Contract Law Notes

CHAPTER 1
LAW OF
CONTRACT/AGREEMENT
1.0 Introduction
The heart of a contract is its enforceability.Definition: A
contract is an enforceable agreement. It is a lawful
agreement made by two or more persons within the limits of
their contractual capacity and with a serious intention of
creating a lawful obligation, communicating such intention
without vagueness each to the other and being of the same
mind to perform positive acts.
1.1 Essential requirements

The parties must:
1. Communicate their intentions to each other through the
medium of offer and acceptance. Offer + Acceptance =
Contract
2. Be within their limits of the contract – “Locus standi in

Judicio” – to be in a position to sue and to be sued.
You cannot sue an infant, a certified idiot, etc but a
minor can be sued.
3. Seriously intent to go into contract – “Animus

contrahendi” – the serious intention to be bound by
the contract. “Serious intention” is sufficient, and
“consideration” is not part of a contract.
Consideration is a counter promise to performance. In
Roman Dutch Law (RDL) the doctrine of consideration is not
part of the contract. Consideration is the price paid by each
party to the contract for the other party’s promise and it can
be defined as some right, interest, profit or benefit accruing
to one party, or alternatively some for bearance, detriment,
loss or responsibility given, suffered or undertaken by the
other.
White VsBluett
Facts: The alleged consideration was a son’s promise to his

father that he will cease complaining to him if the father
bought him a car.Court: This was not a valuable
consideration.
A valuable consideration should contain material counter

offer element.
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Louisa Vs Vander Berg & the Protector of SlavesFacts:

Vander Berg was a well-known philanthropist whose mission
was to facilitate release
of slaves. He promised to facilitate the release of Louisa but

failed to deliver the promise. Louisa sued Vander Berg for
breach of contract. Vander Berg’s plea was that there was no
valuable consideration.Court: Dismissed the plea citing that
consideration was not part of the RDL. That being so Louisa
was entitled to specific damages. Louisa sued through some
one with locus standi in judicio, since slaves lacked locus
standi in judicio.
4. Not be vague or should not be “void for vagueness”. In

the event of a dispute, there is need for the court to be
able to get to the bottom of the case by determining
the serious intentions of the parties to the contract –
was there a “Consensus Ad Idem” – a marriage of
minds, that is, speaking the same language manifested
through offer and acceptance. If the contract is “Void
AB Initio” then there was never a contract thus it is
void. This can be an illegal agreement, for example, X
tells M to kill D a business rival for a reward of $10,000,
or X in error marries Y who happens to be his aunt.
This marriage is void AB initio. There was never a
marriage. What X would get is an “annulment”; or an
infant is offered to someone in marriage. This is a legal
nullity. A “Voidable” agreement is a contract with
defects. The injured party can sue citing that there was
no consensus ad idem. For example, a buyer of a car
discovers the model year of manufacturing was
incorrectly entered, or an election petition – the result
was not properly acquired. A Voidable contract
remains in force until set aside by the weaker/injured
party – a girl coerced into a relationship.
5. The performance of the contract should be possible. If

there is physical impossibilities from the word go then it
is void AB initio since the parties cannot give effect to
their agreement.
6. Legal – an agreement involving murder, immorality etc

is void AB initio – it is not enforceable. The
agreement would be “Contra Bones Mores” – contrary
to good public morality.
7. Be of the same mind to the subject of the contract –

consensus ad idem – singing from the same hymn
book.
1.2 Offer and Acceptance

Consensus is normally manifested through an existing offer.
Where the parties are in dispute, the court looks for the
instinctive elements of offer and acceptance. A quasi-
mutual ascent can also be employed – the Smith Vs Hughes
doctrine, or the “Zvinavashe’s doctrine” – that if someone
did not fight in the liberation struggle he cannot be
president.
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Definition: an Offer is an unequivocal and unconditional

business proposition whose unqualified acceptance results in
a contract ⇒invitation to treat/trade – this involves a
preliminary discussion which if accepted by the other party
will result in an agreement – an advertisement or display at
a shop window does not mean a firm offer.
Crawley Vs Rex 1909
Facts: A Johannesburg shopkeeper displayed a placard

outside his shop advertising tobacco at a cheap price. Mr
Crawley came into the shop, bought some of the tobacco. He
returned later for another instalment and the shopkeeper
refused, and when Crawley repeatedly ignored the
shopkeeper’s demands – made in front of a policeman – that
he should leave the shop, Crawley was arrested. When
prosecuted, he claimed that he had every right to be in the
shop, since he and the shopkeeper had a contract, which had
not yet been carried out. To Mr Crawley the display of the
tobacco amounted to an offer, which he had accepted.
Court: Pronounced on the validity of Mr Crawley’s argument –

there was no contract. It was quite clear that the display of
an article with a price at a window is merely an invitation to
treat, and its no sales offer the acceptance of which
constitutes a contract. The same decision was arrived at in
the case of Pharmaceutical Society of Great Britain Vs Boots
Cash Chemists Limited.
Principle: Shopkeepers’ advertised prices are not offers, but

merely invitations to do business, and therefore they cannot
be compelled to sell. Rather, it is the potential buyer who
responds with an offer – in turn – may be accepted or
rejected by the shopkeeper.
Pharmaceutical Society of Great Britain Vs Boots Cash

Chemists LimitedFacts: Boots displayed on self-service
counters certain drugs whose sale was prohibited by
the Pharmacy and Poisons Act (1933) except under the

supervision of a qualified pharmacist. Customers selected
drugs, placed them in a wire basket and took them to the
cashier’s till, where a pharmacist was stationed with

authority – when he thought this necessary - to prevent the
customers removing any drug from the shop.Issue: The case
arose from a contention that Boots were nevertheless
contravening the statutory prohibition, since sales were
actually finalized when the buyers placed the goods in the
baskets and therefore before reaching the cash desk plus
the supervising pharmacist. Consequently, at such time the
pharmacist no longer had the right to refuse the sale. To
answer the question satisfactorily the court had to
determine the distinction between an offer and invitation to
treat.
Court: Consistent with the principle in Crawley Vs Rex, that

the counter displays are not offers and consequently Boots
had not contravened the legislation. Offers occurred only
when buyers tendered the purchase price – at which point
therefore the pharmacist could still intervene since sales
were complete when the cashier accepted a buyer’s money.
Otherwise, ‘once an article has been placed in the receptacle,
the customer himself is bound and would have no right to
substitute an article later of a similar kind and which he
perhaps preferred. By displaying the drugs in the
supermarkets the respondents were not in breach of the law.
The display constitutes an invitation to treat. The customer
was the offeror and the respondent the offeree who could
decline the customer’s offer.
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1.3 Implications of Offer and Acceptance

1. Usually an offer is made to a particular individual.
However, there is also a situation where an indiscriminate
offer is made to the whole world.
Carlill Vs Carbonic Smoke BallFact: The company
advertised in the press that it will give a reward of $100 to
any customer who had used its medicine in a particular way
for some time and still went on to catch influenza. MrsCarhill
bought the said medicine and used it in the prescribed
manner, and despite all this she caught influenza and sued
the company. The company had a variety of pleas/defence:
♦This was not meant to be a firm offer but an invitation to
treat.♦This was an offer targeted at nobody but to
everybody and that it would be
preposterous for the company to be bound to everybody.

Court: Shot down both pleas and upheld that the company
can only contract with
customers who used the medicine in the prescribed manner –

there was a contract between the company and MrsCarhill.
2. The offeree is expected to accept an offer whose

existence he is aware of. A contractual situation cannot
arise from a “blind date”. Bloom Vs American Swiss
Watch Company (ASWC)Facts: The company premises
were broken into and jewellery stolen. The respondent
advertised offering reward to the public for
information leading to the arrest of the thieves. Mr
Bloom witnessed the heist (incidence) and reported the
matter to the police, who recovered the said jewellery.
It was common cause (not in dispute) that Bloom was not
aware of the existence of an offer. Upon learning of the
offer he tried to lay a claim, which the company
refused.Court: Bloom was not entitled to the reward
because he could not accept an offer that he was not
aware of.
3. In situations involving reward cases, if there were only

one reward available, then the reward would ordinarily
go to the first person to bring the information – freely
and voluntarily Lee Vs American Swiss Watch
Company (ASWC)Facts: - The same as in Bloom Vs
ASWC. When Lee gave information to the police and was
aware of the offer, he did so after Bloom.Court: Held
that information is not information unless it contains
something substantially new ⇒Ratio Decidendi – Lee’s
information was redundant.
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4. It is up to the offeror to define the rules of engagement –

the methods and manner of acceptance and the time; for
example, acceptance has to be done telephonically within 7
days.
Laws Vs Rutherford (1924)Facts: Mrs Rutherford offered
Mr Laws a contract to cut timber on her farm subject to;
offer being accepted by a given time (28 July), and accepted
by way of a registered post. On the 29th of July Laws simply
moved to the farm and started cutting timber. Court: The
acceptance has not been done by (i) registered post, and (ii)
Mr Laws went to the farm on 29th July a day after the lapse
of the offer. Mrs Rutherford got an interdict order
(prohibitory order (civil remedy)/peace order (criminal
remedy)) barring Mr Laws from the farm.
Remedy can be in the form of: ♦Damages

♦ Specific performance
♦ Interdict (penditelite) – or litigation given under an
emergency situation. SetlegeloVsSetlegeloTo make an
interdict, one has to show/prove that;
♦ A clear right is in danger of violation,
♦ Absence of another appropriate remedy
1.4 Termination of an Offer

If an offer is accepted unconditionally and within the terms
offered by the offeree then that contract ensures.
1.4.1 Revocation
The offeror may revoke or withdraw his offer any moment
prior to acceptance provided a valid acceptance has not
taken place. If the offeror purports to withdraw the offer
after acceptance, this amounts to breach of contract.
Greenberg VsWheatcroftFacts: On the 6th of June of a
given year Wheatcroft signed a written offer to buy certain
land from Greenberg who was the owner. On the 7th of June
Wheatcroft phoned Greenberg’s agent revoking the offer.
On the 8th of June Greenberg signed an acceptance on the
document containing the offer.Court: The offer had been
effectively revoked on the 7th of June and no longer
available for acceptance.
The offeror cannot revoke an offer where there is an option
– the offer through a subsidiary contract where the offeror
keeps the offer open and cannot revoke it during this period.
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1.4.2 Counter Offer

An offer can be negated/nullified by a counter offer –
counter business proposition whose effect is to destroy the
main offer.
WatermeyerVs MurrayFacts: Watermeyer offered to sell
his farm to Murray on certain terms & conditions. Murray did
not accept unconditionally but made a counter offer
stipulating a different date for the payment of deposit and
other terms, which were generally unfavourable to
Watermeyer. Watermeyer was not prepared to deviate from
the original terms of the offer where upon Murray then
purportedly accepted the original offer.Court: The original
offer had been nullified by the counter offer and thus not
open for acceptance anymore. Murray was not supposed to
accept the original offer because it was no longer available
for acceptance.
1.4.3 Lapse of a fixed period – open ended contract

Laws Vs Rutherford
Acceptance has to be done in a reasonable time. The “Bonus

Paterfamilies” (a hypothetical man) or reasonable man is
supposed to represent an average man (temperate man).
Chief Justice Gubbay described a reasonable man as the
man on the Chitungwiza bus – he is not very rich yet not too
poor, but he can afford his bus fare. The question is “what is
a reasonable time?” This depends on the durability of the
goods e.g. perishables and hardware.
1.4.4 Death of one party
If one party to an offer has died, that’s the end of the story.
But where death supervenes the contract depending on the
nature of the agreement then the contract can still survive,
that is, if the contract does not depend on the physical
presence of the person e.g. sell of property through an
estate agent. If the contract depends on the physical
presence of the parties (delictus personae) then the contract
will immediately lapse e.g. employment, marriage, etc.
1.5 OfferandAcceptancethroughthePost
“A” makes an offer in Harare through fax or post to “B” in
Mutare to supply certain goods. Jurisdiction – is the capacity
and competence of the courts to try anyone. If a dispute
occurs between A & B on the performance of the contract,
the offer becomes a contract at the place and time of
acceptance provided B has accepted, signed and posted the
acceptance, and provided that;
1. The offeror has not suggested any other mode of
acceptance,2. The acceptance has been done within the
stipulated time,3. Postal services are operating normally,
that is, the expedition theory – there is no
insurrection, strike, etc.
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BalVs Van StadenFacts: An offer was made and accepted

through post at the height of the Anglo-Boer war. It never
got to the offeror. The offeree sought to bind the offeror.
Court: There was no contract.
Household Fire Insurance (HFI) Vs GrantFacts: Grant

applied for 100 shares in the insurance company by letter
paying a deposit of 1Sh per share and agreeing to pay the
balance upon allocation of the shares being made. Shares
were duly allotted and a share certificate delivered to Grant
by post but never reached Grant. Grant was the offeror and
Household Fire Insurance the offeree with the choice to
accept or decline. A year later HFI was liquidated. The
liquidator wrote to Grant demanding payment of the balance.
Grant sought to evade liability on the basis that he never
received the share certificate.Court: On the basis of the
expedition theory, the contract became binding when the
letter of acceptance was posted at the place of signing.
Expedition theory- represents the law in Zimbabwe. Other

theories, which could have been law, are Acceptance,
Reception, and Information theories.
Acceptance theory – A in Harare offers B in Mutare, and B
accepts through post – this constitute a contract, but this is
not law in Zimbabwe.
Reception theory – apart from the psychological
satisfaction and valid letter of acceptance, the offeror must
receive the letter of acceptance for a contract to be valid.
Information theory – encompasses the three above, and
requires that the letter must have been read to constitute a
contract.Telegrams – once posted at the Post Office it
becomes binding to the two parties.
1.6 Contractual Capacity – Locus Standi In

