penalty clause provided for in the contract is enforceable.

Interdict. An order of court prohibiting a specified act[s]. Disobedience is punishable as contempt of court. It is used where one party is breaching or threatening to breach the contract. Or to maintain the status quo until a hearing is held to settle a dispute.

Delict is a form of unlawful conduct which causes harm to another person. It is based on fault. The wronged party seeks damages for injury done to him. Damages for delict seek to compensate the innocent party for what he has lost not what he would have gained.

Damages are of two kinds:o Patrimonial damages measured compensation for established monetary

loss. This is actual loss suffered calculated to place the injured party in the position he would have been had he not been wronged. [Actio legis aquiliae]. Claims for sentimental loss are brought about through actio injuriarum eg for defamation.

o Sentimental damages- estimated compensation for contumelia [insult] – culpable infringement of one’s personality.

Our law [if not amended by Parliament] is that in force at the cape in 1891. However, Clayden FJ pointed out in CAA v Vickers-Armstrong Ltd, 1956 SA that “a practice, later shown to be erroneous, cannot be regarded as the law in force in 1891; the true law must be looked to.”
