CONTRACT LAW NOTES

It is a legal enforceable agreement entered into by two or more different persons with legal capacity. The parties should have

serious intention to create legally binding obligations. Their agreement needs to be within parities’ contractual capacity.

Furthermore, parties should communicate such intention without vagueness each to the other and being of the same mind to the

subject matter.

Essentials of a contract

a) it should be lawful

b) possible of performance

c) within contractual capacity

d) with the serious intention to contract

e) union of minds of parties – consensus ad idem

f) it should not be vague

g) intention of both parties should be communicated

- A contract does not necessarily have to be in writing unless there is a specific statutory requirement that it

be in writing.

- A verbal contract is as equally valid as a written one, provided that the party alleging the contract can prove

agreement on certain terms.

- Writing is only important for evidence purposes although its not a requirement.

- The presence of an agreement is determined by there being an offer and an acceptance. This is only a

general rule and does not follow that every contract has to be constituted by a clear offer and acceptance.

OFFER AND ACCEPTANCE

Offer

Definition

A statement by a person, called the offeror, indicating his willingness to contract which statement is made in the awareness that it

shall become binding an acceptance by the other person called the offeree.

An offer must meet/have the following requirements

1. It must be consistent with all the essentials of the contract, otherwise it is void.

2 .It must clearly define all the terms in which an agreement is sought. Therefore it must not be vague, Levenstein v Levenstein

1955 (3) SA 615 (SR)

3 It must be communicated to the offeree. The offeree must have knowledge of the offer if his acceptance is to constitute a valid

contract.

Case law

Bloom v American Swiss Watch Company 1914 AD 100. It was held that there was no offer made to the plaintiff when he

volunteered the information and did not know that there was an offer of reward money. See also Lee v American Swiss Watch

Company 1914 AD 121.

4 It must be made with intention of being accepted. This means serious intention to create legal relations. This embraces

the following:

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- it must not be mere social arrangement or offers made in gest which lacks the animus contrahendi. See

Balfour v Balfour [1919] KB(2) 571.

- It must not be binding in honour or gentlemen’s agreements i.e. excluding the jurisdiction of the courts.

(where the offer) it cannot constitute a legally binding contract. (Rose and Frank Company v Crompton and

Brothers Ltd (1922) (2) KB 261.

- It must not be an offer to negotiate or treat i.e. it must be an offer to enter into a binding contract and not

merely an invitation to do business or receives offers (i.e. tenders). See Crawley v Rex 1909 TS 1105.

- It may be to one definite person, or to the world. If the offer is made to a definite person or to a number of

definite persons, acceptance should be by that person or those persons only. If it is made to the public

anyone else may accept.

5 The offer must not have been revoked or lapsed.

An offer is revoked if it is withdrawn by the offeror.

The following should be noted:

- Revocation is not effective until the offeree is aware of it.

- An offer can be revoked to any stage before it is accepted

- The offeror must take reasonable steps to find and inform the offeree of the revocation

6 Where an offer was accompanied by an option, the latter must not have expired. An option is a separate contract to keep

the contract open for a specific period. The offer must be accepted within the stipulated period Boyd v Nel 1922 AD 414.

7 The offer may be verbal, written or implied. Thus if a person boards a bus, the owner of a bus impliedly makes an offer to

the person to ride in the bus and the passenger accepts the offer by taking bus seat and tending his fare.

Case law

Ferguson v Merensky 1903 TS 657 Transvaal Supreme Court where F was anxious to buy M’s first two farms. F wrote a letter to M

in the following terms:

“If you still desire to dispose of your two farms, I shall be pleased to have your price and terms”.

M replied and said:

“I have no objection to sell the two farms in question and as there are coals on the farm and a railway line I will be passing

near them, I ask 30 shilling per acre”.

In that letter on the referred F to his lawyer with reference to the terms of the contract. When F sued M saying that the latter had

sold the farms to him, the Court held that M’s reply to F’s letter did not constitute a firm offer from which he could not withdraw and

which F was entitled to accept M’s lawyer had written to F declining the offer made by the plaintiff and at the same time making new

proposals. On behalf of the defendant M which the plaintiff had refused to accept.

WHAT CONSTITUTES AN OFFER

There is a distinction between a firm offer and invitation to treat or negotiation. A firm offer is the one which is unconditional and

unqualified, it states all the terms and the material facts on which the offer is based. It must become a contract upon an acceptance

of the offer as it stands. Thus a “come lets negotiate” is not a firm offer – if a shop displays an item for sale at X dollars can we say

that is a firm offer? In the case of Crawley v Rex 1909 TS 1105 state that the complainant, a shop keeper had advertised a sale of a

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particular brand of tobacco at a very cheap price in order that he might attract the custom of a large number of the public. He put a

placard outside his shop on which the price was shown, the Appellant entered the shop, bought the tobacco and went away. After

some minutes he came back again asked for another pound of the same tobacco, unfortunately the complainant declined to serve

the Appellant with the tobacco and told him to leave his shop, the Appellant refused to leave the shop whereupon he was arrested for

trespass. The Appellant had argued that he had a contract of sale with the complainant but the court thought otherwise and held that

there was no contract between the parties. It emphasized that the mere fact that a tradesman advertises the price of the goods he

sells does not mean offer to any member of the public. It does not mean the right to enter the shop and purchase at the displayed

price. The court also held in the case that: A contract is not constituted when any member of the public comes in and tenders the

price mentioned in the advertisement. In summary therefore display of goods at a certain price is not a firm offer but only an

invitation to treat. On the contrary, it is the customer who makes the firm offer by presenting goods at the till and when the shop

owner accepts the offer to buy, a contract then comes into being.

Case

See further Lee v American Swiss Watch Company 1914 AD 12 Dietrichsen v Dietrichsen 1911 TPD 486.

Q. To whom may an offer be made/addressed?

- An offer maybe addressed to a particular person, to a group of persons or to the world at large depending

on its terms.

TERMINATION OF AN OFFER

Firstly an offer can be terminated by rejection by the offeree. It can lapse on the expiration of fixed period within which it was meant

to be accepted. If there is no such fixed period within which an offer should be accepted an offer lapse after the expiry of some

(reasonable time).

What constitutes a reasonable time depends on the facts and circumstances of each case

An offer can also be terminated by revocation but this presupposes/presumes that the offer is an ordinary revocable offer as opposed

to an option.

- An OPTION is an offer coupled with a stipulated period of time during which the offeror is not free to revoke

it.

- When an option A make an offer to B and gives a stipulated time within which he must accept to it A also is

not allowed to make the same offer to C within the same.

- Thus in an option there will be two contracts/conditions to be observed i.e. that of time and that of not

having made the same offer to another third party.

- An ordinary revocable offer can simply be terminated by the offer by revocation but before it has been

accepted the revocation must be communicated with the offeree.

Lastly an offer is also terminated by death of the offeror.

Who can accept an offer?

As far as ordinary revocable offers are concerned the general rule is that, “an offer made by A may be accepted by C or D”.

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Case

Blew v Snoxell 1931 TPD 226

Blew wrote to Richard Curle Ltd offering to buy a certain piece of land of a certain piece. The land was owned by Richard Curle Ltd

but by Snoxell who indicated to Richard Curle in writing that he accepted the offer. Richard Curle Ltd thereupon notified Blew that

the owner of the land had accepted his offer. When Snowxell later sued Blew for damages for alleged breach of contract Blew

excepted to the summons on the ground that there was no valid agreement between him and Snoxell. The court held that, “Now it is

trite law (i.e. simple legal principle), and an offer made by one person to another can not be accepted by a third party for the simple

reason that there was no intention on the part of the one person to contract with the other.

Whatever the subject matter of the contract maybe:

-The Court held further that it was perfectly clear and the offer was made to Richard Curle Ltd and that the plaintiff purported to have

accepted that offer but there was nothing to show any acceptance by Richard Curle Ltd. That being the case, there was no contract

on which the plaintiff was entitled to come to court as the offer was never made to him.

Case

Hersh v Nel 1948(3) SA 686(A) where Nel owned two farms and he gave Mr West an option to purchase the two farms and the

together with another person ceded the option to Hersh who then accepted Nel’s offer before its expiry. When Hersh accepted the

offer Nel refused to sell the farms. When sued, the rule made in the case of Blue v Snoxell was applied i.e. an offer made by A to B

may not be accepted by C.

- The court however distinguished an option made in a case sale. The sale of the two farms was on a cash

transaction thus in accordance with the principles outlined above the court ruled and the cession to Hersh

was valid and his accepted gave him a contract with Nel.

Acceptance:

- The acceptance of an offer must result in a binding contract and not further negotiations. An acceptance

must be unconditional/unequivocal and clear.

- A counter offer is not a valid acceptance

- A counter offer is where the offeree instead of unconditionally accepting the offer makes his or her own offer

to the offferor.

- This happens in a case where A offers to sale a thing to B at a price of $5 000 then B in response to that

offer from A tells A that he is prepared to buy that thing for $4 000. B’s conduct in such a situation

constitutes/is what is called counter-offering.

- A counter offer may also be in the form of extraneous conditions attached to the acceptance.

- The effect of a counter offer is to terminate the original offer. If the offeree’s acceptance is also shrouded in

ambiguity/vague it does not constitute an acception.

Case:

Boerne v Harris 1949(1) SA 793(A)

In which the Appellant was the lessee at premises owned and leased by the respondent. The contract lease agreement contained

an option under which the appellant could renew the lease agreement for a longer period of 5 years, the period was to be recognised

from 15 April 1947 and the option was to be exercised by October 15 1946. On October 5 1946 the lessee’s attorneys/lawyers

addressed a letter to the lessor in the following terms, “We refer to the lease in respect of the Hotel … and have to advise you that

our client intends to renew the lease for a further period of 5 years from 15 October 1946 in terms therefore acceptance of the court

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held that the purported option was ambiguous in that it was not in accordance with the terms of the option and because of that the

exercising of the option was held to be invalid.

Case

Water Mayer v Murry 1911 (AD) 61

Water Mayer owned the farm which Murry wished to buy. Murry wrote a letter to Water Mayer offering to buy his farm for 1 700

pounds. Water Mayer wrote back and said, I accept the offer to sell the farm at 1 700 provided you pay all the expenses and 1 000

pounds is paid at the time of signing the agreement. Murry wrote back and said, “Fine, but the price is not payable at the time of

signing … Water Mayer wrote back and said he was no longer interested in selling the farm. When Murry sued Water Mayer the

court ruled that Murry had no case because he had made counter offer therefore no contract had been concluded between the

parties.

- It must be underscored however that a request for modification of terms is not a counter offer and it does

not destroy/terminate the original offer.

- As a general rule a contract is concluded when and where communication of acceptance reaches the mind

of the offeror (however, there are exceptions to this general rule). Thus if the offer is communicated to the

offeree by telephone in a situation where the offeree is in Harare and the offeree is in Cape Town the

contract would be deemed to have been conducted in Cape Town.

- This general rule is subject to change by the parties to the contract i.e. they may agree otherwise the

offeror may decide to do away with the need to communicate acceptance. The offeror may also prescribe a

particular mode of acceptance e.g. the offerer may say if you wish to accept the offer send it by registered

post/ through email or at such and such an office.

Case

R v Nel 1921 AD 339

In this case the Respondent Nel had licence to sell liquor in Transvaal. He received an order form Armstrong who was resident in

Cape Town the order was delivered to Nel in the Transvaal (is the written order) and the bottles of liquor were then allocated to the

purchaser in Cape Town. Nel was prosecuted for selling liquor in Cape Town without licence as it was necessary for court to make a

finding as to when and where the contract of sale had been concluded. The offeror was in the Cape and the offeree in the

Transvaal.

The nature of the transaction was that the offeror had dispensed with the need for communication of acceptance and the court

concluded that the sale agreement/contract had been sealed in the Transvaal, the moment Nel decided to sell the liquor and he was

not guilty.

Case

McKenzie v Farmers Coop Meat Industries Ltd 1922 AD 16

McKenzie applied for shares in the cooperative company the application form read in part, “I agree to accept the above number of

shares or any lesser number and may be allotted to me”. McKenzie was making the offer to buy the shares and concurrently

dispensed with the need for communication of acceptance in that he had expressed the intention that the cooperative should on

receiving his application forthwith proceed to allot shares to him. A contract would come into existence as soon as the share transfer

secretaries sing a share certificate giving McKenzie any number of shares.