Judicio (Lsj)
He who desires to enter into a contract must enjoy LSJ – the
legal competence to sue and to be sued – a legal leg to
stand on. Anybody who is of majority status is vested with
contractual capacity unless there is other rule of law to the
contrary.
1.6.1 Legal Age of Majority
John KatekweVsMhondoroMuchabaiwa 1984Court: A girl
who had gone past 18 years could sue for seduction damages
or a delict – a private wrong or tort. This was a landmark case
– one that makes legal history. Anyone 18 acquires LSJ unless
one is a prodigal, or a certified idiot. In such a case one
requires a curator bonis.
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1.6.2 Mental illness – an agreement where one of the

members is inflicted with mental illness or idiocy is Void Ab
Initio – it is a legal nullity of no force of effect, for example,
same sex marriage is void ab initio – no divorce but
annulment will be issued.
UysVsUysFacts: One afternoon MrUys met his future wife
in a café in Port Elizabeth and continued their association
later that evening at a cinema. He told her that he owned a
farm in the Free State and that he was finding it difficult to
manage it by himself. He said he wished to marry her and
proceeded to marry the following morning. Soon afterwards
MrsUys noticed conducts of a peculiar and irrational nature
that something was amiss. MrUys did not own a farm but was
suffering from mental delusion. Evidence was led and showed
that MrUys was unable to appreciate the nature of the
marriage covenant.Court: Annulled the marriage on the basis
of one of capacity absence. MrUys lacked LSJ.
1.6.3 Prodigals – are people who handle their

estate/assets in an extremely careless and imprudent way.
The court would have to declare them as incapable of
handling their own affairs as a result of the propensity to
spend their wealth and squandering their estate recklessly.
Once declared a prodigal, a curator bonis is appointed –
one’s legal protector or mentor in relation to one’s
proprietary interests.
CillieVsCillie
Facts: A wife alleged that her husband from whom she was
separated was squandering his assets and continuously under
the influence of liquor. Upon verification of the facts Mr
Cillie was declared a prodigal by the court and a curator bonis

was duly appointed. The
curatorbonis’ legal brief is to protect the

material/proprietary interests and not his other personal
interests.
Mitchel Vs MitchelFacts: Mr Mitchel had been declared
a prodigal and a curator bonis had been appointed.
Thereafter, without the curator’s consent Mr Mitchel
married Mrs Mitchel. Mrs Mitchel aided by the curator
sought to have the marriage set aside on the basis of
lack of legal competence by Mr Mitchel at the time of
marriage.Court: The marriage had nothing to do with the
declaration pronouncing Mr Mitchel as a prodigal – such a
declaration does not bar him from conducting in personal
transactions of a legal nature provided that such
transactions have no bearing on one’s assets.
1.6.4 Drunkenness - A contract can be set aside on the

basis of drunkenness – if someone is so drunk to an extent
of incapability to understand the nature of the contract. The
onus to prove that one cannot be bound because he was
drunk to the extent of not understanding the contract lies
with the one who was drunk. If the level of drunkenness
were of such a nature that the affected person was easily
persuadable then that would not be sufficient for setting
aside the contract.
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1.6.5 Artificial Persons – Incorporated Associations

Once an organization is incorporated in terms of the
Company’s Act Chapter 24:03 it acquires the capacity to sue
or to be sued. Section 9 of the Act reads – “ Upon
incorporation a company shall have the capacity and powers
of a natural person of full capacity in so far as a body
corporate is capable of exercising such powers.” The same is
true for statutory organizations – university, parastatals, etc.
Section 9 is mere re- affirmation of the common law position
which has evolved over the years and has its ancestry in
English law – “ Once a company is registered it acquires
legal personality and it can enter into contract or out of
contract in terms of its constitution or its articles of
association.”
Salomon Vs Salomon & Company
Facts: Salomon, a leather merchant/trader sold his boot-

manufacturing business to a company, which he had just
formed. In part payment for the assets he had assigned to
the company he got shares, and also lend money to the
company and by way of security he got debentures in the
company. After a year of trading the company ran into
problems and was wound up. A liquidator was appointed to
reside over the orderly dissolution of the company. The
liquidator got a claim among other creditors from Mr
Salomon. He argued that Salomon was not entitled to
repayment. Mr Salomon owned 98% of the shares. There was
no distinction between Mr Salomon the natural persona and
Salomon & Company the artificial persona.
Court: Shot down the liquidator’s argument recognizing the

distinction between the
shareholder and the company. The shareholder does not own

the company. Natural persons are different from artificial
persons even though they have shares in the company.
Dadoo Vs Krugersdorp Municipality
Facts: Under the apartheid era non-white people (Africans,

Asians, etc) were prohibited from owning movable property in
the Transvaal and Krugersdorp area. MrDadoo and Mr
Dinda formed a company where they owned all shares. Both

of them were Asiatic. The company bought movable property
in Krugersdorp.Issue: Whether the law was violated?Court:
Dadoo limited the company was separate from its
shareholders notwithstanding that people of Asiatic origin
owned it.
1.6.6 Partnership
ShingadiaVsShingadiaFacts: Three brothers had a thriving
furniture manufacturing business in Mutare. One of the
brothers leased immovable property belonging to the
partnership. He defaulted on his rent obligation and was sued
by the other two brothers who purported to issue summons
in the name of the partnership.Court: The partnership did
not have locus standi in judicio. Shingadia the defendant
could not be the plaintiff and defendant at the same time.
This case articulates the principle
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that a partnership lacks locus standi in judicio i.e. a common

partnership. Remedy available to the two brothers – they
could sue as individuals and not as a partnership.
1.6.7 MinorsA contract is voidable at the discretion of the
minor. A minor is DoliIncapax– incapable of making a
decision or mensrea– the wicked intention. The capacity to
determine the desirability of an intention – the minor has no
capacity to determine criminal intent. Actus Reus – the
physical act of the crime. For anybody to be charged with
criminal element the two should be evident. An infant below
the age of 7 lacks DoliIncapax. Between 7 & 18 years, the
minor still lacks LSJ and still lacks capability to determine
desirable intention – the contract is voidable and only
binding at the minor’s option but the other party cannot bind
the minor. The minor can rescind the contract with impunity.
During minority status, if assisted by a guardian at the start
of the contract or at conclusion, and upon reaching majority
status inspite of the fact that the minor was assisted he can
still set aside the contract on the basis that the contract was
not to his advantage, like the case of;
Wood Vs DavisFacts: Wood who was a minor inherited some
money upon the demise of his grandfather. His guardian and
natural father sought to use his money to buy movable
property ostensibly on behalf of the minor. The value of the
property was $1150. The father decided to pay $1750. There
was a forfeiture clause in the contract, which allowed the
seller to cancel the sale, repossess the house and keep all
installments paid in the event of breach of contract. The
minor was at a boarding school and upon attaining majority
status he sought to rescind the contract on the basis that
the contract was not to his advantage.Court: Agreed with
the submission and ordered restitution – the status core ante
– the positions the two were before the contract. The house
had to be repossessed and the paid sums plus interest were
returned to the minor.
There are situations where the contract is not voidable:

1. 2.
If the minor so desired,
If the minor does not want the contract to continue:
(a) He cannot keep the benefits of the contract while
unwilling to perform – this will be an unjustifiable
enrichment.
(b)Minor is tacitly emancipated – freed from the shackles
that are associated with minority even though physically he
is still a minor. Defacto – for practical purposes, he is an
adult. Emancipation can be;Partial – if it affects a few
specified areas,
Total – the guardian has abandoned control over the minor
– the minor fends for himself for all purposes.
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Whether or not the minor is emancipated is a factual enquiry

which the court can investigate and include the following;
♦ Minor gainfully employed,
♦ Lives on his own,
♦ Pays his own food and lodging, ♦Married. The court
must be convinced that the minor is independent.
Dickens Vs Daley (1956)Facts: Daley the minor was
sued for breach of contract by the plaintiff based on a
cheque that had bounced, which had been issued by the
defendant in favour of the plaintiff for outstanding
rent. Daley was gainfully employed and prior to joining
the plaintiff’s house he had been living with his mother
and stepfather and was contributing monthly money for
his sustenance. His biological father who was separated
from his mother exercised no control over him. His
defence was based on the fact that he was a minor and
therefore not bound. In the alternative that the
contract was enforceable at his option.Court: Shot
down the argument on the basis that the minor was
tacitly emancipated – he had achieved adulthood before
his time. DamaVsBera (1910)Facts: Bera – although
just under 21 years old and therefore in South African
terms still a minor – had earned her own livelihood as a
domestic for some four or five years. She controlled
her own income and paid part of her earnings to her
mother and stepfather – with whom she lived – for
board and lodging. The stepfather disclaimed any
responsibility for her. The case arose when Bera sued
Dama (her employer) for wages due, to which Dama
raised a defence that Bera – being a minor – had no
locus standi in judicio.Court: It was quite clear that
Bera was emancipated and the contract was binding. It
was also reiterated that an agreement involving an
unassisted minor is binding at the option of the minor.
There was implied abandonment of the minor by his
parents. The minor upon reaching majority status makes
a conscious decision to enter the contract ex post
facto.
(c) Fraudulent misrepresentation – when the minor pretends
to be emancipated thereby inducing the other party to enter
into contract – the minor has obligation – that is Delict –
opposite of crime. A delict is a private wrong and liable to
damages from breaching a contract. “Malice” in minors
makes up for age and the minor will be bound.
(d) Once married – even when divorced during his minority,
the minor is still bound. Once married, the minor is an adult.
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1.7 Quasi-Mutual Ascent Principle

Quasi – means “as if”. If there is a dispute and reference is
made to the courts, look for offer and acceptance, that is,
the equation offer + acceptance = contract although
there may be additional formalities to be complied with, for
example, the reduction into a return form of a contract. In
some instances it may be sine qua non (condition
precedent):
♦ A marriage contract has to be registered, if not it is a
customary union;
♦ A contract for sale of movable property in terms of
the registry act has to be written agreement. Parties
could agree that unless contract is in writing,
agreement remains in complete. Such a
CAVEAT/RIDER would be perfectly binding and
enforceable;
♦ Short of this a VIVA VOCAE (vocal agreement) is
just as binding.
♦ Where the courts have been unable to establish a
case of offer and acceptance (express/implied) the next
port of call is to determine whether or not a situation of
Quasi-mutual ascent is attained – based on an
objective rather than subjective test. Question:
Whether a reasonable man has been made to believe
that a contract exists? (Can it be made?). The quasi-
mutual ascent philosophy is also known as the Peters
Vs Salomon/Smith Vs Hughes doctrines.
Observation: Smith Vs Hughes; “if whatever a man’s
real intention may be he so believes in himself that he
was assenting to the terms and that other party upon
that belief enters into a contract with him, the man
would be equally bound as if he intended to agree to the
other party’s terms.” The objectives evidence of
consent guides the courts. Any unexpressed reservation
by one party is immaterial. Subjective mental attitude
remains a third factor. Colleen VsReitfontein
Engineering CompanyFacts: After some
correspondence (supply of pump and an engine) Colleen
wrote to Reitfontein, enclosed please find a cheque in
part payment of my pumping plant. Reitfontein paid the
cheque of $150 into its bank account and did not reply
to the letter. Later, Reitfontein supplied a different
pump which proved unsatisfactory and Colleen refuted
the contract.Court: Colleen’s letter amounted to an
offer and although Reitfontein did not accept the offer
expressly, by paying the cheque into their account, a
reasonable person would believe that they had accepted
the offer and therefore they were bound by the
contract on the basis of quasi-mutual ascent. The court
could only interpret the behaviour of the parties on the
basis of the objective facts available to it.
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Peters Vs SalomonFacts: Peters, having been undertaken to

pay off B’s creditors, including an amount paid to
Salomon, he requested all creditors to send money owed to B

to him. Salomon sent in a statement, being owed $490 with
no objection. Peters confirmed that their previous
undertaking stood. Peters thought the amount owed was
$345 and not $490.Court: Held that Peters would have to
pay $490.
Observation: When a man X makes an offer in plain

unambiguous language, understood in its ordinary sense by
the addressee, and accepted Bona Fide (in good faith),
then there is a concluded agreement. Any unexplained
reservations hidden in the mind of the other party are
completely irrelevant – he cannot say that his promise was
subject to a condition he omitted to mention and which the
other party was unaware of.
Page 13 of 13
Business Law – Chapter 2: Factors that vitiate a contract MBA II Semester I

2002 G. Manhangwe R890800P
CHAPTER 2
FACTORS THAT VITIATE A
CONTRACT 2.0 Void ab
initio/voidable
At the time of contracting there may be a defect, a reason or
flaw/deficiency, which might militate against the
enforceability of a contract:
1. Illegality – tainted
2. Mistake – provided that the mistake was of fact rather

than law because of the “ignorantiajuris” principle –
ignorance of the law is no defence/excuse. The mistake
should be reasonable and material.
3. Duress – entering into agreement through fear. That

agreement is unenforceable.
4. Undue influence - is closely allied to duress.
5. Misrepresentation
2.1 Void Ab Initio Vs Voidable Agreements

Void ab initio agreement is a legal nullity right from the
beginning and parties do not acquire obligations and rights
since the agreement is unenforceable. Voidable contracts are
those contracts with defects.
2.1.1 Examples of void ab initio marriage agreements
are:
1. Where same sex parties sex wittingly or unwittingly
purport to marry each other;
2. In cases of vagary where both parties or one party

were validly married to another person at the time they
purport to marry;
3. Where one party has consented to marriage as a

mistake due to the circumstances at hand, or the one
party has mistaken the identity of the other party;
4. One of the parties or both are insane, suffering from

mental idiocy at the time of marriage (Uys V Uys);
5. Where the parties are related to each other within the

prohibited blood consanguinity or affinity – siblings,
first level cousins, etc.
What is obtained here is a decree of annulment – a

declaratory announcement.
Page 1 of 15

An agreement, which gives one party unlimited discretion,

would be void for vagueness, as in the case of;
Kantor V Kantor
Facts: Under an ante nuptial contract, the prospective

husband agreed to settle on his future wife “all such
furniture, linen, plate and domestic effects, together with
any renewals of and additions to the same, as he may then or
thereafter acquire, at such times and in such quantities as
may be expedient to him, to the value of R3,000 ...” . Mrs.
Kantor sought performance of this promise, but her husband
claimed that the agreement was void for uncertainty.
Court: Ruling was in favour of the husband, that the contract

was indeed unenforceable
since the terms of the offer were unclear and left the donor
free to act or not to act as he wished. The contract was void
ab initio for vagueness.
Baretta V Baretta
Facts: A contract between the parties by which a debt was

acknowledged and certain property pledged provided that the
debtor hereby undertakes to pay a substantial sum every
year.Court: Contract was void ab initio for vagueness on
“substantial sum” – the court could not come up with
reasonable interpretation of what the parties meant by
“substantial sum”.
2.1.2 Examples of Voidable marriages are:

1. Where both parties are minors and have consented to
marriage without the consent of guardians or judge of
the high court;
2. One of the parties has been intimidated or coerced into

the marriage – this is voidable at the option of the
complainant within reasonable time – she can chose to
remain in the marriage or opt out;
3. Where one of the parties suffers from permanent

impotence;
4. Where the woman at the time of marriage unknown to
the husband was pregnant by another man as a result
of illicit sex – rape, incest, etc;
5. Where the marriage has not been celebrated due to the

stubborn or willful refusal of one of the parties;
2.2 Illegality
♦Agreements which are illegal or tainted with illegality are
void ab initio and unenforceable from the beginning. The
courts normally refuse to deal with any illegal agreements –
“No action would arise out of an evil cause” – Ex
TurpiCausarule
Page 2 of 15

♦If agreement is contrary to public morality (contra bones

mores) – the agreement is illegal in that it contravenes
public morality.
WesselsVs Lion Match Company
Facts: Wessels sued for the recovery of the purchase price

of wood that had been sold and delivered to the defendant,
which despite lawful demand the defendant neglected to pay.
At the time of the conclusion of the agreement the plaintiff
had not sought special permission from the ministry of trade,
which was supposed to be secured before the sale of
controlled commodities.
Court: The money was unrecoverable because of the

statutory prohibition – the agreement was contrary to
statute – it was actually illegal.
2.2.1 Common Law Illegality

This is centred upon what is deemed to be in the best
interest/pursuit of good/morality/ideals – for example,
agreements which:
1. Interfere with administration are unenforceable – X
who is facing a possible prosecution bribes a law
enforcing officer to buy immunity, but the law enforcing
officer decide to proceed with prosecution – X cannot
sue for breach of contract since such an agreement is
against public good.
2. Undermine/interfere with marriage, as in the case of;
Pietchz Vs Thompson
Facts: Pietchz claimed the return of certain gifts or their

monetary equivalent in pursuance of an agreement under
which Thompson would divorce her husband and marry
Pietchz. Thompson then decided not to divorce her husband.
Court: The gifts were not recoverable because they had
been given in pursuance of an immoral agreement.
The same argument was said in the case of;

Friedman Vs HarrisFacts: Friedman sued Harris, a married
man, for damages due to seduction (reduction of marriage
chances on the market). They then entered into an out of
court settlement to avoid unnecessary litigation/compromise
where by it was agreed that if Friedman repay the amount
that she received from the man the man would proceed to
divorce his wife. In the event that he did not she decided to
sue for breach of contract.Court: The amount that she had
repaid to the defendant is unrecoverable due to the
immorality surrounding the agreement.
Page 3 of 15

2.2.2 Consequences of an illegal agreement

An illegal agreement is void ab initio and unenforceable
and the parties thereto do not acquire rights and obligations.
In Pari Delicto Rule (which is a logical extension to the ex
turpicausa), in an illegal agreement where one party
deceives the other, the cheated party cannot expect to get
relief from the court. The loss will lie where it falls and no
judicial remedy will be forthcoming.
2.3 In Restraint of Trade Agreement

It is an agreement which restricts/circumscribes a party’s
ability to engage in unfettered trade or profession – for
example, an agreement where an employer places
restrictions on the employee to the extent that the employee
cannot compete with the employer within specified time and
radius, or bonding after company assisted training; sell of
good will where X sells to Y but puts restrictions.
2.3.1 In Maxim Modernfern:
The courts described an agreement in restraint of trade as
an interference with individual liberty of action in trading or
profession. Such interference is prima facie (at face value)
contrary to public interest and therefore void – general rule,
but there are exceptions where the restraint is perceived to
be reasonable – if the idea is to restrict or forestall
competition and nothing more, such a restraint would not be
upheld by the court and will be contrary to public policy and
therefore unenforceable. However, if the idea is to protect
the legitimate interest of the employer or fellow trader
where good will is evident it will be enforceable, as in the
case of;
SchawtzVsSubel
Facts: The defendant sold a general dealer’s business to the

plaintiff. A clause in the agreement of sale provided that
“the seller was not permitted to open up a shop in
opposition to the buyer’s business within a radius of 5 miles”.

Soon after the agreement and payment, Subel purchased a
business 1.5 miles down the road.Court: Schawtz was able to
obtain an interdict permanently restraining Subel from
operating the new shop. The idea was to protect the good
will, which Subel had sold to Schawtz with the inventory.
2.3.2 Covenants between employers and employees

A covenant prima facie is contrary to public policy and
therefore unenforceable if its only purpose is to restrict
honest competition. However, the courts are more tolerant
of covenants, which try to strike a balance between the
interests of the two parties. Covenants which recognize and
uphold that where you have a skilled employee he should be
allowed to practice his profession without hindrance if it is
beneficial to the individual and society, unless the employee
is privy to the employer’s trade secrets.
Page 4 of 15

Court: As long as the employment covenant is reasonable it

becomes enforceable. If the idea is not merely to
avoid/restrict competition then it is enforceable as in the
case of;
MunyaradziMangwanaVs Brian Muparadzi& OthersFacts: In
1986/7 MunyaradziMangwana completed his legal studies at
the University of Zimbabwe. At the turn of the New Year he
joined Brian Muparadzi& Others legal company as a qualified
assistant. He signed a covenant to the fact that should he
leave the employer he will not be allowed to practice as a
lawyer at his own or with others anywhere in Zimbabwe for 5
years. Soon afterwards he took up employment in Chinhoyi.
After a year he decided to form his own company in Chinhoyi
about 0.5 km down the road. The matter went to court to
determine the question of its enforceability or otherwise.
Court: The agreement was not acceptable because of its
infinity nature (too broad in nature) and at the same time, in
the mind of the good judge fortified with the case (involving
lawyers who should actually be legal experts), he decided to
invoke judicial activism at the risk of being part to the
judicial combat/arena.
Adversarial system of justice – the judicial officer should

be a neutral umpire deciding a case on the basis of evidence
submitted.
Inquisitive system – the judicial officer takes a more
pronounced role in trying to get to the bottom of the story
probing either side actively.
The court decided to go into judicial combat and modified
the agreement reducing the time frame 5 years to 3 years
and the place restriction from the whole of Zimbabwe to
Chinhoyi. MunyaradziMangwana simply moved to Kadoma
swapping business premises with a friend.
Morris V SaxelFacts: Saxel was employed as a teller’s
assistant by Morris and they agreed that should Saxel leave
his employer he would not be allowed to practice his trade
within 10km from the employer.Court: Was not convinced
that the case met the required legal thresholds – such a
covenant should not solely aim to restrict competition. It was
an anti-competition agreement/device or trick and nothing
else, and that being the case it was contrary to public policy
and therefore unenforceable.
Page 5 of 15

2.5 Mistake
A contract that is induced by mistake is void provided that
certain conditions are in place – the mistake was one of;
1. fact and not law, 2. Justus error, and 3.material.
These three conditions should exist simultaneously – they
should be contemporaneous. Mistake of fact –
ignorantiajurisnon excusat ex – ignorance of the law is
no defence or excuse – it is not a privilege but a misfortune.
A situation induced by mistaken motive is irrelevant. Mistake
going to the root of the problem – what would a reasonable
man say? – officious bystander – one way of describing
the profile of a hypothetical reasonable person. Cases
deemed to constitute an essential mistake;
1. Error in Egotio
A mistake to the nature of the agreement. If X thinks that he
is selling goods to Y who on his own thinks the goods are a
donation, that is, no consensus ad idem – there is no
agreement.
2. Error in Corpore
Relate to the identity of the subject matter of the
agreement. X wants to sell a donkey and Y wants to buy a
horse. Parties are at cross-purposes – there is no unanimity
of minds.
3. Error in Personae
A mistake that relates to the identity of the other
party.Issue- if the contract envisages personal
performance, personal identity is important, for example,
with marriage and employment, then the error is essential –
agreement contains elements we call Delictus Personae –
identity, reputation, integrity of a particular individual is
material consideration – for example selling goods on credit,
select some and snub others, if cash sale there is no matter
who buys.
More errors are subject to additional qualifications that they
have to be reasonable – be able to stand scrutiny in the
mind of a reasonable person – a Justus error. If a mistake
were reasonable one would be bound on the basis of Quasi-
mutual assent because of the impression in the mind of a
reasonable person, as in the case of;
Page 6 of 15

MerringtonVs DavidsonFacts: At an auction sale, Davidson

bought certain pieces of land comprising lot numbers 1-
28 in block CC for six pounds each. Despite the fact that lots
and blocks were clearly identified on a plan, Davidson sought
to void the contract on the grounds of his mistake. Davidson
argued that he had meant to buy lots in block C and not CC
and therefore that his mistake rendered the agreement
VOID.
Court: Although there was a mistake, it was not a Justus

error, so did not find sufficient reason for setting aside the
agreement. Error in corpore will only void a contract if there
is Justus error. Therefore Davidson could not escape the

contract, there has been no misrepresentation and since the
plans had been clearly displayed – he had obviously been
careless. Consequently his mistake could not be considered
reasonable.Principle: Where a contracting party’s mistake in
identifying the subject matter of a contract is due to his own
negligence, such a contract stands and he is bound.
2.4.1 Caveat Subscriptor Rule

Let the signatory beware – warring signatories to be aware
of the contents of the documents. He who signs a document
has familiarized himself with the contents therein. Signature
signifies consent. If later there is discovery to the contrary
then he blames himself. Signing documents carelessly
(having not understood the meaning and contents e.g.
mortgage bonds), one is bound by one’s signature, as in the
cases of;
George VsFairmeadFacts: George a guest at a hotel signed a
hotel register, which also doubled up as a contractual
document, at the time he became a guest at the hotel. One of
the provisions, which George did not read, was that “in the
event that property was lost/damaged/stolen, the hotel
owner was exempted from liability”. When clothes were
stolen from his room, George sued the hotel company,
claiming a mistake through ignorance based on Justus error
in that he had believed himself to be signing merely a hotel
register – not a contract – and that in any event his attention
had not been drawn to a written term not included in his oral
agreement..Court: Dismissed the case on the basis of the
caveat subscriptor rule. Consequently, his signature bound
George on such contract. “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 doing so, his assent to whatever
words appear above his signature.” The courts in numerous
other cases reinforced the decision.Principle: Unless induced
by misrepresentation or fraud, one is bound under the
doctrine of caveat subscriptor by one’s signature – even if
the material to which it is attached has been neither pointed
out nor read.
Page 7 of 15

BhikhageeVs Southern Aviation CompanyFacts: Bhikhagee

signed a flight ticket containing contractual provisions, one
of which was
to the effect that Bhikhagee would still be obliged to pay full

fare even if the flight was discontinued. Bhikhagee, an Indian
businessman with a limited knowledge of English language and
in a hurry, signed. The flight was cancelled because of bad
weather and passengers were obliged to use alternative ways
to get to their destinations. Presented with a full bill, his
argument in evading being bound by the agreement was that
of English language deficiency.
Court: “Can a man who has signed a document in the form of

the one now before us claim that he is not bound by it simply
because he did not know what the document referred to”. No!
The fact that the defendant did not read the conditions on
the ticket and did not know their contents is immaterial – and
he is in no better position if he is unable to read (a fact
unknown to the company). By his signature he elected to take
the risk, and he is bound.
Observation: It is a sound principle of our law that when

someone signs a contractual document he is taken to be
bound by the ordinary meaning and effects of the words
which appear over his signature. Even when he has not read
the document and propheses of ignorance. Where there is
duress or misrepresentation one can invoke Non Est
Factum – there was intimidation – the consensus ad
idem does not arise as in the case of;
Shepherd Vs Farrell’s Estate Agency 1921Facts: Seeking
to sell his interest in a business, Shepherd responded to a
newspaper advertisement by Farrell’s Estate Agency which
read: “Business wanted... our motto: “no sale, no charge. All
advertisements at our expense”.In the process he signed a
document which stated contrary to the advertisement –
though this was not pointed out to him – that the estate
agency would have sole selling rights and was to receive
commission if the business was sold within three months,
irrespective of whether that business was sold through the
agency or not. Shepherd’s business was subsequently sold
through another agency and Farrell’s Estate Agency then
sued on the agreement for $75 commission.Court: No
commission was payable because:Although Shepherd would be
normally liable on his signature, the onus of blame had been
shifted to Farrell’s Estate Agency by the misrepresentation
inherent in the fact that “the contract which the defendant
was asked to sign departs most seriously from the
advertisement”.Principle: Advertisements are not offers and
therefore an advertiser cannot be compelled to enter into a
contract on the basis of his advertisement. But if a contract
does arise from an advertisement, then the terms of that
advertisement must be followed unless the party contracting
on the basis of such advertisement has first been notified
otherwise.
Page 8 of 15

2.6 Misresentation
Definition: A misrepresentation is a false statement of fact,
which is made either in writing or orally by the one party or
his duly authorized agent, which has the effect of inducing
the innocent party to enter into a contract with the first
party.
2.5.1 Essential Elements of Misrepresentation
♦ A misrepresentation was made by one party or his
agent to the other party in order to induce him to enter
into contract.
♦ That the misrepresentation was material – must be
of such a character that it will persuade a reasonable
man to enter into a contract with the misrepresentor.
♦ That the misrepresentation was in fact false –
element of falsity/untruthfulness is essential. A
misrepresentation is not a misrepresentation unless it
contains an element of falsehood – A who is an Art
dealer makes a misrepresentation to B who is an arts
enthusiast that the piece of work which he is selling
was made by Mr. C a celebrated artist and turns out
that it was in fact made by an unknown Mr. Moyo a
starter in the game – that is misrepresentation. 2.5.2
Distinction between Misrepresentation and
Puffery Puffery is cheap “sales talk” or boastery
language, which a reasonable man would be able to
distinguish. It is an over exaggeration of one’s goods
and services – a bicycle I am selling will be able to do
100km/hr; Shakespeare Maya claiming he will win the
2002 presidential election, etc – its not
misrepresentation but mere puffery.
♦ An opinion which is wrong but given bona fide and
well entertained is not a misrepresentation e.g. X says
that her husband is elegant and handsome, but her
friend thinks he is horrible – this is an opinion and not a
misrepresentation.
♦ A dishonesty opinion is misrepresentation – when
you are aware that what you are saying is wrong.
♦ A prophecy or forecast that turns out to be wrong is
not a misrepresentation – a misrepresentation has to
relate to an ascertainable fact i.e. verifiable. In the case
of; NaudeVs HarrisonFacts: The seller of a house
described the house as well built and the purchaser
then discovered that in fact the house was
disappointing.Court: It was a mere opinion and not a
misrepresentation. But if it can be proved that the
opinion was dishonestly entertained then it would
become a misrepresentation.
Page 9 of 15

2.5.3 How a misrepresentation come about

2.5.3.1 Active concealment or blatant lie
Mr. X who is married says to Miss Pretty Face he is a single
man – that is misrepresentation. A seller says his farm has
two perennial rivers when he knows they are seasonal
rivers, etc.
2.5.3.2 Non-disclosure
Simple non-disclosure of material fact may be
misrepresentation only where there is a duty of disclosure
e.g. contracts involving agents are under duty to
uberrammae fide – disclosure of everything in utmost
good faith i.e. moralizing everything. Note that law and
morality do not always coincide.
2.5.4 Types of Misrepresentation
2.5.4.1 Fraudulent
The guilty party issues a false statement of fact intentionally,
knowingly and deceitfully i.e. he is aware of the fact that
what he is saying is not true as in the case of;
Derry Vs PeekCourt: In order to establish the existence of
misrepresentation deceit must be proved.
Generally fraud is proved when it is shown that a false

misrepresentation was done intentionally, knowingly and
without belief in its truth e.g. A is the owner of a piece of
land. Bordering his piece of land is another piece of land
belonging to the municipality, a fact that A is aware of. A
then sells the two pieces to B saying both pieces are his –
that is fraudulent misrepresentation and the contract is
voidable at B’s option.
2.5.4.2 Negligent
The person making the contract is careless. A reasonable
person would verify the truthness. A owns a piece of land
which he intends to sell to B. He thinks that there is sub
terrain water like in all other farms in the area. He makes a
representation to B and on that strength B buys the farm
only to discover that there is no sub terrain water – that is
misrepresentation – because A could not just jump to the
conclusion of sub terrain water just because his neighbours
have such water. He should have verified the facts as
pertains to his own farm. In negligent misrepresentation we
speak of the state of mind on conditions obtaining.
Page 10 of 15