The leading case on the Expectation theory is that of:

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Cape Explosive Works v SA Oil & Fat Industry 1921(4) CPD 244 where the first defendant wrote a letter on the 10 th of July 1916 and

sent it by post from Delmore in Transvaal to the plaintiff in Sommerset in Cape Town. The letter contained an offer to sell certain

quantities of glycerine oil. On the 14 th of July 1916 the plaintiff replied accepting the offer. Then on 11 September 1916 the second

defendant of Durban sent a letter by post to the plaintiff in Cape Town containing another offer to sell a certain quantity of glycerine

oil. The letter of acceptance was the posted on 16 September by the plaintiff’s in Cape Town. In an action of the …… the

defendants took exception to the jurisdiction of the court on the ground that they were not entered into in the Cape but in the

Transvaal and Natal respectively where the defendants had received the letters of acceptance. This argument did not find favour

with the court which held that the contracts had been concluded in Cape Town where the letters of acceptance had been posted.

- When the offeror makes the offer by post the immediate inference is that acceptance can also be by post so

it is open to the offeror to indicate that he will not consider himself bound unless and until he receives the

letter of acceptance.

- If the offeror does not make this special provision the expedition theory will be applied without any

exception. The basis of the rule is that by using the post first the offeror by implication authorises the

offeree to use the same method of communication.

Case

Smeiman v Volkersz 1954(4) SA 170

The Applicant and the respondent made an option to sell some shares to the applicant. The option was verbal and it was to remain

open till 15 February 1954. On the 15th of February a lawyer acting for the applicant phoned the respondent’s office in the Cape only

to be told that the respondent was not in the Cape but somewhere in OFS.

- Applicant’s lawyer then quickly wrote a letter exercising the option on behalf of the applicant. A copy of the

letter was sent to respondent’s Cape Town office and another to where the respondent was thought to be.

- Both copies were posted on the 15th of February but neither reached the respondent on the date. If the

expedition theory is applied then the option had been exercised timeously but if it did not apply, then it was

not exercised on time because it had lapsed. The question was, “Had the respondent impliedly authorized

the use of the post?” Looking at the facts and what was the appropriate method of replying? The court held

that the mere fact that parties reside at a distance does not per se warrant the use of post, the expedition

theory therefore did not apply.

- By using the post one of the risks the offeror assumes is precisely that the offeree had an option of using a

more expeditious means of communication in respecting the offer.

- Similarly, a faster means of communication would neutralize a posted acceptance.

Case

A to Z Bazaars (Pvt) Ltd v Ministry of Agriculture1975(3) SA 468

- The offer contained in a notice of expropriation in terms of Section 2 of the Expropriation Act (SA) requires the offeree to

signify his acceptance or rejection of the offer of compensation. In accordance with the provision of Section 6(1)of the Act.

- This Section provided that the owner of the property in question should deliver or cause to be delivered a statement

indicating whether or not he was accepting. Court interpreted this Section to mean that the owner was required to

physically deliver to the Ministry concerned a written acceptance for a contract to come into existence.

- There was accordingly no room for the applicant of the expedition theory.

Jansen JA said, But even under the law the question whether the alleged agreement has been conducted by posting must

depend upon particular circumstance of each case. The Expedition Theory does not hold without exceptions.

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- It is important therefore to establish the precise limits of the application of the Expedition Theory.

- Thus the judge emphasized that it is not clear that all whether the Expedition Theory, mainly condemned for

the protection of the offeree, should necessarily produce the possibility of a neutralization of the posted

acceptance before it is received by the offeror.

MISTATE AND QUASI-MUTUAL ASSENT

N/B First there must be offer and acceptance (i.e. in the formulation of a contract).

-The second requirement that ought to be present is that of agreement of which can either be actual apparent. As regards actual

agreement there has to be a meeting of minds of the parties involved in a coincidence of wills. This is referred to as a consensus ad

idem on the subjective theory.

-What it means is that if the terms of the contract are different as known by A and B then there is no contract.

Case

Jordan v Trollip (1960) (1) PH 825

-In a Robert AJ reiterated Wessels train/trial of thought that in order to determine the existence/otherwise of a contract. It is the

manifestation of the parties wills and not the unexpressed will which is of importance.

-This point was further emphasized in the case of Jones v Anglo African Shipping Company 1936 (1972) SA 827 of 834, where the

court held that, “In the interpretation of a contract the general rule is that the court should determine what the true intention of the

parties was.

-As regards apparent agreement it has come to be accepted that a contract can also come into existence in the absence of actual

agreement. If one of the parties conducts himself in a manner that make the other party believe that he is agreeing to a proposed

term of contract. This is referred to as Quasi Mutual Assent or the objective theory of contract.

-The doctrine of Quasi Mutual Assent was clearly articulated in the case of Smith v Hughes (1871) 6QB 597 of 607 where Blackburn

J had this to say, “If whatever a man’s real intention maybe he so conducts himself and reasonable men would believe that he was

assenting to the terms proposed by the other parties terms”.

-This is sometimes referred to as Agreement by conduct.

-The following relevant factors must be taken into consideration when dealing with matters relating to Quasi Mutual Assent:

(a) has A instead of B into believing that he is prepared to contract on terms a, b, c if the answer is no then the court

should consider the following question

(b) Was B’s belief reasonable? If the answer is Yes then there is a contract as understood by B on the basis of Quasi

Mutual Assent.

-Courts have often asked this question, “Is there any difference between Quasi Mutual Assent and Estoppel?

-Before addressing the question it is imperative to define what estoppel is.

-Estoppel is a general principle of law whereby, if a person either negligently or fraudulently misrepresents facts and another relies

on the misrepresentation to his detriment the person making the misrepresentation is prevented from ascertaining and providing that

the true state of affairs is different.

-For a person to establish estoppel he has to prove the following four factors:

(i) That there was a misrepresentation (i.e. either negligent/fraudulently).

(ii) That there was fault on the party of the representor either in the form of negligence.

(iii) That the other party relied on the misrepresentation.

(iv) That there was detriment which was caused by a reliance upon such misrepresentation.

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Differences between Estoppel and Quasi Mutual

1. Estoppel can only be relied upon as a defence and not a cause of action whereas quasi mutual assent can found a cause

of action

2. Quasi mutual assent does not require fault, fraud and detriment to found a claim. Instead there should only by

misrepresentation and a reliance on misrepresentation which reliance need not be detrimental.

Case

Spesbona Bank Ltd v Portals Water Ltd SAPDY Ltd (1983)1978

NB Not only does the courts confine themselves to the four corners of the contract but at times they go further in looking at the

particular conduct of the parties as they/at the time they entered into the contract (i.e. objective approach of which may include either

representation by one party)

NB Freedom of contracting i.e. within the confines of the law.

3. Animus contrahend: it refers to the intention to create legally binding obligations when an offer is accepted.

-It is the yardstick (i.e. AC) that usually distinguishes a contract from social agreement. It is important to note that our courts have

derived agreements into two categories in order to ascertain legal effects, these are commercial transactions and social

arrangement.

Social arrangements: It is true that social arrangements are not meant to be legally binding unless there are special arrangements

which allows for that.

Case

Balfour v Balfour

The plaintiff was the wife of the defendant. The defendant was employed in Ceylon. When the plaintiff went there she decided that

she did not want the weather there and opted to stay in England instead. The defendant offered to pay her 100 pounds as

maintenance periodically. The defendant then flouted the promise and plaintiff sued him for maintenance on the basis of the

arrangement they had made. The courts dismissed the claim on the ground that by holding that this was a social arrangement which

did not create an intention to be legally bound.

Case

Jones v Padabaton 1969 2 ALL ER 166

Commercial transactions: these are presumed to create legally binding obligations. However, some commercial transactions can

specifically exclude animus contrahend by what are called “honorp clauses”.

An honor clause specifies that an agreement is only supposed to be binding in honor and not give rise to any legally enforceable

obligation. This position was confirmed in the case of Electronic Building Elements v Huang (1992) 2 SA 384 of 387 where Levy AJ

held that “if the parties choose to exclude from legal enforceability any arrangements arrived at between them, it can then become no

more that a moral obligation or an obligation of honor but unforceable in court of law.

Rose and Frank Co v JR Crompton and Brothers Ltd and Anor 1923 2 KB 261

Possibility to person: An agreement cannot be deemed to be a contract if the performance of the obligation is impossible . This

position was captured in the case of: Peters, Flamman and Co v Kokstad Municipalities where the court held that by the civil law a

contract is void if at the time of its inspection its performance was impossible. This rule/principle is however subject to the following

qualifications.

a) The impossibility must be absolute as opposed to probable.

b) The impossibility must be absolute as opposed to relative

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c) The impossibility must not be fault of one of the parties to the contract

NB Parties should not agree upon anything unlawful nor outside human capabilities

5. Contractual Capacity

For an agreement to valid the parties to a contract must be legally entitled to enter into such agreements. In Zimbabwe the law has

divided persons into artificial persons and natural persons.

Artificial persons: this refers to companies and private business organisation and sometimes state cooperatives.

Companies – for a companies to enter into an agreement it must be represented by a natural person who is empowered by its

Articles of Association to enter into contracts on behalf of the company.

Also the contract itself must fall within the parameters of the memorandum of Association.

NB Thus if contracting with any company one should check on the above two requirement otherwise the contract would be deemed

and void.

Partnership

As regards a partnership the capacity to contract is found in the partnership deep. However, it is generally accepted that any partner

can enter into a contract on behalf of the partnership if the contract furthers the interests of the partnership.

Natural Persons

In Zimbabwe the legal age of majority is 18 years and any person who has reached that age can enter into a binding contract. The

following people are disqualified from contracting:

a) Manors: this refers to people who have not reached the age of legal majority and are not tacitly emancipated.

b) A minor does not have contractual capacity at all unless he is assisted by guardian. The reason for this was

established in the case of Edelstern v Edelstern (1952) 35A1 at 11g where the court held that “In Roman Dutch law

the judgment of a minor is considered immature turn-out his minority and he is consequently not bound by his

contract” As a general rule children below the age of 7 do not have contractual capacity at all this means that the only

contract that can bind them is that which was made by his guardian on his behalf.

It is important to note that if a minor entered into a contract with a major unassisted by his guardian such a contract is called a

Limping contract i.e. The minor will not be bound by the terms therefore but the major will be bound.

This position was well captured in the Edelstern case at p13f where the court held that Voet explains that in all contracts in which

mutual obligations are assumed the guardian’s assistance is necessary, failing with the contract limps. The other party to the

contract is bound by it. If that appears to be in the interest of the minor the minor on the other hand is not bound by the contract but

may resile from it.

If the minor wishes to enforce the contract he will have to perform his understanding. This seems self evident. For he will either sue,

assisted by his guardian or when he has attained his majority either of which will imply ratification of the contract.

NB However there are circumstances in which a minor can be bound by a contract which he enters without the assistance of

the guardian. The minor that can be bound are follows:

a) Tacitly emancipated minor i.e. refers to one that is either living apart from his parents or living with them but paying for

their upkeep. Carrying out his own trade or generating his own account.

b) The Marriages Act provides that when a minor gets married she can be allowed to enter into binding contracts without

the assistance of the guardian. In this respect such a minor can be referred to as a tacitly emancipated minor see

case: Dickens v Daley (1956) 2 SA11.

c) Marriage on its own confers majority on a woman

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d) Tacit emancipation is usually relied upon for children between the ages of 14 and 18 and marriage as for girls is

recognised at law as from the age of 16 years.

e) A minor can be bound if at the time of contracting he misrepresents his age to the other party or misrepresents his

age to the other party misrepresents that he has/had been given the guardian’s consent when in assence he has not

been given such.

Fouche v Battenhausen and Company (1939) CPD 228

A minor can be bound if he is unjustly enriched unjust enrichment. In this regard occurs when a minor unduly benefits from a

contract with major. Here he is obliged to restore the things that he has benefited.

However in a bid to protect minors the courts have restricted the extent to which the minor should restore the things that he has

benefited.

It is true that a minor can only restore the things that are in his possession at the time when the suit of unjust enrichment is instituted.

This position was understood in the Edelstern case where the court held that “the other exception is that a minor is under an

obligation/is obliged to make restitution to the other party to the extent to which he has been enriched. However the minor is not

obliged to restore whatever he has received pursuant to the contract but only so much as still remains in his possession at the time

of the action or the surrogates of such residue.

a) When he ratifies the contract upon majority/when his guardian ratifies the contract and the minor entered into the effect of

such a ratification is to render the contract valid and effective from the time of the purported agreement.

Stuttaford and Company v Oberholzer 1921 CPD 855

NB The building effect is ratification will have a retrospective effect that is from the time the minor entered into a contract.

In Zimbabwe boys under the age of 16 years should get approval from the Minister responsible for marriages for his marriage to be

regarded as a valid marriage.