2.5.4.3 Simple Misrepresentation

The misrepresentor does not have a guilty mind. He is
wrong but the statement is made honestly and sincerely
without knowledge of its falsity.
2.5.5 Remedies for Misrepresentation
2.5.5.1 Requirements to Prove Misrepresentation
1. The innocent party must have contracted on the basis of
the misrepresentation. The misrepresentation should be the
reason why he concluded the agreement.
Poole &NourseVsMcLennaFacts: McLenna advertised in a
magazine called “The Farmers’ Weekly” the sell of a farm in
Chegutu area. He deliberated exaggerated the farm where
upon Poole &Nourse visited the farm for three days during
which time McLenna was able to put the record straight.
They proceeded to buy the farm as joint purchasers and
later on decided to repudiate the contract allegedly on the
misrepresentation in the advertisement.Court: Since at the
time of conclusion of the agreement they were aware of the
true state of affairs there was no misrepresentation.
2. The contracting party must make the

misrepresentation. Where the misrepresentation has
been done by a third party the injured party cannot rely
on the misrepresentation unless the third party is acting
on behalf of the injured party to the contract i.e. duly
elected. The innocent party should establish privities of
the case.
3. The innocent party must be able to prove to court that

the misrepresentation was material fact i.e. should be
able to go to the root of contract – it should not be a
feverous consideration.
2.5.5.2 Expected Action by Injured Party

As soon as the innocent party becomes aware of the
deception its incumbent upon him to choose within a
reasonable time what to do about his situation: whether to
stand by the agreement or to rescind it and the choice of
one option necessarily mean having to forgo the other
option. Undue delay may be regarded as condonation of the
misrepresentation. The courts may not excuse delatory
action as in the case of;
Bowditch Vs Peel & McGillCourt: The injured party cannot
approbate and reprobate (blow hot and cold). Once he makes
a decision he has to stand by that decision.
Page 11 of 15

2.5.5.3 Nature of Remedies
Character or nature of remedies available to the injured
party to a large extent are determined by the type of
misrepresentation e.g. with fraudulent misrepresentation the
injured party has a number of options available to him:
♦ He can content with the cancellation/rescission of the
contract and claim restitution – to restore to status quo
ante – the position that existed before the conclusion of
the agreement. This is a remedy found in equity to
avoid unjust enrichment.
♦ The injured party could claim damages or a
combination of rescission, restitution and damages. Or
simply he could claim damages for any loss he might
have suffered. Petit Vs Abrahamson Facts: Petit
intending to buy, inspected three horses belonging to
Abrahamson. On being asked about their ages,
Abrahamson said two horses were 5 years and the third
was 6 years old. Petit bought the three horses and later
discovered that none of the horses was less then 10
years.Court: Petit was allowed to rescind the contract
and obtain restitution. Coomers Motor Spares Vs
AlbaniaFacts: Albania sold a second hand Mercedes
Benz to Coomers Motor Spares (CMS). He indicated
that the car was a 1971 model and that it was never
involved in an accident and had done no more than
70,000 miles. It turned out that the car was a 1975
model and had done 150,000 miles. It had been involved
in accidents in at least three occasions.Court: Allowed
rescission, restitution and damages. With fraudulent
misrepresentation it is important for the injured party
to prove deceit as was said by the court in the case of
Derry Vs Peek. Mere negligence will not do. ♦For
negligent misrepresentation rescission is always
available. Rescission is standard in all three
misrepresentations. In Roman Dutch Law, damages for
misrepresentation are not given just as a matter of
course. The courts take into account certain
considerations as said in the case of; Bristol VsLycetl
Facts: A tourist was gnawed by a lion in the lowveld due
to negligence of the warden. Court: In
misrepresentation situations/cases, liability arise only if
there is duty, if one speaks at all, to give the correct
information and this involves many considerations. Legal
duty is not necessarily moral duty.
Page 12 of 15

The considerations are:

1. There must be knowledge or its equivalent that the
information is required for a serious desire;
2. That he to whom it is given intends to rely and act

upon it;
3. That if false or erroneous the innocent party will be

injured in person or property;
4. The relationship between the parties arising out of the

contract or otherwise is that in law the one party has
the right to rely upon the other party for information
and the party offering the information owes a duty to
give that information with care.
A case that encompasses these considerations is;

Wood Vs Northwood Service StationFacts: Wood was a
regular customer of Northwood Service Station. On one
occasion as was usual he send his car for service. He was told
by the representative (mechanic) that it was not economic to
repair the car and that the car as it stood was worth $800.
It was better off to dispose of the car. Wood sold the car to
one of the garage persons who after minor repairs restored
the car to good working condition. [This was negligent
misrepresentation. Fraud involves bad faith.]Court: Wood
was entitled to recover damages through misrepresentation.
As a general rule where a customer is in a habit of asking for

such advice the garage has a legal duty to advise him with
care and that he has a right to rely on the garage for such
information. The remedy available for simple/innocent
misrepresentation is rescission only, damages are not
available.
2.6 Duress/Metus(force or fear or absence of

free will)
Duress and undue influence – essentially there is a binding
agreement. However, there is a defect in the consent but it
is not such that the contract will be void ab initio unlike a
situation where there is a mistake – cross purposes – there
is no consensus ad idem. The law says as long as the
injured/weaker party chooses to remain in the contract then
the agreement is binding. Once he acquires knowledge of
the deception he is put to his election either to stand by the
agreement or to repudiate/rescind it within reasonable time.
Selection of one option means abandoning the other option
– he has to choose one of the two options – the agreement
is voidable at his pleasure.
A contract induced by duress is voidable at the pleasure or
option of the party coerced into the contract – the innocent
party. Duress involves threat, intimidation and whatever
Page 13 of 15

will produce fear in the weaker party causing him to

conclude the agreement as a result of fear. To rescind such
contracts certain elements have to be established namely:
♦ That one party induced another party to enter into a
contract as a result of reasonable fear of violence;
♦ That the fear related to the threat of some evil to the
weaker party and his family – and the evil should be
considerable e.g. “if you do not vote us we will unleash
mayhem and there will be another war” – a reasonable
person will not simply dismiss such threats;
♦ The implementation of the threats must be imminent
and inevitable;
♦ That the threat/intimidation must be contra bones
mores – contrary to good public morals – “ stop
stealing or I will call the police” is a good moral threat;
♦ The fear caused in the mind of the weaker party
must not be unrealistic, vein or foolish but must be
such that it overcomes a mind of ordinary firmness and
fortitude. BroodrykVs Smuts N.O. (in his official
capacity)Facts: Broodryk, a married road worker with
one minor child – alleged he had only entered a contract
of voluntary enlistment for military service in the South
African army during the WWII because he had been
threatened by two government recruiting officials that
if he did not, he would be regarded as hostile to the
government and interned. On which basis, Broodryk
claimed rescission of the contract, citing as defendant
General Smuts, the South African Prime Minister, in his
capacity as Minister of Defence.Court: Ruled in favour
of Broodryk because his fear was reasonable in the
circumstances alleged, fear of internment was not “vain
or foolish” and was certainly as to overcome the mind of
ordinary firmness.
2.7 Undue Influence

Undue influence is closely allied to duress and
misrepresentation, and has the effect of making a contract
voidable rather than void ab initio.
Undue influence:
♦ Is a situation where one person (the stronger party –
politically, socially, economically) obtains an influence
over the weaker party which influence weakens the
other party’s resistance rendering his will pliable or
manipulable;
♦ That the stronger party however you define their
strength uses his influence/power in an unscrupulous
manner to persuade the weaker party to enter into a
prejudicial
Page 14 of 15

or disadvantageous contract which he would not normally

have entered into with freedom of will.
Whereas duress relies on overt force (open force) undue
influence relies on subtle force. In English law certain
contractual relationships give rise to a rebutable
presumption of undue influence. The legal position in
Zimbabwe is not as clear cut as the English law even though
the balance of legal opinion is in favour of the English law
position. Some of the relationships that will be affected are
the following:
♦ Doctor / patient
♦ Lawyer / customer or client
♦ Parent / child
♦ Teacher / pupil
♦ Employer / employee
♦ Minister of religion / parishes The important issue is
whether there was freedom of volition, its not all
relationships where undue influence can be cited.
Preller& others VsJordaanFacts: Jordaan, an elderly
farmer, donated and transferred four farms to Preller,
his doctor and adviser – to be administered by Preller
for the benefit of Jordaan’s wife and farm labourers.
Preller then transferred one of the farms to his son and
two to his daughter. But Jordaan, seeking to recover
the farms from Preller and his children subsequently
claimed that at the time of the contract he had been
sick, spiritually weak and mentally plus physically
exhausted. In which condition, he had fallen totally
under the influence of his doctor, who had used such
influence in an improper and unlawful manner to obtain
the farms which Jordaan would not otherwise have
transferred.Court: Rejected the defense arguments
that “undue influence” was not – in Roman-Dutch law – a
valid ground for setting aside a contract. Consequently,
the court ordered restitution to Jordaan of the one
farm retained by Preller. It was unable to order
restitution on the three farms held by Preller’s
children. It was agreed that a contract based on undue
influence is not void but voidable so that ownership had
indeed passed under the contract to Preller, who could
therefore, provided this occurred (as it did) before the
contract was set aside by the court – pass it on in turn
to his children. The contract was voidable but remained
valid until set aside by the weaker party within a
reasonable time. Before set aside third parties can
acquire legal rights and obligations. Preller could do
whatever he wanted with the farms.
Page 15 of 15
Business Law – Chapter 3: Termination of Contracts & Remedies MBA II

Semester I G. Manhangwe R890800P
CHAPTER 3
TERMINATION OF
CONTRACTS AND
REMEDIES
Contractual agreements can be terminated in a variety of
ways:
• Agreement• Operation of law • Breach
3.1 Termination Through Breach

Breach can be through a variety of ways but it simply
involves conducts, which are inconsistent with proper
performance of the agreement. It’s a violation of a material
aspect of the agreement – an aspect that goes to the root of
the contract.
3.1.1 Repudiation
Where the debtor (the person to whom performance is due)
shows a clear intention to be no longer bound e.g. a house
that has been let to A by the lessee is re-let to B, or a
situation of double sale of a car. The creditor could accept
repudiation and sue when the time of performance is due.
Alternatively he can refuse the repudiation and sue for
specific/exact performance originally envisaged in the
contract by the parties.
Damages are the monetary equivalents to performance.
They constitute the surrogate to specific performance.
Specific performance is usually given at the discretion of the
courts – on the basis of specific consideration the courts
may refuse to grant specific performance.
3.1.2 Mora
Apart from repudiation there is also mora – delaying
performance without lawful excuse where time is a material
aspect of performance e.g. if the time within which
performance is clearly defined (within 7 days). Commercial
agreements are accompanied by
lexcommissoria(foreclosure or forfeiture). A forfeiture
clause is a penalty clause, inasmuch as a foreclosure.
Whereas a lexcommissoria is also a penalty
Page 1 of 11

clause in an agreement, which empowers to cancel the

agreement and impose a penalty, in the event of breach of
contract e.g. delivery dates.
Apart from the defined time of performance the debtor can
also be in mora if time is of essence – when it is clear to a
reasonable person that performance has to be rendered
without undue delay e.g. Munashe telephones Cannan a
plumber to fix a leaking tap at his house. Cannan comes
after a week, he is in mora. Or Mr. Gushungo in panic
telephones the ambulance to come as his wife is in labour
and the ambulance comes two weeks later.
Broderick Properties V Rood
Facts: Broderick Properties borrowed from a bank on first
mortgage R220,000 – the money to be available only upon
registration of the bond, but interest at 7.5% to be payable
in any event from 16 November 1959. on 20 October 1959,
Broderick Properties instructed Rood – a conveyancer – to
register the bond, but it was in fact only registered on 11
February 1960. Consequently, Broderick Properties only
received the R220,000 after having already paid interest
amounting to R3,899 – covering an approximate three months
period during which Broderick Properties did not have use of
the capital sum. Broderick Properties therefore sued Rood
for this amount. But Rood countered by claiming that, since
time had not been fixed and Broderick Properties had made
no prior demand setting a date for performance, he was not
in mora.
Court: Ruled in favour of Broderick Properties on the

grounds that there is no inflexible rule that “where there is
no date specified in the contract there must be interpellatio
(prior demand by the creditor for performance by a
reasonable date) before there can be mora (liability for a
default in performance on the part of the debtor)....”. Rood
was quite in mora and that the receipt and use of the money
by Broderick Properties was dependent upon Rood’s
expeditions and implementation of the undertaking. Rood was
to attend to the matter without delay.
3.1.3 Mal-Performance
When the debtor under-performs either in terms of quality
or quantity e.g. Kudzai, a butcher is supposed to deliver to a
city café 100kg of high quality beef but delivers 50kg, or she
delivers 100kg of offal.
3.2 Termination Through Agreement

This is an amicable way of terminating a contract. It involves
the consensus of both the creditor and debtor. And because
there was agreement there is no question for suing for
breach of contract.
Page 2 of 11

3.2.1 Novation
Involves the conclusion of a new agreement, which
supercedes and negates the existing agreement e.g. a
contract of sale that is transformed into a donation.
3.2.2 Waiver
Where the creditor intentionally releases the debtor from his
obligation without compulsion and purposeful decision.
3.2.3 Cancellation
A contract that has not yet been performed can be
terminated by the parties agreeing to cancel the agreement
may be after realizing they may encounter problems in its
implementation. If one party or both had already performed
part of the agreement they are entitled to restitution to
effect simple justice and avoid unjust enrichment.
3.3 Termination Through Operation of Law

Operation of law does not involve breach and neither does it
involve agreement. Nonetheless the courts would pronounce
there is no agreement any more. The following situations
apply;
3.3.1 Death
Usually the death of one of the parties to the agreement
should not really herald the end of the agreement because
the deceased’s estate can be bound through an executor – A
sells a house and before the sale is concluded he dies – this
should not bar the completion of the sale even though
delays would be experienced during appointment of the
executor.
Where the identity and presence of the other party is
material component of the agreement then the death of that
party would entail termination: e.g. contract of service in
which you had employed an agent, marriage, ordinary
employment etc.
3.3.2 Set-off
Where two persons owe each other money and the two
debts can be weighed up against each other. If the two are
equal then the two can be extinguished. If one is smaller
then the smaller is extinguished provided that;
I.
Thedebtsmustexistbetweenthepartiesintheirpersonalcapacitie
s,
Page 3 of 11

II. Thereciprocaldebtsmustbothbedue.
3.3.3 Merger or Confusio
Takes place where there is a coincidence or coalition of
capacities of both creditor and debtor – capacities united
into one person. Such a debt becomes extinguished because
one cannot be debtor and creditor for the same obligation -
e.g. A owes B his landlord, and A marries B under
community of court. There is merger of capacities.
3.3.4 Prescription
Is when debt/obligation is extinguished due to passage of
time and the creditor has done nothing about recovering the
debt. Two types of prescriptions:
♦ Extinctive Prescription – becomes extinct.
♦ Acquisitive Prescription – acquire the prescription e.g.
if X moves to a piece of land belonging to B and B does
nothing to evict the squatters. After 30 years X can
acquire title deeds. Ordinary debt where X owes Y
some money, after 3 years the debt lapses. A
prescription is interrupted by; an acknowledgement of
debt by the debtor, through issuance of summons
through legal action – formalization of the case. 3.3.5
Supervening Impossibilities This is the “doctrine of
frustration” – a contract is frustrated due to
intervention of outside forces – due to emergency of
providence due to act of God or act of state – those
factors that cannot be foreseen by reasonable forecast
or cannot be prevented by reasonable means/care –
vis major & casus fortuitus. Only objective and not
subjective supervening impossibilities may be
considered. Casus fortuitus– is an unusual
occurrence or accident. Vis major – is the intervention
of elements such as drought, floods, hailstorm,
earthquake, legislation of an adverse character, which
outlaws an activity, which used to be lawful, is
regarded as an act of state and therefore considered as
supervening impossibility. In English law the nearest
equivalent to the notion of supervening impossibilities is
the “doctrine of frustration”. A contract is frustrated
where although possible to perform at the time the
contract was agreed upon it subsequently becomes
impossible through the occurrence of an event which
was not the fault of anybody – this doctrine has been
underpinned by lots of cases:
Page 4 of 11

Taylor V CardwellFacts: The plaintiff entered into an

agreement with the defendant for hire of a certain
music hall for purposes of holding a series of concerts.