Married women

b) Their capacity depends on the type of marriage that they enter into. There are basically two types of marriages namely:

(i) Marriage in community of property: here the husband and the wife own the property jointly and is referred to as a joint

estate. The husband is the administrator of the marriage estate and he can enter into any contract in respect of that estate without

the consent of the wife but the wife cannot enter into a contract in respect of that particular estate without the consent of the

husband, the only exception is when the wife enters contracts in respect of necessacive and (i.e. day to day basic necessities e.g.

food.

Amendment No.17 of the Administration of Estate Acts come with the ruling in Magaya v Magaya of which did away with the concept

of perpetual minority of the women.

(ii) Marriages out of community of property: under this institution the husband and the wife own the property separately and

the wife can enter into any contract without the consent of the husband.

In H v H it was held that a husband can not at law rape his wife. In Zimbabwe marriages are presumed to be out of community of

property unless parties enter into an Ante-nuptial contract.

However, there has been a question of whether or not customary marriage are in/out of community of property. This issue was

however addressed in the case of:

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Jena v Nyemba 1996(1) ZLR 138 where the court held that, even though the very nature of a customary marriage reveals that it is in

community of property, the promulgation or enactment of the Legal Age of Majority Act (i.e. LAMA) conferred majority status on

women that are married customarily.

What this means is that such women enter into a valid contract without the consent/assistance of the husband.

c) Insane Persons

Sometimes referred to as imbeciles. The general rule is that any party who suffers from a mental illness or incapacity at the time of

contracting has no contractual capacity at all. This position was captured in the case of Lange v Lange (1945) AD 33 of 341 where

the court held that, “It is clear of course, that if, owing to a mental disease, a contracting party does not understand or appreciate the

nature of the matter the contract will be void of the inquiry of the court usually makes in case of insanity was crystalised in the case

of: P v Warne 1922 AD 481 at 488 where the court held that, “A court of law that is called upon to decide a question of contractual

liability depending upon mental capacity must determine whether the person concerned was or was not at the time of managing the

particular affairs in question is whether his mind was such that he could understand and appreciate the transaction into which he

purported to enter.”

d) Intoxicated Persons

As a general rule an intoxicated person lacks contractual capacity. As with insanity, the question is whether the party in question

was so intoxicated as to be unable to reach consensus and not merely whether his judgment was affected. Case Essakow v

Galbraith 1970 OPD 53.

e) Insolvents

An insolvent is a debtor whose estate is subject to a sequestration order owing to his inability to pay debts. As a general rule

insolvents can only contract through their trustees.

f) Prodigals

A prodigal is a person who is declared by the court to be incapable of managing his affairs as a result of a propensity to squander his

property e.g. a spend-thriff is not allowed at law to enter into a contract in respect of his property without the assistance of a curator.

6. CERTAINTY

For a contract to be valid it must be certain and where it lacks certainty such a contract is referred to as a contract void for

vagueness and it does not constitute a contract at all. When parties enter into a contract there must be sufficient content for the

court to enforce a particular contract.

Where detail/content is lacking such a contract can be deemed void for vagueness. The requirement of certainty is reflected in the

rule of offer and acceptance must result in certain terms. Uncertainty may rise in a number of different ways. It is often extremely

difficult to establish whether or not the uncertainty is such as to vitiate the transaction.

At the end of the day each case depends on its own facts.

In Levenstein v Levenstein 1955(3) SA 615 where in an answer to the plaintiff’s claim for an ejectment order the defendant pleaded

that, “In or about April 1946 a verbal agreement was concluded that Salisbury between plaintiff and defendant in terms of which the

plaintiff undertook, in consideration of/for the understanding by the defendant hereinafter mentioned to give; and transfer to the

defendant the said number 977 and the said business. The defendant in turn understood to maintain the plaintiff to the best of his

ability during the remainder of her life, and further undertook to maintain and educate, “… till such a time as she was capable of

maintaining herself.” The plaintiff excepted to this plea on the grounds that the agreement was void for vagueness and was

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unenforceable. The word business was ambiguous and the words to maintain the plaintiff to the best of his ability were uncertain to

be capable of precise definition. In the same case, it divided contracts void for vagueness into four categories:

(i) Contracts and are incomplete : On such cases the so-called contract is not enforceable e.g. In King v Potgieter 950(3)

SA 7 – where the plaintiff sued the defendant on a deed of sale. Defendant admitted having signed it but contended

that it was void for vagueness. Reason for this was illustrated in clause 2 of the agreement which provided that, The

purchase price is 2 750 pounds payable by the purchaser to the seller as follows; 11,45 pounds per month as from …

as from … as and from the 1st day of …………. the purchaser should be liable for interest at the rate of 5%. Again

clause 3 of the same agreement read “… Possession of the property shall be given to the purchaser on …”. The

plaintiff argued that in reading these clauses the court has to consider the element of reasonableness i.e. the interest

should be payable within a reasonable time, the court dismissed this agreement and ruled in favour of the defendant

because it was not clear from what date instalments were payable where the interest was due to be calculated and

when the purchaser was to be given vacant possession. As a result the court deemed the agreement to be void for

vagueness.

Contrast with Blundell v Bloom 1950 2 SA 629 – it was involved with a contract of sale which had many blank spaces e.g. A

provided, “I agree to pay the sum of ……., as deposit immediately on signing the agreement.” When the plaintiff sud the defendant

argued that the contract was void for vagueness because it was incomplete but the court however thought otherwise and held that

the deposit was a term which could be waived by the seller as long as the purchase price was agreed.

It was well established that an agreement which is incomplete because the party or parties did not reach an agreement/consensus

on an essential/material aspect for vagueness and incapable of being enforced.

Schneider and London Ltd v Bennett 1927 TPD 346 where the Respondent had been employed by the Appellant as the manager of

their timber company. They agreed on a monthly salary of 49 pounds and a small commission to be agreed between the parties but

never agreed on the quantum of the commission. When Bennett was dismissed, he sued for the commission arguing that he was

entitled to a fifth of the turnover of the company because this was reasonable. The court however rejected his argument and held

that the phrase “small commission was not sufficient to give rise to a contract in Bennett’s situation. There was of cause an

agreement but the court was not in a position to enforce the agreement.

Contracts which give unlimited discretion to the persons bound thereby e.g. Scaurnel v Ostern 1941 AC 257 where the Respondent

bought a van from the Appellant. A deposit was paid and the outstanding balance was to be paid over a period of 2 years.

Court held that the time period for payment of the outstanding amount was unnecessary long and the contract was therefore void for

vagueness.

In Kantor v Knator 1962(3) SA 202 – Before the plaintiff and the defendant got married and they entered into an Ante nuptial

contract. The husband made an undertaking to buy his wife all such furniture, linen and domestic effects as may then or thereafter

acquire at such time or such quantity … Upon marriage the husband failed to fulfill this and the wife brought a legal action against

him. Court held that the husband was not bound to do anything because there was unlimited discretion.

Courts have devised the 4th class of cases where the unspecified details of the contract are questions of fact which are capable of

determination by evidence.

Angath v Munckunlal Estate 1954 (4) SA 695 where the plaintiff was the Defendant’s nephew. Defendant had invited plaintiff to

assist in his shop and plaintiff was supposed to be paid something sometime. This meant that there was no agreement on plaintiff’s

salary. However the defendant died before paying the plaintiff’s anything and plaintiff sued Defendant’s estate. The court held that

the plaintiff was to be awarded what the court considered as reasonable remuneration for his services..

Contrast with Ellite Electrical Contractors v The Coveed Wagon Restaurant 1975(1) SA – where the Respondent had hired the

service of the Appellant. Parties had not agreed on a particular price and when the Respondent received a bill from the Appellant he

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ignored it. The Appellant then sued for payment. Court held that although there was no agreement on the price there was an

implied agreement to pay a reasonable amount of money for the work done. The court was to rely on the reasonable element to give

content to the contract. Court also looked for characteristic evidence in determining the price that was payable.

It is clear from the above cases that when courts are faced with contracts that are purportedly void for vagueness they have a

tendency of leaning towards enforcing a contract rather than striking it down. This is in a bid to try it down. This is in a bid to try as

much as possible to preserve, sanctity of contract.

Whilst this approach is commendable it can be argued that the Supreme Court stretched it too far in the case of Labin and Anor v

Associated Packing Company 1996(1) ZLR where the third Respondent owned shares in the first and 2nd Respondent’s companies

which he sold to the Appellant. The parties started negotiating and finally made a draft agreement which stated that it was subject to

the signature of both parties. They agreed on the price and method of payment. It was stated that the money had to be paid in a

way that was tax advantageous to the seller. It was then left to the accountant to do his work. The document was sent to the third

Respondent for his signature who then refused to sign it and the contract could not go further. The High Court was not vague at all

even the parties had not agreed on an amount that was tax advantageous to the seller.

7. LEGALITY

For an agreement to be binding it should comply with the law. However there were instances when a contract violates the law. Such

a contract is deemed to be illegal and unenforceable. Illegality comes in two forms:

(i) statutory illegality

(ii) common law illegality

Statutory illegality: Occurs when an agreement contravenes a piece of legislation either in the form of a statute or statutory regulation

or by-law. Such a contract is null and void.

This position was underscored in the case of Schlerhant v Minister of Justice 196 AD 99 at 109 where the court that “It is a

fundamental principle of our law that a thing done contrary to the direct prohibition of the law is void and of no effect” Contracts that

are illegal by virtue of an express statutory provision pose no problems because one simply has to read the statute and apply it to the

facts of the alleged contract, no important legal issues arises where illegality arise from statute.

See case Patel v Sigauke and Anor HC HH-55-1994

Wilken v Kohler 1913 AD 1351 it was important to note that where a contract contravenes a statutory enactment which does not

expressly declare the contract void, the intention of the legislature must be asserted.

However, instances do occur when parties (conscious of the statutory prohibition) draft their contract in such a way as to circumvent

the statutory provision. Such contracts will be held to be illegal.

Zimbabwe Care v Grain Marketing Board SC-214-92.

In addressing the court’s approach to these contracts of the case of

Dadoo v Krugersdorp Municipality Council (1920) AD 530 at 543-8, Court adopted a three pronged approach:

(i) The court must interpret the statute in the ordinary way not during violence to it to the extent its meaning to cover its

supposed intention.

(ii) The courts must then determine whether or not the contract in question falls within the armpit of the statute.

(iii) If it falls within then cadit queastio [end of story]

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(iv) Then if it falls without the armpit of the statute, then out the court should proceed to inquire whether or not the said

contract has been craftly designed to circumvent statute.

At page 47 of the Dadoo decision the court held as follows:

“An examination of the authorities therefore leads me to the conclusion that a transaction fraudem legis. [i.e. illegal by virtue of

contravening a statute or legislation] where it is designed to escape the provisions of the law but falls in truth within these provisions.

Thus the rule is merely a branch of the fundamental doctrine of the law regards, the substance rather than the form of things.”

COMMON LAW ILLEGALITY

This refers to contracts that are contrary to public policy/common law/good morals. Acquilius [Roman Dutch Schdar] defines public

policy as:

“One stipulating performance which is not pose illegal or immoral but which the courts, on the grounds of expedience, will not enforce

because performance will detrimentally affect the interests of the community.”

Generally a contract is said to be contrary to public policy if it is clearly detrimental to the interests of the community and runs counter

to social economic expedience. The position was underscored in the case of Sasfin (Pty) Ltd v Beukes 1989(1) SA(1)(A), where the

court held that:

“Agreements which are clearly detrimental to interests of the community whether they are contrary to law or run counter to social or

economic expedience will accordingly on the grounds of public policy not be enforced. No court should therefore shrink from the

duty of declaring the contract contrary to public policy. If it is clearly detrimental to the interests of the community/is contrary to law

or morality/runs counter social or economic expedience is plainly improper and unconscionable and unduly harsh and oppressive,.

It is important to note that the (iv) fourth criteria is not sharply defined especially when it is remembered that public policy is a

question of fact and not a question of law and it always changes with the general sense of the justice of the community or the ban

mores manifested in public opinion.

Professor Christie convincingly argues that a distinction must always be drawn between superficial public opinion which can swing

like a weather and seriously considered public opinion on the general sense of justice and good morals of the community. It is the

later and not the former to which the courts should direct their attention and this limitation coupled with criteria (i) and (iii) above

maintains the stability of the law of contract by ensuring that contracts are not at the mercy of jickle public opinion. Words like clearly

detrimental to the interests of the community” and “runs counter to social/economic expedience” must be relied on sparingly and only

in the clearest of cases.

NB At the end of the day what determines the public policy of the day is the philosophical outlook of judges presiding over the

matter and this overstretches the position/power of the judges.

The following contracts have come to be accepted contrary to public policy.

a) Contracts tendering to injure the public service

Roman-Dutch law did not permit any contract in the nature of a bribe to a public official or which bound him of corruption and intrique

or which corruptly secured a promise of advancement, employment, office or any other advantage the main difficulty with a corrupt

contract with a public official is that he undertakes to exercise the discretion vested in him not in accordance with his public mandate

but for an oblique motive such as personal gain or a sense of obligation to a suitor, such contracts are void and unenforceable.

b) Contracts injurious to the administration of justice examples are as follows:

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(i) ousting of the jurisdiction of the courts. Parties to a contract are neither allowed to deprive the courts of their normal

jurisdiction nor confer the jurisdiction up on a court which that court does not possess. In terms of either common

law/statute this position was emphasized in the following cases.

Schierhart v Minister of Justice 1925 AD 41 at 424 where the court held “If the terms of an agreement are such as to

deprive a party of his legal rights generally or prevent him from seeking redress at any time in the courts of justice for any

future injury or wrong committed against him, there would be good grounds for holding that such an undertaking is against

the public law of the land.

Gold Schmidt v Folip (1974) 1 SALR 576 where the court held that:

“Private individuals cannot confer jurisdiction on the court which they do not possess in terms of the common law/statute,

nor can they impose tasks upon the courts which they are not legally obliged to perform. However, this principle does not

apply to arbitration and honour clauses.

(iii) Collusion this was defined in Bevin v Bevin. Court held that “ordinarily speaking collusion in our law is a keen

consiance and means that an agreement or mutual understanding between the parties that the one shall

commit/pretend to commit an act in order that the other may obtain a remedy at law as for a real injury.” Such

agreements are illegal and unenforceable.

(iv) Contracts encouraging crime delict and other unlawful acts. These contracts are void and not enforceable. It will be

hopelessly self contradictory if courts treated a contract to commit an unlawful act as enforceable because the court

would be approbating or reprobating the same act, “blowing hot and cold.”

(v) Contracts injurious to the institution of marriage

Examples of these are contracts and encourage/facilitate polygamy or in a monogamous marriage.

(vi) Miscelleneous Contracts . Examples are gambling, contracts to commit acts of sexual immorality of contracts to

defraud creditors, contracts lending to produce forced labour, pactum successorium [i.e. a contract whereby a person

curtails his freedom of testation – writing of a will – by promising to bequthe or not to bequeth property to the promisee

or to a third party]. These agreements are not enforceable.

(vii) Covenants in restraint of trade

Covenants in restraint of trade are important to the world of commerce. A person may limit his freedom of carry out

business or to be involved in business by way of a covenant in restraint of trade.

Book v Davidson 1988(1) ZLR 365(S)

Book v Davidson 1989(1) SA 638(25)

Mangwana v Mparadzi 1989(1) ZLR 97(S)

Ellis 1984(4) SA 874(A)

The reason why covenants in restraint of trade are invariably employed in contracts of employment is because the covenants (i.e. the

employer) will be seeking to protect.

(i) his goodwill

(ii) his client

(iii) his business

In the case of Magua and Research (SA) Pty Ltd v Ellis is the locus classicus on covenants in restraint of trade.

Principles draw from this case are:

(i) a covenant in restraint of trade will be presumed to be reasonable unless the party wishing to escape from it can show

it to be unreasonable.

(ii) The onus to prove the unreasonableness of the Covenant lies with employee covenantee.

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(iii) The unreasonableness or otherwise of the Covenant is a matter to be decided on the facts of the case (i.e.

circumstances of the case)

(iv) The facts circumstances to be considered are the facts and circumstances prevailing at the time of enforcement of the

Covenant.

The Blue Pencil Test

When a restraint is to be reasonable it is sometimes possible to enforce the restraint in party by cutting the unreasonable part (or

rather by restricting the Covenant to the reasonable party).

New United Yeast Distributors v Brokes 1935 WLD at 75

Where brookes and other yeast merchants formed a company to distribute yeast products. Brookes was bound by a Covenant in

restraint of trade prohibiting him from having an interest in any other business involved in yeast production. The Covenant

proceeded to restrict him from having any interest in any company or business whose objectives were similar to those of the

proposed company. The court held the striking down the unrealistic part of the Covenant can only take place if the contract posses

the blue pencil test. The Blue Pencil test states that as ………. can only take place if the clause/Covenant passes the blue pencil

test i.e. the test of making grammatical sense after removing the offending part of the Covenant with no words being added to the

restraint must still carry grammatical sense. The blue pencil test only arises in relation to the changing grammar of the clause.

VOID AND VOIDABLE CONTRACTS

The absence of any of the discussed above aspects said to be requirements of a valid contract means that the contract is void. Thus

a void contract is the opposite of a valid contract.

A voidable contract is whereby a contract is valid because it has all the requirements of a valid contract but one of the parties may

dispute the contracts on any one of the additional points i.e. misrepresentation, duress, undue influence and mistake.

Void Contracts

Are of no legal force at all. It is a contract which lacks any one or more of the essentials of the valid contract. In the eyes of the law

the contract is a nullity. Restitutio in intergrum i.e. restitutution remedy. This simply means in both parties return to their original

positions.

Voidable Contracts

It is a valid contract in that it satisfies all the requirements of a valid contract serve for the fact that the innocent party to the contract

has the right to set aside the contract if he so chooses.

MISREPRESENTATION

Is a factual statement concerning a certain state of affairs but is not true (it however must be material). A misrepresentation is a

statement made by one party to the other before the time of contracting; the statement must be material i.e. of much importance),

factual and relates to the subject matter of the contract. Further the statement must induce the other party into a contract (i.e. must

have relied upon it).

A contract which is induced by misrepresentation is voidable. There are 3 types of misrepresentation:

(i) Innocent misrepresentation – i.e. misrepresentation made in honest belief that a statement is true.

(ii) Fraudulent misrepresentation – the statement made by a party knowing fully that it is untrue or are made recklessly

(iii) Negligent misrepresentation – a statement made in belief that it is true but the circumstances of the contract

demonstrate that it is untrue. Once there is a misrepresentation a question obviously arises.

Viljoen v Hillier 1904 TS 312

The case lays out the requirements that the innocent party must satisfy in a claim for misrepresentation:

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(i) that a false representation was made

(ii) it must be material

(iii) that the innocent party entered into the contract in the faith of representation.

The innocent party who establishes the three elements set out above is entitled to rescind the contract whether or not the

misrepresentation is innocent, fraudulent or negligent. Rescission leads to restitution in integrum. Through rescission one would be

taking the contract to the state of being void and thus restitution in integrum will be automatic and then finally leading to damages i.e.

with voidable contracts but such damages differ with negligent/fraudulent/innocent misrepresentation.

By whom/who can make a misrepresentation?

In a nature of things a misrepresentation is made by the other party to the contract but it may also be made by the agent of the other

party. The principale who is the party to the contract is however liable for any misrepresentation made by his agent.

A misrepresentation by a third party is not actionable

Who can make a misrepresentation?

Lamb v Walters 1926 AD 358

In this case the seller of a house assured the buyer/purchaser that the price was fair and reasonable. The buyer was not permitted

to rescind the contract when he discovered that the price was considerably more than the house was worth. This case raises the

debate between a representation and an opinion.

The law defines misrepresentation with some care in order to fit in which the realities of life. People do not usually assume that

somebody else’s opinion is unquestionable and the law does not treat an expression of an opinion that tends out to be untrue as

misrepresentation.

But as will be noted in the case of Feinsten v Nigglian the expression of opinion by a party knowing it to be false amounts to

misrepresentation in that the opinion is a false statement of his state of mind.

Feinstein Niggli – where the court held that fraudulent misrepresentation in the form of an opinion/forecast of future success of a

business may amount to/rather is actionable.

Misrepresentation by Silence

In Speight v Flass (161)(1) SA 778 it was said:

“there is in our law no general duty upon contracting parties to disclose to each other any circumstances/facts known to them which

may influence the other party in deciding whether to conclude the contract.” In particular circumstances the law requires the truth to

be revealed. In those circumstances silence will amount to misrepresentation. In contracts such as insurance; partnership and

agency (contracts uberrima fide – (i.e. utmost good faith).

Apart from those particular contracts an attempt to lay down a broader duty to disclose was made in the case of Pretorious v Natal

South Sea Investments Trust (1965)(3) SA 410 – where P successfully applied for shares in the company in ignorance of the fact

that the directors had bound the company to a very burdensome contract (oppressive contract). He sought to rescind the contract on

the basis that the directors had not disclosed the burdensome contract. The court held that there was a fraudulent misrepresentation

by silence in that the directors had failed to disclose a material fact which was in their exclusive knowledge.

Thus every case is determined on its facts and circumstances (i.e. in determining whether there existed an obligation to disclose).

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Misrepresentation must induce a contract

A misrepresentee is not entitled to rescind a contract unless the misrepresentation induced the contract. The misrepresentee must

go further and show not only that he was induced and any other reasonable person would have been induced (i.e. under the same

facts and circumstances). It will not avail the misrepresentor and the mispresentee could have easily discovered the truth.

Wiley v African Reality Trust 1908 TH 104 – where a lawyer bought some debentures (i.e. a loan by an outsider to the company). It

was misrepresented to him and after 10 years, he had an option to surrender the debenture in exchange for either land, a house or

cash. From the wording of the debenture it was such that he would have to accept land with no option for cash. He sought to

rescind the contract alleging misrepresentation. He sought to rescind the contract alleging misrepresentation. The contract was

rescinded.

The Misrepresentatee’s right rescind

Misrepresentation does not destroy that contract altogether (A makes the contract voidable) at the instance of the innocent party.

The significance of classifying a misrepresentation as fraudulent negligent/innocent is to enable the party not only to rescind but to

claim damages.

Under negligent and fraudulent misrepresentation delictual damages are claimable.

Bayer SA v Frost (1991) 4 SA where Frost was a former with vineyards intermingled with onions and wheat. The agents of Bayer

South Africa negligently misrepresented to Frost that its herbicide could be sprayed in the vineyards by helicopter without damaging

the onions and the wheat. Frost was induced into the contract on the basis of those representations the vineyard was sprayed and

which resulted in the onions and the wheat being damaged to the extent of R55 000. The court allowed Frost to recover the R55 000

as delictual damages.

MISTAKE

This refers to an error of a material fact made by either one/both parties to enter into a contract which they could not have entered

into had it not been for the mistake.

For a mistake to vitiate a contract the following have to be satisfied:

(i) it must be a mistake of fact and not a mistake of law. It has been accepted that a mistake of law does not excuse a party

from a contract. The main basis of such a proposition is found in the max ignorantia juris neminen excusat. (i.e. ignorance of the law

excuses no one/rather is no excuse).

Miller and Others v Belliville Municipality 1973(1) SA 914

This point was emphasized in the case of Sampson v Union and Rhodesia Wholesale Ltd 1929 AD 481 where the court held that “a

general proposition of the law is that if you think the meaning of a clause is such and such, you cannot get rid of your liability when

you discover that the legal meaning is different from what you thought for you cannot be heard to say that you did not know the law.

The propositions upheld in the Zimbabwe case of Ncube v Ndlovu 1985(2) ZLR 281(SC) where the appellant seduced the

respondent’s major daughter. The appellant then signed an agreement undertaking to pay the respondent damages for seduction.

He latter on sought to avoid the contract on the basis of mistake of law (he was mistaken as to the legal position that a father has no

right to sue for seduction in respect of a daughter who had reached the legal age of majority while relying on the Katekwe v

Muchabayiwa case His appeal was dismissed on the basis that a mistake of law does not invalidate a contract.

In South Africa the courts have departed on some occasions from the general principle that a mistake of law does not vitiate a

contract. The courts have come to accept that not everybody knows the law and if they knew the law there would not be any point in

training lawyers. The courts have in essence set aside some contracts on the basis of mistake of law.

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Willis Faber Enthoven Properietary Ltd v Re Inland Revenue (1992)(4) 2002 p224 (b) – where the court held that, “In my judgment

our law is to be adopted in such a manner as to allow no distinction to be drawn between mistake in law and a mistake of fact.

However, it is important to note that the Zimbabwean judiciary has not yet departed from the proposition that a mistake of law does

not vitiate a contract.

The mistake must be of a material fact or term. This simply means that the mistake must refer to one of the essential terms of a

contract itself.

In this regard two categories of mistake have evolved.

a) Error in motive – This occurs where there is a mistake regarding the reasons why parties entered into a contract.