Before the series was due to begin the hall was accidentally
gutted by fire.
Court: The destruction of the hall constituted frustration of

the contract. Both parties were excused from performing
the contract.
Krell V Henry
Facts: Mr Henry a monarchist through and through hired a

room for two days so that he could view the coronation of
king Edward II from a vintage point. The king fell ill and the
proceedings were postponed to an undefined time when the
king would have recovered. Mr Henry decided not to take
occupation of the room. When sued for breach of contract
he pleaded frustration of the contract in defence.
Court: Agreed with Mr Henry’s submission.
In Roman-Dutch law the notion of supervening

impossibilities related to the non- performance of a contract
on account of an event, which cannot be avoided even when
ordinary precautions are taken. However, a self-created
impossibility will not do or where performance becomes
inconvenient and not objectively impossible will not be
accepted e.g. where a builder neglected to put an escalation
clause in a contract, and due to inflation it becomes costly to
complete the project – this is not supervening impossibility.
Peters, Flamman& Company V Korstad Municipality 1919
Facts: Peters, Flamman& Company contracted with the

Korstad Municipality to light the town with acetylene gas for
a period of years. But at a time when the contract still had
ten
years to run, Peters and Flamman were interned as enemy

subjects. Following which, the Treasury – acting under
statutory powers – ordered the partners’ business wound up
by a controller, who accordingly cut off the gas and
discontinued the light supply. Consequently, the Korstad
Municipality sought $20,000 in damages for the breach of
contract plus forfeiture under a penalty clause in the
contract of plant and equipment erected and installed by the
partnership.
Court: Under common law the contract is void if under the

time of its conclusion the contract is impossible to perform.
Where also a contract becomes impossible after it has
been entered the situation is the same. The position... was

that by the order of the Treasury winding up the business of
the partnership it became impossible for the
defendants to carry out the contract with the plaintiff, and

the question is whether in these circumstances they can be
held liable for damages for breach of contract. On which the
court took the view – in line with the authorities – that “if a
person is prevented from performing his contract by vis
major or casus fortuitus, under which would be included such
an act of state as we are concerned with in this appeal, he is
discharged from liability”. Because “the contract was
extinguished so soon as it became impossible for the
defendants to carry it on .... And if the contract had come to
an end, there could be no further breach of it, and
consequently no action would lie for damages for breach of
contract ..” and therefore no forfeiture.
Page 5 of 11

The doctrine of supervening impossibilities would not apply

in the following cases:
♦ The contract becomes more expensive to perform,
♦ Where one party expressly say he will do which he
later finds he cannot do,
♦ Where one party by his own conduct or misconduct
includes impossibilities e.g. where a businessman fails
to comply with the relevant legislation governing his
industry and is forced to close down he cannot plead
supervening impossibility. Parties to a contract that has
been frustrated by factors beyond their control are
discharged from further performance of the contract. If
there was already partial performance the courts would
normally effect a situation of restitution in gratia – to
avoid unjust enrichment.
3.4 Remedies For Breach Of Contract

Where a dispute arises to the alleged contract there are a
number of pertinent issues, which the aggrieved party has to
resolve;
. 1) He must show that there is a cause of action – there
was a binding agreement which was breached by the
other party i.e. offer and acceptance, quasi-mutual
assent, etc.
. 2) The breach must relate to a material term of the
agreement – going to the root of the contract. If the
breach is peripheral or inconsequential then the injured
party is not entitled to a remedy.
The main remedies available in our jurisprudence are; 1.
Interdict (pendite lite),
2. Cancellation,3. Specific performance, 4. Damages.
3.4.1 Interdict (Pendite Lite)
Is an extraordinary remedy given in extraordinary situations.
It is a prohibitory order, which makes it mandatory for the
concerned party to refrain from doing what has been
mentioned in the order in which the applicant would have to
show that if the interdict is not given an irreparable harm
would be done. An interdict should show urgency as in the
case of Setlegelo V Setlegelo.
Page 6 of 11

3.4.2 Specific Performance

Is exact performance. A general approach of the courts is
that a party who is willing and able to observe the
obligations on his part is also entitled to expect the other
party to perform – not surrogate performance. A rider to this
proposal is that specific performance is discretional – in
appropriate legal circumstances the courts may decline to
grant specific performance – these are exceptions.
Farmers’ Cooperative Society V Berry 1912Facts: Berry –
obliged as a member of the Farmers’ Cooperative Society to
deliver his whole crop to the society – nevertheless he
refused to deliver a crop of 1,200 bags of mealies as agreed.
Consequently the Society sued for specific performance or –
alternatively – damages of $765, being the computed
additional cost to the Society of replacing the 1,200 bags
through the open market in order to fulfill the Society’s own
contractual obligations to deliver to various merchants.
Though at the trial no damage was shown to have actually
been caused in this manner.Court: On appeal, that the
Society had indeed ‘failed to prove any portion of its
damages as laid .. But that only disposes of the alternative
claims as framed; the question of whether specific
performances should be decreed ..still remains’. In which
regard, the court ruled in favour of the Society and a grant
of specific performance, because basically, ‘every party to a
binding agreement who is ready to carry out his own
obligation under it has a right to demand from the other
party, so far as it is possible, a performance of his
undertaking in terms of the contract. It is true that courts
will exercise discretion in determining whether or not
decrees of specific performance should be made. They will
not of course be issued where it is impossible for the
defendant to comply with them. And there are many cases in
which an award of damages can fully and conveniently do
justice between the parties. But that is a different thing
from saying that a defendant who has broken his undertaking
has the option to purge his default by the payment of money.’
3.4.2.1 Situations Where Specific Performance Is Not

Available
♦ Where it is felt that damages can adequately remedy
the loss,
♦ Where the claim by the creditor is easily available on
the market and is not a rare/unique/extraordinary
commodity,
♦ In contracts envisaged the rendering of personal
performance (marriage/employment etc),
♦ Where unreasonable hardship will be caused on the
debtor and the public – an award of specific
performance will be injurious to the debtor and
members of the public.
Page 7 of 11

Haynes V Kingwilliamstown MunicipalityFacts: The

Kingwilliamstown Municipality was obliged under a 1911
agreement to release to
Mrs Haynes 250,000 gallons of water daily from its storage

dam. This agreement was faithfully carried out until 22 April
1949 when, due to drought and in order to relieve the
consequent shortage of water plus concomitant threat to
health in Kingwilliamstown, Mrs Haynes’ water allocation was
reduced to between 1,500 and 2,000 gallons daily. Although
she had adequate water from other sources, Mrs Haynes
sued for specific performance. Court: Against Mrs Haynes,
because, although a plaintiff has a right (which the
defendant has not) to choose between claiming specific
performance or damages and although the court ‘will as far
as possible give effect to a plaintiff’s choice to claim specific
performance, it has a discretion in a fitting case to refuse to
decree specific performance.’
3.4.3 Damages
Damages are the monetary equivalent of specific
performance. In general the courts would like to place the
injured party in the position that he would have occupied
through the payment of money and without undue hardship
to the debtor. Contractual damages emanate from breach of
contract e.g. Farmers’ Cooperative Society V Berry. Delict
damages emanate from situations where there is no
contract. The damages are not meant to punish the debtor –
they should not be vindictive. They are meant to place the
injured person in the position that he would have occupied
had the contract been performed.
3.4.3.1 General Guidelines In Assessing Appropriate
Damages
The idea is to avoid an in determinant/infinite amount of
damages in an in determinant way:
(a) Damages Must Be Direct
The courts insist that the damages should be direct rather
than indirect. Direct damages flow naturally from the breach
– they are not remote. Damages must be within the
contemplation of the parties so much that a reasonable
person would agree that the damages are a direct
consequences of the breach.
Victoria Falls & Transvaal Power Co Ltd V Consolidated
Langlaagte MinesFacts: Under an agreement of 25th
February 1911, the Victoria Falls & Transvaal Power Company
Limited undertook to provide 1,200 kilowatts of power to
Consolidated Langlaagte Mines Limited for the introduction
of a new reduction plant. Consolidated Mines made clear that
the power was required by 1st July 1912 – a deadline
acknowledged by the Power company with the words: “We
have duly noted these requirements and will make the
necessary arrangements.” But in fact the power was not
actually supplied until 29th September 1912. Consequently,
Consolidated Mines sued the Power Company for damages as
follows:
Page 8 of 11

♦ $4,080 lost in extraction because of the need to

continue using the less efficient, old system for a
further period of three months after the agreed
completion date, plus
♦ $27,833 profits deferred due to the need over the

same period to treat ore at the old rather than the new
mill – profits which would consequently only be
recoverable at the end of the mine 22 years hence, plus
♦ $6,910 loss due to greater development costs by

failure to provide the power promised by due date, plus
♦ $3,281 loss on shaft sinking arising in similar manner.

Court: Dwelt at length on calculating the actual amount
of damages, which, though already reduced by the trial
court from $42,104 as originally claimed to $29,527 –
were nevertheless the subject of an appeal by the
Power Company. Which appeal was successful in the
sense that the Appellate Division further reduced the
damages awarded to $19,000 (plus costs) – confining
damages only to profits actually lost because of the
delay. But throughout there was no doubt whatsoever of
the Power Company’s liability – which the court
determined and evaluated on the basis of ‘the general
principles, which govern the investigation of that most
difficult question of fact – the assessment of
compensation for breach of contract’.
(b) Mitigation Of Losses

The injured party must mitigate his losses as a reasonable
person. He is expected to take practical steps to curtail his
losses e.g. a contractor relocates elsewhere before he
completes the contract – you would naturally take steps to
minimize the loss. The debtor is not expected to take
unreasonable/extraordinary steps to mitigate his damages as
in the case of:
Bulmer V Woollens Limited (in liquidation) 1926
Facts: Bulmer contracted to be the managing director of

Woollens Limited for a period of 5 years. But after a little
more than 2 years Woollens Limited was placed in voluntary
liquidation and Bulmer’s employment terminated. When

Bulmer sued, the defence was raised that he could easily
have obtained employment as a builder’s foreman – so
mitigating his loss – and that in the light of failure to do so
his claim for damages should be reduced accordingly.
Court: Bulmer was entitled to damages for full amount of his

loss, because the position of
builder’s foreman was of totally different and subordinate

character to his previous employment. Consequently, he was
not obliged to take such a position in an effort to mitigate.
Principle: Where an employee who has been wrongfully
dismissed seeks damages, he is entitled to the actual loss he
has suffered – namely the amount he would have earned up to
the earliest date at which the contract could lawfully have
been terminated either by
Page 9 of 11

notice or passage of time. Moreover (although he should

attempt to mitigate his loss and the cost to the other party
by seeking during that period similar employment – the
earnings from which can offset against the damages) he is
not obliged to take an unsuitable or subordinate position.
(c) Avoid Unjust Enrichment

These setbacks are meant to ensure that the injured party is
overly paid and that the debtor should not be unreasonably
punished. Damages are meant for patrimonial (quantifiable)
loss and not normally for sentimental loss.
Jockie V Meyer
Facts: Jockie a Chinese officer on a British vessel plying the

route England – Port Elizabeth, made arrangements to get
accommodation at Meyer’s Hotel in Port Elizabeth. Upon
arrival and realizing that Jockie was Chinese, the Hotel
decided not to honour the contract. Jockie sued for
damages, which included a portion that related to injured
feelings because of his race.
Court: On appeal the court said that contractual damages

normally should not include injured feelings – they are for
patrimonial damages. However, where the accent of the
contract is the conferment of pleasure and that pleasure is
not forthcoming then damages may be available for injured
feelings e.g. in the hospitality industry, as in the case of
Jarvis V Swan Tours.
Delict: is a private wrong that damages one’s reputation in

the eyes of right thinking members of the public. It is
defamation. In English they call it a tort.Dolus – wicked
intention; culpa – an accidental negligence. Defamation
causes injuria – violation of one’s individual dignitas.
Defamation can come through a direct reference or indirect
reference (innuendo) – that bears defamatory meaning e.g.
the Daily News cartoon of Jonathan Moyo. To a reasonable
man an innuendo means one thing – negative perception
about the person. Injuria impairs one’s self worth.
An example of defamation: to say that somebody is a thief,
prostitute, homosexual etc when they are not. The question
of defamation is contextual and relative to the individuals
and circumstances. Recent cases of defamation include:
♦ MujuruVsMoyse
♦ JosephMadimbaVsZimpapers
♦ EdisonZvobgoVsKingstons
♦ EdgarTekereVsZimpapers
Page 10 of 11

Defences Open To The Defendant Under Defamation
Cases1. Justification – involves two things that it is: (a)
true component; (b) in the interest
of the public;
2. Privilege – parliamentary privileges – MPs in the
chamber can say anything whilst in the chamber – they
enjoy absolute privilege. Other people may enjoy qualified
privileges – a priest on the pulpit, or a judicial officer, a
parent in certain situations when counseling children.
3. Rixa– “an eye for an eye, or a tooth for a tooth”
philosophy. It has to be momentary i.e. there and there
without any premeditation.
4. Jest – just joking which is restricted to close friends or
family members only.
Page 11 of 11
Business Law – Chapter 4: Contract of Sale (EmptioVinditio) MBA II Semester