As a general rule a mistake that relates to the reasoning or motivation of one of the parties does not render a contract

void.

Diedricks v Minister of Lands (1964)(1) SA 49(N)

b) Error regarding the contents or existence of the contract – Therefore these can be divided into four categories namely:

(i) error with regard to the person or the other party. An example of such occurs where A wishes to conclude a

contract of employment with B who is trustworthy but mistakenly concludes the contract which (a criminal)

who he thinks is B. This contract is null and void due to error with regard to the person of the other

contracting party.

(ii) error with regard to the identity of the other contracting party (i.e. his name) e.g. where A employs John

(whom he wants to employ but mistakenly thinks that his name is Peter, a contract which cannot be entered

void due to error. This kind of mistake does not affect consensus and does not invalidate the contract

between A and John.

(iii) error with regard to the nature of the agreement E.g. where A wants to sell his house to B but mistakenly

enters into a contract of lease, such a contract will be invalid because there will not be any consensus (i.e.

ad idem).

(iv) error with regard to performance e.g. where A wishes to buy a candle stick made from silver but a

candlestick made from silver there can be no consensus between him and the seller.

(v) The mistake must be reasonable/justifiable

A reasonable mistake is known as a Justus error and can infact invalidate a contract.

Logan v Beit 1890 7 SC/AC 19 – a mistake made by one party to a contract which is due to his own

careless is not reasonable and cannot be relied upon as a basis for setting aside a contract. George v

Fairmead Properietary Ltd (1958) 2 SA 465.

NB Reasonableness/otherwise should be decided on the facts of each case Yelierton 1972(4) SA 114.

(vi) A person may not deny the existence of a contract where he is estopped from doing so i.e. the estopped

person cannot succeed if he sets up the defence that he entered into the contract while labouring under a

material mistake.

TYPES OF MISTAKES

There are generally 3 types of mistakes:

(i) Unilateral mistake

(ii) Mutual mistake

(iii) Common mistake

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Unilateral mistake

This occurs where one party is mistaken and the other is not as a general rule the mistaken party must be bound by the contract on

the basis of quasi mutual asset because, “by his conduct he led the other party as a reasonable mean to believe that he was binding

himself” as was held in the case of George v Fairmead at 471 (supra).

However there are instances where a unilateral mistake can vitiate a contract, these were spelt out in the case of National and

Overseas Distributors Cooperation Pty Ltd v Potato Board 1958(2) SA 473 at 479(g)-(h) where the court hold as follows:

“Our law allows a party to set up his own mistake, in certain circumstances in order to escape liability under a contract into which he

has entered but where the other party has not made any misrepresentation and has not appreciated at the time of acceptance that

his offer was being accepted under a misapprehension, the scope for a degree of unilateral mistake is very narrow, if it exist at all. At

least the mistake would have to be reasonable and it would have to be pleaded.”

From this passage 3 possibilities emerge where a unilateral mistake can vitiate a contract mainly:

(a) where the other party knew of the mistake at the time of contracting

(b) where the other party induced the mistake by misrepresentation

(c) where the mistake is reasonable

However this (c) position was varied in the case of Lamdsbergen v Van der Walt 1972(2) SA 667 where the court held that even a

reasonable mistake will not release the mistaken party from the contract unless the mistake is material in the sense that he would not

have contracted if he had known the truth.

Mutual mistake

This occurs when each party is mistaken about the other’s intention so that the parties are at cross-purposes. In solving this problem

the court usually applies the doctrine of quasi mutual assent. Courts have adopted two approaches namely:

a) if one parties understanding what has been agreed is unreasonable in that it conflicts with the impression he has

given to the other party, he will be deemed to have agreed in accordance with the impression he has given.

b) If each parties understanding/mistake is reasonable then there will be no contract between the parties

Maritz v Pratley (1894) 11 SC 345 where “M, was an auctioneer, called for bids lot 1208 which was the successful bidder but he

refused to pay because he thought he had bought the mantel piece together with a mirror which was standing on it. The mirror was

infact a separate lot 1209. The court held that Pratley’s mistake in thinking that Maritz intended to sell the Mantel piece and mirror

together was held to be reasonable and Maritz’s mistake in thinking that Pratley was bidding for the mantel piece only was obviously

reasonable. The court held this to be a case of mutual mistake and there was no contract.

Common mistake

Both parties will be mistaken concerning a particular thing. It occurs where both parties are labouring under the same mistake. In

dealing with this problem the court usually considers two things namely:

a) where the common mistake leads to initial impossibility, then the contract between the parties becomes void e.g.

where parties agree to buy and sell something which they both mistakenly think is still in existence when in actual fact

has been destroyed.

b) Where there is no initial impossibility the effect of common mistake is that either party is entitled to rescind the

contract if the mistake is sufficient serious.

Dickinson Motors (Pty) Ltd v Obahozer 1952(1) SA 448(A) where Obahozer paid 291 pounds which was the amount that his son

owed on a car he had bought from the company. In return the company released to Obahozer a car with both the company and

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Obahozer mistakenly thought was the car concerned. When the true owner of the car successfully claimed it. Obahozer relied on

common mistake to justify claiming the repayment of 291 pounds. This is what the court had to say, “The 291 pounds was paid

under a common mistake in regard to a matter which was vital to the transaction and if either of them had been aware of the position,

the transaction would not have gone through”

As such the company was ordered to repay Obahozer the 291 pounds paid.

Rectification

It refers to the correction of errors with a contract (in most cases these are typing errors)

It can only be granted by the court when the written contract contains the exact wording that the parties intended but the wording

produces an effect that the parties did not intend. This point was underscored in Tesben v SA Bank of Athens (1994) 4 AII SA 396

p401 where the court held as follows “to allow the words that the parties actually used in the documents to override the prior

agreement or the common intention that they intended to record is to enforce what was not agreed and so overthrow the basis on

which contracts rest in our law.

DURESS

It occurs when a person is forced into a contract by fear induced through either actual violent or threats of violence either on his

person/family or property.

A contract obtained this way is voidable at the option of the innocent party i.e. innocent party can elect to set aside the contract.

White Brothers v Treasurer General (1883) 2 SC 337, at p35 the court had this to say:

“where a man is forced by menaces to his person to make payments which he is not legally bound to make it cannot be said that

there is a total absence of consent but in as much as his consent is forced and not free, the payment is treated as involuntary and

therefore subjected to restitution.”

In the same vain Sabbides v Sabbides (1986) 2 SA 321, 325 – The court adopted Van der Lindern’s observation and held as follows:

“When the consent of one of the contracting parties is extorted by undue violence or fear provided the violence is of such actual

important that it would make an impression upon a courageous person the judge must take into consideration the circumstances of

both the person and of the things e.g. The fear which cannot be deemed sufficient to disturb the mind of a person of a mature age or

of a soldier may be quite sufficient in the case of a woman or an old man.” Broodnjk v Smuts 1942 TPD at 47, 51 and 52, the court

held that for a party to establish duress he must satisfy the following requirements.

(i) There must be actual violence or reasonable fear – see the Sabbies case

(ii) The fear must be because by threats of some considerable evil to the other party or his family. The question has

been raised regarding whether or not thus requirement can he satisfied when the is a threat to one’s property. In

addressing this question English law provides that duress of goods is not sufficient to set aside a contract.

However the position is different in Roman-Dutch law where economic duress/duress of goods can infact invalidate a contract. This

was stated in the case of Union Government (Minister of Finance) v Gower 1915 AD 426 p434 where the court stated as follows:

“where goods have been wrongly detained and where the owner has been driven to pay money in order to obtain possession and

where he has done so not voluntarily as by was of gift or compromise but with expressed reservation of his legal rights, payments so

made can be recovered as had been exerted under duress of goods.

The onus of showing that the payment has been made in voluntarily and that there has been abandonment of rights would of course

be upon the person seeking to recover and hence the importance of a protect or an unequivocal statement of objection made at the

time. Without such protest it is difficult to see how the plaintiff’s state of mind could be established to the satisfaction of the court.

(iii) It must be a threat of imminent evil.

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In determining this requirement courts usually assess whether or not (assuming that the threat was sufficiently serious

to affect the mind of such a person) he could by some method other than agreeing to the contract. If there was a way

to avert the threat other than agreeing to the contract than there will not be duress.

(iv) The threat must be unlawful/contra bonos mores (contrary to good morals) See Shapestone v Shapestone 1914(1)

SA 411

(v) The threat must have caused damage i.e. the threat must have induced the party into a contract to his detriment. See

Freedman v Kruger 1906 TS 817, p821 and 822. It has come to be accepted that duress by a third party can vitiate a

contract the essential elements for duress are satisfied. See Broodryk v Smuts. The effects of duress on a contract is

that such a contract is voidable at the option of the innocent party.

UNDUE INFLUENCE

A party to a contract may rescind it if he can prove that the other party had acquired an influence over him when weakened his

powers of resistance and made his will probable and used this influence in an unscrupulous manner to persuade him to consent to a

transaction which is to his detriment end with which normal free will he would not have entered into.

Preller v Jordan 1956(1) SA 485 . The court held that a party leading undue influence should meet the following five things:

(1) That the other party obtained an undue influence over the other. In this regard the law recognises that such an undue

influence is more likely going to exist where there is a special relationship between the parties e.g. doctor and patient

– lawyer- client; guardian – minor, religious advisor-disciple relationships.

This point was emphasized in the case of Armstrong v Magid and Anor 1937 AD 276. – where the court held as follows, “wherever

two persons stand in such a relation that while it continues confidence is necessarily repossessed by one and the influence which

naturally grows out of that confidence is possessed by the other and this confidence is abused or the influence is exerted to obtain

an advantage at the expense of the confiding party, the person so availing himself will not be permitted to retain the advantage

although the transaction could not have been impeached if no confidential relation had existed.”

(i) The influence must have weakened his powers of resistance and rendered his will compliant

(ii) The other party must have used his influence in an unscrupulous manner

(iii) The influence must have induced the conclusion of the contract

(iv) The contract must be prejudicial to the influenced party

Effects of Undue Influence

(i) Undue influence makes a contract voidable at the instance of the influenced party

(ii) It can also make a contract void ab initio only if the influence induced in the mind of the party seeking relief such a

fundamental mistake that apparent assent to the contract is in truth not assent at all.

TERMS OF A CONTRACT

These are promises agreed upon by the parties which together make up the contract. A term must be distinguished from other

statements which may have been made only to induce one of the parties to enter into the contract. Such statements may be mere

puffs or representations which unlike terms cannot grant an action for breach of contract in the event of them turning out to be

untrue.

This position was emphasized in the case of Petit v Abramson 1946 NPD 673 at 679 where the court held as follows:

“It is notorious that statements made by parties when negotiating a contract may conceivably take the status of either:

(i) mere puffing/commendation

(ii) representations

(iii) undertakings commonly referred to as warranties

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Classes of contractual terms

Contractual terms can be classified into two namely:

(i) express terms

(ii) implied terms

Express terms

This refers to contractual terms that are gathered from what was actually said by the parties either orally or in writing. As regards

contractual terms in a verbal agreement.

Small v Smith (1954) 35 ALR 434, 437 held as follows:

“A statement made seriously and deliberately during the negotiation of a verbal contract becomes a term of the contract if the parties

by mutual intention either expressed or implied intended it to be a term of the contract.”

The usual challenge is to prove the existence of such terms

Regarding written contracts terms are easy to prove because they are reduced into writing. Judges tend to uphold the position that,

“documents speak for themselves” What this means is that judges prima facie (i.e. on the fact of it) rely on a written contract unless

a justifiable reason is presented to prove otherwise.

Effects of a signature on a written contract (caveat subscripto).

This was well captured in the case of: Burger v Central African Railways 903TS, 571, 578 where the court held that

“It is a sound principle of law that when a man signs a contract he is taken to be bound by the ordinary meaning and effect of the

words which appear over his signature.”

This principle is referred to as caveat subscripto (i.e. let the signatory beware i.e. the signor should be weary).

This principle applies to the doctrine of quasi mutual assent but in essence a reasonable person is entitled to assume that a person

who signs a contract intends to be bound by it, so he is bound even if that was not his true intention.

George v Fairmead (Pty) Ltd (1958) 2 SA 468

Mathde v Mathde (1951)(1) SA 256

It is important to note that a person who signs a contract containing blank spaces is prepared to be bound by that contract when the

blank spaces are filled in by the other party.

National Grindlays Bank Ltd v Yelvireturn (1972) (4) SA 114.

But if the signatory has in any way indicated how he wishes the blank spaces to be filled in the other party must of cause comply with

the wishes.

Commercial Bank of Namibia Ltd v Trans Continental Trading (Namibia) (1992) 2 SA 66, 75, 77.

However the caveat subscripto principle is not rigid “Courts will not apply it where there is misrepresentation, fraud, illegality, duress,

undue influence and influence.

Spindufter (Pty) Ltd v Lester Donorvan (Pty_ Ltd (1896) (1) SA 303

Unsigned Contracts/Ticket Cases

It refers predominantly to notices, tickets and other unsigned documents. In dealing with these courts have adopted a three pronged

approach which was aptly summarized in Kings Car Hire (Pty) Ltd v Wakeling (1970)(4) SA 640, 643 d-f

“The approach of the court is to enquire whether the person who received a ticket knew that there was printing/writing on it.

Secondly if so a further question “Did the person who received the ticket knew that the printing or writing contained provisions or

references relating to the provisions of the contract in question.”

If these 2 questions are answered in the affirmative then the provisions in questions are part of the contract.

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If either of such questions are answered in the negative then a third question becomes relevant namely, Did the person, giving the

ticket do what was reasonably sufficient to give the other party notice of the conditions?

If the answer to such last mentioned question is in affirmative then also the provisions or conditions are part of the contract. If not

then the conditions form no part of the contract.

A customer is not bound by unreasonable terms printed on an unsigned written contract such as a ticket.

Exemption Clauses

An exemption clause is a term of a contract which exempts one party from some specified liability or responsibility which would

otherwise fall on him.

An argument in favour of the exemption clauses is that by shading some of his responsibility which would otherwise fall on him.

An argument in favour of the exemption clauses is that by shading some of his responsibility the user of the standard form contract

will be able to obtain insurance at a cheaper rate and therefore charge less for the service he provides for the benefit of all his

customers. However courts have not been impressed by this argument and have placed limits on the effectiveness of exemption

clauses.

Courts have developed a two pronged approach namely:

(i) Is the exemption clause part of the contract. If it is not part of the contract then the stay ends there. The other party

would not be bound. But if it is a part of the contract the courts will apply the caveat subscripto principle and raise the

following question:

(ii) What does the clause mean?

Here the court usually adopts a strict interpretation. In the event of either doubt or ambiguity, the court will interpret

an exemption clause against the drafter of the clause. This is referred to as the contra proferentem rule.

Shubwa Ranch (Pvt) Ltd v Shield of Zimbabwe Insurance (Pvt) Ltd 1988(2) ZLR 306

It is important to note that courts have held that a party who wishes to exempt himself/itself form liability caused by his own

negligence should clearly state so in the exemption clause.

Cotton Marketing Board v National Railway of Zimbabwe 1988(1) ZLR 304

However the above mentioned principle does not apply where the other party’s negligence amounts to breach that goes to the root of

the contract.

Transport and Crane Hire (Pvt) Ltd v Hubert Davies and Co (Pvt) Ltd 1991(1) ZLR 190

However this dispute has been settled by the promulgation of the Consumer Contracts Act (Chapter 8:03).

In terms of the said Act a consumer contract is defined as a contract for the sale or supply of goods or services or both in which the

seller or supplier is dealing in the course of business and the purchaser or user is not.

In terms of the Act the following exemption clauses are prescribed:

(i) those that exclude/limit negligence

(ii) those that exclude/limit liability in the event that goods do not conform with any description or sample given in respect

of the goods

(iii) those that exclude/limit liability for latent defects in goods

(iv) those that deny/limit the buyers’ right to require the seller/supplier to either:

(a) re-imburse the goods

(b) replace the goods

(c) repair the goods

(d) reduce the price or amount payable in respect of goods

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INTERPRETATION OF EXPRESS TERMS

It has generally been accepted that when a contract is reduced into writing the courts must rely on the provisions of the written

contract (not extrinsic evidence) to deal with any dispute arising therefrom. This is referred to as the Parole Evidence Rule and was

underscored in the case of Johnson v Lean 1980(3) SA 927, 937, where the court held as follows:

“When a contract has been reduced to writing, the writing is regarded as the exclusive embodiment or memorial of the transaction

and no extrinsic evidence may be given of other utterances or oral acts by the parties which will have the effect of contradicting,

altering, adding to or varying the written contract.”

The rational for this is that if parties to a written contract are permitted to give you extrinsic/external evidence written contracts will

lose much of their value.

However the parole evidence rule is not a hard and fast rule (i.e. rigid rule). In a bid to enhance justice between the parties courts

have developed the following exceptions to the application of the parole evidence rule:

(i) If the parties did not intend the written agreement to be the exclusive embodiment of their contract the parole

evidence rule will not apply. This normally occurs where a contract is partly written and partly oral.

Baldachin 1920 AD 312

(ii) Extrinsic evidence can be allowed to show that the written contract was contradicted, altered, added to or varied by a

subsequent oral contract.

See Johnson v Neil case

(iii) External evidence may also be given to an oral agreement the making of which induces the making of a written

contract provided the oral agreement does not conflict with the written agreement.

Duplesis v Nel 1952(1) SA 513

In Stiglingh v Theron 1907 TS 198, 1003 the court pronounced the following exception “but again evidence is

admissible of a separate oral agreement constituting a condition precedent to the attachment of any liability under the

written instrument. Thus is an exception to the general rule.

(iv) The parole evidence rule does not prohibit evidence in support of a claim of rectification of the contract not in support

of any defence which challenges the validity of the contract nor evidence to contradict the debt of signature recorded

in the contracts since this is not part of the agreement between the parties but an objectively determinable fact.

Otto v Heymans 1971(4) SA 418, 453-153

Express terms: Exceptions to the Parole Rule

The first exception is not strictly one exception as such, it says Parole rule evidence does not exclude the leading of evidence to

establish that the contract was subject to a suspensive condition.

1. One will not be varying the terms of the contract.

2. The rule will not be applicable where it is the intention of the parties, that the contract should be

partly in writing and partly oral. The court will give effective to that intention of the parties.

See Oerseput v Avis(1) 943 AD 331 where the court took the view that this was the situation that the parties had intended that their

contract should partly be in writing or oral. Held that the oral agreement would be given effect to (that the oral agreement would be

given effect to) or will be valid.

Harting Properties and Other v Los Angeles Hotel 1962(3) SA 143 where a contract was held by the court to be constituted by the

lease agreement and a letter. To counter this problem when drafting a contract one would have to include an integration clause or a

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whole contract clause. This will be a term to the effect that the document will be entire contract between the parties and all terms,

conditions, warranties or representations, not the included will be expressly excluded.

This means that one would be entrenching the Parole evidence rule into the contract. See the case of Mhere v Tubbs 1986(2) ZLR

179. The Parole evidence rule is designed to promote certainty, it reduces the costs should litigation arises, i.e. instead of leading

many witnesses, the contract document just serve all the purposes. However the exceptions to the Parole evidence rule makes the

written document uncertain and ultimately the court had to balance the conflicting parties interests. The Parole evidence rule does

not apply where the validity of the contract itself is being challenged by the parties.

Kok v Osborn 1993(4) SA 788 where the court ruled one could not exclude Parole evidence to establish the ground of invalidity the

contract e.g. mistake, thus courts are prepared to disregard the intergration clause as it did in Mhene v Tubbs (supra). An

intergrational clause is often coupled with non-variation clause. If the parties intend to vary the terms of the contract it must be in

writing and signed. In such purported and evidence to vary the terms of the contract will be of no force or effect. There used to be a

doubt whether parties to a contract were bound by a non variation clause in their contract. The argument was that the parties are at

liberty to vary it orally if they intended to do it so. In 1964 the CPD decided that the non variation clause is binding on both parties

and any purported oral variation inconsistent with such a clause will be invalid. However a non variation clause does not in itself

preclude a waiver. Accordingly a non variation clause is purported by a non variation clause.

Since we are talking of a term in which both parties have an interest they infact have to agree to waive it as well. With a non-waiver

any party which has a right can unilaterally waive that term. A non-waiver or indulgence clause says that no indulgence made by the

party can be taken to be the waiver of his rights.

The Supreme Court considered this issue in the case of A Finance C v Porcock 1986(2) ZLR 229 SC-138-1986 where P was a

farmer who had borrowed some money from AFC according to the contract, the AFC could come at any time and possess the farm

and sell it. The contract had a non-variation and non-waiver terms. P fell into arrears, he went to AFC and had discussions with the

manager of AFC, one R, R agreed that instead of AFC moving into the farm they would enter into arrangement with R, he was

surprised to see a letter from AFC threatening that they would move in and sell the property. P argued that they had entered into an

oral agreement with R. So AFC cannot repossess the farm. It was argued on behalf of the AFC that there was non-variation and

non-waiver clause hence they were supposed to proceed as they had done. P argued that the oral agreement constituted a waiver

by AFC of its rights in terms of contract. P further tried to argue that the AFC should be estopped from denying the existence of the

oral agreement with its general manager. P’s argument were reflected by the court which ruled in favour of the AFC.

Exemption clauses and third parties contracts

The issues arising are

Can a third party sue or rely on the contract between A and B whilst C himself is not party of the contract. This issue arises

inevitably because of the doctrine of Privity of Contract which postulates that a contract is binding upon and creates rights and

obligations only.

Thus a third party cannot acquire any rights or obligation in the contract.

The case of Adler v Dickson 1955(1) QB 158. The case of A and D (supra) illustrate the whole issue of third parties and exemption

clauses.

Alder was a passenger in a ship owned by P and C, when the ship arrived on a certain port most passengers got out of the ship and

upon reboarding whilst walking upon the gang of banks and fell due to the unstableness of the which expressly provided that the

company was excluded from liability as well as its servants for negligence. It is tried that the contract was between Mrs Adler and

Co. Instead of suing the company Mrs Adler sued the company’s employees for negligence. Dickson was manager of gang for the

planks. The employee D relied upon the exemption clause. The court held that the exemption clause. The court held that the

exemption clause exempts the company not the employees. The employees no matter how efficacy was the wording of the clause

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could not derive benefits from a contract to which they were not parties. The ship in which Mrs Adler was traveling was called

Himalaya and the exemption clause at issue in that case became commonly known as Himalaya Clause. After the Adler case

company went back to the drawing board and came up with an embracing clause which protected its workers. The issue then came

up again for decision in the case of Scruttons v Midlands Silicons Ltd 1962 AC 446, 1961(2) LLR 365. In this case Lord Raid’s

speech made it clear that it is possible for exemption clause between A and B to adequately protect C on condition that (1) the

exemption clause must expressly make reference to C the employee. The one in the Himalaya did not. (2) The company in entering

into contract with the customer must have acted both in its own rights and as an agent for its employee.

Having considered the speeches in the Midlands case appropriate clause was now drawn by the company.

Principles of interpretation

The following principles have evolved in interpreting written contracts.

(i) The ordinary grammatical meaning – it provides that the contract must speak for itself through the ordinary

grammatical meaning of its words.

Total SA Pty Ltd v Bekker 1992(1) SA 617 at 625 the court held that, “the underlying reason for this approach is that

where words in a contract agreed upon by the parties thereto and therefore common to them speak with sufficient

clarity, there must be taken as expressing their common intention.”

NB You can use the parole evidence rule principle to support the idea that our courts still uphold the principle of

SANCTITY.

However, the ordinary grammatical meaning will not be applied in the following circumstances:

(a) If the result with be absurd Scottish Union and National Insurance Co Ltd v Native Recruiting Coop Ltd 1934 AD

458, 465, the court held as follows, “It however the ordinary sense of the words necessarily lead to some

absurdity/to some repugnants or inconsistency with the rest of the contract then the court may modify the words

just so much as to avoid the absurdity of inconsistency but no more.”

(b) If it is clear from the contract itself or from evidence that the words have been used in some special and technical

sense:

Rand Reitfontein Estates Ltd v Cohn 1937 AD, 517, 318, where the court held that “Again if the words on the

contract have been used in a peculiar sense evidence of the sense in which the parties used the words may be

given.”

(ii) The context: words in a contract must not be read in isolation but in their context. The court’s approach was

summarized in the case of Melmath Town and Board v Marious Mostenrt Pty Ltd 1984(3) SA 718, 728 where the

court held as follows, “As in the case of statutes the contextual approach phrase in a contract requires that regard

must be heard not only to the language of the rest of the provision concerned or the contract as a whole but also to

considerations such as the apparent scope of purpose of the provisions.