I G. Manhangwe R890800P
CHAPTER 4
CONTRACT OF SALE
[EMPTIO VINDITIO]
4.0 Agreement of Sale Elements
The agreement of sale essentially involves three elements:
1. Agreement that relates to the,2. Merxor the identity of
the merchandise, and3.The pretiumor price – the
modalities of arriving at a price.
It does not matter that the agreement is not in writing – an
oral agreement is just as binding as a written agreement
unless there is another rule of law that requires that the
parties need to formalize in writing e.g. the sale of an
immovable property has to be in writing in terms of the
deeds act, a marriage contract because of the need for a
certificate. The parties themselves could make the tabulation
in writing as a condition precedent – unless and until the
agreement is reduced in writing it remains void. Once in
writing the parties are not allowed to introduce extrinsic
evidence to prove the terms of the agreement (the Parole
Evidence rule). The document itself is complete.
Agreement – the common offer + acceptance less undue
influence, illegality, voidability, mistake, lack of consensus ad
idem, etc.
Merx- should be Res Intra Commercium(merchantable),
that is, being capable of being sold and bought – it can
either be tangible or intangible i.e. Res Corporialor Res
Incorporialrespectively - sui generis i.e. a contract of its
own kind like lobola.
Price/pretium– has to be in money or capable of
ascertainment in monetary terms – there should be a
modality of arriving at money. It has to be serious and not a
disguised donation. The price must be a realistic market
price of the merxor res.
If you buy a non-existent thing in error then there is no sale,
and one cannot be the buyer and seller at the same time –
you need at least two parties.
CawcuttVsTapersonFacts: At an auction sale the purchaser
bought a horse at credit terms and paid a deposit with the
outstanding amount to be paid at a latter date. He latter
realized that he had bought his own horse stolen from him.
He then refused to pay.
Page 1 of 11

Court: The purchaser “was not liable to pay the purchase

price” because it was his own property.
4.1 Types of sales 4.1.1 Cash Sale

Ownership passes from the seller to the purchaser upon the
payment of the purchase price and delivery. Delivery can
either be actual or fictional. Actual delivery involves
TRADITIO (physical hand over). Fictional delivery has the
same effect as actual delivery – the major difference is that
the merx or res may already be in the hands of the
transferee through an earlier agreement other than sale e.g.
through a loan. Examples of fictional delivery are:
1. TraditioBrevi Manu – the purchaser already has the
merx e.g. an ox loaned to him which he now wants purchase
– what matters is now the mental attitude.
2. Traditio Longa Manu – delivery by the long hand
pointing to the merx e.g. lobola cattle.
4.1.2 Credit Sale
Ownership passes at the time of delivery – actual or
fictional/constructive delivery. For a Hire Purchase (HP)
ownership passes from the seller to the purchaser upon
payment of the last installment. Sales of immovable property
(house, stand) – ownership passes from seller to purchaser
upon registration at the Deeds Office.
4.1.3 Voetstoots Sale
The merx or res is sold as it is with all its defects if any. The
seller absolves himself of responsibility in the event that the
merx is latently defective. A latent defect is a hidden defect
that is not easily discoverable by a reasonable man upon a
reasonable inspection e.g. cancer of the lung in an animal, a
debilitating heart defect, etc. With a patent defect the
caveat emptor rule applies – let the buyer see or and
beware – it is an analogue to the caveat subscriptorrule.
Caveat Emptor
He who buys an item is expected to have inspected and
acquainted himself with what he is purchasing – if it has a
defect the purchaser has no remedy. If the purchaser is
unable to discover a defect, which only an expert can
discover, there is still a latent defect and the law gives the
purchaser a remedy where the merx was latently defective
at the time of the conclusion of the sale or at any rate prior
to the conclusion of the agreement. If the latent defect
supervenes subsequent to the conclusion of the
Page 2 of 11

agreement it becomes a risk that must be borne by the

purchaser. Under the Roman- Dutch law the purchaser who
had not yet benefited from the purchase is entitled to a
remedy for the latent defect.
Where the seller is fraudulent and sells an article
voetstootswhich he knows to be latently defective without
disclosing the defect to the purchaser, the law says that he
is not entitled to the protection afforded by a voetstoots
clause – it is only given in cases of genuine ignorance, as in
the case of;
Vander MerweVsCulhaneFacts: A timber merchant sold
timber voetstoots that was infected with wood ants to his
knowledge. It then transpired that he was aware of the
existence of the ants. When sued by the purchaser for
rescission of the contract he invoked the voetstoots clause.
Court: The seller could not rely on the voetstoots clause
because of the fraudulent conduct.
MatamboVsChakauyaFacts: The plaintiff bought a house in

Marlborough voetstoots. When the rains fell he
discovered that the roof was leaking heavily. He sued in the

High Court for rescission of the contract. The seller in his
plea invoked the voetstoots clause. There was evidence
establishing the seller’s mala fide that he was being
fraudulent.Court: The voetstoots clause was rendered
useless and inoperable on account of the seller’s fraudulent
conduct.
4.2 Risks in Purchase and Sale

Risk is any disadvantage, loss or depreciation that is
occasioned to the merx e.g. buy a car and be a victim of a
robbery. On the other hand, benefits in the merx relate to
the accruals or advantages gained. The common law says
that risk and the benefits go hand in hand. The question is
at what stage during the transaction does risk pass from the
seller to the purchaser? The law says that once the
agreement is Per Fecta(concluded) in relation to the
identity of the merx and in relation to the price of the merx
(or modalities of arriving at an appropriate price) the
principle of law is that risk passes from the seller to the
purchaser irrespective of the fact that delivery has been
constituted or the purchase price has not been paid. If
custody of the merx is still in the hands of the seller and
accidentally lost or damaged, then the rule does not apply.
Per Fecta– in sales of specific goods, the contract of sale
becomes per fecta once the item has been identified e.g. a
car parked in the show room. On the other hand with Res
Fungbles(RES = any article that is capable of economic
utility) – these are bulky goods where you need to weigh,
measure, appropriate – the risk will not pass from the seller
to the purchaser until the required weighing, measurement,
appropriation has taken place e.g. 1000 bricks.
Page 3 of 11

Fitwell Clothing VsQuorn HotelFacts: Quorn bought some

clothing items for their hotel staff. There was a discrepancy
between what the Purchasing Manager thought was the

agreed price on the one hand and the price that appeared on
the invoice after delivery. The parties failed to resolve the
discrepancy and Quorn called upon the seller to come and
recover the concerned goods. Before he could do that the
goods were destroyed by fire.
Issue: For determination by the courts was “whether or not

the purchaser was legally liable to pay the purchase price”
Court: No, because the contract was not Per Fecta. There
was no agreement on price.
Horne Vs HuttFacts: One farmer in Karoi sold maize for

stock feeds to a neighbouring farmer. The maize was set
aside for the exclusive benefit of the purchaser. Before
delivery could be effected thieves pounced on the lot.Court:
Appropriation had been effected and the risk lay with the
purchaser.
4.2.1 Exceptions To The Rule: When Does The Risk

Remain With The Seller?
♦ If the sale is inclusive e.g. where appropriation has to
be done and has not been done,
♦ Fraud of either party especially the seller – absence
of bona fide,
♦ The parties may agree that unless delivery has been
done, the risk remains with the seller – if that is the
case, so let it be. The sale is subject to suspensive
conditions. The risk remains with the seller until
delivery is done. Should the merx be destroyed before
the fulfillment, the seller will bear the risk of the
transaction. Jacobs Vs PetersonFacts: Peterson
bought a horse drawn cart from Jacobs and undertook
to pay the purchase price in weekly installments. The
contract included suspensive (namely the seller would
remain the owner of both the horse and the cart until
the end of the transaction). After the first installment
the horse died.Court: The risk remained with the seller
and the purchaser could not pay the outstanding
balance. By the same token, if a sale is subject to
suspensive conditions, benefits in the merx will not pass
to the purchaser until the suspensive condition has been
fulfilled.
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4.3 Duties Of The Parties

A sale is what we call a consensual contract – a bilateral
agreement where there are strong elements of Quid Pro
Quo. The primary duty of the purchaser is to pay the
purchase price at the right time and right amount. At the
same time, the seller must be willing to surrender the goods.
If the seller delivers goods not in conformity with agreement
he would be in breach. Where one party is in breach, the
injured party can have recourse to any of the ordinary
remedies available for breach. However, if the breach relates
to latent defect and the sale is not voetstoots, the common
law gives the purchaser the AEDILITION REMEDIES – a
peculiar remedy for a latent defect, which can be:
♦ ActioRedhibitoriaaction to nullify – predicted upon
the assumption that if the purchaser had known of the
defect he would not have bought the merx when he
did, since the defect is so grave that it impairs the
merx.
♦ ActioQuantiMinorisan action for the reduction of
the purchase price – does not negate the contract.
What is affected is the purchase price – if the
purchaser had known of the defect he would have
bought the merx nonetheless but for a lesser price.
Normally it is the duty of the seller to effect delivery.
The underlying assumption is that if the purchaser had
known of the defect he would have still bought the
merxbut at a lesser price. Theoretically the purchaser
could have rescinded the contract if he wanted but
decided not to do so. 4.3.1 Tacit Condition
♦ Where the purchaser refuses to accept delivery
for no good reason, he would be in breach of the
sale agreement. The seller would be entitled to
remedies – the purchaser had no legal right to
refuse delivery.
♦ Where the seller is in MORA and the time for
effecting delivery is an important aspect, the
purchaser can refuse to accept delivery. The
purchaser would reimburse the seller of any
necessary and useful expenses incurred by the
seller on account of the merx. Whether or not the
expenses incurred (by the seller) are useful, we
use the reasonable man’s test. But the expenses
would have been of utilitarian character – go
towards the preservation of the merx e.g. storage
costs. On the other hand if the expenses are
strange and cannot be justified then they would
not be recoverable. 4.3.2 Duties of the seller
Page 5 of 11

♦ To look after the merx between the conclusion of the

sale and delivery,
♦ Must deliver the merx: the principal + accessories
(fruits of the merx – natural or civil) e.g. cow and
offspring. Civil – rents, hired tractors etc. Delivery
normally means Traditio, but it can be fictional. For
the purposes of the law, fictional delivery has the same
legal significance as Traditio.
♦ To give VaccuoPossessioof merx/res to the
purchaser
4.4 Types or forms of fictional delivery

With immovable property delivery take the form of
registration. Movable property – Traditio De Manu In
Manu i.e. physical delivery. Fictional delivery implies
delivery, which is not Traditiobut legally, has the same
effect as Traditio.
4.4.1 TraditioBrevi Manu
The transferee already has possession of the merx or res.
What he lacks is the ownership only and he acquires
ownership through traditiobrevimanu e.g. Anna borrows a
book from Betty and later wants to buy it. It is not necessary
for Anna to repossess and re-deliver it.
4.4.2 Traditio Longa Manu
Delivery with the long hand and normally involves bulky
goods where the transferor must point out the merx e.g.
lobola cattle.
XapaVsNstokoFacts: Lobola cattle by the son in law to his
father in law were pointed out. Unfortunately for the father
in law he could not effect driving away the cattle because of
east coast fever regulations prohibiting the free movement
of cattle. He argued that because of this legal obstacle,
delivery had not taken place.Court: Ownership had been
effected through the Traditio Longa Manu. But there must
be an intention to use a particular method of fictional
delivery, and with Traditio Longa Manu that pointing out
evidences intention.
Botha V MazekaFacts: The seller marked the cattle, sold

and placed them in a separate enclosure.
Court: This did not amount to Traditio Longa Manu as the

parties did not have the intention that delivery was to take
place by marking the cattle. There was no pointing out.
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4.4.3 Symbolic Delivery

Where the transferor gives the transferee means and
wherewithal to access the res e.g. keys to the granary, or
keys for the car – both Traditio Longa Manu and symbolic
e.g. import/export of a car – on CIF, delivery include total
package – cost, insurance, etc. The bill of lading constitutes
symbolic delivery. Once the person is in possession of the
bill of lading, its symbolic delivery.
4.4.4 ConstitutumPossessorium
The transferor retains possession of the merx/res but what
changes is the mental attitude toward the merx/res. The
seller is transferred from being the owner of the merx/res to
a custodian. The purchaser is guaranteed
VaccuoPossessio– free and undisputed possession.
The third obligation incumbent upon the seller is to give
VaccuoPossessio– guarantee in favour of the purchaser
i.e. free and undisturbed possession and enjoyment of the
merx. The purchaser should not be interfered with in his
enjoyment of the merx. The seller does not guarantee
ownership of the merx – a third party should not interfere
with purchaser’s enjoyment of the merx. If there is lawful
interference (to lawfully recover the merx by the seller) then
the seller’s obligation to confer VaccuoPossessiohas been
violated –ActioReiVindicatio, under which the seller has to
prove that:
1. He is the owner,2. The merx is in the hands of the
defendant
ActioReiVindicatiois an action against the world at large.
The owner of the res is at liberty to do whatever they want
with the res.
Possession – is purely a physical concept, which denotes a
large degree of physical control over the property – factual
control.
Ownership – is a legal control where the owner of a thing
needs not to be in possession all the time. In the case:
R VsMafohlaFacts: A notorious rustler shot and mortally
wounded an animal belonging to the National
Parks at West Nicholson. Darkness was falling and the illegal
hunter could not immediately identify where the carcass was
although it was certain that he would in the morrow. He was
Page 7 of 11

immediately apprehended by the Wardens and brought

before a magistrate the following morning charged with
illegal possession of the animal carcass.
Court: Dismissed the case. At the time of apprehension he

was not in possession of the carcass. The res was not in
detention of the defendant.
4.5 Mandament Van Spoile Principle

Possession can either be bona fide or mala fide. The law
protects both because possession is nine tenths of the law –
why? Because it is part and parcel of keeping and upholding
peace in the community – “the rule of law”. The legal moral
of protecting mala fide possession is that everybody should
enjoy property rights and “nobody is above the law”.
Spoliation – is taking your own law into your own hands.
The thief can apply for restoration through the Mandament
Van Spolie. The person who has been dispossessed should
prove that:
1. There was quite and peaceful possession and enjoyment,
2. He was unlawfully dispossessed or despoiled by the
defendant.
FredricksVs Stellenbosch MunicipalityFacts: MrFredricks
was a notorious squatter who erected two structures on land
belonging to the municipality. Without the benefit of a court

order the municipality raised the structures to the ground.
MrFredricks sued for spoliation.Court: Ruled in favour of
MrFredricks and ordered restitution ante. The municipality
should have done it judicially and legally.
4.6 Acquisition of Possession & Ownership