The evidence of surrounding circumstances – this was aptly summarized in the case of Delmas Co. Ltd 1955(3) SA 447, 454, where

the court held that, “If the difficulty cannot be cleared up with sufficient certainty by studying the language recourse must be heard to

surrounding circumstances i.e. matters that were probably present to the minds of the parties when they contracted. The court can

also apply rules of interpretation these rules have evolved from common law and they include the following:

a) courts may always presume that the parties intended an interpretation that is fair to them both rather than

an interpretation that gives are party on unfair advantage over the other

b) an interpretation that avoids inconvenience is usually preferred

c) an interpretation that gives effectiveness to a contract is usually preferred to the one that renders at abortive

d) it will be presumed that every word in the contract was intended to have some effect to be of some use

e) the change of expression will be presumed to signify a change of meaning

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f) general words will be given a restricted meaning to fit in with the context in which they are used

g) greater weight will be given to special provisions rather than to general provisions

h) the express mention of one item will be presumed to exclude similar items that are not mentioned unless it

appears that the one item was mentioned for the sake of caution.

Implied Terms

These are terms that are imposed into a contract from its context. They come in three forms namely:

(i) terms implied by law/

These refer to terms that are imported into a contract by operation of either common law or statute law regardless of

the intentions of the parties e.g. a sale of land has to be in writing i.e. The Labour Act imposes a number of minimum

conditions on an employment contract. Every contract of sale has an implied warranties against latent defects. Also

the Higher Purchase Act requires every Hire Purchase agreement to be reduced into writing. It also forbids a

purchaser in a Hire Purchase Agreement to waive his rights given to him by the Hire Purchase Act.

Terms Implied by Trade Usage

These arise where a specific trade has developed its own universally and uniformly observed rules which apply in contracts of that

trade or profession.

The requirements for implying a contractual term by trade usage were laid down in the case of Golden Cape Fruits Pty Ltd v

Footplate 1973(2) SA 602 as that the term should have universal, uniform, notorious, reasonable, certainty and should not conflict

with other provisions of the contract.

Such a term can become a term of the contract in two ways namely:

a) if both parties are familiar with the usage they may be taken to have tacitly agreed that the usage

should be a term of their contract

b) if one of the parties is ignorant of the usage he can only be bound by the alleged trade usage if it

satisfies the requirements laid down in the Golden Cape Fruits case.

Terms implied from facts

Tacit terms

These refer to terms that become patently clear when regard is given to the language used in the contract and surrounding

circumstances.

In the case of Alfred Mcalpale v Transvaal Provincial Administration a tacit term was defined as, “an unexpressed provision of the

contract which derives from the common intentions of the parties as inferred by the courts from the express terms of the contract and

surrounding circumstances.

”A question that inevitably arises from the definition from is how are courts supposed to infer terms implied from facts? This question

is answered in the case of Wilkins v Voges 1994(3) SA 158 where the court adopted a four pronged approach namely:

a) whether the proposed implied fact has been written in the contract if not then the court will ask itself the following

question:

b) whether the tacit term is necessary in the business sense to give efficiency to the contract

c) whether it can be competently that of that time the contract was being negotiated someone had said to the parties, “of

course so and so will happen.”

This is called the official By-Stander Test

d) whether the term is capable of clear and exact formulation. See also Reigate v Union Manufacturing Co. 1918 (KB)(1

592, p605.

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It should be noted that the courts are reluctant to imply terms into contract because:

1 for instance if there is a written contract the whole idea is to have certainty and it is unlikely that the parties

will leave certain terms

2 if a court started to imply certain terms hence destroy the idea of certainty

3 the whole basis of the agreement of contract is agreement and parties are bound because they had agreed.

Doctrine of sanctity and freedom of contract

The doctrine of freedom of contracts and the doctrine of sanctity of contract dictates that courts should not

interfere with parties’ contract.

4 courts are also reluctant because, they do not want to be accused for making contracts for parties

5 if implied terms became inconsistence with expressed terms there is no rational for implication.

Note however that, there are certain implied terms which parties by mutual assent contract out of.

Freedom of Contract

This essential means that one is free to enter a contract or not to and having decided to enter the contract, to enter with whom

he/she ever wants and to decide upon which terms they want. The general law is that while it is formal true, in practice it is very

different, if you choose to contract in most cases depends on the strength of your bargaining power one does not have a choice

especially in cases of standard forms contracts i.e. mortgage bonds.

If one chooses to contract with a building society to borrow money from them there is no freedom to lent money on daily basis and

they draft standard form contracts, which the borrower may contract to or not. It must be noted however that those standard form

contracts, have merits for bankers who has to enter into one contract with thousands of customers will reduce their costs.

Sanctity of contracts

This doctrine merely means that where parties had freely entered into the contract it becomes sacro-sanctity and the courts cannot

make another contract for them. The statutes such as Consumer Contracts Act and Contractual Penalties Act, seeks to aid

interpretations of such contracts. By making exemptions clause the party concerned seeks to exempt itself from which it should be

ordinarily be liable. This is interpretation the courts should try to uphold the doctrine of freedom of contract. The common law

position is that the court will not struck down the exemption clause on the basis of being harsh or unreasonable against the other

party. The court also looks at the liability to which the proferens would be subject to where there is no exemption clause. At

common law if there is no strict liability the other party will have to prove negligence CMB v NRZ 1990(1) SA 522, 1988(1) ZLR 304

Transfer of Contractual Rights

Contractual rights can be transferred through:

a) cession

b) delegation or

c) novation

Cession

In regard to cession the contractual obligations are transferred to the other party known as a cedent. Cession is sometimes

described as some kind of novation. Cession brings in commercial convenient and facilitates commerce by enabling the creditor to

account his rights to account by selling them instead of enforcing them himself.

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Cession curtails circuit of litigation. Notice of cession to the debtor, is not necessarily required but it is legally advisable that the

debtor who pays the ceded after the cession in good faith without notice of the faith, is considered as legal have settled the debt.

However a debtor who pays the ceded after notice of cession still remains liable to discharge the debt to the cessionary.

He cannot reclaim the payment from the ceded. Cession is sometimes described as a kind of novation but it differs from novation in

that novation is requires consensus of the debtor and consequent of the novation will be that there will be a new contract to replace

the old contract.

Whereas cession result in novation the cessionary still sues on the old contract but cession does not do so. It is submitted that it is

legally improper to refer to cession as a form of novation. Cession is the opposite of delegation.

Delegation

It requires the agreement of the all parties concerned that a third party be substituted for the original debtor and the later become

discharged from the obligation of the debtor. The creditor had to agree the older debtor in replacement by the new one. The idea

behind delegation is to transfer burden to of the debtor i.e. irrecombly from the original to the new debtor. Accordingly the creditor

cannot sue the original debtor see the case of Van Acherbeck v Walters 1950(3) SA 734. See also Jacobs v Faw 1982(2) SA 863.

The common intention of all the 3 parties that a delegation should take place may be express it may be implied from surrounding

circumstances including the contract of the parties. See Metalbox of SA v Dustan (Pvt) Ltd 1974(2) 208. The introduction of a third

party to a transaction does not necessarily mean that there has been delegation e.g. where a debtor requests a third party on his

own initiative, promises the creditors to discharge the credit on behalf of the debtor. This does not realize the original debtor.

Novation

It means the replacement of existing contractual obligation by new obligations. The concept of novation arose during Roman times,

to alleviate the problems caused by supervening or initial impossibility. Novation discharge the old obligation and a completely new

contract is created. There are 2 types of novation:

- Voluntary novation (novatio voluntaria) - where 2 parties to a contract mutually agree to enter into a new

contract to replace a existing contract.

- Compulsory novation – where an existing contract is superceded by a judgment of a court of law. This is

sometimes called novatio necessaria. See the case of Van Copenhagen v Van Copenhagen 1947(1) SA

576 , Barclays National Bank v Smith 1975(4) SA 675 and Suncliff (Pvt) Ltd v Dyke 1978(1) SA 1980.

Termination of contractual obligation

A contract is terminated after being performed. What kind of performance is required? Performance means that each party must

perform its own obligations as envisaged by the contract.

Performance should be made by the party upon whom the obligation is imposed and that performance must be rendered to the

person recognised by the law as being competent to receive the performance. See Hanornag SA (Pvt) Ltd v Otto 1940 CPD 437.

What happens if the performance does not exactly confirm to performance expected in the contract i.e. must a party performed

exactly what he is obliged to do under the contract (informa specific) does it suffice if a party rendered equivalent performance.

For a court of law to decide this issue it is always difficult.

However this problem has been fairly settled in SA in the case of Van Diggelen v De Brain and Anor 1954(1) SA 188 where the court

outlined the approach to the adopted.

First and foremost the court must establish the parties intention, talking into account the surrounding circumstances and everything

which gives a due to that mutual intention.

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The court must seek to find, what the parties would have wished to had their minds had been directed, whether the performance was

to be specific and equivalent.

Secondly should there be no clues as to the parties to mutual intention, the presumption that the performance was to be specific.

This is a rebuttable presumption.

Thirdly the court will in case of doubt be more likely to have a favour of equivalent performance.

If the manner of the act to be performed if it is immaterial or where performance, informa specific is impossible through no fault of the

promissor. See the case of Peters Hammon v Koksrud 1999 AD 427

Impossibility of performance must be genuine

This that the promissor cannot simply tender equivalent, performance because specific performance is becoming expensively

difficult.

Fourthly the act of performance tendered where such as permissible must in the just instance be an equivalent to that mentioned in

the contract or be of such a nature that it can make no material difference to the promisee.

Such seems to be the position if any immaterial or inequality can be put right by compensation given to promisee by promissor.

Finally the court’s paramount obligation is to be justice between man and man. It must to this be guided by the terms and

circumstances in the contract under consideration.

Thus in cases where the promissor had discharged the onus required by number 2 he may be circumstances falling short of

impossibility and even where there may have been some fault on one party, the promisor and where the court may come to

conclusion that the promissor’s performance or tendered performance amounted to substantially performance or is such of a nature

that the promisee may be compensated damages for any shortfalls. See Reliance Agency (Pvt) v Patel 1946 CPD 465. See also

Adler v Eliot SC 169 of 1958.

Termination by mutual agreement

A contract can be terminated by mutual agreement. The methods of discharge dealt with above all have one thing in common, they

are initiated and are a consequence of mutual agreement. If parties are free to enter into a contract on any terms and conditions

then it follows that they are at liberty to agree to discharge the contract. Thus where the parties by mutual agreement agreed to

discharge the contract that is legal quite proper. For a contract to be discharged by agreement, it is not problematic if the contract

had not been performed, it is still executed. Problems may arise where the contract had been partially performed. If the parties have

completely performed, then the question of discharge by agreement does not arise as such a contract will be deemed to have been

discharged, through the first method dealt with i.e. discharge by performance. It is submitted therefore, that discharge by mutual

agreement is different from discharge by performance. In general an agreement to discharge the contract tacitly raises the

presumption of restitution of whatever performance have been rendered. See the case of Geldenhnys v Maree 1962(2) SA 571(O).

Once a contract is discharged by agreement a part cannot be heard to argue that they seek to enforce the contract or some rights

arising therefrom. Lastly under this rubric, a contract can be discharged through waiver by the promisee.

What are the requirements of waiver. The promisee/or the person who was supposed to receive the performance must have

knowledge of his rights under the contract and the party alleging waiver must proof the fact of waiver, whether expressly or by

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conduct. If a party alleges waiver by conduct, the promisee’s conduct must leave no reasonable doubt, as to his intention of

abandoning his rights in the issue. These requirements were underscored succinctly in the case of Hepner v Roodepoort-

Maraisburg Town Council 1962(4) SA 77(A), where the court stated the requirements as follows:

“The onus is on the appellant, (the promissor, he must show the respondent (promisee) with the full knowledge of her right decided

to abandon it, whether expressly or by conduct, plainly inconsistent with the intention to enforce it.

In Ex Parte Sesseus 141 TPD 15 the need for full knowledge was justified on the basis that waiver is a form of a contract, in which

the promise i.e. taken intentionally to have surrendered his rights. Intention to sole surrender can only exist where the promisee has

knowledge of the facts of legal ramification of his consequences. See the case of Chidziva and Others v Ziscosteel SC/137/97. See

also the case of Patel v Controller of Customs and Excise 1982(II) ZLR 82.

Termination of discharge by operation of the law

How courts with supervening impossibility in Zimbabwe. Until the decision of Pieters, Flamman & Co. v Kokstad Municipality 1919

AD 422, they used to be no contract between English law and Roman-Dutch law on the effect of supervening impossibility. English

law starts from the general proposition, that supervening does not excuse non-performance of the contract subject to several

exceptions which include the doctrine of frustration. In Pieters Flamman case the Municipality contracted that company to provide

streets lights for ten years.

During the substance of the contract, the partners were failed as enemy aliens for imprisonment and their business was wound up

under the relevance legislation.

The municipality claimed damages for breach of contract and forefeiture of the firm’s plant under the contract. The Appellate Division

dismissed the action.

The court held that if a person is prevented from pertaining his contract by this vis major casus fortuituous under which falls an act of

state i.e. person is discharged from liability. A contract is void if at the time of its inception its performance is impossible. The same

apply to where the contract became impossible for performance.

Void – everything must be returned to original position status core. Supervening impossibility discharge the contract provided the

promissor proves that the contract has absolutely become impossible of performance. This does not mean that the promissor can

escape from his obligation simply because performance has become uneconomic/difficult. The English doctrine of frustration does

not apply in our law.

If only a part of a contract had became impossible for performance the court then looks at the divisibility of the contract and if then

find that some obligation may be performed, then the promissor is discharged to the extent of impossibility. The creditor or promisee

had the option to cancel the contract or accept reduced performance. See Stanfeld v Kuhn 1940 NPD 84, See also the case of Lupu

v Lupu 2000(1) ZLR 120 and the case of Bobs Shoe Centre v Heneways Freight Services 1995(2) SA 421. See also Minister of

Industry and Technology v Tanaka Powers SC 114/1990. In Stanfeld there was the contract for the sale of land for 500 pounds per

acre, thus major in the form of expropriation of or a national road, made it impossible for the seller to transfer more than 0,471 of an

acre, the court held that the buyer was entitled to demand transfer of 0,471 of an acre against a price of 47 pounds. If parties agree

to the performance of something which is risk impossible, then the court will enforce the contract i.e. remedies of breach of contract.

In the same light, impossibility created by a party does not discharge the case of WireOHMS v Greenbalt 1939(3) SA. See also the

case of Hershman v Shapiro and Co. 1926 TPD, 367 and Dickson Motors v Oberholzer 1952(1) SA 443. See Kok v Osborne

1993(4) SA 788; Benjamin v Myers 1946 CPD @ 655; Bayley v Harwood 1954(3) SA 498. See Kell v Henry [1903] 2 KB 740.

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Set off – Compansatio

It denotes a situation where two parties to a contract or generally where a creditor and a debtor have reciprocal obligations. If the

debtor or obligation are equal both are discharged and if they are unequal, the smaller debt is discharged and the larger is reduced

proportionally. See the case of Scheirant v Union Government 1926 AD 256. See also Treasure General v Van Vuren 1905 TS 582

and Baine v Barclays Bank 1937 SR 191. Set off is the principle of common law that is Roman-Dutch law not English law. It has to

be pleaded and proved. For set off to be effective the reciprocal debts or obligation and fully due. Liquid means that the debt must

be certain or capable of readily being ascertain i.e. over draft v interest miscalculations by a bank.

The one debt extinguish the other as if performance or payment have been rendered. Spurious defences based on bailey denial of

the debt will not defend set off. See the case of Bevcorp v Nyoni and Ors 1992(1) ZLR 352. See also Roman Catholic Church v

Southern Life Assurance Ass 1992(2) SA 807. See also Central African Railways v Williams 1963 Rand Nyasaland 106/166. See

also Trinity Engineering (Pvt) Ltd v Anglo Shipping Ltd 1986(1) SA 700(25).

Breach of a Contract

It can be rightly be classified as the method of termination or discharge. However although breach is said to be a mode of

termination of contract. Breach does not of itself automatically terminates a contract. Breach has the effect of entitling the innocent

party to cancel the contract besides to give such entitlement the breach complained of must be either a major (material), or

fundamental breach, repudiation, or breach in circumstances where the contract provides that breach will provide an effect of

terminating the contracting. Breach of contract is committed where one party who is bound to vendor performance at a later date

(future date) indicates that he/she will not tender performance when it falls due (anticipatory breach or repudiation).

Performance that should have rendered is not rendered at all – Non-performance or ordinary breach

Some performance is rendered such performance is not in accordance with the terms of the contract, the debtor fails to perform

timeously. A party who fails to perform timeously is said be in mora. See the case of Breytenback v Van Wijk 1923 AD 341. See

also Broderick Property v Rhool 1962(4) SA 447. See also Goldstein and Wolff v Maison Blanc 1948(4) SA 646 and the case of

Microu-Tsicos and Anor v Swart 1949(3) SA 715.

Repudiation

Apart from the time element in breach, where does any other kind of breach terminate a contract? Repudiation is where one party to

a contract evinces (discloses) an intention no longer to be bound by that contract, that repudiation can be express or by conduct.

Tuckers Land Development Corporation v Holves 1980(1) SA 645, the appellant property drew a plan of a township on which

appeared on 2 stands, which were then sold to the respondent Holves. The appellant came up with new plan which two stands did

not appear. The court held that the drawing up of the new plan meant that the appellant have repudiated the old plan contract.

Where somebody expresses an intention no longer to bound by his contract, that is fine. The innocent party has an election whether

to accept the repudiation thereby terminating the contract, or rejecting the repudiation/in which event the contract remains in force,

such an election however must be made within a reasonable time. See White and Carter Council v McGregor 1961(3) AIIER 1178,

1962 AC 413. The city council were responsible for distributing litter bins and the defendant owned a garage, the city council, will

allow organizations and people to advertise on the bins. The initial contract between the council and the defendant was duly

performed. Later one of the employees of the counternewed the contract for a further 3 years. The employer did not have the

authority to renew the contract. Defendant went to the council that advised then that he had cancelled the contract.

The council decided not to accept the repudiation, thus the contract remained in force from 1957-1960. The council later ratified

what its employer had done – that is irrelevant in determining the outcome. The defendant did not take advantage of advertisement

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places but the council claimed payment. The court held that the contract remained in force for both parties and the council was

entitled to the 3 years of advertising. In that case the court did not take about the mitigation rule. This rule means that any person

who suffers loss or damages should take reasonable steps to mitigate that loss). Mitigate – to reduce the detrimental. The council in

his causa/case had not mitigated its loss. The mitigation rule applies to damages and not to cases of specific performance. And it is

submitted that in the White and Carter case the court did not apply the mitigation rule because the council was seeking specific

performance. It was fortuitous though that in that case the council was able to render performance without Mcgregor’s consent.

Material breach

This is sometimes called fundamental breach. This is a breach that goes to the root of the contract, the analysis i.e. is a factual one.

Is the breach that had occurred is so serious that it undermines the contract. And the innocent party is not reasonably expected to

continue with the contract. It amounts to non-performance. In terms of drafting a contract, parties tend to say or to provide that any

breach if not remedied within 14 days will give the innocent party time to cancel the contract. The purpose of such provision is to

obviate the need to proof that the breach was fundamental or serious. Spies v Lombard 1950(3) SA 469 ; Universal Cargo Carriers

v Citati [1957] 2 QB 401, See also Ankemp v Morton 1949(3) SA 611. On repudiation see also the following cases Street v Dublin

1961(2) SA 4. See also Ponisammy v Versailles Estate (Pvt) Ltd 1973(1) SA 372.

Remedies for breach of contract

When a distressed/distraught dashes client into your offices one had to decide what can be done, to enforce the contract or to secure

some remedies and how it is going to be done. If X does not pay under his contract you can sue him and get a contract judgment

which can be enforced by selling his property. There are five remedies of breach of contract:

1 cancellation and damages

2 order for specific performance

3 declaratory order

4 interdict

5 Exceptio non adimpleti contracts (I cannot perform because you had not performed your part)

1 Specific performance

In Roman-Dutch law an order for specific performance is the primary remedy. This is an order directing the defaulting party to

undertook what they had agreed to do under the contract. Intercontinental (Pvt) Ltd v Nestle Zimbabwe 1993(1) ZLR 21. Nestle had

undertaken to deliver certain quantities of milk and they failed to deliver the milk, then Intercontinental went to the contract for an

application for specific performance.

The principle that specific performance is the primary remedy is the way of contrast with English law, where, unless there are special

circumstances which makes specific performance appropriate, the court will award damages. In Roman-Dutch law the court will

order specific performance unless there are special circumstances which makes it appropriate. See the case of Kruntel Bro v

Lazarus 1992(2) SA 423, 1991(2) ZLR 125. See also Haynes v King Williams Town Municipality 1950(1) SA 370; where the SA

Appellate Division gave indication where the court will refuse the order of specific performance. The guidelines in this case require

caution because of the influence of English law. The court will refuse specific performance where the damages are adequate. (Note

that this neglects the primary purpose of specific performance in Roman-Dutch).

2 The court will refuse to give order where specific performance is difficult to enforce.

3 Where the thing being sought in terms of the contract can be easily be found elsewhere. It is submitted that this is not

a valid ground, because like the first its nature is to undermine the nature of specific performance. The SA courts

have moved away from 3 and 1. See Benson v SA Mutual Life Assurance Co. 1986(1) SA 776, where the plaintiff

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was seeking specific performance of delivery of company shares when some were available at the Jorburg Stock

Exchange. The court ordered specific performance. The first ground was also rejected by court or the

Intercontinental case where the court ordered specific performance and also rejected by Zimbabwean courts.

4 A court will not order specific performance where that will entail services of personal nature.

5 A court will not order specific performance where such performance will operate unduly harshly over the defendant.

Or where the performance is impossible.

Services of a person nature will arise for instance in employment situations. The court may not order a worker to go and resume

work because one can not be sure whether the performance will be rendered fully.

At common law a court will not order a specific performance of a contract, See the case of Sheahood v Union Government 1926 AD

286. See also the case of Commercial Careers Ltd v Jarvis 1989(1) ZLR 344; Winterton Holmes and Hills v Paterson SC 115/95

where the Supreme Court accepted that it will not order reinstatement specific performance where there has been a bitter

relationship between the employer of employee. In the case of Hama v National Railways of Zimbabwe, the court said that a part

who seeks specific performance must have performed his part of the bargain or alternatively must tender performance and indicate

ability will to perform. The ratio of the Hama case is however the court will not order specific performance where it is impossible to

perform/enforce/order. See also Farmers Cooperative Read Berry 1912 AD 343.

Exceptio non adimpleti contractus

Like said earlier on a party cannot seek specific performance from the other party from the contract if he has not performed his own

party. The party seeking specific performance must tender his own performance. The essence of this remedy is, simply stated, that

my obligation to perform has not arisen because you have not performed your own obligation. It is submitted that this remedy must

be treated with caution as it will optimally apply to reciprocal obligation.

Interdict

There are 2 types of interdict – temporary and final interdict. An interdict is an order stopping the other party from the doing of

something, which will jeopardize one’s rights under the contract. A final interdict is an equivalent of specific performance, where the

obligation sought to be enforced in character, i.e. negative prestation i.e. in a Covenant Restraint of Trade, what the covenantor

undertake not to do something in Zimbabwe or Harare. The undertaking is negative in character. One is not undertaking positively

to do X. The only way to enforce the covenant is order (final interdict), stopping the covenantor from breaching the covenant. A

temporary interdict (an interdict pendente lite). This literally means to free a situation pending litigation i.e. where a purchaser wants

to stop the seller from transferring a disrupted property pending litigation (legal action). Flamelilly v Zimbabwe Salvage (Pvt) Ltd and

Anor 1980 ZLR 378 where the interdict being sought was to stop the respondent from destroying a mining dump it until litigation

pertaining therefrom had been finalized. Christie indicates that the requirements for a final interdict are the same of these specific

performance but are different to those of a final interdict. The requirements of temporary interdict are:

1 The applicant or the person who seeks interdict must prove a clear prima facie right i.e. in the sense that the right

might be open to some doubts, if the averments/submissions made by the applicant taken together with averments

made by the respondents are such that given the possibility of providing further evidence the right will be proven.

2 There must be a reasonable apprehension of irreparable harm if the interdict was not granted the Flamelilly case if the

respondent had proceeded to destroy the mining time is that there would be no mining dump at the end.

3 There must be no other ordinary adequate remedy which would give the applicant some protection which would seek

through the interdict. The balance of convenience must be in the applicant’s favour, this means that the

circumstances must be such that the prejudice suffered by applicant if interdict were not granted would be greater

than the prejudice suffered by respondent if interdict were granted. The potential prejudice to the applicant should he

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succeed in the main claim is that he will not be able to get an order for specific performance. See the case of Gideon

v Ngumo 1973 RLR 197. See also Setlogelo v Setlogelo 1914 AD 221. On the other hand the prejudice the

respondent tend to suffer is being lend to freeze his affairs. See Ericsson (Pvt) Ltd v Protea Motors Ltd and Anor

1973(3) SA 655.

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