4.6.1 Through Original Means
A unilateral act where ownership is acquired through a Res
Nullius (property belonging to nobody), or Res
Derelicto(abandoned property). This can be through:
1. Occupatioof the Res Nullius or Res Derelicto,
2. Plantatio– things that are planted belong to the planter,
3. Specificatio– where a person uses material belonging to
another person to produce a product that cannot be
reverted to the original material e.g. MrA steals grapes
belonging to Mr B to produce wine. The grapes cannot be
recovered.
Page 8 of 11

4. Commitio– two or more people mix liquids to come up

with one product, and they become joint owners e.g.
two people mix beer brands at a beer hall.
5. Inaedificatio– things that are attached to land belong

to the owner of the land.
4.6.2 Through Derivative Means
Bilateral means that requires the cooperation of another
person e.g. sale, donation, etc. A mere possessor cannot
claim ownership or confer such ownership to another
person.
The guarantee against eviction is an automatic right enjoyed
by the purchaser by virtue of the contract of sale even if
both parties are not aware. Where it is violated the
purchaser is entitled to rescind the contract and receive
damages and a reimbursement of the necessary and useful
expenses that he incurred on account of the merx – storage
costs, etc.
4.6.3 When Is The Right To Possession Not
Available?
1. If it is an express term in the contract – a term that is
not implied but explicit in the written contract,
2. If you buy property that belong to a third party,
3. If property has been lost or damaged through vis

major or casus fortuitusafter the conclusion of the
sale agreement.
4.7 Guarantee against latent defects

In terms of the common law the seller is obliged to take
responsibility for defects and flaws which appear in the merx
that partially unfit or substantially unfit the merx for the
purpose for which it was bought, or for the use for which it
was ordinarily to be put. The two specialized remedies
available are collectively known as Aedilition Remedies:
ActioRedhibitoria, or ActioQuantiMinoris
For other forms of breach the purchaser has other remedies
in terms of the Actio Ex Emptorule – breach of contract
based on the EmptioVinditio(contract of sale). If the
grievance the purchaser has relates to latent defects then
the two remedies under Aedilitionrequire that the
purchaser prove that:
Page 9 of 11

1. The merx suffered from a latent defect – it was not of a

patent nature because of the operation of the Caveat
Emptio rule, which requires the purchaser to have
made reasonable inspection of the merx before he
bought it. A latent defect is a hidden defect that a
reasonable person could not have discovered after a
reasonable inspection but requires sophisticated
expertise to detect.
♦ InZieve V Usher – measles in pigs were

regarded as latent defect.
♦ InMatambo V Chakauya– a leaking roof was

again regarded as latent defect.
♦ InCattle Producers case along Beatrice road –

study bulls delivered for research and were unable
to perform the function for which they were
purchased was regarded as latent defect
(concealed defect).
2. The defect existed at the time of the sale rather than
supervening or subsequent to the conclusion of the
sale. Once the sale is concluded the risk passes to the
purchaser unless there is an agreement to the contrary,
3. The sale was not voetstoots – where the merx is sold

as it is with its latent defects, unless the seller was
fraudulent as in the case of Vander Merwe V
Culhane.
4.7.1 Redhibition under ActioRedhitoria

Becomes condition precedent where the parties have to
restore their status quo ante – the condition prevailing
before the conclusion of the sale. However, out of
consideration of equity, even if redhibition cannot be
effected because the merx has perished because of the
defect complained of and the purchaser has not benefited
and neither had he been negligent in his handling of the
merx, the law still allows the purchaser to be compensated.
TheronVs AfricaFacts: The purchaser bought eggs on a
commercial scale. It was discovered that the eggs were not
suitable for human consumption and were destroyed.Court:
The purchaser was entitled to compensation.
Dodd VsSpitaleriFacts: A purchaser bought a horse, which

was later discovered to be suffering from a debilitating bone
disease. The horse later died.Court: The purchaser was
entitled to compensation.
African Organic Fertilizers VsSeirlius
Facts: The purchaser bought manure, which turned out to be

useless when applied to the ground, but could not restore it
to the original status.
Page 10 of 11

Court: Purchaser allowed to rescind the contract.
Harper Vs WebsterFacts: The purchaser bought 387 head

of cattle. 54 were either ill or sold when he discovered a
latent defect on the remaining 333 head. He wanted to be
refunded the entire purchase price although he could only
return 333.Court: He could only receive a refund for the
333 head returned because he had already benefited from
the 54.
4.7.2 When Is The ActioRedhibitoria Not Available?

1. Sale is voetstoots,
2. Purchaser in spite of knowledge of the defects

exercised unequivocal rights of ownership,
3. Defect is trivial and not serious,
4. Claim has been prescribed.

Page 11 of 11
Business Law – Chapter 5: Law of Lease MBA II Semester I 2002 G.

Manhangwe R890800P
Chapter 5
LAW OF LEASE 5.0 Introduction
Lease in many ways resembles sale; except to sale that
whereas sale will confirm ownership provided certain
conditions have been met e.g. cash has been paid, the
transferor is the owner of the merx/res or a duly appointed
agent of the transferor – one cannot confer to another
person more rights than they legally have. A thief who is
mala fide possessor cannot confer ownership on a third
party regardless of the bona fide or otherwise of the third
party. The true owner can institute ActioReiVindicatioto
recover ownership of the res. This is action against the world
at large – Rights In Rem. It does not matter there was no
legal binding or Vinculum Juris.
Rights In Personam– are directed to a particular
individual e.g. divorce.It is important that both parties
envisaged the intent to transfer and receive ownership.
You cannot receive ownership by accident unlike possession.
Lease only confers Commodus Usus(use of the
commodity) – possession. Possession constitute nine tenths
of the law regardless of the character of possession – to
discourage a culture of the law of the jungle.
Sale versus Lease
Seller LessorBuyer LesseeMerx Immovable property Pretium
Rent
Lease is a typical a example of a consensual agreement. It is
a bilateral agreement where rights and obligations flow in
both directions unlike in a one sided agreement e.g. a
donation – which is as binding as any other agreement.
The parties to the contract of lease are at liberty to agree on
any term for purposes of regulating their relationship subject
to one important caveat rule – essentially the agreement is
lawful. It should conform to the 1982 Rent Regulations,
which however has become obsolete. However where the
parties are silent on the terms and conditions upon which
the lessor is willing to let out his property the law then
implies the existence of certain terms (implied terms) which
are meant to give business efficacy (or completeness) to the
agreement unless the parties have expressly excluded such
implied terms and conditions.
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Manhangwe R890800P
5.1 Duties Of The Lessor

1. To deliver the property at the agreed time. The
property must be fit for the purposes for which it is let
– if it is residential it should be habitable.
2. The lessor must give the lessee

vaccuopossessio(undisturbed, quite and peaceful
possession and enjoyment of the immovable property).
SofiantiniVsMouldFacts: The lessor frequently visited the

let property at odd times and would refuse to leave the
property with no good reason.Court: Granted an interdict
restraining the landlord from undue interference. The
landlord was not entitled to enter the premises without the
consent of the inhabitant and he must have reasonable
grounds to enter the premises e.g. to inspect.
3. The land lord has a duty to maintain the property in the
absence of a statement to the contrary in the agreement.
Where he is negligent the tenant can sue for specific
performance or damages. The tenant can repair the property
and set off the costs against rent due.
Lister Investments VsNarshiFacts: The tenant requested
the landlord to repair broken taps in the apartment on
several occasions. The landlord did not cooperate. The tenant
effected the repairs and when the rent was due the tenant
set off the costs against the rent.Court: This was
permissible.
4. The landlord must compensate the tenant for damages

due to material defects on the property e.g. if the roof leaks
through no fault of the tenant, and his property is damaged,
provided that the leakage was not occasioned by the
dolusor fraudulent acts of the tenant. The landlord must
reimburse the tenant of any necessary and useful expenses
incurred by the tenant on repairs on his property. Usefulness
and necessary expenses are of utilitarian character –
reasonably justifiable, it is not strange.
5.2 Duties Of The Tenant

1. To look after the immovable property. To pay accurate
amount of rent at the agreed time and place. If the
agreement does not specify a date it becomes an implied
term that rent becomes due in advance at the beginning of
the month. If rent is not paid a forfeiture clause (penalty
clause) empowers the landlord to
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Manhangwe R890800P
rescind or abrogate the contract and repossess the premises

in the event of breach or violation of one of the terms and
conditions in the contract. The forfeiture clause relate to
material breach – non payment of rent, change of land use
(from residential to a brothel or shabeen), where one is
making unrestrained noise, and illegal subletting.
2. In terms of the common law, unless the agreement
excludes subletting, the tenant can sublet. Naturally the
sub-lessee cannot enjoy greater rights than the primary
lessee in terms of the lease period, and other
conditions.
3. At the end of the lease agreement the tenant is obliged

to return the property in its original condition fair wear
& tear.
5.3 Subletting
Subletting only becomes illegal if the agreement itself
outlaws subletting. Generally subletting is illegal unless if
supported by written consent of the lessor. When subletting
is permissible the sub-lessee cannot claim or purport to have
better rights than the primary lessee in terms of the lease
period, dos and don’ts of the agreement, etc. Illegal
subletting is normally one of those provisions where a
forfeiture clause (penalty clause) can be invoked allowing
the lessor to cancel the agreement of lease and repossess
the immovable property.
5.4 Remedies for Breach

The parties are entitled to remedies, which are due to them
in terms of ordinary rules of the agreement.
1. For non-payment of rent, the lessor can sue for specific
performance or invoke the forfeiture clause. The Tacit
Hypothe– security for rents that have fallen in arrears,
the landlord can judicially attach movable property
belonging to the tenant once rent has fallen due – this
is done through the operation of law.
2. The lessee can sue for specific performance or

damages if the landlord fails to deliver the property.
3. If the landlord neglects to maintain the property the

lessee can sue for specific performance or damages for
costs incurred in repairing the landlord’s property.
4. The tenant can invoke the “MandamentVan Spoile” if

the landlord simply takes movable property belonging
to the tenant, which is on the leased property without
the benefit of a court order. In Webster Vs Alison the
court said to render the tacit hypothe effective it is
necessary to have a court order.
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Manhangwe R890800P
5. The landlord can also attach the property belonging to a

third party sub-tenant up to the depth of the sub-tenant’s
rent arrears to the primary tenant. Property belonging to a
third party may be attached provided that:
♦ There must be knowledge and consent on the part of
the property owner,
♦ There must be an intention that the goods remain
with the lessee indefinitely, ♦The landlord or lessor
must not be aware that the goods belong to the third
party.
5.5 Termination of a Lease Agreement

1. If the lease is for a fixed time which has since expired,2.
Where the lessee has given reasonable notice of intent to
vacate the premises,3. Where there has been a supervening
impossibility – the property is destroyed by fire.
Page 4 of 4
Business Law – Chapter 6: The Law of Agency MBA II Semester I 2002 G.

Manhangwe R890800P
Chapter 6
THE LAW OF AGENCY 6.0
Introduction
An agent comes about because of considerations of
convenience and practicability of competence – for example,
hairdressing at a saloon, or the employer who may be a
Juristic person - an artificial person or company. Culturally
one may need the beneficial intervention of an agent in
order to accomplish certain things – for example, negotiating
lobola payment is done through a medium of an agent to
create a Vinculum Juris, that is, a legal tie (contract)
between the Principal and the other party.
The Principal and the third party assume the obligations.
The agent is merely a facilitator but owes the Principal
certain obligations:
♦The Principal should pay the agent commission; and♦The
agent should perform his duties diligently and correctly in
utmost good faith
– Uberramae fides principle – should refrain from making
secret advantage.
6.1 What is Agency?

Agency – is an agreement or relationship that exists
between two persons, the one called the agent who is
considered in law to represent the other person called the
Principal in such a way as to be able to bring about the
creation of legal relations between the Principal and third
parties. Consider the position of an Managing Director who
signs a contract on behalf of the company. The idea behind
the appointment of an agent is the performance of services
by the agent on behalf of the Principal, which he finds
difficult to perform on his own.
An agent can either be a servant or an independent
contractor – very important primarily because if the agent is
an independent contractor, the Principal will not be
vicariously liable to the delicts of the agent. This concept is
based on privity of interest (coincidence of interest). For
example, an employee who drives the employer’s vehicle
while not on duty and causes harm or damage to another
party. Provided that the agent is a servant and acting in the
course of his duties, then the Principal is liable. The agent
should not be on frolic fanfare – nothing to do with the
furtherance of the Principal’s interest.
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Manhangwe R890800P
6.2 Distinguishing Factors: Servant or

Independent Contractor?
1. Extent of control by which the Principal exert on the
agent – the more control there is the more the courts
would regard the relationship as master and servant in
the usual case. It may not be decisive.
2. Whether the agent is involved in a distinct task or the

Principal is at liberty to issue instructions related to the
tasks or project. Consider the position of a handyman
who comes to repair a chimney – he is an independent
contractor and the Principal is not at liberty to issue any
instruction. With a servant the Principal has more
latitude to issue varying instructions.
3. The level of skills that is required for the performance

of the particular task. The more skills the more likely
the agent is an independent contractor.
4. The length of time for which the person is employed.

The longer the more one is likely to be a servant.
5. The powers of dismissal enjoyed by the Principal –

more enjoyed when the agent is a servant.
6. The modality of payment for the services – a servant

draws a regular wage/salary, and with an independent
contractor there is agreement on payments per task on
condition that work has been satisfactorily done.
6.3 If the agent is a servant, is the Principal
obliged to provide work provided he can and
is able to pay wages?
1. NO – if the servant is involved with ordinary tasks like a
maid who eat at your house;
2. YES – with certain types of relationships the employer

is obliged to provide work. For example, if the
employee is paid on commission he should be given
items to sell; if he requires regular exposure in his line
of work in order to progress then there is obligation for
provision of work – a surgeon or any other
professional.
MuzondoVs University of ZimbabweFacts: Muzondo’s

employer was not satisfied with his quality of work and the
employer stopped him but he continued to receive his salary.
He went to the High Court alleging breach of contract. The
employer was obliged to provide work. In his profession he
required constant academic interaction with students.Court:
Muzondo had a right to teach, short of which the employer
should dismiss him.
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Manhangwe R890800P
6.4 Vicarious Liability

For the Principal to be vicariously liable the following
conditions should be present:
1. The agent should be a servant and not an independent
contractor. The Principal should have a right to issue
commands. The agent should be under the control and
direction of the Principal on what to do and the manner
to do it.
2. The delicts should have been committed when the

servant was doing the scope of his work. It is not
sufficient to say the delict was committed during
working hours but should have been furthering the
interest of the employer.
Hendricks Vs CattingFacts: The employee was a lorry driver

who stopped at a Service Station for fuel. He lit a cigarette
causing fire. The petrol attendant was injured. The driver
was on duty.Court: The employer was liable.
Ministry of Justice VsKhosaFacts: Two police constables

were doing their work and guarding prisoners. One constable
in jest pointed a pistol at the other constable. The pistol
fired injuring the colleague. Court: The Principal
(Government) was liable.
If the employee is acting in the interest of the employer the

Principal is still held liable whether what the agent did was
illegal.
MkizeVs MartinsFacts: The employer supplied his two
employees with food. They made fire where open fire was
prohibited. The fire made extensive damage to the next
property.Court: Preparing food was material for the
employees to further the employer’s duties and thus the
Principal was liable.
What is of public interest is important to the vicarious
liability. If an employee is executing the employer’s duty and
partly doing his private tasks:
Freedman Vs MallFacts: The employee delivered goods
belonging to the employer. On his way back he detoured and
later was involved in an accident, which injured a third party.
Court: The employee was not on a totally frolic of his own
spree (some private & personal tasks not related to the
employer’s interest).
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6.4.1 Defence against Vicarious Liability

1. Contributory negligence – the third party voluntarily
assumes a risk situation, that is, inherently dangerous
or places the plaintiff in jeopardy – where the third
party hitchhikes for a lift and fails to put on safety
belts.
2. Volenti Non Injuria– he who consent to an injury

cannot be heard to complain. For example, a boxer
who ends up with a black eye because the sport is
inherently dangerous – unless the other party behaves
in unorthodox manner from the rules of the game
(Tyson Vs Evander Holyfield). In common law however,
one cannot be assumed to have consented to an act
that is inherently Mala In Se (naturally wicked) –
suicide, etc.
6.5 Formation of Contract of Agency

There are various ways through which a contract of agency
comes into being.
6.5.1 Express Agreement
Through the normal Offer + Acceptance preconditions. For
example:
♦ You take your car to ABC auctions so that they sell it
on your behalf.
♦ A situation where one party confers the Power of
Attorney on the other party – whatever pleadings in the
negotiations are binding on the Principal. The Power of
Attorney is a formal legal instrument to act for and on
behalf of the Principal.
6.5.2 Agency Can Be Implied
The implication must be reasonable and necessary: if you
send somebody to fetch your child from a boarding school
because you cannot make it yourself – the agent is
empowered impliedly to buy fuel and food for your child on
the way.
6.5.3 Through Operation Of Law
In certain situations in a number of circumstances certain
people by virtue of their positions of necessity they have to
act as agents:
♦ An appointed guardian – is empowered by law.
♦ A trustee in an insolvency estate – the Morrison
Sifelani and Edie Cross situations.
♦ A curator appointed to look into the affairs of a
certified idiot (mentally deficient), or looking after
young people without necessarily being their guardian.
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(a) Agency Through Ratification

Somebody who purports to act for and on behalf of
someone but does not have mandate to do so at the time of
action. The mandate is acquired Ex Post Facto (after the
act). Ratifications involve the agent making a contract
without authority from the Principal. The Principal may
generally sue and be sued thereon in the same manner and
the same effect as if he had originally given the authority.
However, the fact that the Principal had ratified the contract
does not bar him from taking action against the agent where
the agent had exceeded his mandate or where there is some
other breach.
Mine Workers Union Vs Broderick
Facts: Broderick who was the General Secretary of the Mine

Workers Union and acting as its agent with regard to
purchase of a certain farm misrepresented his employers and
professed to the seller that he was authorized to purchase
the property which was not the case. He then altered the
relevant resolution for the Executive Committee to make
appear he was authorized. The Union ratified the agreement
and proceeded to dismiss Broderick.
Court: Endorsed the dismissal and noted that a Principal, for

a variety of reasons, may choose to ratify an agreement done
by the agent and still has rights against the agent.
Ratification is retrospective rather than prospective in

character – it takes effect from the time the agent concluded
the agreement with the third party rather than from the time
the Principal adopted the agreement.
(b) Ostensible or Apparent Authority
This is not real authority at all; rather it means appearance
of authority. It means that ostensible authorities exists
where there has been a representation by the Principal
expressly or impliedly of the existence of agency which
representation causes the third party to enter into
transactions through the agent. The Principal is then
debarred or estopped from denying the existence of
authority even though in truth and fact there is no authority.
The Principal cannot repudiate liability because the
impression, which would have been created in the mind of a
reasonable man, suggests there was authority. It is
analogous to the Quasi Mutual Assent doctrine adopted
due to lack of a real agreement.
Baptist Convention of Zimbabwe Vs Ben
Facts: The respondent did an installation at the appellant’s

school over a period of two months on the instructions of the
appellant’s Executive Secretary. The respondent had
had occasion to do maintenance work for the appellant in the

past having received instructions from the Executive
Secretary. The appellant denied that the Executive
Secretary had any authority.Court: The Supreme Court
found evidence of ostensible authority.
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HungweVsGrinlays Bank of ZimbabweFacts: The bank

applied to dismiss the plaintiff. At a labour hearing before a
Labour
Relations Officer, the bank’s representative (the Personnel

Manager) agreed to withdraw the dismissal charges and
reinstate the appellant. On the basis of that resolve the
Labour Relations Officer issued a determination ordering the
bank to reinstate the appellant. The bank did not authorize
the Personnel Manager to reinstate Hungwe, and sought to
repudiate the agreement.
Court: The bank was bound since there was appearance of

authority. (c)Agent of necessity – NegotiorumGestor
The Principal had not given instructions to the agent to

represent him. The agent acts without authority from the
Principal and at the same time without prohibition. The
agent acts as a Good Samaritan. The following conditions
have to be met:
1. The agent should have been in control of the Principal’s
property.
2. A genuine emergency should have arisen which

threatens the Principal’s property.
3. It must have been impossible to obtain the Principal’s

instructions timeously – not feasible to communicate or
ascertain the Principal’s wishes before action is
necessary.
4. The agent must be acting in good faith and solely to

protect the interests of the Principal, and that if the
Principal knew of the situation he would desire for the
agent to act.
5. The action taken by the agent is the best method of

protecting the interest of the Principal or a method
which the Principal would have desired going by the
agent’s knowledge of the Principal.
For example, a neighbour is on holiday and his house is on

fire. You incur expenses in extinguishing the fire. You are an
agent of necessity. You may not even know the Principal.
You are entitled to reimbursement of expenses. Because an
agent of necessity is a mere benefactor rather than an
employee, he is not entitled to remuneration or commission
but only entitled to reimbursement of expenses incurred.
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6.6 Duties of the Parties

A contract of agency is a typical example of a consensual
contract with rights and obligations flowing in either
direction like in agreements of sale, lease, and etc. provided
there is material breach the aggrieved party can sue for an
appropriate remedy.
6.6.1 Duties of the Principal
1. He must pay the agent his commission in terms of the
agreement of agency. If the agreement is silent on the
level of remuneration, the law implies the agent is
entitled to a reasonable commission in terms of trade
usage or the circumstance of the agreement. The
agency commission where he sells immovable property
of the Principal; the agent is entitled to 5% of the first
$50,000.00 and 1% on the balance.
2. To reimburse the agent for expenses properly incurred

e.g. accommodation, storage costs etc as long as they
were incurred in the course of advancing the Principal’s
interest.
3. The Principal must indemnify the agent for all losses he

has suffered as a result of performing the mandate. If
the agent was on a frolic of his own, he cannot look to
the Principal for indemnity.
4. The Principal is vicariously liable for the delict of the

agent provided the agent was a servant rather than an
independent contractor, and he was not on a frolic of
his own.
6.6.2 Duties of the Agent

1. To perform the mandate within the parameters of the
Principal’s instructions.
2. The duty to exercise powers bona fide the Principal.
3. Duty to exhibit skill and diligence e.g. auditors

recommending dividend payment where the company
has made losses, the Principal can sue the Agent for
lack of skill and competence.
4. To show utmost good faith (uberramaefides) – honest
and integrity. Agency creates a fiduciary relationship
based on trust between the Principal and the Agent.
The Agent should perform duties of the Principal solely
for the benefit of the Principal. He may not acquire or
retain secret profits, which may come about as a result
of the contract. Any benefits belong to the Principal
unless the Principal has made a conscious agreement to
forego such benefits.
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Manhangwe R890800P
6.7 Company Directors

Where a conflict of interest arises involve Directors of a
company - In terms of the company law every company is
enjoined to have at least two Directors one of whom must
ordinarily reside in Zimbabwe (S169). In terms of eligibility
for appointment to the Board of Directors, because of the
fiduciary nature of a Director’s position, certain persons are
prohibited from being appointed as Directors (S173):
♦ A body corporate – it is inanimate (lifeless) persona –
it is simply juristic persona.
♦ A minor – lacks locus standi in judicio, and is
DoliIncapax.
♦ An un-rehabilitated insolvent – already shows
propensity towards squandering wealth and
carelessness.
♦ Serve with the leave of court, any person who has
been convicted of fraud, theft etc or any group of
offences that involve breach of trust. See the case of
Oliver John TengendeVs Registrar of Companies.
In common law, a Director is subject to fiduciary duties,
which requires him to exercise his powers bona fide,
and for the benefit of the company. A person possesses
fiduciary duties when he is in a position of trust e.g. a
guardian who administers the affairs of a minor, he is
in a fiduciary capacity and he is enjoined by the law to
act solely in the interests of the Principal. With a
company Director the fiduciary duties are owed to the
company and not to the shareholders. He must act
bona fide and should refrain from putting himself in
positions of conflict of interests. Anderson VsHagreaves
Facts: Hagreaves was authorized by Anderson to sell a
certain hotel. He sold the hotel for a nominal fee but in
reality the purchase was on behalf of a partnership to
which Hagreaves had an equal share.Court: Inter alia an
agent employed to sell a property who purchases it
himself cannot with one hand claim the property as the
purchaser and on the other hand claim commission as
the agent of the Principal. If he is interested in
purchasing the property himself he has to fully disclose
to the Principal his interests to purchase so that the
Principal can appoint another agent if he is so minded.
An agent has a duty to exhibit utmost trust – a very
honourous level of trust. Robinson Vs Randfontein Gold
Mining CompanyFacts: The Managing Director
(Robinson), using the information he had acquired in the
course of his official duties for the company and using a
front bought movable property for 60,000 pounds,
which property the Principal was also interested in.
Using the same
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Manhangwe R890800P
front (third party) Mr Robinson immediately re-sold the

property to the company for 275,000 pounds.
Court: The Principal could recover the secret profit from

the agent – “where one man stand to another in a position of
confidence involving a duty to protect the interests of the
other he is not allowed to make a secret profit at the other
party’s expense, or place himself in a position where his
interests conflict with his duties”.
In the case of; Cook VsDeeks: the court said “it is the duty
of all agents including Directors of companies to conduct the
affairs of their Principals in the interests of the Principals
and not for their own benefits”.
In company law if a Director has a direct or indirect interest

in a contract involving the company he has a duty to
disclose such interest (S186). In the case of;
Canadian Aero Services Limited VsO’MarleyFacts: The
plaintiff company offered mapping and geophysical
exploration services mainly to government – either requiring
their services directly or as part of CIDA. The two
defendants have been Directors of the plaintiff and have
been involved in preparatory work for the plaintiff for a
project in Guyana. The Canadian government later invited the
plaintiff and others to submit tenders for disposals, where
upon the defendants immediately resigned their offices with
the plaintiff and formed their own company, which was later,
awarded the contract.Court: The defendants had made use
of information that had come their way when they were still
agents for the plaintiff and used that information to obtain
secret benefits. They were held liable for the plaintiff losing
the contract.
The agent must account to the Principal (full and accurate

information) on what he has done in the execution of the
mandate. He must have his books of accounts at the
disposal of the Principal.
6.8 Termination of Contract of Agency

1. If the agency is for a specific project. If the mandate is
for a continuing nature, then the agency remain open-
ended e.g. munyai.
2. Revocation by the Principal: the Principal could revoke

without incurring liability for damages unless the
contract of agency specifically proscribes against
revocation.
3. Renunciation by the agent: the agent can renounce

agency e.g. a lawyer approached by a client if he
discovers that he is related to the other party he can
renounce agency if the situation puts him in conflict of
interest, etc.
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Manhangwe R890800P
4. Through supervening impossibilities – an objective
impossibility rather than something subjective or
inconvenient is required. It can be where the
performance of the act becomes illegal e.g. maize is
now a controlled commodity and cannot just be
delivered anywhere without the Minister’s approval.
5. Through operation of law – the death of the agent.

Page 10 of 10

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CHAPTER 1

1.1 Essential requirements

2. Be within their limits of the contract – “Locus standi in

3. Seriously intent to go into contract – “Animus

Facts: The alleged consideration was a son’s promise to his

A valuable consideration should contain material counter

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

Louisa Vs Vander Berg & the Protector of SlavesFacts:

of slaves. He promised to facilitate the release of Louisa but

4. Not be vague or should not be “void for vagueness”. In

5. The performance of the contract should be possible. If

6. Legal – an agreement involving murder, immorality etc

7. Be of the same mind to the subject of the contract –

1.2 Offer and Acceptance

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

Definition: an Offer is an unequivocal and unconditional

Facts: A Johannesburg shopkeeper displayed a placard

Court: Pronounced on the validity of Mr Crawley’s argument –

Principle: Shopkeepers’ advertised prices are not offers, but

Pharmaceutical Society of Great Britain Vs Boots Cash

the Pharmacy and Poisons Act (1933) except under the

cashier’s till, where a pharmacist was stationed with

Court: Consistent with the principle in Crawley Vs Rex, that

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

1.3 Implications of Offer and Acceptance

preposterous for the company to be bound to everybody.

customers who used the medicine in the prescribed manner –

2. The offeree is expected to accept an offer whose

3. In situations involving reward cases, if there were only

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

4. It is up to the offeror to define the rules of engagement –

Remedy can be in the form of: ♦Damages

♦ A clear right is in danger of violation,

♦ Absence of another appropriate remedy

1.4 Termination of an Offer

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

1.4.2 Counter Offer

1.4.3 Lapse of a fixed period – open ended contract

Acceptance has to be done in a reasonable time. The “Bonus

BalVs Van StadenFacts: An offer was made and accepted

Household Fire Insurance (HFI) Vs GrantFacts: Grant

Expedition theory- represents the law in Zimbabwe. Other

1.6 Contractual Capacity – Locus Standi In

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

1.6.2 Mental illness – an agreement where one of the

1.6.3 Prodigals – are people who handle their

Cillie was declared a prodigal by the court and a curator bonis

curatorbonis’ legal brief is to protect the

1.6.4 Drunkenness - A contract can be set aside on the

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

1.6.5 Artificial Persons – Incorporated Associations

Facts: Salomon, a leather merchant/trader sold his boot-

Court: Shot down the liquidator’s argument recognizing the

shareholder and the company. The shareholder does not own

Facts: Under the apartheid era non-white people (Africans,

Dinda formed a company where they owned all shares. Both

Business Law – Chapter 1: Law of Contract/Agreement MBA II Semester I G.

that a partnership lacks locus standi in judicio i.e. a common

There are situations where the contract is not voidable: