CONTENTS

TYPE OF LAW PAGE

The Legal System …………………………………………………………..……...3

LAW OF CONTRACT………………………………………………………….…....8

LAW OF PURCHASE AND SALE ..................................................................28

LAW OF PROPERTY......................................................................................34

LAW OF NEGOTIABLE INSTRUMENTS.......................................................37

LAW OF SECURITY ......................................................................................43

LAW OF AGENCY .........................................................................................47

LAW OF EMPLOYMENT ...............................................................................54

LAW OF PARTNERSHIP ...............................................................................57

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REVISION QUESTIONS………………………………………………………….60.

The legal System

Nature of law
Laws are rules established by authority to regulate the behaviour of members within community or country. Is a
yardstick, which determines what must be done or must not be done. Not all rules are laws. Laws are legal rules.
Moral rules are not laws.

Principles/Essentials/Elements/Characteristics of law
The major principles of law are equality, uniformity, certainty, authority, and reasonableness. These principles
should be available within each a piece of law.
1. Equality
Laws must be applied equally to people who are in similar circumstances or cases regardless of status, that is
the poor, rich etc. No person should be above the law. But at times it be may be unjust/unfair to treat minors
and adults the same, insane and normal the same.
2. Uniformity
Legal rules must be applied uniformly through a given area/territory. No area must be above law
3. Certainty
Law must clear, unambiguous. In addition everyone is expected to know what the law says. Laws must be
gazetted for people to know them before implementation hence ignorance of law is not a defence (ignorantia
juris nemi nem excusat)
4. Authority
Laws must be made by those authorised to do so. In Zimbabwe, it is the Parliament and other delegated
authorities eg municipality to make by - laws
5. Reasonableness or just application
Law must order what a reasonable person considers reasonable or appropriate in a given circumstance. Must
not cause hardship to people. Must order what is possible not impossible. Law should promote what is right
and proper in accordance with community’s moral. It should prohibit what is evil and should be administered
fairly.

SOURCES OF LAW .
The sources of law can be grouped into common law and legislation.
1. Common law is the law common or known to the country as a whole as distinct from the laws in a
locality. Are laws made using common sense. Covers laws or rules as enunciated by courts, custom,
writings of jurists and academic authors. Thus common law covers all sources except statute law (Laws
originating from legislation/parliament)
2.
a) Customary Law. Custom refers habits or practices observed by individuals in a society. Are
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 unwritten code of conduct or behaviour. Custom is one of the oldest sources of law. It applies in
restricted circumstances. Customs can be social or legal. Legal custom is the source of law
“Until a court of law, rules that a custom is law, there is no law”. To establish a custom as law
the rules in Van Breda v Jacobs 1921 AD 330 are followed.

“The custom must be reasonable, proved to have been in existence for a long time, generally
recognised and observed by the community, certain, clear and consistent with statute law”. It had
long been a custom – known as ‘first come first pull’ – among fishermen at False Bay that once
nets/lines had been set on a stretch of beech where no boats were permanently stationed, other
fishermen were not entitled to poach on the shoal of fish. Held that a custom will be enforced by
the courts where it is:
 Reasonable
 Certain long-standing
 Uniformly observed
 Consistent with statute law.

b) Judicial precedent/Case Law is the second most important source of law in Zimbabwe after
legislation. This refers to laws made by judges when they face a novel case.
Functions of judges interpret and apply existing laws to solve a case before them but when faced
with a novel case, they are forced to make laws. Hence judicial law or precedent is used in a novel
situation where no legal rules exist. The case is then decided based on legal principles of justice or
reasonableness. The decided case can then be used to solve future similar cases.

In passing judgement, a judge gives his reasons (ratio decidendi) by setting out the facts of the
case and the law applicable to it. So another judge should able to extract the essential reason for
the decision; the ratio decidendi as opposed to observations on the law that were not essential to
the decision – obiter dicta [statements made in passing to clarify a point]. The ratio decidendi, if
made by a higher court becomes the law.

A ruling concerning the legal position applicable in a particular set of circumstances becomes the
law – stare decisis et non quieta movere. It is the reason or principle that must be followed i.e.
ratio decidendi. Obiter dicta are statements said in passing and are therefore not binding.
Precedents save the profession and the courts from being overwhelmed by volume of the cases.
They also allow for certainty and predictability.
Advantages of judicial precedent
 Consistency.
 Certainty/predictability.
 Flexibility. Law can be created without waiting for legislation.

Disadvantages of judicial precedent

 Uncertainty due to the large number of cases that can be reported or referred to.
 Unconstitutionality. Judges are then seen as making law instead of merely applying it
 Bias arising from judges especially under conditions of rapid change
 Reform may be stifled.

c. Roman-Dutch Law. Sometimes know as general law. Romans spent 400 years in the Netherlands.
Roman law was grafted gradually to Dutch law by court actions and Dutch writers. As the society
grew, Roman laws were used where local Dutch laws were silent, not reduced to writing,
obscure or non-existent. Thus we talk of the reception of Roman law into Netherlands. This
happened as follows:
 Formal reception. Roman law taken over completely by legislation
 Informal Infiltration-unnoticed. Not openly accepted

Roman-Dutch laws were introduced in Zimbabwe during the colonial era.

2. Legislation. A statute is the most authoritative source of law in Zimbabwe. Its provisions apply in every court.
Statutes may change existing laws. Statutes are made by the Parliament. Parliament consists of the House of
Assembly and the Senate. Legislative power is vested in the Legislature i.e. the President and Parliament. The
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 Legislature can make whatever law it considers necessary or desirable in the interest of peace, order and good
governance by way of statute law.

The legislature process can be broken down as follows:

1. First Reading. The Minister gives notice to the House of his intention to present the bill. The proposal is
heard in its illegal language. At this stage no debate takes place and the bill/proposal is referred to the
Parliamentary legal Committee(PLC) . PLC checks whether any provisions might violate the Declaration
of Rights or other provision of the Constitution. PLC reports back to the House. Any adverse report is
considered and the House may accept/reject the opinion of PLC

2. Second Reading. The Minister explains the principles of the bill. Debate is confined to the principles only.
After the 2nd reading the bill goes to the committee stage.

3. Committee Stage. This stage gives members of Parliament (The whole house becomes one committee), or
the committee an opportunity to discuss the Bill clause by clause and improving the wording.
Amendments may be introduced without upsetting the underlying principles of the bill.

4. Report back of Committee: Findings can be subjected to debate, amendments etc

5. Third Reading. Debate may take place on the principles. The bill is then read a 3rd time. Once it is passed,
it then goes to the next House.

Once passed by both Houses, the Bill is presented for Presidential Assent. When the President signs a Bill
it becomes an Act of Parliament and part of law, thereafter published in the Government Gazette. If the
President withholds his assent the bill is returned to Parliament.

Disagreement between the two houses.

If Senate rejects a bill or amendment; the bill may be presented for Presidential assent “in the form in
which it was passed by the House of Assembly”. In addition, where there is a certificate of urgency the bill
may proceed for Presidential assent in the form in which it was passed by the House of Assembly.

The Zimbabwean court structure

SUPREME COURT
SUPERIOR COURTS

HIGH COURT

MAGISTRATES COURTS

PRIMARY COURTS INFERIOR COURTS

A) COMMUNITY COURT

B) VILLAGE COURT

The Zimbabwean court structure is as follows:

a) Superior courts are the Supreme Court and the High Court
b) Inferior courts. comprising village courts, community courts, magistrates courts, administrative courts,
small claims courts and labour courts.

The word inferior simply means that these courts have a smaller or lower jurisdiction than superior courts.
Are also referred to sometimes as the .lower courts.

1. Supreme Court
-Is the superior court of record and final court of appeal
-Is presided by the Chief Justice who is head of the judiciary and judges of the Supreme Court
-Is not a court where a case may be heard for the first time, is mainly a court of appeal, unless is a
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 constitutional case
-Not a court of original jurisdiction
-Has unlimited jurisdiction in both criminal and civil cases
-There should be no appeal from any judgement/order of the Supreme Court
-Is not bound by its previous decisions or judgements
-Is the highest court in the country

2. High Court
-Is presided over by judges appointed according to the constitution of Zimbabwe
-Has full unlimited jurisdiction in both criminal and civil cases
-Is a court of appeal from the Magistrate court
-Has jurisdiction and authority to review all proceedings and decisions of all inferior courts.
-Is a court of record
-Appeals goes to the Supreme Court
-Can pass death penalty or life imprisonment judgement

3. Magistrates Courts
-Are presided over by magistrate appointed by the Public/Civil Service Commission. The person must
have relevant qualifications of a legal practitioner.
-Have no jurisdiction to try criminal cases involving the following:
i) treason
ii) murder
iii) any offence where the person can be sentenced to death if convicted
iv) Cannot dissolve marriages other that customary law marriages in terms of
Customary Marriages Act 5:07 but can determines incidental cases to marriages eg the
guardianship and custody of children.

May only act as preparatory in the above cases. Magistrates court are in different
categories which are regional, provincial, senior and ordinary

4. Primary Courts:
Primary courts do not have criminal jurisdiction. Procedures are informal and are not formal courts of
records. Rooted in customary laws (Civil laws). Cannot dissolve civil law marriages but may determine
incidental matters eg custody of children, maintenance etc. Presided over by a person appointed by the
Minister of Justice or local authority from a list of candidates recommended by the local community. No
legal practitioners are required to represent clients in courts
a) Community Court:
-Is presided by a Traditions Chief. Sometimes as Chief’s Court.
b) Village Court
Is presided by a Traditional headman. Is the lowest in the hierarch of courts.
Specialist Courts
These deal with special areas, which require a special court eg, Labour Relations, The Administrative Courts,
Small Claims Courts

CLASSIFICATION OF LAWS
There are many types of laws, making classification of law cucumber some. Generally, law can be classified into
Private law and Public law.

Private law refers to laws, which regulate relationship between the citizens. Private law includes: family laws,
law of property, law of succession, civil law and law of delict.

Public law is concerned with the issue of power within the state, the relationship between the state and the
individual. Examples are constitution, criminal laws, administrative laws and international laws

The difference between civil law and criminal law

Criminal law Civil law
Type of matter Deals with crimes. A crime is an offence Civil law sets out the rights and duties
dealt with against the state. The state prosecutes sbetween citizens/ people. An
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 a person who is accused of a action is brought by one person (the
crime. The object is to prove claimant) against another (the defendant).
guilt. The object is to show liability.
Parties involved Parties involved: State & the defendent Parties involved: Individual affected
persons
Standard of proof Burden of proof – guilt must be shown Burden of proof – liability must be
beyond reasonable doubt. shown on the balance of probabilities.
Purpose of court Object – to regulate society by punishing Object – to regulate the society by
action/ nature of the wrong doer through imprisonment, fine compensating the claimant, through
sanctions etc damages, to the position he/she
would have been in had the wrong act not
occurred.
Examples of Theft, rape, robbery, assault, treason, Defamation of character, breach of
cases murder contract, divorces, dispute over piece of
land
Responsible The criminal courts(Supreme, High and The civil court (Community and Village
courts Magistrate courts) will sentence courts) will order the defendant to
the defendan. May fine or impose a period pay damages or it may order some other
of imprisonment remedy, e.g. specific performance.
Reason for action The wrongdoer must have had intention to An action arises even if the wrongdoer
or offence commit the offence eg murder had no intention to injure or prejudice
another
Nature of act The act complained of must be unlawful There is no need to establish that the act
complained was unlawful

LAW OF CONTRACT
Contract can be defined as :-
I. A lawful agreement between two or more competent parties, which establishes rights and obligations
between or among the parties, breach of which gives rights to legal enforcement

II. Is a lawful agreement made by two or more persons within the limits of their contractual capacity, with
serious intention of creating legal obligation, communicating such intention, without vagueness, to each
other and being of the same mind as to the subject matter, to perform positive or negative acts which are
possible of performance.
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III. Is a binding and enforceable agreement (promise) between two or more competent parties.

Therefore agreement is the essence of a contract, in fact, is the first requirement for a valid contract, hence
when talking about a contract, people will be referring to an agreement. But not all agreements are
contracts. Agreements which lack serious intentions may not amount to a contract, examples include
gentlemen`s agreements such as:-
a) Social agreements e.g. agreement (promise to buy a drink.

b) Domestic agreements e.g. a promise to buy a dress by a husband.

Gentlemen’s agreements lack the essentials of a valid contract, are based on one`s willingness.

The objective of a contract is to change the status of the parties positively if the created obligations
are fully performed.

THE ESSENTIALS OF A CONTRACT

1. The parties must communicate their intentions to enter into an agreement with each other.

2. The contract not must be vague.

3. The agreement must be made within the limits of the contractual capacity of the parties involved

4. The agreement must be lawful.

5. The parties must seriously intent to contract i.e. animus contrahendi.

6. The parties must be of the same mind as to the subject matter – consensus ad idem.

7. Performance must be possible

8. Necessary prescribed formalities must be followed.

9. Parties must agree to contract

CLASSIFICATION OF CONTRACTS
1. Formal or informal contracts

The distinction comes from the method used in creating the contract.
a) Formal contract- Parties engage in certain formalities when contracting, some of these formalities
are prescribed by the law.

b) Informal contract- Do not require any defined procedures and may not require a seal, such
contracts may be oral, written or may be implied from the conduct of parties.

2. Unilateral or bilateral contracts

In every contract there are two parties involved i.e. the offeror and the offeree. An offeror promises to do
something to a person to whom the offer has been made. The offeree’s acceptance determines whether a
contract is unilateral or bilateral.
a) Unilateral contract –is a contract in which a promise is from one side only, i.e. the offeree
accepts by doing the requested act, acceptance by conduct.

b) Bilateral contract – is a contract in which a promise is made on both sides. The offer is
communicated and accepted by promising to do the requested act.

3. Valid ,Void and Voidable contract

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 The classification is based on the essentials of contract contained
a) Valid contract

Is a contract, which which contains all the essentials of a contract, exist in the eyes of the law, is
not characterized defects and is recognised by the court of law. The parties in the contract incur
legal duties and enjoy rights. The contract is legally binding and enforceable by the courts of the
law.
b) Void contract

Is a contract, which lacks one or more essentials of a contract. It is said to be void ab intio (from
the start) and do not exist in the eyes of the law.
Parties do not incur legal duties or enjoy rights. The contract is unenforceable through the courts of
laws.
c) Voidable contract
Is a contract into which the consent to enter (contract) may have been induced by defects (flaws)
such as misrepresentation, duress, undue influence. The contract is valid and fully enforceable until
the other party disaffirms it.

Where there is a defect in consent, the party whose consent result from that defect may either stand
by contract or may set it aside and claim rescission, restitution in interregnum ( restoration to the
original position). The aggrieved party must decide within a reasonable time after knowledge of
defects and having made his choice, cannot change his mind

4 EXPRESS AND IMPLIED CONTRACTS

a) EXPRESS CONTRACT-is one in which the parties set their intentions specifically and definitely
either in writing or orally

b) IMPLIED CONTRACT – is one which is inferred from the action or conduct of parties. There is no
express agreement between the parties.

5 EXECUTOR AND EXECUTED CONTRACTS

A. An executor-is one in which some conditions or promise has not yet been completed by one or more of the
parties in the contract

B. An executed contract –is one in which all conditions or promises have been fully completed or performed

6 UNENFORCEABLE CONTRACTS
Is a contract, which cannot be forced by legal action, is a valid contract, not void, although unenforceable to
create valid moral obligation e.g. wagering, lotteries. No actions can be brought on it and imposes no legal
obligation. Obligation remains as a natural obligation, having legal effect in circumstances.

a) DETAILED ANALYSIS OF THE ESSENTIALS OF A CONTRACT

1. PARTIES MUST COMMUNICATE THEIR INTENTIONS TO EACH OTHER.

Communication is done to make each other aware of one`s intentions. The intention can be communicated
either :-
a) Expressly- means that the intentions are clearly stated in words either in writing or verbally (orally)

b) Impliedly- means communication by conduct (actions). There is no passing of words.

The communication consists of an offer being made by one party and acceptance by another party. These
intentions must be communicated. Hence, offer acceptance make up a contract.
Contract= offer + acceptance

An offer
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Is a proposal one made by person expressing the willingness (intention) to enter into a contract, inviting
another person to enter into the contract and if accepted, binds both parties contractually. Is an invitation to
enter into a contract

A person who makes an offer is called an offero/offerer

Not all invitations or proposals are offers. The following are not offers but only mere invitation to come
and negotiate a contract
a) Catalogue advertisements

b) Declaration of the intention to hold an auction

DIFFERENCES BETWEEN OFFER AND INVITATIONS

OFFER INVITATION
Is final Lakes finality
Not subjected to negotiations Is subjected to negotiations
Unconditional Conditional
Serious intention No serious intention

ESSENTIALS OF AN OFFER
a) Must be consistent with all other essentials of a contract

b) Must define all terms on which the agreement is sough

c) Must be definite, clear and unconditional

d) Must be communicated to the person to whom it is intended that the contract should be made

e) Must be made to a specific person or group of people and cannot be accepted by a third person

f) Must be made within the intention of being accepted by some other people

A. OFFER MUST BE CONSISTENT WITH ALL ESSENTIALS OF A CONTRACT

1. Serious intention

An offer must be firm and deliberated with the intention of being accepted. Mere invitations to do
business do not to an offer e.g. advertisements.

Advertisements not amounting to an offer but an invitation

Advertisements are mere statements to sell an article at a lower price. Is not an offer to a person
inquiring but an invitation for a person to come and make an offer. The buyer is not one who
makes an offer. Adverts include price lists or catalogues. Are not binding the seller but only
indicating willingness to do business if the prospective buyer approaches.

Case: Crawely Vs R (1909)

A shopkeeper in Johns burg advertised a tobacco brand at a cheaper price, having a placard
outside his shop on which the price was shown, C enter the shop, bought the tobacco and left. He
re-entered the shop and asked for another. The shopkeeper refused and C also refused to leave the
shop without the tobacco

Held ,The advertisement was not an offer and a contract. C was convicted for not leaving the
premises when requested.

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 Advertisements amounting to an offer when requesting a person to perform at act
a) Advertisements may amount to an offer where a general offer is made to do business with
whoever shall perform certain acts as cited in the case of Carlill Vs Carbolic Smoke ball
Company (1893) in which, a company advertised that it would pay $100 to any user of a
smoke ball manufactured by it in the event of the contraction of influenza. C used the smoke
ball but contracted influenza.

Held The offer was a valid offer duly accepted by C and she was entitled to the $100

b) REWARD OFFER/ADVERTISEMENTS

Where an offer made in advertisements for a reward for giving information, if the informant
gives information while ignorant of the advertisement, there is no contract. No offer has been
communicated before supplying the information. A person cannot accept an offer he is
unaware of as cited in the case of Boom Vs American Watch (1915) in which the premises of
the A were broken and jewellery of $5 000 were stolen. A company advertised in press
offering a reward of $500 for providing information to the police leading to the arrest of the
thieves and Jewellery recovery. B furnished information, which led to the arrest and Jewellery
recovery in ignorance of the offer. After having head of the offer, B claimed the reward.

Held There was no contract since no offer has been communicated to him .He cannot accept
an offer he is unaware and acted on good faith B was unsuccessful.

Reward offer is an offer, which invites a person to make specific performance in return for
monetary reward. For a contract to be created from a reward offer, the acceptor or offeree must
be:
a) The first to make the performance required

b) Aware of the existence of the reward

c) Be the intended offeree or be amongst the intended offeree

ACCEPTANCE
Acceptance is to agree to abide by all the terms of the offer. If acceptance differs in terms of the offer it becomes a
counter offer. The original offeror becomes the offeree. Requesting for additional information or clarification is
not a counter offer

Requirements ( essentials) of a valid acceptance

 Consistent with the essentials of a contract

 Must be in terms of the offer and unequivocal. If the terms differ, the acceptance will be a counter offer

 Must be made during the life of the offer or option

 Must be clear, unambiguous and unconditional

 Communicated in the manner prescribed by the offerer, The manner of the acceptance can be expressly
implied communicated by the offer.

 Express acceptance is when the offeror defined the manner of acceptance and that has to be
followed

 Implied acceptance is when the offeror do not communicate the mode of acceptance and conducts
are regarded as mode of acceptance as follows

1. Performing an act in the prescribed manner without need to notifying the offeror as in the
case of Carlill V Carbolic Smoke Ball Company(1893)

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 2. Mode of media used to make the offer e.g. post by post. The mode is said to have been
implied by the method of offering.

3. When bargaining about a purchase of an item, when money as a partially settlement has
been sent, silence of the seller means acceptance

4. When an order for goods at a certain price is sent to a person at a distance and nothing had
been said to the manner of acceptance, acceptance is at the same time of the dispatch of
the goods

5. Silence means acceptance where there is a duty of disclosure

ACCEPTANCE BY POST, TELEGRAM, TELEPHONE AND FAX

A. Acceptance by post and telegram

Acceptance is valid as soon as the letter is posted. A valid contract is said to have been created at the time,
place and date of posting even though the offeror has not yet received the letter of acceptance, so long the
letter was correctly addressed. Minor addressing errors do not invalidate a contract.

The delays is the fault of the offeror if is the one who has chosen the method of acceptance. By posting,
the offeree will have done his best.

The post office will be acting as an agent of the offeror, i.e. acting as an extended hand of the offeror.
Delivering or communicating to an agent is similar to delivering to the principal (offeror). Failure to collect
the letter in time is the fault of the offeror.

The rule of the post is not applied when normal communication is not operating

Case: Cape Explosive Works ltd v South African Oil Fat Industries ltd (1921)

‘’Where in the ordinary course of post office is used as the channel of communication and a written offer is
made, an offer becomes a contract on the date of posting the letter of acceptance ‘’

B. Acceptance by telephone and telex

A contract is created when the offer has understood the offeree`s acceptance. The offeror will not have
appointed an agent. The acceptance must be made directly to him.

Telephone and telex falls under immediate or direct means of communication. Contract is created at the
place where the offeror received and understood the offeror `s acceptance.

C. Fax- contract is created when the message has reached the offeror`s fax machine. Acceptance is made
although the offeror is absent.

Methods of withdrawing an acceptance

1. By using a faster communication media

2. By counter offer (cross offer)

Termination of an offer
1. Lapse of time 6. Rejection
2. Loss of contract capacity 7. Cross offer (counter offer)
3. Revocation 8. Acceptance
4. Death of a party 9. Reward in case of reward offer
5. Supervening impossibly of performance egAct of God Act or State.

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An offer can be irrevocable or cancelled if the offeror binds him by creating a separate contract to keep an offer
open for a specific period. (An option). An Options is a subsidiary contract prior to the making of the making of
the main contract. The offer may not be revoked until the period given has expired. If revoked before then, the
offeror may be sued for damages, interdict or specific performance

2 THE AGREEMENT MUST NOT BE VAGUE

Agreement must be clear, definite and unambiguous. Should not be so vague that the meaning cannot be
ascertained by a court or any reasonable person. Incompleteness or uncertainty does not render a contract void for
vagueness. Can remain valid so long its meaning can be determined by the court on the evidence before.

Vagueness full into (4) classes

a) Where performance in a contract depend upon a condition that the promissory will be bound if so wishes,
reserving options to the promised [another party]

b) Where languages used is vague and uncertain that it cannot be decided what was agreed upon by the parties
appear not ad idem [the same ]

c) Where the agreement is not final and there are still terms to be negotiated

d) Where unspecified details contract are questions of fact

Elements of vagueness were highlighted in the case of Lowenstein vs. Lowenstein.

There was an agreement whereby one party promised to donate and transfer a house and business to another in
consideration of his undertaking to maintain her ``to the best of his ability `` during the remainder of her life. When
the agreement was pleaded in answer to a claim for an ejectment order, it was argued that the agreement was void
for vagueness and unenforceable

Held The words ``to the best of his ability`` were void for vagueness and the contract was unenforceable.

INTERPRETATION OF VAGUE DOCUMENTS

This is done to ascertain the meaning of the words used, grammatically errors where the meaning of the written
contract is vague or ambiguous. The courts may use any of the following to determine the intention of the parties:

a) Words are given their plan ordinary and popular meanings known by any reasonable person unless it
appears clearly from both parties that they intended them to bear a different meaning.(GOLDEN
RULE)

b) Written are inserted in a printed or typewritten document and there is a conflict, the written words are
preferred. Oral evidence may not be used to invalidate a written document but can only be used to
show mistakes, fraud, undue influence and clear up an ambiguities (PATROL EVIDENCE RULE)

c) When all the ordinary rules of interpretation have been exhausted and fail to arrive at the true parties`
intention, the ambiguous written document is interpreted against the party who or whose agent drew up
the document or if insertions are ambiguous, against the party who made the insertion (CONTRA
PROFERENTUM RULE )

d) Reconstruction of sentences and facts to which the document relate and arrive at the sense of the
whole document

e) When the words are capable of more than one meaning, the court will place the meaning which
validate the contract rather than which makes it illegal and void.

f) An ambiguous clause is interpreted to bring it into harmony with the whole document

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3 LAWFULNESS
An agreement must be lawful for it to be enforced by the courts. Illegal agreements are void. Law prohibits
agreements if they are against public policy or contra bonus mores [against good moral].
Agreements can be prohibited by Statue or Common law
A contract can be against the statue or common law because of its making, purpose, or performance
a) Formation or making of a contract

Formalities may be required by statutes or common law in the formation of the contract. Failure to follow
the required formalities may invalidate a contract eg
-Communication between parties
-Be in writing e.g. hire purchase are required to be in writing and signed by parties
-Execution before an attesting witness e.g. mortgage bond over immovable property
-Registration e.g. formation of companies

b) Purpose of a contract- must not be against the rule of the land, if so is illegal

c) The performance to be made

The statue may prohibit performance of a certain act and any agreement to that act will be void e.g.
Companies Act prohibit private limited companies from selling shares to the public

Other agreements prohibited by common law

Include the following:
a) Unfair trading [business] activities e.g. sale of inferior goods

b) Agreement interfering with justice

c) Agreement affecting marriage

Prohibition can be express or implied. Implied is when a statue provides a penalty for the performance of an act and
express where the statue either orally or written prohibit an act.

Rules applicable to illegal contracts/unlawful contracts

There are rules applicable to illegal contracts, if brought to the court by parties. These depend on performance
made and nature of contract.
a) Ex-turpi causa non arithor action

Is a Latin phrase meaning ``no court of law will come to the assistance of parties in an illegal contract ``.
That rule covers illegal and moral contracts that have not yet been performed by either party to the contract.
The parties must desist from pursuing the contract any further because in the event of litigation the law will
not come to the aid of neither party.
The rule is that a person seeking to enforce on illegal contract cannot get assistant from the court.

b) Peri delicto rule meaning equal guilty

This covers illegal contract that has been disproportional performed by parties in a contract e.g. when only
one party performed, but where both parties are equally guilty for the illegality of the contract or known it
to be illegal. In such case, the following are applied:
i. If both parties are equally to blame for the illegality of the contract the party who has performed will be
not be able to recover the performance. Must suffer the loss; hence “let the loss lie where it falls”

ii. If parties are not in peri delicto, [not equally guilty for the illegality of the contract] the party not in
delicto, the innocent party may be ordered to recover the losses suffers

iii. In an illegal contract, the position of the defendant may be stronger that the plaintiff, and however for a
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 contract between a man and a man, and there is need for justice to be done, the law may order the
aggrieved party to recover the loss he had suffered if only he has repented

Hence the maxim can be viewed as ``Let the one who knew the contract to be illegal to suffer the loss but
the one who was not aware to recover the losses”

Case: parties not in pari delicto : Van Staden vs. Prinsloo

P sold and delivery to Van Staden a second hand tractor for f 600 when the maximum permissible price
was f 425 making it offence to sell but not to buy above the controlled price. Van Staden paid a deposit of f
110 and thereafter came aware of the price control

Held The parties were not in pari delicto. Van Staden was not in delicto at all because there was no
evidence of being aware of the price control at the date of purchase. P was in delicto. Van Staden was
entitled to reclaim repayment of $110 paid by him on the grounds that the contract was null and void.

c) Doctrine of severance
This cover illegal contract, which can be safe from illegality by removing the bad part of the contract from
the good ones, provided the substance of the contract remain essentially the same after the removal of the
illegal part. This is mostly found when the contract contains a number of parts, one part is void, and the bad
part is not a material one. If the illegal part embodied the main purpose, the contract is unenforceable.

Case: BAL vs. Staden [1903] in which the plaintiff acquired the option to purchase land and cession of
the mineral rights. Cession of minerals was void because it was not executed and registered as required by
Statute law.
Held Cession of mineral rights was void and removed from the contract

4 SERIOUS INTENTION TO CONTRACT

Parties must seriously intend to contract. Serious intention to contract can be indicated through:
a) Communication and agreement expression

b) Delivery of the merx to another person, as well as, acceptance of the item supported by recording in the
books

 Lake of serious intention can be noticed from:

a) Agreements of social nature e.g. offering to take a friend to lunch and accepted by the person

b) Agreements excluding the jurisdiction of law e.g. formalities

c) Agreements entered into as overstatement

4 PERFORMANCE MUST BE POSSIBLE

The purpose of a contract is to change the position of parties involved when it has been performed. In any legal
valid contract the obligations taken must be possible of being performed

Impossibility of performance will render contract void. A contract is void on grounds of impossibility of
performance:
a) If performance is impossible at the time of contracting

b) If performance becomes impossible after contracting, resulting from acts beyond the control of parties.
This is called supervening impossibility performance and may result from the Acts of God like drought or
Act of the Statute like a prohibition act

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 5 CONTRACTUAL CAPACITY
Is a legal ability required for a person to enter into a contract. A contract must be made within the limits of parties
contractually capacity. In the eyes of the law all legal people are free to enter into to any contract within their
contractual capacity.

A legal person is somebody who acquires legal rights, can be subjected to legal duties, can sue and can be sued. At
law, a person can be natural person or juristic person.

Natural person is a human being created by God in his image e.g. man and woman
Juristic or Artificial person is a person created by the law e.g. companies may enter into any contract excluding
of personal nature.

To determine full contractual capacity of a person, the law considers the number of factors including age,
nationality, marital status, financial status, mental status etc

Persons with limited contractual capacity is limited are minors, married women, artificial persons, insolvent
people, prodigals, drunk persons, criminals, alien enemies and mentally ill persons

MINOR
Is any unmarried person under 18 years, under custody and lawful authority of a guardian. The guardian`s duty is to
maintain the minor, administer his property and assist him in contracting until the minor can maintain himself. A
minor has no contractual capacity, to enter into a contract has to be assisted, represented or authorized by a
guardian. Any unassisted contract is not valid because of lack of maturity on part of the minor. A minor cannot sue
or be sued. There are two types of minors, i.e. infant and pupils.
a) Infant – is a minor up to age of 7 years. Has no contractual capacity at all. Any contract entered is void.
The infant cannot even be assisted into a contract. The parent will be said to have entered into his or her
own contract and bound but not the minor

b) Pupils- are a minor over 7 years but less than 18 years. They have limited contractual capacity. They can
enter into a contract with assistance of a guardian or on permission from the guardian. They can also be
contracted on their behalf.

Any contract entered binds the minor although the minor cannot be forced to perform his obligation until the age of
18 years, but the minor can ask to major to perform.

Contracts made by a minor can be assisted or unassisted contracts

a) Assisted Contracts are contracts made by a guardian on behalf of the minor or by the minor with the
assistance or authority of the guardian. The minor is bound by the contract if it is beneficiary to him or her.
Any contract, which prejudices the minor, is void. The guardian’s powers are not limited when
administering the minor’s property to the advantage of the minor.

Contract will bind the minor when:

i) The minor is assisted by a guardian
ii) When the guardian or the minor ratifies the contract
iii) If it is beneficial to the minor

b) Unassisted Contracts

A minor`s unassisted contract is void because a minor cannot sue or be sued.

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 Valid unassisted contracts of a minor
A minor can enter into valid contract without the guardian’s assistance under the following headings. These
are exceptional contracts only:
a) Unjust Enrichment d) Fraudulent misrepresentation

b) Tacit emancipation e) Ratification

c) Statutory exception

A. UNJUST ENRICHMENT

When unjust enrichment in a contract, a minor is bound to the extend he or she has been enriched. Is bound
to restore to the major the value of the service received and enjoyed. Service received and not enjoyed is
ignored. A minor is enriched with necessities (essentials) not luxuries. Essentials include food, clothing, and
medical expenses.

Case: Tanne vs. Goggit (1938)

An unassisted minor entered into an agreement with a college principal to attend typing classes for two
weeks in March and April. He attended two weeks in March and nothing in April. The guardian was sued
for April fees.
Held The minor benefited only from lessons attended therefore there was no further liability to him.

B. FRAUDULENT MISREPRESENTATION

If a minor fraudulently (intentionally) misrepresent age or pretends to be emancipated and induced another
party into a contract, the minor incurs an obligation which is not a contractual obligation. The minor has to
pay for the loss suffered by another party due to lie, which is a crime.

Conditions necessary for the law to compile the minor liable are as follows:
i. The lie (misrepresentation) must be reasonable and capable of misleading.

ii. The lie must be at or before contracting

iii. The advantaged party must prove that was induced to enter into the contract by lie otherwise might
not have done so. Believed the misrepresentation to be true

C. TACIT EMANCIPATION

Emancipation is the renunciation (withdrawal) of parental duties and freeing of a child from the control of
parents. It occurs when a minor is allowed to carry on business or occupation on his own behalf. The minor
cannot contract outside that business without the guardian`s consent but can contract within the limits of a
business or occupation and acquires a contractual obligation.

Case: Dame vs. Berra (1910)

A 21-year old Indian girl, still a minor, had been earning her leaving a servant for four years. She lived
with her parents but retained control of her income and paid them for board and lodging.
HELD: She was tacit emancipated and could sue her employer for wages due.

D. RATIFICATION

Ratification means approval. The result where a minor contracted without the guardian`s consent, either the
guardian approves the contract as if the guardian consented at the time of contracting or the minor on
attaining the majority age ratifies the contract. Ratification can be express or implied. After approval , the
contract becomes valid.
Case: Stuttaford and co vs. Oberhalzer
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 O less than 7 months before attaining the majority age, entered into a contract purporting to buy a motor
cycle from S on hire purchase and continued to use it after attaining majority age.

HELD: He had ratified the agreement

E. STATUTORY EXCEPTIONAL

The law may authorize a minor to enter into a contract before the majority age mostly when it approves that
the contract is likely to benefit the minor.

How a major can mitigate losses from minor’s unassisted contracts

a) Exceptio non-adipleti contractus means if you cannot perform l will not perform. This principle
is used in reciprocal contracts. It calls for immediate action.

b) Delict/ misrepresentation

Misrepresentation is a false statement made by one person in order to induce a party into a
contract. It is a lie. A lie (delictus) is a crime. The minor has to pay the major the loss incurred or
suffered by the major. The major had to prove that the delict or misrepresentation was reasonable
and misleading and that was induced into a contract of which he might not have done so.
c) Unjust enrichment

The law requires the major to determine the extended to which the minor has actually benefit from
the major’s performance. That is only what the minor complied to pay. The minor is only unjust
enriched with necessaries
d) Negotiorium gustio

Is a law principal, which states that if someone performs on behalf of the owner, in respect of
necessities (basics), the owner will pay expenses incurred by the guestor. The person who
performs the guest is known as negotiorum guestrum. The minor’s guardian will reimburse the
guestor for necessary expenses not luxuries incurred.

Case: Valid assisted contract

Skead Vs Colonial Banking and Trust Co (1924)
With the guardian’s consent, S a minor signed a promissory note for 37 pounds in payment of the first
annual premium on a twenty-year policy for 750 pounds, the note to become due 8 days after he attained
his majority age. On due date, payment was refused. The minor claimed that the contract was to his
prejudice. HELD: The guardian acted reasonably in the minor’s interest and benefit. The minor was
liable.

Case: Invalid assisted contracts

Wood vs Davies (1934)

A guardian left with 10 000 pounds in a trust bought a house on behalf of a minor for 1 750 payable in
instalment. At the time of purchase, the legal price was 1 550 pounds. HELD: The minor was prejudiced.
The contract was void and the minor was entitled to cancellation of the contract and restitution in
integrum

Restitutio in integrum meaning restoration to original position or condition. A minor may cancel a
contract and use this principle if the contract is not of benefit to him or her. The minor can do so either in
assisted or unassisted contracts. Restoration to original position can be done. If the minor was assisted, the
guardian is liable for restoring the other party. If not assisted, restoration is done after attaining majority
age (18 years)

MARRIED WOMEN
Marriage may fall under two headings:
a) Marriage in community of property
b) Marriage out of community of property

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a) Marriage in community of property
Is a marriage which creates a joint estate being headed by the husband having the sole right and
power of its administration. Powers may extend over the property the wife may be the sole owner.
Such married women are subject to the marital power and custody of their husbands. They do
have limited contractual capacity similar to that of minors under the guardianship of the parent.
Can only enter into a contract binding the couple and family with the knowledge and consent of
the husband, if not so, the contract is void unless it is ratified by the husband.

Circumstances where the marriage may incur obligation/s through the acts of wife

i) Unjust enrichment ii) Pubic trader iii) Authority of court iv) Statutory exceptions

i) Unjust enrichment
Where the joint estate is unjust enriched through the acts of the wife, when the wife
contracted for necessaries eg food, clothing etc.

Conditions applicable for necessaries

-Where the parties are living together
-When the parties have separated owing to the husband’s fault by not where the
household broke up by the wife’s conduct.
-If marriage dissolved before debt payment, the husband is sued for the whole debt
-If after dissolution of marriage, the husband pretends as if the marriage exists, the
husband is liable.

NB. The husband may obtain an interdict from a court is the wife abuses her right

ii) Public trader is where the wife does trading business or when the wife expressly or
impliedly indicates that she is open to do business with any person, with the husband not
objecting, the joint estate is liable for anything resulting from that business.

iii) Authority of the court

The court may authorise a wife to contract:
-When the husband is outside the country
-When the husband has been incapacitated
-When it sees it fit and justifiable

iv) Statutory exceptions

A woman may contract without the husband’s consent:
-For insurance policy under the Insurance Act
-As a depositor

b) Marriage out of community of property

This type of marriage does not create a joint estate. The husband is liable for all necessaries.
When the wife is sued or paid for necessaries voluntarily, she can recourse against the husband for
his pro-rata share or the whole debt. The wife can contract without the husband’s consent so long
as the household estate is not affected. The wife has full contractual capacity. The wife can
acquire and own her assets

NB The husband may not, in any marriage, without his wife’s written consent:
-Receive wages or salaries for services rendered by the wife
-Receive money from her bank or society account
-Receive any compensation awarded for her personal injuries
-Receive money payable in terms of an insurance policy taken by her.
ARTIFICIAL PERSON
Companies are examples of law made persons. Cannot enter into contracts of personal nature eg marriage.
Their contractual capacity is defined by the company’s memorandum of association. Any contract made
outside the contractual obligations is void.
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 INSOLVENT PERSON
Insolvency is a situation whereby the liabilities of a person exceed assets. For public’s safety, not only
creditors but also others, a trustee is appointed to realize the assets and distribute proceeds to creditors. An
insolvent person can contract freely but not in some contracts eg:
-Contract purporting disposal of insolvent property without the consent of the trustee
-Cannot hold a liquor license
-Be employed in a position of authority eg director

PRODIGALS
Prodigal is a person declared by a court to be incapable of managing his affairs as a result of squandering
of his assets. Any contract made regarding his property is void but apart from assets may contract freely
e.g marriage

DRUNKEN PERSONS
A contract entered while so drunk that the person does not know that is entering into a contract or has no
idea of the contractual terms if void but not if the drunk person is or willing to conclude the contract.

CRIMINALS
A person once convicted of a crime has limited contractual capacity depending on the crime
committed

ALIEN ENEMIES
An alien enemy is a person residing or carrying on business in the enemy territory. Any contract made
with his in times of war is void because he cannot be sued or sue in the country’s court. Fulfilment of
future obligations may be hampered to the detriment of the country.

MENTALLY ILL OR INSANE PERSON

Contract made is void if at the time of contracting the person could not understand the contract or if his
consent was motivated or influenced by an insane delusion caused by a mental disease.

Case : Lange vs Lange

At the time of his marriage, L understood the nature of the contract and understood the obligations he was
undertaking but was already suffering from a mental disease influencing him into the contract. HELD:
The contract was invalid ab initio

7. PARTIES MUST BE OF THE SAME MIND AS TO THE SUBJECT MATTER OF THE

CONTRACT (CONSENSUS AD IDEM)

Parties must be of the same mind as to the material terms of their agreement, if not ad idem, the contract is
void for mistake.

Mistake is disunite of mind or misapprehension of the mind on aspect (s) of the contract. Occurs when
parties are mistaken about the existence or absence of a fact that is material to their transaction. Mistake is
not synonymous to ignorance, inability or poor judgement.

Mistake can be of law or fact.

Mistake of law is a mistake that affects or relates to the matter of law. This is when parties are mistaken
as to what the law says. Such a mistake does not invalidate a contract because of the principle, ignorantia
juris neminem excusat, hence is not a Justus error.

Case: Benning vs Union Government (Minister of Finance) (1914)

B paid f5 customs duty on a certain floor-surfacing machine imported by him, believing the machine was
of the class ‘domestic machine’ on which duty was payable. B subsequently claimed f5 as the machine
was exempted from duty. HELD: B could not recover as the payment was made as a mistake of law.
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Mistake of facts relate to a matter of fact(s) on which the agreement is based on, not as to law applicable
to fact, that is, relates to the terms or conditions of the contract. Affects validity of the contract if it is an
operative or fundamental mistake. Fundamental or reasonable or Justus error is the one which causes
hardship to a person.

A contract is void for mistake if:

-The mistake if of facts
-The mistake is a material/fundamental or Justus error
-The parties or party would not have entered into the contract if they had known it.

Fundamental mistake errors include:

a) Error in negotio – error as to the nature of an agreement, that is, a mistake affecting the nature
(kind) of an agreement eg a selling intention vs leasing intention, student application vs
employment

b) Error in persona- mistake as to the identity of a party to a contract

c) Error in corpora- mistake affecting the identity of the subject matter (thing) eg buying an ox
instead of a bull
d) Error in material/substantia- error to the nature of the quality of the subject matter of the
contract
e) Error in quantity – error as to the amount of the subject matter

CLASSIFICATION OF MISTAKES
i) Unilateral mistake ii) Bilateral or mutual mistake iii) Common or joint mistake

i) Unilateral mistake- occurs when only one party is a contract is mistaken. May occur because of
misplaced expectations of value. Eg buying a diet coke thinking that is the ordinary coke without
asking the seller.

ii) Bilateral or mutual mistake – occurs when both parties are in error about the essence of the
agreement. Both parties will be at cross-purpose as to the state of mind of another party. Eg
making a mistake thing that what you are thinking is what one is thinking.

iii) Common or joint mistake-occurs when both parties are mistaken about the same thing. Parties
will be at ad idem but both labouring under mistake as to some essentials of the contract eg selling
a gold coated ring believing it to be gold ring and the buyer on the same belief. Is a special type
of bilateral mistake.

A party relying on mistake, as defense so as to cancel a contract must establish that:

-The mistake was a Justus error (reasonable error)
-The mistake was made at or before the time of contracting
-The mistake was a factual one
-Must not have entered into the contract if had known of the mistake

Rectification (Correction) of a contract entered by mistake

The court may rectify a mistakenly agreement upon application by one or both parties in a contract.
Rectification cannot be effected when:
-The contract is illegal, that is, does not comply with statutory formalities or requirements
-The contract will prejudice one party or the third party

Case: Weinerlein vs Goch Buildings ltd (1925)

Where it was said “It seem self-evident that, upon satisfactory proof of the terms of the agreement the
instrument should ........be made to conform to the precise intention of the parties”

Rules of interpretation of written vague documents are used to rectify a mistake eg the golden rule, contra
proferentum rule and the parol evidence rule

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 WRITTEN DOCUMENTS SIGNED BY MISTAKE
The effect of signing a contractual document is that the party signing is bound by the contractual terms
because of his or her signature as stated in the doctrine of CAVIAT SUBSCRIPTOR meaning basing on
the signatory. This doctrine requires a person to be alert when signing a contractual document. It states
that the signature binds a party who signed a document containing contractual terms whether or not he has
read and not understood the terms of the contract.

The rule is applicable even when:

-The signatory signed in blank spaces
-It is obvious that the signatory has not even read and not understood the document
-The document was recklessly, carelessly or signed by mistake

The rule is not applicable where signatory is illiterate or blind but not to a trader

Moreover, the doctrine of Caviat subscriptor is not applied if signing was induced by a false statement of
another to sign a fundamentally different document from the one he intended to. The party has to prove
that:
-Signed the document different from the one he intended to sign
-Was induced sign by misrepresentation, force or undue influence otherwise might not have done
so
-The mistake was not due to his carelessness, the defense being “plea of non est factum” meaning
it was not my deed
-The mistake was a reasonable one
-Entered into a contract at his prejudice.

Case 1 - George vs Fairmead (1958)

G who was a hotel guest signed a hotel register containing contractual terms some of which he completed
by filing in blank spaces, but the rest of which he did not read. One of the clauses exempted the company
from liability for loss caused by theft. Certain clothing belonging to G was stolen. G sued the Hotel
Company. HELD: G was bound by the terms contained in the document. He signed the document
recklessly, carelessly without understanding it and not asking assistance. There was no misrepresentation
therefore cannot be compensated for the stolen clothes.

Case 2 - Bhikhagee vs Southern Aviation (1949)

B an experienced businessmen, who was accompanied by a friend who could read English but was not
asked to assist, signed a flight ticket in English language he could not understand. Bad weather prevented
the completion of the journey in time resulting in B making alternative arrangements. The company sued
him for the fare. HELD: B was bound by the conditions because he had signed the document.

Case 3 - Mans vs Union Meat Company (1919)

M signed a memorandum containing a guarantee, without reading or understanding it, on the
representation of company’s representative that he was merely acknowledging a receipt of a cheque.
HELD: The memorandum because of the misrepresentation did not bind M

VOIDABLE CONTRACTS

Voidable contracts contains all the essentials of valid contract but its inception would have been induced by defects
(flaws) such as misrepresentation, duress or undue influence

The party whose consent was induced by defects may:

-Stand by the contract and claim damages
-Set aside the contract (rescission) and claim restitution in integrum

MISREPRESENTATION is a false statement of material facts by one person which induces the other person
to enter into a contract with him or her that he would not otherwise have entered.
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Requirements for misreprentation
The induced party, to set aside the contract on grounds of misrepresentation and be legible for damages must prove
that the misrepresentation:
-Was internationally made by one party or his agent. Mere puffing is excluded but incidental inducing
statements may be considered.
-Was material and reasonable to induce a person into a contract.
-Was made before or at the time of contracting.
-Was false in fact not law.
-Contracted on the faith of the representation to be true otherwise might not have had contracted.
-Entered a contract to his/her detriment.

TYPES OF MISREPRESENTATIONS

A) Innocent misrepresentation B) Negligent misrepresentation C) Fraudulent misrepresentation

A) Innocent misrepresentation happens when a person gives information when he or she has all reasonable
grounds to be to believing it to be true unaware of an changes. There is no intention to misrepresent.
Misrepresentation is incidental
Remedies for innocent misrepresentation
The misrepresented person may:
-Claim rescission and complete restitution in integrum
-Claim rescission, restitution in integrum
-May uphold the contract and claim partial restoration

B) Negligent misrepresentation
Occurs when one makes a false statement without adequate grounds or reasons for doing so. Is when one passes
a statement as true but without adequate grounds for believing it to be true.

Remedies – The aggrieved party may cancel the contract and claim restitution integrum and also recover losses
suffered
C) Fraudulent misrepresentation
This is sometimes known as true misrepresentation. Occurs when one makes a false statement intentionally to
deceive another party into the contract. The presenter of false information must be ware that the presentation is
incorrect or presents to have knowledge when he knows that is ignorant.

The aggrieved party has to prove absence of honest by showing that the presenter misrepresented:
-Knowing to be incorrect and ignorant but presented to be knowledgeable and correct
-Recklessly, carelessly whether it to be true or false
-Prove the losses suffered as result of the fraud misrepresentation

Remedies:
-Rescind the contract and claim restitution
-Claim rescission, restitution and consequential damages
-Treat the contract binding and clam damages for any losses suffered
-Ignore the contract and if sued, use the fraud as a defence. The defence remedy being ‘Exceptio no adimpleti
contractus’ meaning that the party claiming performance is in breach of the contract.

Cases
a) Mans Vs Union Meat Company (1919) see signed documents.
b) Coomers Motor Spares (Pvt) Vs Albanis (1979) in which the seller of a car misrepresented that it
had done no more that 50 000 miles and that it had never been involved in an accident while it had
done about 150 000 miles and had been in two accidents. HELD: The contract was void on
grounds of fraudulent misrepresentation.

SILENCE AS MISREPRESENTATION

Silence is when a person is unwilling to speak or to volunteer information to another party in a contract.
Silence is misrepresentation where:
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 - There is a duty to disclose
- Information in question is material to the contract
- The truth has been said and omission of the remainder may present misleading information
- A true statement has been made at the time of contracting but the facts have changed, the silent on the
changes will be misrepresentation
- A mistake has been made and no rectification of the mistake will give misleading impression

2) DURESS means intimidation. Is where force or fear through threatening danger was used to induce
another person into a contract. The contract is voidable not invalid. Duress can be through words or goods.
There must be improper use of pressure forcing one party into the contract against his will.

Requirements of duress: To set aside a contract on grounds of duress the aggrieved party has to prove that:
- The contract was entered into as a result of actual violence or reasonable fear being sufficient enough
to induce an ordinary firmness man to consent
- The threat was of an imminent or inevitable evil such that the threatened victim would not be able to
protect himself against it
- The intimidation was illegal and against public policy e.g. gunning family member
- Entered the contract at his detriment
- Force was used before or at the time of contracting
- Entered into the contract under protest

Case – Blackburn Vs Mitchell (1897) sometimes known as the Table By case

A ship lying in TableBy parted both anchors and grounded near the beach. The wind rose and the ship was in
a position of increasing peril, to lead to destruction. A tug captain come to the ship’s assistance but refused
aid unless M, the master agreed to pay £2000. M protested that the amount was too much and the captain
threatened to leave unless a clean contract was signed. M signed under duress and contract was voidable .
Held: $1000 was warded to B as a fair and reasonable payment for the service.

3. UNDUE INFLUENCE
Occurs where a party enters into a contract under the kind of influence or authority, which prevents him from
exercising free and independent judgement. Mostly exist where a special relationship is abused or exerted to
obtain contractual advantage at the expense of the aggrieved party. No threat or force is used. Mostly found
between doctor and patient, guardian and minor or religious adviser and disciples (followers)

Requirements when setting aside a contract on grounds of undue influence the aggrieved party to prove that:
- The other party over exercised an influence over him
- The influence weakened his powers of resistance and made his will liable
- The influence was used in an improper manner
- Entered the contract to his detriment and of which he would not have concluded
- There is a trust relationship, which exists between the parties, which was abused to obtain contractual
advantage.

TERMS AND CONDITIONS IN A CONTRACT

1. A term is defined as provisions agreed upon before a contract entered into. Is a statement which
has an effect on the contract. It defines the party’s rights and obligations in a contract.
Terms may be
a) Express terms are agreed by parties to a contract either orally or in writing

b) Implied terms are rules or provisions of common law that are automatically in
a contract unless parties to it agree to exclude them. Implied terms arise
either by:
- Law : where they are implied into special contracts without reference to
the true intention of the parties but by legislation e.g. sale of property
be in writing, building a standard house
- Trade usage in a particular market/trade.
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 - Tacit terms are implied from the facts.

c) Essential terms are fundamental, important terms on which the contract is

rooted. Breach of these terms leads to the cancellation/dissolution of contract.
Eg delivery of merx in the contract of purchase and sale

d) Non- essential terms are not central or essential to a contract. Breach leads to
damages. Eg delivery of a car with warn tyres.

e) Imposed/exemption terms (clauses)

These are terms included in a contract by one party to limit his or liability in a contract. These are
mostly found on tickets, notices, receipts etc. The courts are reluctant to accept these unless
answers to the following are positive:
-Was the person receiving the receipt, ticket, et aware of the terms?
-Did the person know that this writing refers to the contract?
-Did the person giving the ticket, receipt, notice do what was reasonable to
notify the receiver of the terms?
-Are the terms displayed clearly in such a way that any normal person could have seen it or could
see it?
-Are the terms not meant to escape a fundamental obligation in a contract? If aimed at escaping a
fundamental obligation are not enforced

2. A condition is a future uncertain event. Types of conditions are:

 Impossible conditions –physically or legally- render the contract void ab initio but the impossibility
must be absolute not relative.
 Suspensive (Precedent) Conditions this has the effect of suspending the contract or some part of it
until the fulfilment of the condition. Eg Agreeing to maintain a wife only when a man gets employed.
 Resolutive condition [condition subsequent] –terminates the contract or part of it on the fulfilment of
the condition or event. Eg No financial support until a person gets employed or married

Breach of a contract
is a failure to undertake obligations as stipulated in the contract. Both the debtor and the creditor may breach the
contract.

Forms of breach
Breach may be due to the following:
a) Positive mal-performance – doing what one promised not to do or doing what one promised but not in
the appropriate manner
b) Repudiation – stipulating that one no longer wants to perform as agreed. Occurs when one of the parties
states that he or she does not intend to perform his or her part to the contract.
c) Anticipatory breach- showing clearly that one will not perform when time for performance is up. Occurs
when one of the parties by act or conduct he or she shows that, does not intend to perform his or her part to
the contract
d) Late performance when time for performance is given

Remedies for breach of a contract

There are five remedies available for breach of contract or a threatened breach of contract. The
remedies include specific performance, interdict, declaration of rights, cancellation and
damages.

It should be noted that, the choice of these remedies rests solely and primarily with the injured party, who may
elect more than one of them either in the alternative or together of course subject to the overriding principles that
he must not claim inconsistent remedies and that he must not be overcompensated.
a) Specific Performance
Specific performance is court order to compel the party in default to perform according to the contract

.Every party to a binding agreement who is ready to carry out his own obligation
under it has a right to demand from the other party so far as it is possible to perform accordingly.

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 Courts may not grant specific performance in the following situations:
- Where it is impossible to comply with the order
- Where it causes undue hardships on the defendant and the community and large
-In contracts of personal nature or services like contracts of employment
- Where the item that is being claimed by the plaintiff is readily available on the market.
-Where damages would adequately compensate the injured party

b) Damages: Is warding sum of money to the innocent party to compensate him or her for loss arising from
breach. The innocent party should do his best to minimise his or loss. The loss must result from the normal
course of the breach. Awarded where specific performance cannot be granted. Damages can compensatory,
consequential and punitive damages

c) Interdict
This is a remedy to prevent breach or threatened breach of contract. It takes the form of a court
order prohibiting the defendant from doing what can hinder him or her to perform as expected. The order is
obtained before the breach

d) Declaration of Rights
This is remedy whereby parties approach the court for an order declaring the position of their
rights.

e) Cancellation used when the breach is fundamental/serious. The innocent party can regard the contract
cancelled and raise breach as a defence if sued on it. The act of cancellation, is also sometimes described
as acceptance of the repudiation

TERMINATION OF CONTRACTS
Refers to dissolution or coming to end of a contract. Contracts may come to an end due to the following:
1) Performance : when parties undertook /performed their obligations as agreed on the contract and there is
nothing else to do
2) Agreement. Parties may agree to terminate or dissolve the contract

3) Set- off. Happens when parties have reciprocal debts to each other which are of the same nature. The
debts cancels out each other. If one debt is greater than the other, the smaller is discharged and the greater
is reduced by the amount of the greater. Both debts must be due for payment

4) Merger/Confusio: Happens if one person becomes both debtor and creditor in respect of the same
obligation. Eg a tenant who bought a house he or she was renting from the landlord cannot continue to pay
rent to him or herself.

5) Supervening impossibility of performance: This happens when initially the contract was possible but
due to things beyond the control of either party, it becomes impossible to perform. This may be due to vis
major, (Act of God or State). None of the parties will be at fault. Eg drought or change of law making
performance impossible.

6) Novation. Is replacing an old contract with a new one. Parties may agree to change terms of the old
contract. This terminates the old contract. Novation may be made compulsory by the court or voluntarily
by the parties

7) Delegation is where a new debtor is brought into the contract with the agreement of the creditor since the
creditworthiness of the new debtor is material. The original debtor is released and replaced by the new
debtor. Is the transfer of an obligation to another debtor

8) Cession is like delegation, is where a new creditor is brought into the contract. No agreement of the debtor
is necessary since the debt remains the same and payable. Is the transfer of personal rights to another
person.

9) Prescription. Contract comes to end where the time limit has expired

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10) Death . Death of a party terminates a contract especially when the obligations are of personal nature, if
not the estate of the deceased would have to bear the liability.

LAW OF PURCHASE AND SALE

A contract of sale is a contract in which one party (seller or vendor) promises to deliver a thing or a merx to
another who is the buyer (emptor), with the latter agreeing to pay a certain amount [pretium]..

Essentials of the Contract of Sale.

Like any contract, contract of sale must satisfy the requirements for a valid contract in general. Other additional
essentials are:
a) The merx [ the thing being sold] must be definite or ascertainable at the conclusion of the
contract e.g. mention by name or in the case of a generic sale, by number, weight, measure etc.
The merx can be movable, immovable, corporeal or incorporeal. It can be something that will exist in the
future, capable of being sold, but not prohibited/restricted [e.g. liquor or firearms].

Where a thing did once exist but unknown to the parties has ceased to exist, the contract is void.

A sale may also be of an existing hope that the merx will come into existence. Is the purchase of a
hope/expectation e.g. all the diamonds in my claim. If more diamonds than anticipated are found the good
fortune is with the buyer. The merx includes its accessories or ancillaries.

b The Price [pretium] must be agreed upon tacitly/expressly otherwise there is no sale. It must be
definite/ascertainable The usual/customary price may suffice.

The contract of sale is based or rooted on the identity of the thing sold and the price to be paid. Beyond
that the parties may agree on other terms as they wish. Unless agreed otherwise, payment is assumed to be in
cash.
c) Agreement to sell and buy. There must be agreement by one party to sell and by the other to buy. In the
absence of such agreement no sale would occur and risk does not pass

Normally ownership passes on delivery to the purchaser if the seller is the owner [even for a credit sale]
unless agreed otherwise.

However the buyer becomes the owner only when the merx is delivered even though he does not always
acquire ownership.

Delivery and payment are not essentials to the contract of sale but are mere obligations of a seller and
buyer respectively

DELIVERY. Delivery is the process by which ownership in a thing is transferred from one person to another. The
seller should deliver the merx to the buyer and the buyer should be free from interference. Delivery should enable
the buyer to have effective control.

Forms of delivery
a) Delivery of immovable property takes the form of registration at the Deeds Office.
b) Delivery of movable property can be:
 Actual delivery (Physical handing over.)
 Constructive delivery. Here something else is delivered which enables the buyer to obtain control
e.g. by long hand for objects too big/heavy.

1) Actual delivery [traditio] is the actual, physical handing over of the thing sold or placing of the thing
within the effective control of the buyer.

2) Constructive delivery [fictitious delivery] is merely delivery at law although there is no physical
handing over of the merx. The forms of constructive delivery in our law:

a] Symbolic delivery: This involves not the merx itself but some other item which enables
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 the buyer to exercise control over the thing sold e.g. giving keys to a house, giving the buyer
a bill of landing for goods sold while in transit. The bill of landing being a document of
title will enable the holder and no one else to deal in the goods.

b] Traditio longa manu [Delivery with the long hand]. It takes the form of pointing the item to the buyer.
This occurs where physical delivery is not possible because of the size of the item in question or law
prohibit actual taking over.

c] Traditio brevi manu [Delivery with the short hand]. This mode of delivery takes place
where the thing to be delivered is already in the possession of the person to whom it has to be
transferred. It is often used where goods have been pledged , rented, borrowed and the same goods are
later taken over by the person in possesstion. Eg Tenant, using the whole house, and later buys it from a
landlord.

d] Constitutum possessorium. This is the converse of traditio brevi manu. It denotes a form
of delivery in which the transferor/seller retains physical control over the thing in which he has agreed
to transfer ownership to the transferee/buyer. Thus the thing remains with the seller with the
acknowledgement that the merx is now owned by the buyer. The seller will keep it on behalf of the
buyer e.g. where a person buys a watch from a jeweller but leaves it with him for the belt to be adjusted.
The purchaser leaves the merx in the custody of the seller and the latter keeps it on her or his behalf.

e] Attornment. This occurs where the thing to be delivered is not in the possession of the
transferor nor the transferee but under the custody of a third party who is holding it either as an agent of
the transferor or in some other capacity e.g. a hirer. In such a case, the transferor will instruct the third
party to hold the article on behalf of the transferee provided:
 There is mental concurrence of all the three parties involved
 The third party in question actually is in control of the property.

Obligations of the Seller and Purchaser. Each party has obligations undertake expressly/impliedly. However
unless parties have agreed otherwise, the following are implied by the law by the very nature of the contract of
sale.

Obligations of the Seller.

i. To take care of the merx and preserve it until it is handed over. The seller is liable for damage
and loss of the merx only if he was grossly negligent or failed intentionally to take care. In the case of
vis major(natural occurance) or things beyond control of the seller, the buyer takes the risk. If the
seller is in mora (default) to deliver, he is responsible for all losses. The buyer bears the general risk
that the merx may be damaged, diminished or lost; provided the seller was not at fault.

ii) Duty to deliver [make the merx available] is fundamental to the contract of sale as this was the
buyer’s motive in entering into the contract. The merx must be delivered in the condition it was at the
time of the sale. It must be delivered together with its fruits. The seller must put the merx at the
disposal of the purchaser to enable him to take it away without hindrance. For immovables, the seller
must take steps to effect transfer at the Deeds Office. The seller must deliver the specific thing sold,
not a similar/identical thing. Otherwise the buyer may cancel the contract.

iii) To guarantee/Warranty against eviction. In the contract of sale, the seller undertakes
to pass free and undisturbed possession of the thing sold to the buyer. Eviction simply means being
deprived of the possession, use and enjoyment of the merx.
Warranty eviction is implied by the law in a contract of sale whereby the seller undertakes that the
buyer will not be disturbed in his use and enjoyment of the thing bought. The warranty does not give
protection against the unlawful acts of other people. It protects the buyer from lawful eviction
because of defective title. A purchaser who gives up [or agrees to give up] on the mere demand of a 3rd
party has no remedy

The seller undertakes to protect from eviction and ensure that the buyer enjoys use of the merx.

The implied warranty against eviction will however not apply in the following circumstances:
 If the parties expressly agree that the seller will not be responsible in the event of the buyer's eviction
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  Where the buyer is aware that a third party is the owner of the article, he has no right of recourse against
the seller in the event of eviction. By proceeding to buy the property, the buyer voluntarily assumes the
risk of eviction by the owner.
 Where the cause of deprivation arises after the sale and the seller is not at fault, the warranty will not apply
because it is considered to be risk which passes to the buyer on conclusion of the contract.
 If eviction is unlawful or by illegal means

Remedies to the buyer on eviction

Can cancel the contract, claim for the refund of the purchase price and damages if had suffered any

iv. To guarantee or Warranty against latent defects. The seller has a duty to deliver the thing sold without any
defects. Defects simply refers to defaults. Defects can be latent or patent.

Latent defects are hidden and not easily identifiable. Identification requires an expert.
Patent defects are those easily identifiable or are obvious

A seller warranty against latent defects present at the time of concluding a sell only but not patent defects,
and those arising after sale. The latent defects should render the merx partially and totally unfit for or
substantially unfit for its purpose or other purposes known by the buyer and seller

Patent defects and Caveat emptor rule

Seller does not guarantee against patent (easily identifiable) defects. The Caveat emptor rule “let the buyer
beware” is applied. The rule states that the buyer is expected to make reasonable inspection of the merx
before purchasing so as to satisfy himself as to its condition. Inspection will help to discover the patent
defects. The seller’s warrant is against hidden (latent) defects only.

Remedies[Aedilitian actions] available for latent defects

Where the defect is latent, the buyer has some special remedies unique to the contract of sale. These remedies
apply whether or not the seller was aware of the defect at the time of sale. It must be such that it destroys or
impairs the usefulness of the merx for its ordinary purposes. It must be present at the time of the sale.
a) Actio quanti minoris is a demand for a reduction in the purchase price. Is granted if the defect is
not
vital but reduces the value of the merx.

b) Actio redhibitoria. The buyer cancels the contract and claim the purchase price
against a return of the defective article. Restoration to original position is appropriate if the merx is
totally unfit for its ordinary use because of the defect. Redhibition is available if the defect goes to the
root of the contract

Actio redhibitoria will not apply in the following situations:

o Where the goods have perished after delivery as a result of the latent defect making restitution
impossible.
o Where the goods have been consumed in the course of normal use to which the seller knew they
would be applied and the buyer had no knowledge of the defect.
Circumstances in which the warranty against latent defects does not apply or operate.
The seller is however not responsible for latent defects in the following circumstances:
i) In the case of sales voetstoots. Sales voetstoots is when goods are sold in their state as
they stand with all defects or faults. The buyer accepts the goods in the state or condition
in which he finds them. The buyer does not have any remedies from the seller against
latent defects unless the seller acts fraudulently

i) Where the seller expressly contracts out of liability by agreement with the buyer but the
seller must not be silent about latent defects of which he is aware. Where he does so, even
a voetstoots clause will not avail him.

ii) If the defect does not exist at the time of sale. In such cases the ordinary rules on passing
of risk will apply and the loss lies with the buyer. The onus is on the buyer to prove that
the defect existed at the time of the sale.

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 iii) Where the buyer is aware of the defect at the time of sale or became aware of it
subsequently and expressly or impliedly accepts the position.

iv) Where non-disclosure of a latent defect, was not done intentionally. Generally by
non-disclosure, the seller acts fraudulently. Thus intention must be proved.

v) Where the defects do not impair the merx or reduce the value or performance of the
merx

c) Actio ex emptio. The buyer can claim for consequential damages, which he would
have suffered as a result of the failure by the seller to deliver the merx

Obligations of the buyer. These are equivalent to the rights of the seller.
 To pay the purchase price is the most important duty of the buyer who must pay the whole price; in
instalments only if agreed so. The buyer is entitled to a receipt upon payment; and may withhold payment
if receipt is refused. Ownership normally passes when the price is paid. Such payment must be made at the
place and time agreed. In cash sale this is the place delivery was made.

 Duty to take delivery. The purchaser must accept proper delivery and assist when such delivery is made.
If the buyer delays in removing the merx and the seller incurs costs e.g. storage, maintenance or the keep
up of an animal, the seller is entitled to reimbursement.

 To reimburse the seller’s necessary expenses

The buyer should compensate the seller’s necessary expenses incurred upon the merx sold from the time of
sale to the time of delivery. Eg if the buyer is in mora in accepting delivery and the seller incurs storage
and warehouse expenses, the buyer is bound to repay or to reimburse the seller for consequential expenses.

Passing of Risk/Benefit and ownership

Risk and ownership do not pass at the same time.

Risk comprises deterioration/destruction, liability to bear loss/burdens e.g. taxes etc. as well as all advantages and
disadvantages. Risk will pass as soon as the sale is completed even if delivery has not been made. For cash sale
there must be delivery and payment immediately. For incorporeals there must be agreement as well as delivery of
documents if any.

General rule: The risk or loss of a thing falls upon its owner. Risk/benefit in a contract of sale falls on the buyer
as soon as the sale is perfect or complete (conclusion of sale) The loss/damage then accrue to the buyer. But if
the contract is imperfect, loss/benefit accrues to the seller.
Examples of risk include:
o Death of an animal
o Burning down or collapse of a building
o Imposition of excise duty.
o Natural risk beyond the control of either the seller or buyer

A sale is perfect when the price is determined, the merx is definitely identified and the contract is not still subject
to a suspensive clause/condition. On the sale of a specific thing, the purchaser assumes risk on the conclusion of
the contract.

Situations where the general rule of passing risk does not operate.
In this circumstances, the risk lies on the seller:
i. Where the seller is in mora/default in effecting delivery
ii. If the sale is subject to suspensive conditions and the condition has not yet been fulfilled
iii. Where loss or damage to the merx is due to the negligence or wilful acts of the seller
iv. Where the buyer and seller agree to the contract when risk is to pass
v. Tangible items have to be ascertained , that is, measured, counted or weighing. The risk pass to the buyer
if the items have been measured, counted or weighing (Res fungibles)

Ownership refers to the right to the exclusive enjoyment of something based on the rightful title. For a buyer, once
he become the rightful owner, no one can have a better title to the thing and no eviction
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Ways of passing ownership
i. Payment of purchase price
In cash sales of movable merx, the purchase price is paid at the time of delivery and ownership passes
immediately. In credit sales of immovable property delivery and other conditions eg payment of purchase
price, may be sufficient to transfer ownership.

ii. Delivery: The merx should be delivered to the buyer and the buyer should accept it

iii. Ownership of the merx

The seller should be the owner of the merx at the time of delivery. If not, cannot transfer ownership or
confer ownership to another.

iv. Serious intention

There must be serious intention on the seller to transfer ownership and on the part of the buyer to acquire
ownership

Double sales
Is a situation where the same article is sold to two different people. Eg where B sells a car to C, but before time
for delivery, sells to same to D..

General rules applicable to double sales

a) The first buyer is entitled to treat this a repudiation/ cancellation of a contract and can sue for restoration
and damages.

b) Where first buyer has obtained delivery or transfer of the merx, his title to the merx is valid and should
keep the merx or goods.
c) Where the second buyer has obtained delivery or transfer and it can be proved that had no prior knowledge
of the previous sale, either and the time of sale or delivery, he can keep the goods. The first buyer cannot
take the goods from him.

d) Where the second buyer knew of the prior sale, the first buyer can recover the merx from him provided he
would have entitled to obtain a court interdict in hindering the merx from being transferred to the second
buyer, provided he is entitled to an order of specific performance against the seller.

Conditional Sales
A condition is a future uncertain event.
a) Suspensive Condition [Condition Precedent]. Suspends the operation/effect of one or more obligations
until the condition is fulfilled e.g. ownership. In this case there is no sale until the condition is fulfilled. A
suspensive condition prevents the conclusion of the contract A sale under the suspensive condition is
imperfect.

When a suspensive condition is fulfilled the effect is retroactive – rights and duties are determined from
the conclusion of the initial agreement. The risk of total loss remains with the seller until the condition is
fulfilled.

b) Resolutive or Dissolving Condition [Condition Subsequent]. The agreement operates as a sale right from
the beginning but the sale lapses once the condition is fulfilled. For a resolutive condition the sale is
perfect.

Sales By Sample, Description and Opinion/estimate

Goods sold by sample/description are subject to an implied warranty that the bulk conforms to the
sample/description. However where the goods are themselves available for inspection, this warranty will not apply.
Where goods are sold in bulk or as a lot if the seller acted in good faith then the estimate does not constitutes a
binding warranty. However in the case of bad faith or fraud an estimate will bind the seller and the buyer can
cancel and claim damages.

Specific Contracts of sale.

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 1. Auction. The thing for sale is openly put for sale by an auctioneer for bidding and is sold to the highest
bidder. The purpose is to find a buyer who is willing to offer the highest price. Auction sales happen at the
instance of private individuals or they may have an official character e.g. in an insolvent estate or sales in
execution. The later are sometimes referred to as public auctions. All auctions may be with/without
reserve. Without reserve auctions- the highest bona fide bidder becomes the buyer/purchaser. With reserve
the highest bona fide bidder who exceeds a previously fixed sum.

2. Judicial sales involve the sale of movable property belonging to a debtor in a judgement of court which
may set the rules. In such a sale the officers take care of the property and obtain the highest price.

3. CIF [Cost, Insurance, Freight] is a product of English law. It involves goods in transit by sea at a price
covering their cost, insurance and freight. Under such a sale the seller is obliged to ship and insure the
goods and then invoice the purchaser for these. He then tenders to the purchaser: shipping documents i.e.
bill of lading, policy of insurance and the invoice. Risk passes upon shipment, ownership passes upon
delivery of the bill of lading.

4. Free on Board [FOB] also FOR- free on rail]. Here the seller is responsible for the cost of transporting
the goods to the ship and putting them on board.

5. Hire Purchase is a type of credit sale with payment being made by instalments. The seller is protected by
a right to recover goods if buyer defaults.
LAW OF PROPERTY
Property is anything valuable that can be owned. The law of property is about the rights of ownership in a thing.
It deals with the methods of how one can acquire ownership by law. The law of property or law of things controls
transfer of rights in a thing from one person to another and where conflict is, it settles them.

Characteristics of property
a) Is impersonal
For anything to qualify as property, it should be outside a human being or not a human being. The old
Roman law notion that certain human beings eg slaves could be treated as things or property is no longer
acceptable.

b) Individuality
In order to qualify as a thing, the object at law should be an independent entity, able to stand on its own.
Something which does not stand on its own, is not a thing because it becomes part of the thing which is
stands with eg roof is not property

c) Capable of human control

For a thing to qualify as property should be capable of being placed under human control and appropriation
eg farms, cars etc. Things that cannot be susceptible to human control are not property eg the sun, moon,
stars, wind etc

d) Use and value

For a thing to be called property, it must be of use and value to person.

e) Corporeal
Incorporeal objects such as personal rights were sometimes excluded from the definition of a thing. An
object is corporeal if it occupies space, tangible and can be identified

Classification of property
Classification of property can be according to their relation to man or nature.
1. Classification of property according to their relation to man
Property can be classified according to their nature
a) Corporeal or incorporeal property
b) Movable and immovable property
c) Divisible and indivisible property
d) Consumable and inconsumable property
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 e) Fungible and non-fungibles things
f) Personal things. Can be divided into tangible and intangible property
g) Real property

Methods of acquiring ownership or property

This refers to how one can become an owner of a property. The methods can be grouped into original and
derivative acquisition.
A: Original methods of acquiring property
This is where one acquires something independently, not from someone who is transferring it to him. It is
a unilateral act by one person, which does not involve transferring. The ownership is not derived from the
ownership of any predecessor. These methods include Occupation, Accession, Acquisitive prescription,
Specification, Commixtio (et Confusion) and marriage in community of property.

a) Ownership by occupation
Arises when a person acquires a thing, which can be owned but at the time of such acquisition was
not owned and occupied

b) Ownership by accession
Arises when a person acquires a thing derived from something he already owns. This can be
natural, industrial and mixed accession.
i) Natural accession: This result from the ownership of the origin of the off-spring, that is
the mother of the young animal. This general principle is that ownership of a young is
vested in the ownership of the mother. The owner is entitled to take and enjoy the fruits of
the property.

ii) Industrial accession arises from the conversion of two or more things into one entity
resulting in a combined things losing their original identification, properties and cannot be
separated eg chemical mixing or there being permanent attachment eg of buildings
structures to land (plantation) with the owner of land becoming the owner of the
infrastructure. The owner of the land can compensate any person who build a building or
provide material

iii) Mixed accession occurs when fruits of property are gathered or separated. Fruits can be
either natural fruits (those produced by nature) or industrial fruits (those produced by
human cultivation) or civil fruits (those arising from the use of property eg rent). The
absolute owner of property is entitled to the fruits arising from it.

c) Ownership through acquisitive prescription

Arises when a person occupies a property (land), uses the property openly as if it his, for an
interrupted period reasonable or 30 years, with the intention of acquiring ownership. The owner
should aware of this fact and does not protest, or exercise his right to recover the property. This
can be applied to both movable and immovable property. This method of acquiring ownership is
not applicable is the owner is a minor or insane at the time of occupation.

d) Marriage in community of property

Whatever couple brought into marriage belongs to them equally. There is no need for delivery or
registration of the property. Ownership is acquired as soon as the marriage takes place.

e) Ownership by spoliation or Statute order

Occurs when the law or statute deprives the existing owner of a thing and gives it to a new owner.
Is a lawful acquisition of property. The ownership may be transferred without delivery in the case
of movable or without registration in the case of immovable. The court’s ruling is final. The
property to be transferred must be described specifically. Mostly applied on government property
eg land. This is done with or without the consent of the existing/original to pass ownership

f) Ownership by specification.
Takes place by working on a thing, belonging to another, into a new product or by manufacturing
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 of a new product out of the material(s) of another, provided the material used ceased to exist and
cannot be restored to original form. The manufacturer (specificant) becomes the owner of the new
thing because of the labour and economic power he or she applied. The owner of the raw
materials is only paid for them. Is sometimes regarded as industrial accession

g) Ownership by commixtio (et confusion)

This is sometimes regarded as industrial accession or specification. The results from a situation
where by things are mixed together or mingled and cannot be separated or indivisible eg mixing of
liquids or mingling of solids. Where separation is impossible or very cost, the mixture becomes
the common property of the original owners in proportion to their respective contributions,
irrespective of whether or not their consent was obtained, if the mixing of the substance was not an
intentional wrongdoing.

For intentional wrongdoing, and the mixture cannot be divided and share of each cannot be
determined, the title of the mixture will pass to the innocent party, unless the wrongdoer can prove
his or her share to the court’s satisfaction.

h) Abandoned property
Arises when a person finds an abandoned property and reduces it to possession will acquire title to
it. Abandonment must have been done intentionally, like throwing away without the intention of
retaking possession. Lost property is not abandoned property The new owner should not hide the
property.

Derivative methods of acquiring property

Ownership is a result of a bilateral transaction as it involves transfer of ownership by the original owner to
another.. The main methods include Delivery (Traditio), Registration, Inheritance and Gift.
a) Delivery(Traditio)
Is where the owner of a property agreed to transfer or exchange of ownership is negotiated to
another person. The methods of delivery depend on the nature of the property in question.
Methods of delivery may include any of the following, actual delivery (tradition vera), delivery by
shorthand (delivery brevi manu), delivery by longa manu, symbolical delivery, constitutum
possession and attornment delivery.

b) Registration
As a general rule, one can transfer ownership to another by registration if the things are immovable
by registration. Registration is thus equivalent to delivery as in movable property. For instance, if
one is transferring land to another person, he can do by deed transfer. The deed is prepared in the
way prescribed by the deeds regulations, and should describe the property being sold specifying:
i. The names of the transferor and the transferee
ii. The amount of purchase consideration if any
iii. A statement showing serious intention to make a transfer
iv. An adequate description of the property
v. A list and description of any ownership rights that are not included in the
transfer eg mineral rights
vi. The quantity of the estate transferred
vii. The signature of the transferor

c) Inheritance
Result when a person received property from the estate of a deceased person either through a valid
will or intestate succession (transfer of assets by the state where no will exist or the will is invalid)

d) Gift
In an intentional giving of a property to someone else freely. The person who transfers is called
the donor and the one who receives is the done.

Requirements for a valid transfer by gift

i. The donor must intend to make a gift with full and fair consideration
ii. The donor must deliver the gift property to the done either actual or constructive
iii. The gift must be accepted by the done
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 LAW OF NEGOTIABLE INSTRUMENTS
Negotiable instrument is a document entitling the holder to the payment of a sum of money, which is transferable
by delivery or endorsement, in such a manner that the transferee, who takes the instrument in circumstances,
which render him a holder in due course, becomes the indisputably entitled to payment.

Characteristics of negotiable instruments

-Are transferable either by delivery or by endorsement and delivery
-Are transferable free of equities (deductions for charges)
-Confer on the holder on due course exclusive right to the instrument

Conditions of negotiability of negotiable instruments

The instrument must be in a deliverable state, that is, payable to the bearer. Instrument payable to a specified
person is delivered by endorsement. An instrument is not in a deliverable state if an endorsement was forged and
the transferee does not obtain a good title to the instrument.

Examples of negotiable instruments

a) Bills of exchange b) Cheques
c) Promissory notes d) Treasury bills
e) Dividend warrants f) Share and debenture warrants

Bills of exchange, cheque, promissory note and treasury bills are negotiable instruments created by statute.

Share dividends and debentures are examples of negotiable instruments created by custom

1. Bills of Exchange is unconditional order in writing, addressed by one person to another,

signed by the person giving it, requiring the person to whom it is addressed, to pay on demand, or at a fixed,
or determinable future time, a certain sum of money to or the order of a specified person or bearer.

Parties to a bill of exchange

a) Drawer is the issuer of the bill or the person who orders the bill to be paid. Is the creditor
b) Drawee is the person who is ordered to pay the sum of money or the person to whom the bill is
drawn. By signing acceptance is an agreement to be bound by the contract. Failure is a breach of
contract. Is the debtor.
c) Payee is the person who is to be paid the value of the bill

Bill of exchange (specimen)

30 days after date pay Gwenu the sum of two thousand dollars (US $2 000), value received.

A (Drawer’s name) B (Drawee’s name)

(Signature,Date) (Signature,Date)
( & address) ( & address)

Essentials ofa bill of exchange

These can be deduced from the definition
a) Is an order or promise
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b) Is unconditional. The order or promise to must be unqualified one, must be definite.
c) Must be in writing in a visible clear form
d) Signed by the party giving it and accepting it (drawee)
e) The sum certain in money – must comprise a definite, specific sum of monetary obligation and nothing
more
f) Payable on demand or at a fixed or determinable future time:
-On demand is when time for payment is not expressed on the bill. Time for payment is when
holder demand payment.
-Fixed or determinable future time – time can be expressed as:
i) at a fixed period after date if the instrument is dated
ii) at a fixed period after sight i.e presentation to the drawee for
acceptance
iii) at a fixed period after the occurrence of a specified event
g) To a specified person on his order or bearer
-The person must be named if he can be identified
-Bearer of bill if the person cannot be specified
h) Date of drawing the bill must be indicated

A bill of exchange can be rejected:

i) By none payment- failure to pay after acceptance
ii) By none acceptance- indicate unwillingly to pay the bill

Classification of bills
A) Bearer bill is a bill payable to no-one in particular. It is payable to anyone who presents the bill to the
bank for payment. Is negotiated by mere delivery. Is like an open cheque

B) Order bill is a bill payable to a particular person or to order of a particular person. Such a bill is negotiated
by endorsement and delivery. More like a closed cheque.

Acceptance of a bill by the drawee

Acceptance of a bill can be general or qualified acceptance
a) General acceptance is a form of acceptance where the drawee accept the entire terms of the drawer. Is
regarded as positive acceptance
b) Qualified acceptance- This form of acceptance tends to vary in terms and conditions of the bill. Is
regarded as a negative acceptance. Forms of qualified acceptance are:

Characteristics of acceptance
i. Must be written on the bill and signed by the drawee, the signature being sufficient
ii. Must express payment using money not other means

Transferring of bills
Bills can be transferred by:
- mere delivery only if the bill is bearer
- by endorsement and delivery if the bill is crossed

Endorsement is a representative or identification mark(s) of endorser. There is :

a) Blank endorsement
This represent simply the signature of the endorser. Specifies no endorsee. Such endorsement
renders the bill payable to bearer. Similar to bearer cheques
b) Special endorsement
This consists of the name of the person to receive payment of the bill in addition to the signature of
the endorser. Specifies the person to whom the instrument is to be payable.

A blank endorsement can be converted to a special endorsement by writing above the endorser’s
signature directing the instrument payable to a named person.

c) Restrictive endorsement
Such an endorsement specifies the person to be paid and restrict further negotiability of the bill eg
pay X only. Similar to non-negotiable cheques.
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 Endorsement is used to transfer/negotiate negotiable instruments to another person who is to receive
payment. Endorsement is complete when delivery of the instrument to the endorsee takes place

Endorser is one who is transferring the bill right

Endorsee is the person to whom the right is being transferred

Characteristics of a valid endorsement

a. Must be completed by delivery
b. Must be written on the instrument itself and signed by the endorser
c. Must be of an entire bill. A partial endorsement does not operated as a negotiation of the
instrument.
d. Where the instrument is payable to 2 or more payees or endorsees who not partners, all must
endorsee, unless one endorsing has authority to endorse for others.
e. Where a payee or endorsee is wrongly designated or mis-spelt, he must endorse the instrument as
described and add his proper signature. For many endorsement an allonge is necessary

Allonge is a piece of paper cut to the size and dimension of the negotiable instrument and pasted
on the instrument to accommodate further endorsements.
Holder
-Is a person in possession of a bill which by its terms is payable to him or
-Is a payee or endorsee of a bill who is in possession of a bill or
-Is a bearer where the instrument is payable to bearer

Characteristics of a holder
a) Must be a payee or endorsee therefore a thief of an instrument is not a holder if payable to order
b) Have rights and powers to sue on the bill on his own name
c) Can negotiate the instrument in such a way that the transferee may become a holder in due course

NB A bearer is a person in possession of an instrument payable to bearer. Any bearer is a holder.

An owner of a bill is a person to whom a bill has been negotiated. Acquires ownership through
endorsement.

Forms of holders
A true owner/holder of a bill is a person who should in fact ( immediately) be entitled to the bill

Holder for value is a person who takes a bill for which all of his predecessors have given value although he
himself did not give value for it eg in donation, a donor

Holder in due course is a person who takes a bill, which is complete and regular on the face of it before it was
overdue, in good faith, and for value without notice of any defects in the title of the person who negotiated it and
acquires indisputable title to it.

Circumstances under which a holder us due course cannot have indisputable title to it ( ie not entitled to the face
value of the bill)
a. If the bill is materially altered by the payee before endorsement to the holder in due course. A holder is
due course is not entitled to an altered bill except where alterations were not apparent
b. If title depends on a forged endorsement
c. If the transferor lacks contractual capacity

Powers of holders.
-To negotiate or transfer the bill by endorsement
-To discharge it by receiving payment is due course

The powers can be effectively exercised although the holder’s title is defective because a thief can exercise these
powers if the bill is payable to bearer but the instrument becomes a nullity (useless).

Rights of a holder
i. To insert certain additional matter on the instrument eg the true date of issue or acceptance.
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ii. To present an unaccepted bill for acceptance
iii. To present a bill or note for payment
iv. To sue on a bill or note in his own name. Suing successfully depends on whether the holder is a holder in
due course
v To protest a bill or note on dishonour (non-acceptance or non – payment)
vi. To give a notice of dishonour.

2. CHEQUE
Is a bill of exchange drawn on a banker and payable on demand

Parties to a cheque
a. Drawer – a person making payment who draws the cheque\
b. Payee – A person being paid or a person to whom a cheque is drawn.

The bank being the drawee, only act as an agent of the drawer, and is not sued for the breach of contract.

Drawing is simply instructing in writing, duly signed to a particular person, to pay a sum of money to the third
party

Difference between a cheque and a bill of exchange

Bills of exchange Cheque
1. Drawer is the creditor 1. Drawer is the debtor
2. Three (3) ie the drawer, payee and drawee. By 2. Two parties, drawer and payee. The
signing “acceptance” the drawee becomes part of drawee(bank) act as agent of the drawer
the contract

Relationship between banks and clients

The relationship is that of the debtor and creditor. The customer being the creditor and bank being the debtor.

The banker treat cheques of the client customer according to the instructions on the cheque and provided there are
sufficient funds in the current account of the customer to meet the payment. If the bank pays out a cheque in
accordance with instructions given by the customer, it is entitled to debit customer’s account but it may not do of if
paid out the cheque in negligence or to someone else who is not entitled to the cheque.

Types of cheques
a) Ante- cheque is with a date before, back dated, but not sale
b) Post dated cheques
c) Bearer cheques
d) Crossed cheques
e) Stale cheques

Crossings in a cheque
Are instructions of the client to customer as to how the bank should treat the cheque. There are general and special
crossings

a) General crossings – is where a cheque has two parallel lines across the face of the cheque incorporating
either the words “And Company or not negotiable” examples are:

i) ii) And Company iii. Not negotiable

b) Special crossing
These specify the name of the bank on which the cheque is to be drawn, across the face of the cheque plus
either the words “Not negotiable eg

Barclays Bank

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 2 First Street
Marondera
Not negotiable

The instruction “Acc payee” or “Acc payee only “ has no legal effect on the negotiability of the cheque in that the
cheque can still be negotiated but at the risk of the person doing so.
The instructions “Not negotiable” on the cheque does not totally prevent negotiability of it in that the instrument
can still be negotiated only, in that, is thus instance the transferee takes a cheque subject to equities ie his title to
the cheque may not be greater than the transferor of it and everything is done at the risk of the transferor or
transferee.
A cheque may prohibited completely from negotiability by deleting the words “Bearer order of “ on the face of the
cheque and replacing them, as the case may, with the words “Not transferable”

Banker’s protection
A banker (bank) who pays a cheque in circumstances of negligence is liable for the loss caused, this is common
law position.

Similarly, in law, if a banker pays a cheque to someone else who is not entitled to it, the banker is liable to suffer
the loss and may not debit its customer’s account.

But in terms of the Banker’s Protection Act, a bank is protected from any loss that may arise as a result of paying
cheque with a forged signature provided:
a) The cheque was paid in the ordinary course of business
b) The cheque was paid in accordance with instructions off the client-customer
c) The cheque was paid in good faith
d) The person to whom the cheque was paid is not a customer of the branch or the bank at which the
cheque was honoured.

The drawer (debtor) is also protected from any liability to the payee if the former draws a cheque to a
payee and the cheque is stolen before it has been cashed. In this case it is up to the payee to recover the
money from the thief when he is discovered.

3. PROMISSORY NOTE
Is unconditional promise in writing addressed by one person to another, signed by the maker engaging to pay
on demand or at a fixed or determinable future time, a sum certain in money to or to the order of a specified
person or to bearer

Parties to a promissory note

a) The maker of the note-is the issuer of the note or the person promising to pay the sum of money. Is the
debtor
b) Payee is the person to be paid the sum of money by the maker

Discharge/Termination of negotiable instruments

A negotiable instrument is discharged when all rights of action on it are extinguished and ceases to be negotiable.
The following are some of the ways in which discharge can take place:
a) Payment of due course
Payment made at or after maturing of a bill of exchange in good faith discharges the bill

b) Acceptor becoming the holder at maturity since a person cannot pay himself

c) Express waiver
This arises where the holder renounces at or after maturity and in writing on the instrument, his rights
against the acceptor.

d) Cancellation
Arises when the instrument is intentionally cancelled by the holder in due course or his agent.
Cancellation must be apparent

e) Fraudulent and material alteration on the bill

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 LAW OF SECURITY
Security is anything that puts the lender in a stronger legal position than relying on the borrower’s promise to pay.
Security has a wide application and it include the debtor creditor relationship arising out of a contract. .

Forms of securities
a) Real security which create a real right in a thing, which is good against any other person. Real securities
include mortgage, lien and pledge. They give the best possible security provided the value of the thing is
adequate to cover the debt.

b) Personal security eg Suretyship on the other hand does not create a real right, but extends the personal
rights to another person.

MORTGAGE
Mortgage is the right by person over the immovable property of another, having the effect of securing an
obligation. It includes the right to have that property sold (in the event of the debtor’s default) and the right to
receive payment. It is generally accepted as the soundest of all forms of security.

Parties in a mortgage
These include the following 1) Mortgagee (creditor or lender)
2) Mortgagor ( debtor or borrower)
Creation of mortgage
A mortgage comes into by registration of the mortgage bond in the presents of registrar of deeds by the registered
owner of the property to the mortgage or by a legal practitioner authorised by owner.

Mortgage of land
It covers all buildings and other immovable properties on it at the time or which are subsequently erected on it,
which is attached to it. A registered long lease is a form of movable property and can be mortgaged. The
mortgage will fall away at the termination of the lease

Principles/essentials/requirements of mortgage
a) Agreement
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 Mortgage arise out of an agreement between a creditor and the debtor

b) Cession.
Mortgage should be cessed in good faith. Cession is giving up or transfer of rights to another person. A
person who receives a bond in good faith by cession from another would be entitled to enforce it, even
though the ceded (mortgagor) would not.

c) Specific property
A mortgage should bind a specific immovable property. It should not contain general clauses mortgaging
all of the property of the debtor.

d) Insolvency
On insolvency of the debtor, lender is usually ranked as a preferred creditor.

e) The debt may be existing or current. If the principal debt is non-existent or unenforceable, the same will
apply to a bond.

Rights of the mortgagee (creditor)

i. Protection
The creditor should protect the property, except cases of insolvency assignment or liquidation. Mortgaged
land cannot be transferred without the consent of the mortgagee.

ii. Fore- closure clause

The creditor may fore-clause or call up the bond and have the property sold. This he may do, if there is
provision to the contract contrary to fore clause close. This right is usually exercised upon failure by the
debtor to repay the capital sum or interest on due date, or failure to insure the property.

iii. Sale of mortgaged property.

The creditor may sale the property. if the property is sold on less the amount of the debt, the mortgagee
may:
a) Buy the property for up to the amount, settling off the balance against his claim

b) If he fails to do so he looses the shortfall, he cannot recover it, but he only receives the amount for
which the property was sold

c) No more than one bond is registered on property and if the amount raised in sale is insufficient to
recover the amount due. The creditors are paid in order of preference as laid down in the
insolvency Act Chapter 203

Disadvantages of the mortgage

i. If there is a defect in a bond passed by someone other than the true owner, the bond is invalid.

ii. Prescription: A debt secured by the mortgage becomes prescribed in 30 years unless the claim has been
made prior to the lapse or expiry of that period

iii. Bonded property may still be lost eg by vis major. This is why there is often clause requiring that the
property be insured, the mortgagor bearing the burden of payment.

PLEDGE
Is a right over the movable property of another person. The pledger (debtor) hand over the pledged property to the
pledgee (creditor) , as security for payment. The movable property may be corporeal or incorporeal.

Parties in a pledge
-Pledgee (creditor or lender)
-Pledger (debtor or borrower)

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Essential of a pledge
1. Agreement
There has to be an agreement by handing over the pledged property to the pledge

2. Delivery of the pledged property o the lender.

3. To retain security

Rights of the pledgee (creditor)

a) To receive necessary expenditure on item from the pledger eg cost of feeding the animal pledged.
b) To retain property until payment

c) To realise or sell property, it the pledgor fails to pay capital and interest on debts or breaching any
other terms.

Obligations of the pledgee (creditor)

a) To take of the property, while it is in his possession. He will be liable if it is damaged due to his
negligence.
b) To credit the pledger with any fruits or profits from the property, while it is still in his possession, unless it
is otherwise agreed.
c) To restore the property if the debtor or pledgor pays his obligation in full.

LIEN
Lien or a right of retention is a right conferred on a person who is in possession of someone’s property of retaining
possession of that property until some expenditure of money or monies incurred by himself in respect of the
property is paid to him. It can be either movable or immovable property but suitable for movable.

Types of liens
a) Debtor – Creditor Liens
This lien entitles the creditor to retain possession of the debtor’s property until the full contractual price
has been paid. The price may be expressly fixed or may be the usual reasonable price.

A debtor-creditor lien arises where there is a contract between a debtor and a creditor, in items of which
the creditor has done work on property of the debtor, which property still remains in the creditor’s
possession and so secures all expenses which the creditor has incurred upon the property under contract

b) Enrichment liens
These liens are based on the principle of unjust enrichment, which states that, no person should benefit or
profit through necessary or basic expenses incurred by another person on the property owned by another
person, the former. These include Salvaged and Improvement lien. These liens result in real rights over
the property against the whole world.

i) Salvaged lien
This is where a person incurs necessary or useful expenditure or expenses on the property of
another, he may acquire a real right (real lien). These necessary expenses or expenditures are for
the preservation of the other’s property. Eg giving food to a dog when the owner was not there for
some days

ii) Improvement lien

This is where the creditor has done something to increase or to improve the market value of the
property of the debtor. Based on the principle of unjust enrichment, the debtor should not benefit
or profit on his property at the expense or expenditure of the creditor. The creditor has the real
right of retention of the debtor’s property until all necessary and useful expenses or expenditure
has been paid by the debtor. Nonetheless, luxurious expenses or expenditure do not give rise to
rights to these expenditure. This is because they are not expenses or expenditure that can be relied
upon to acquire or attain a real lien over another person’s property.

SURETYSHIP
Is a contract is terms of which a third party (surety) agrees to pay the whole or part of that obligation to the credit if
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the debtor fails. The debtor therefore remains bound to the creditor, in terms of the principal obligation and the
surety is bound to the creditor in terms of the contract of suretyship. Surety agrees to pay. Suretyship contract is
sometimes known as personal security.

Nature /Essentials of the suretyship contract

It is fundamental to the suretyship contract that:
a) A valid principal obligation must be in existence between the debtor and creditor
b) Someone other than the surety must be the debtor in terms of the obligation, debtor and surety be different
persons.
c) The principal obligation need not, however, be in existence at the time of the suretyship contract. It may
come into existence latter.
d) The surety is not bound on the contract of suretyship until the principle obligation is created.
e) Once the principal obligation comes to an end, the suretyship obligation is terminated or discharged.
f) Formalities: No contract of suretyship can be valid, unless the terms are in a written document signed by
or on behalf of the surety.

Relation between the parties

Once the debt is due, as a general rule, the creditor may have recourse against either the principal debtor or the
surety for payment. There is no obligation upon him (creditor) to proceed against the principal debtor first.

Benefits/rights of surety
When the surety is sued, may use the following defences:
a) Benefit of excursion
Despite the above rule, however where the creditor proceed against the surety first, the latter (surety) may
have the benefit of excursion, that is, that may require the creditor first proceed against the principal
debtor. Excursion is at the risk of the surety. If the creditor incurs additional cost in an unsuccessful
attempt to obtain satisfaction (payment) from the principal debtor, the surety will be responsible for the
costs.

b) Benefit of division
This applies where there are two or more sureties in respect of one obligation by the principal debtor. In
such a case when sued by the creditor for the whole amount of the debt, may demand that the claim be
divided proportionally between or among others and that he be responsible for only his proportionate
share. As in the case of excursion, the benefit of division must be claimed before the joiner of issue and
may be renounced expressly or impliedly.

c) Benefit of cession of action

This benefit is of different nature. It is not a benefit that can be raised against the creditor, but a benefit
which is available to a surety who has paid in terms of his suretyship obligation entitling him to recourse
against the principal debtor and core-sureties if any.

d) Benefit of rem
The surety may set up any defences in rem which the principal could have taken successfully against the
creditor, that is, defences to the validity or effectiveness of the original obligation. Among the defences
are: -That the original debt has been paid or set-off
-That the amount or part, which the debtor is able to pay first, be determined and paid
-That the debt has been declared by a judgement to be ineffective
-That debt had been incurred illegally or had been acquired by fraud or extorted by duress
-Debtor still a minor

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 LAW OF AGENCY
Agency is the contract in which a person [the principal] employs another [the agent] to act for him and enter into
contractual relationships binding between him and 3rd parties”.

An agent is a person who has authority from another [the principal] to create contracts between his principal and a
3rd party/parties. A person who carries out the instructions of another may be an agent or an employee. An agent
thus has authority to enter into contracts but an employee carries out his employer’s orders. An employee may
however be a special type of an agent.

An agent may be employed to perform in a specific transaction [special agent] or for acts in a designated class
[general agent] . Moreover, an agent can be or not in permanent of the principal, or can be an independent
contractor or not.

An agent may be authorised to act on behalf of the principal with respect to one matter, several transactions or all
matters/affairs of the principal.

Agents are used when:

a) One lacks capacity to enter into a contract
b) A person lacks relevant skills to contract
c) Time and expenses prevent the person from concluding a contract

In agency three people are involved and there are two contracts:
a) The contract of agency between the principal and agent. Is the contract of mandate
b) Binding contract between the principal and the third party.

Requirements or Essentials of contract of agency

a) There must be a principal, agent and third party

b) Agreement. The principal should agree and entrust the agent with the subject matter of the agency and the
agent should agree to perform the task or act which has been entrusted to him. There should be an offer
and acceptance and the terms may include remuneration.

c) The agent must possess sufficient knowledge of the field or work to be done

d) All other essentials of a contract, inter-alia legality, possibility of performance

Anyone can act as an agent but it is essential that the agent:

i. Understand the effects of acting as such
ii. Has the knowledge and skills to act as such
iii. Has contractual capacity

Anybody is capable of engaging an agent provided has contractual capacity to employee.

FORMATION OR CREATION OF AGENCY

Agency is created through:

a) Authority/Agreement b) Ratification.
c) Estoppel or Conduct of parties d) Operation of law
e) Negotiorum gesto (Agency by necessity) f) Stipulatio alterio

a) Agency by authority
This form of creating an agent can be divided into express or implied authority
Express authority
Agency is created by an oral or written agreement between the agent and the principal. The parties
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 will on the scope of the authority and remuneration to be paid to agent.

Implied authority
The authority can be implied from events or circumstances. This is where a person is deceived to
have been authorised to act or to do all acts, which are essential to the tasks, which he or she has
been authorised to do. A person appointed manager for instance, by virtue of position, is expected
to perform all duties which are essential to that position, even if have not been authorised by the
principal.

b) Agency By Ratification. Ratification means confirmation, adoption or approval. Occurs where a person
without prior authority purports to act on behalf of someone else who subsequently adopts the antecedent
transactions. Here a person professes to act as an agent for another but lacks initial authority. This act is
ratified in retrospect as if it had been authorised from the beginning. Ratification puts all parties as if the
act had been performed properly in the first place.

Requirements of ratification are as follows:

 The person doing the act professed to act as agent. He must actually hold out to the 3rd party that he
acts on behalf of the other who can be named or not. He must have had a particular principal in mind.
Principal need not be in existence at the time it is created
 The act must be capable of ratification thus excluding informal acts, or those, which are illegal,
immoral or are contrary to public policy. Act must be lawful
 The principal must have contractual capacity.
 Ratification must be of the whole transaction and must be made before the contract is performed or
within a reasonable time
 The juristic act must be of such in nature that the principal can ratify it
 The ratifier must have full knowledge of the transaction he or she is ratifying

Only the person for whom the agent acted can ratify. This must be done with full knowledge of the facts;
the whole transaction must be ratified. Ratification may be express or implied.

c) Agency By Estoppel. Happens where a person (principal) by his conduct, expressly/impliedly represents that
a certain state of affairs exists for another person to act on his or her behalf, and so leads another person (third
party) acting as a reasonable man, to be prejudiced. That person (principal) is prevented/precluded from
denying such state of affairs. Thus if a principal, through his conduct represents to another to have authorised
another person to act on his behalf, he is estoppeled from denying such representation ( has granted such
person authority to act on his behalf). His representation has misled the other as a reasonable person.

This form of agent arises where one party (principal) gave a false impression, acted as if has delegated
authority to another person to act on his behalf and the third party acts upon this belief to his detriment. In such
a case, if a juristic act is performed in his or her name, is bound by the operation of estoppel. A person making
the misrepresentation is estoppled from denying the existence of his or representation.

Estoppel is a law principle, which precludes a person from assenting something contrary to what is implied by
a previous action.

The person acting on his or her behalf (agent) is regarded as having ostensible or apparent authority hence this
method of creating agency is agency by ostensible or apparent authority

Requirements for estoppel:

o Misrepresentations by one party through words, actions/conduct, or even inaction that a certain state of
affairs exists.
o Such representation was of such a nature as to mislead a reasonable person who developed reliance on that
representation.
o The person who holds that reasonable reliance acted on the faith of that representation or was induced by
it.
o Actual/potential prejudice was created and suffered by the party relying on it. The prejudice must have
resulted from the reliance.

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 When these requirements occur the party responsible for them will not be allowed to deny their truth. He is
precluded from denying that a contract was created. Thus estoppel is a form of defence.

d) Agency through Implication of the Law arises without agreement but by law or the nature of
one's office and status Some people may not be able to run their affairs or do certain acts. Then law requires
such persons lacking the capacity to be represented in areas of incapacity by a duly appointed person. Such
agency derives authority from law. No permission by the principal is necessary e.g.
 Guardian and Pupil [minor]- normally the father or any parent.
 Trustee of an insolvent estate. Authority to bind the insolvent estate arises from the Insolvency Act.
 Curator and lunatic. The court appoints the curator and it determines his authority
 Board of directors represents a company

e) Agency by Negotiorum Gestor or Agent by necessity [Adminstrator of Affairs] Happens when a person
acts on his own accord without agreement/authority; express/implied in order to benefit another e.g. when a
man put off fire at a neighbour’s house. This is a salvage case. The action must arise from a situation of
urgency and there is no time to communicate with the principal.

Arises where a person (negotiorum gester) voluntarily undertakes to protect the interest of someone (principal)
in the absence of the later and in circumstances justifying the exercise. The person (agent) should act out of
necessity for the principal, took a course of action which was the only necessary is the circumstance and was
reasonable.

However the rights and duties of a gestor are similar to an agent. He is however reimbursed for useful or
necessary expenses only. No remuneration is paid for service or time lost and extravagant expenditure.

The following conditions give rise to the creation of agency by negotiorum gestio:
-Where there is reasonable ground to protect the interest of someone
-Where it is impossible to contact the principal to obtain prior authority to undertake the
necessary exercise.
-The act performed must be a juristic one

f) Stipulatio Alterio
Sometimes known as a contact for the third party. This is a contract in which the original
contractors agreed that one of them shall be subsequently replaced by a third party. Upon
acceptance of the offer by the third party, the party to be replaced falls away and his place is
taken by the third party with retrospective effect. The third party must however adopt the
contract by the time stated for him to do so. The parties may put to an end the contract if it is
not adopted by the third party on schedule.
Causes of withdrawal of the former party may include:
-Impossibility of performance
-If the contract was for the third party
-If the third party attain contractual capacity.

By its nature a contract of agency creates two sets of legal relations: [between principal and agent; and the
principal and 3rd parties]. The first is a direct result of the formation of the company and the second follows the
formation of the contract.

Types of Agents
1] Broker is a middleman/intermediary who negotiates between two parties. His task is to link between the
two parties until they agree on terms of the purchase and sale. He does not have custody of the goods but
he acts as agent for both buyer and seller. He must deal fairly with both and he gets a brokerage
commission from one or both.
-Do not have possession of goods to be sold. Is just a intermeaditor
-Has no implied authority to complete a contract or power to bind the parties
-Is an agent appointed by either a buyer or seller to negotiate on his behalf.

Stockbroker is a specialised broker, a member of the Stock Exchange who deals in shares, debentures or
other securities of public companies. The stock exchange protects investors, channelling funds from the
investing public. Members must be registered with ZSE.
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2] Factor – an agent who sells goods delivered to him for a factorage commission. He must have custody
(possession) and control of the goods he sells. He has discretion to sell for cash/credit and to set the price.
Can sell the goods in his own name.

3] Auctioneer is an agent of the seller for selling movable/immovable property by public auction. Seller may
stipulate a reserve price and in that case, the auctioneer should not sell below that. Goods are sold to the
highest bidder. The sales are normally of expensive items and on cash basis unless credit is authorised by
the principal. Eg ABC auctioneers

The conditions of the sale are read out at the start of the auction and buyers are held by those terms
whether or not present when the terms were read. Most conditions would include “the sales voetoots, cash
only and the bid excludes tax”

He has a lien for his commission over the proceeds of the property sold but not over the property itself if it
is not sold e.g. if seller and buyer agree to cancel the sale.

Special agent is an agent appointed and authorised to act on behalf of his or her principal for only one
specific task. Once the transaction (task) is completed the agent’s mandate comes to end eg most lawyers

4] Del Credere agent is an agent to sell or dispose off goods on behave of the principal. What distinguishes
this from others is that guarantees that the 3rd Party will pay under the contract, so bears the risk of bad
debts. Can also guarantee a minimum purchase price for goods adding his or her risk, hence is paid a
higher commission called del credere commission. The commission may include basic commission plus
extra commission. A del credere agent can be a factor, broker and auctioneer but with extra risk.

5] An estate agent is an agent authorised to negotiate the sale/purchase of immovable property. He is thus
similar to a broker. His authority is not to conclude a contract of sale; merely to negotiate. He is not
obliged to do anything. He introduces a person who is able [legally/financially] to buy. He is entitled to his
commission if he is the effective cause of the purchase, hence has to prove that his or her efforts were the
cause of the sale.. He receives instructions from prospective sellers of immovable property and tries to find
a buyer whom he introduces to a seller.
As a standard practice, the estate agent presents the seller and buyer with a contract of sale for signature.
He also includes a clause obliging the seller to pay him his commission. Normally an estate agent basis his
commission on a scale from the Estate Agent's Council unless agreed otherwise. Estate Agent Act
maintains standards of integrity and protects the public. It registers estate agents. He is not reimbursed for
expenses e.g. advertising, transport, entertainment of prospective buyers. This is so because he is not
obliged to do anything.
6] General agent is an agent given the authority to represent the principal in several transactions. Represents
the principal in variety of activities with his range eg Managing Director

7] Universal Agent is an agent given the authority to represent the principal in every aspect of his or her life.
The agent has unrestricted authority. Can act in any matter relating to the principal’s affairs. Eg guardian.

Authority of Agents
This can be deduced from the formation of the agent as follows:
a) Actual authority, which can be express or implied authority
b) Authority by ratification
c) Ostensible or apparent authority
d) Authority by necessity

Duties of Agent.
 Perform mandate/duties personally. May only delegate if has been the authority to do so and or if the
custom of the trade allows it

 The agent must perform his duties competently ie must exercise necessary skills, care and diligently in
the performance of his duties. Must exercise the duty to the best of his ability and within reasonable time
frame. Must also obey lawful instructions and follow trade usage during the absence of information from

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 the principal. If fails to perform competently, exercising necessary skills, care and diligent, may be liable
for damages because of negligence.

 Conform to the authority given and obey all lawful instructions from the principal; in the absence of such,
he must observe trade customs.

 Keep accurate proper accounts – an agent should keep proper accounts of his property and business
separately. If he cannot prove what is his, it is presumed that every transaction belongs to the principal.
All property received for the principal must be delivered. Unless he holds a lien [right to hold and retain
property pending satisfaction of a claim] on it. The principal has a right to inspect the records of the agent

 The duty to account to the principal. This includes:

-To give what belongs to the principal to the principal
-To give full and accurate information of what he has done in carrying out his
mandate(feedback)
-To give full and accurate information of the contract for the principal
-To permit the principal to inspect all books and records relating to the contract

 Show utmost good faith [uberrima fides]

o All profits in respect of the agency accrues to the principal and must be handed over unless the
transaction was outside the scope of his agency or the principal waives his right to the profit or the
profit was purely accidental.

 Must not enter into any contract or transaction involving a conflict of interest with his principal except if
he discloses this. So he can’t buy his principal’s goods or sell his goods to him unless he discloses this.
This principle applies even if no prejudice arises.

 He must not accept a bribe or secret commission from a 3rd party. The agent is criminally liable in such a
case [Prevention of Corruption Act]

Rights of An Agent.
a Be reimbursed for expenses/liability in connection with the mandate. The expenses must have been
necessary and in terms of the mandate. The principal takes over all liability incurred.
b. Entitled to his remuneration in accordance with any express agreement and after due performance of
mandate fully and faithfully. Remuneration may be implied from trade custom/usage; or previous dealings
of the parties; otherwise reasonable remuneration [quantum meruit] must be paid. The agent is entitled to
his remuneration when he has substantially performed his mandate – even if the principal derives no
benefit.

Duties of the principal

a) To pay the agreed remuneration.
The principal should pay the agent remuneration as per agreement, if no agreed remuneration:
-the principal should pay as per trade usage rate
-Where trade and agreement are silent, the principal should pay reasonable amount
-The rates may be fixed by courts on what is fair and reasonable remuneration, taking into account
items such as time, labour, nature of occupation and the value of the service to the principal

Remuneration is claimable if the mandate is completed or substantially complete. Moreover, remuneration

is also payable when the principal has not benefited from the agent’s performance provided it is not the
fault of the agent.

Case: Levi vs Philip (1915)

An agent was employed to find a buyer of a house. As a result of his effort, a contract of sale was
concluded. Later, the principal (seller) voluntarily released the buyer from the sale and refused to pay the
agent’s commission on the grounds inter alia that he had not benefited from the agency. It was ruled that,
he was bound to pay the agent since the agent had done everything in his power and he had, thus to earn
his remuneration.

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b) To reimburse and indemnify the agent
The principal is bound to reimburse (refund) the agent for all necessary expenses or liabilities incurred by
him in the execution of the mandate. The agent is entitled only to expenses incurred due to his or her
own negligence, default, breach of duty and wilful acts.
c) Duty of disclosures of an account
This is necessary when the agent’s claim for payment is based on the figures or information held by the
principal.

Liability of an agent.
Provided the agent acted within his mandate is not liable on the contract he creates for his principal even if
in the process he contracted in his own name and or does not disclose the identity of the principal.

An agent will be bound and liable on contracts he create for his principal only if:
i. Agreed to be liable
ii. Contracted for none existing principal
iii. Contracted for a principal who has no contractual capacity unless such principal has contractual
capacity through the operation of the law
iv Where the agent has contracted for a foreigner as the principal, the agent may be liable on the
contract
v. Where the agent has purported to act on behalf of the principal , but he himself being the principal
vi. Where the agent has not disclosed to the third party that he was acting as an agent and has not
disclosed the principal.
vii. Where the agent has benefited directly in a contract
viii. Where trade usage requires that the agent be bound on the contract, he or she would be bound.

Other additional circumstances when the agent is liable

a) If the agent receives instructions from the principal he or she may be liable for any losses the
principal suffers as a result of the agent’s failure perform mandate properly as instructed

b) Where the agent gains secret benefits, the principal may sue him/her for breach of agency contract,
losses sustained and damages suffered as a result of obtaining secret profits in an agency

c) An agent may also be executed or made liable for accepting bribes, which is a criminal offence

d) If the agent acted fraudulently, the principal may sue the agent for damages suffered as a result of
the fraud.

Liability for Agent’s Wrongdoing. The agent as perpetrator is always liable. If the agent was an employee then
the principal is liable for wrongs done in the course/scope of employment.(Vicarious liability)

Termination of Agency
 Performance of the respective duties
 By agreement either express or implied between the parties
 Expiry of fixed time if time- framed
 Destruction of subject matter
 Mandate becomes physically impossible of execution
 Revocation of agency by the principal. Expenses incurred by the agent must be reimbursed and he must be
indemnified from liability
 Renunciation by agent. If this causes prejudice to the principal damages may be claimed.
 Death of either agent and of the principal if estates cannot take over
 Loss of contractual capacity eg insolvency or insanity of principal/agent.

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 LAW OF EMPLOYMENT
Contract of employment is an agreement where a person undertakes to submit to the direct control of another
person in return for a specified reward (salary)

The parties involved are the employee and the employer

An employer is a special type of a principal who has the right to tell his or her employee (a special type of an
agent) what to do and how to do the work involved.

The direct and control of the employee usual includes:

a) What the employee has to do (work employed to do)
b) When to do the work
c) How to do the work

Contract of service- is a contract for a dependant employee

Requirements or essential
a) All essentials of a contract but no formalities at common law
b) Parties to agree on the service to be rendered and the remuneration. The agreement must be complete in
regard to hours of work, leave conditions, sickness, pension, fringe benefits even bonuses

When entering into contract of employment, the employee implies that:

a) Is qualified for the post
b) Will exercise due and reasonable care in the discharge of his or her duties
c) Is not to work against or harm his employer’s interest
d) Shall be honest and faithful serve his employer
e) Shall not abuse his confidence in matters pertaining to his service

The employee is obliged to (implied duties of the employee)

1. To execute his duties personally
2. Obey lawful orders
3. Carry out his duties competently using reasonable skills and care
4. Not to neglect his duties
5. Act in good faith
6. Be willing and ready to work
7. Convents in restraint of trade patents
8. To take care of the employer’s property

To act in good faith, among others mean:

a. Not to make secret profits from the employment
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 b. To be honest to the employer
c. Not to act to the detriment of the employer
d. To disclose information to the employer concerning the employment or employer
e. Not to disclose confidential information of employment to outsiders

Implied obligations of the employer in a service contract.

a) To pay the employee a reasonable remuneration
b) To provide a safety system of work ie suitable equipment , environment and clothes
c) To observe provisions relating to sick pay, holiday, and hours of work
d) To permit employees time off for public duties
e) Indemnify and reimburse the employee for losses suffered
f) To give enough information concerning the work especially unskilled employees
g) To obtain insurance for employees
h) To provide work

Labour laws allow the employer and employee to negotiate terms of employment. These to be in writing. Breach
of any of these terms by a party entitles the other to cancel the contract and claim damages

In event of unlawful dismissal, the Minister responsible for industrial affairs may intervene or refer the matter to
industry tribunal.

Remedies for unlawful dismissal

a) Reinstatement: The employee is re-employed but the employer must treat the employee in all respect as if
not previous dismissed. There is no loss of seniority, all arrears of pay and benefits etc are paid.

b) Re-engagement: An employee is re-employed but on different form of employment. Meaning loss of

salary arrears, seniority etc. All these being considered by the tribunal.

c) Compensation can be made of such amount as fit to the complainant’s loss. Done where re-instatement and
re-engagement is impossible.

d) Declaration of rights is a statement issued admitting that the person was right and was unlawfull
dismissed. Can be use demanded in addition to damages.

Any employee may face summary dismissal for any or combination of the following reasons:
1. Gross incompetence
2. Negligence of duty of serious nature
3. Insubordination ie wilful disobedience of lawful orders falling within the scope of appointed duties
4. Gross dishonesty in the course of duties eb fraudulent misrepresentation to unjust advantage
5. Misconducts likely to make the employer unfit for his position
6. Commercial infidelity to the employer, eg competing with him or assisting a competitor by revealing trade
secrets or taking secret profits.
7. Continued absence from work without reasonable excuses
8. Drunkenness so as to unable to perform one’s duties or interfere with the work of other employees

Vicarious liability of an employer

The doctrine of vicarious liability states that an employer is liable for the wrongful acts of the employee committed
whilst in the course of discharging duties of employment. This is done for two reasons:
a) Since the wrongful act was committed while the employee was engaged on the employer’s business, the
employer should be liable since work was being done for his or her benefit
b) The employer is likely to meet the damages claimed and therefore the injured person is in a better position
to recover damages than if claimed against the employee

Case: Lotter vs Rhodes (1902). A shepherd acting for his employer’s benefit and in the course of his
employment, set fire to the grass on his employer’s farm. Owing to his negligence, the fire was
allowed to spread and as a result trees and crops on a neighbour’s farm were destroyed.

Held: The employer was held liable for the damage

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The employer is liable for the following wrongful acts of the employee:
a) Authorised acts committed negligently when carrying out a duty
b) Damages caused by the employee to any third person when protecting employer’s property
c) Wilful wrongful acts of committed by the employee in executing his duty
d) Wrongful acts of the employee, although have been forbidden, occurring in the course and scope of
employment
e) Wrongful acts of employee committed during his course and within the scope of his employment to third
party who is injured or whose property is damaged
f) Negligence of the employee causing harm to the third party committed during execution of work

The employer will not be liable for wrongful acts committed outside the employer’s business premises or outside
the scope of the business.

Negligence of duty and use of reasonable care and skill

Although an employer is liable for the employee’s negligence and carelessness, the employer may be reimbursed
for any losses resulting from the employee’s gross negligence as cited in the case of Lister vs Romford Ice and
Cold Storage Company ltd

“A lorry driver, employed by the company carelessly reversed his lorry and injured an employee, who was his
father. The company paid damages to the father but the company claimed an indemnity from the son on the
grounds that he had broken an implied term of the contract of employment”

Held: The employee would be indirectly liable because of the breach of the implied duty and the employer was
reimbursed expenses suffered.

This indirect liability of an employee is not applied where the employee is inexperienced or unqualified and must
be applied with caution so that the employers will not escape their vicarious liabilities.

Termination of a contract of service

1. By performance 2. By passage of time when engaged for a fixed period
3. On notice when engaged for in indefinite duration
4. By agreement
5. By cancellation through summary dismissal or resignation where there is material breach of the
contractual terms
6. On insolvency of the employer.

Contract for services

This is a relationship whereby the employee undertakes to provide expert knowledge in return for a specified fee.
The employee in this relationship is called an independent contractor.

An independent contractor uses his knowledge to determine how to perform his task. The physical performance of
his mandate is not directed or controlled by the employer. Relies on his her own expertise to determine the best
way of doing his or her work.

Generally, the employer is not liable for wrongful acts of the independent contractor, which cause harm or injury to
third parties except in the following circumstances:
a) Where the independent contractor is employed to engage in dangerous activities
b) Where the contractor is employed to act under the supervision of the employer
c) Where the employer gives inadequate information eg of any effects to the third party like a neighbour and
has not specified the boundaries
d) Where the employer observes the contractor committing a wrongful act in connection with is mandate but
failed to stop him from committing the act.
e) Where there is mutual agreement to be liable
f) Where is engaged to commit crimes, which is an illegal contract

Independent contractors have fiduciary duties. Resulting from special position of trust or confidence and the
person is expected to act with utmost good faith and loyalty

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 LAW OF PARTNERSHIP
A partnership is a legal relationship between two or more people not exceeding 20, except in agreed
professionals eg lawyers, accountants etc, who agree to place their money, goods or other property or their skills
in some lawful venture with the objective of making profit and share the profit/loss between or among themselves
in certain proportions.

Unlike a company or a statutory body a partnership is not a legal person. It cannot acquire/dispose of property or
make contracts, sue or be sued or injure others. These rights vest in the individuals
members/partners. However the Insolvency Act allows a partnership to have a separate estate; and the Magistrate
Act allows actions in the name of the partnership.

Generally therefore a partnership is an unincorporated association for the purpose of gain. Its property belongs to
the members jointly. A partnership acts through its members while a company acts through it directors/officers.
Each partner is the agent of the partnership; therefore the law of partnership is an extension of the law of agency.
Each partner represents the partnership and can enter into contracts with 3rd parties. However a share holder does
not represent the company and cannot enter into contracts on its behalf except if authorized:
 A partnership does not have perpetual succession and ends on the death/insolvency etc of a partner.
 Transfer of shares requires consent of other partnership
 A partner has unlimited liability for partnership debts
 In general at least 2 members [ but less than 20 except for recognised professions]
 Partnership `may require no registration.
 Dissolution by agreement without further formalities. However returns for Income Tax, NSSA etc must be
made]
 No necessity for auditors.

Essential of a partnership
a) All essentials of a contract
b) The membership (partners) must be two to twenty (2-20) except in agreed professionals where the number
can exceed 20
c) Each partner to contribute something into the common business either inform of capital and labour
d) Common business. The nature of the business or the work should be business, if otherwise no partnership
exist
e) Making and sharing profits. The aim of a partnership is to make profit which is shared between or among
all the partners in agreed proportions if no agreement exists:
i) Profit should shared according to contributions of partners into the business
ii) If contributions cannot be easily determined, profit can be shared equally

f) Sharing losses. Sharing profits implies the sharing of losses. In the absence of an agreement, losses are
borne in the same ratio of the profits

Formation of Partnership

1. By agreement oral or in writing. A written agreement is called a deed of partnership can be required
although not a necessity.

2. By Conduct ( Tacit)
The existence of a partnership can be implied from the facts, circumstances and or conduct of the parties
without any agreement

3. Marriage. If a husband and wife are married and get engaged in a business of their joint benefit, it could
be taken as a partnership. The same applies to those living in a marriage of convenience.

Fink v Fink. 1945. A husband and wife married to each other out of community of property ran a dairy
business which ostensibly belonged to the husband. On dissolution of marriage it was held that the wife
had a half-share in the business.

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4. Holding out
A non-partner can be estoppeled from denying that he or she is a partner and therefore he or she be held
liable to the third parties as an ordinary party if:
a) He or she presented himself as a partner by words or conduct
b) Knowingly allowing himself or herself to be presented as a partner. In such a case, he or she will be
liable to a partner who has dealt with or given credit to the partnership firm on a reasonable belief in
such representation.

Types of Partnerships
The two major types are ordinary and extraordinary.
1) Ordinary partnerships consist of ordinary partners each being liable jointly and severally [in solidum] for
debts and obligations of the partnership to third parties . Such partners are active or general partners who can
take part in the day to day running of the business. Where parties are jointly or severally liable, a creditor if so
choose:
a) Claim a debt from the parties as a group
b) Claim the whole debt from any one party and if he or she pays, can claim from co-
partners their appropriate share

2) Extraordinary partnerships consist of ordinary partnership who are disclosed to the whole world h as well
as sleeping/dormant partners who are undisclosed and have liability which is limited to a degree. Dormant
partners must avoid publicity because the presumption is that a partner is protected by limited liability.

Relationship between Partners. (Duties of Partner)

 Good faith as between partners [uberrimae fides]. This duty continues until partnership is dissolved.
Thus secret profit or competitions are not allowed. Breach of this duty allows dissolution. They put the
greatest trust and confidence in each other: they must not conceal anything relating to the partnership or
obtain an advantage for himself or be in rivalry with the firm. However a partner may engage in a venture
in his private capacity if it is not within the scope of the partnership.
 Pay contributions promised. Each partner is a debtor to the partnership and can be sued for this amount.
 Account for and deliver whatever is received on behalf of the partnership
 Share profits and losses. They cannot claim interest on capital contributed or remuneration unless
specifically agreed or for special work which was not contemplated in the partnership agreement.
 Exercise due care. Liable for gross negligence. A partner must show the same level of care he would
devote to his own affairs.
 Partnership property. The partners must contribute the property agreed upon, though sometimes the
agreement may be for mere use of such property.
 Contribute due effort in the running/management of the partnership unless agreed otherwise or being a
dormant partner.
 Render account. Each partner is entitled to inspect partnership books and make extracts.

Rights of partners
1. To demand an account of other partners dealing in the partnership provided he has submitted or is to
submit an account of his own partnership transaction
2. Inspection: A partners has a right to inspect books of accounts of the partnership transactions at an
reasonable time.
3. Reimburse: Partners have the right of reimbursement of expenses and profits or losses (liabilities) arising
out of partnership business or injuries in person or property of the partnership
4. To a share of the profits: Partners have the right to share in the profits in agreed proportions.

.Authority in a partnership.
 Express authority may be granted to one member even if that exceeds the scope of partnership business.
 Implied authority. Each partner has implied authority for all acts necessary/incidental to the partnership
business.
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  Ratification confers authority ex post facto on that partner as in agency. The partnership however has a
choice to adopt/repudiate. The partner is regarded as having authority from the time the contract was
concluded.
 Ostensible authority. There must a representation by the partnership to the innocent party who then
suffered as a result of relying on the representation. The innocent party relies on estoppel and the
partnership would be prevented from denying.

Causes for Dissolution: Termination may be friendly or unfriendly.

a) Death of a partner automatically dissolves the partnership as regards the deceased and the
survivors except if the partnership deed allows the partnership to continue among the survivors or the
survivors and the estate of the deceased, or the deceased's will allows the partnership to continue between
his estate and the survivors.
b) Insolvency of a partnership or member. If the partnership estate is sequestrated then the private estates
of the members are also sequestrated except if a member provides security for the full partnership debts or
if he is a partner encommandite.
c) Effluxion of time if it was agreed in the partnership deed.
d) Completion of venture – if it was establish for a particular undertaking e.g. to build a bridge.
e) Mutual agreement is the most common method if all the members agree. If anyone disagrees
then they can renounce the partnership or seek a court order.
f) Change of membership. A new firm is constituted e.g. on the admission of a new member or on
retirement of a member.
g) Notice of dissolution
A partnership can be discharged by notice of dissolution called by one or more of the partners. Such
notice should be granted through mutual trust (good faith), not for private gain. Should be for reasonable
period of time.
h) Order of court
Any partner may apply to the court for the termination of the partnership as long as show sufficient
grounds or reasons for dissolution eg when partners cannot see eye to eye (become enemies)

Dissolution by Court e.g. The court may dissolve a partnership due to the following reasons:
 Mental disorder of a partner other than the one suing
 Incapacity through illness of a partner other than the one suing e.g. when a partner is substantially
incapable of performing duties for an unreasonably long time or for a permanent period.
 Conduct calculated to bring prejudice to business
 Fundamental breach of duties and agreement of the partnership
 Just and equitable circumstances, loss of confidence, impossibility of further cooperation.
 Impossibility of making profit

REVISION QUESTIONS
A) ESSAY TYPE QUESTIONS
Answering of essay type questions
i. There must be a leading introduction of not more than three lines.
ii. Make use of paragraph headings which are meaningful , underlined but not numbered unless there are
numbered on the question
iii. The must be a concluding conclusion.

Q1. Define law. Discuss any five (5) factors which must be taken into consideration when formulating a piece of law.
Q2. With the aid of a diagram, explain the hierarchy of courts in Zimbabwe (20 marks)
Q3 a) Outline and briefly explain 4 sources of Zimbabwean laws (10 marks)
b) Discuss custom as a source lf law (10 marks)
c) How are laws made in Parliament (10 marks)

Q4 a) The Constitution is the supreme law in Zimbabwe. Explain the 3 arms of the State as
defined by the constitution (10 marks)
b) Explain the difference between civil law and criminal? (20 marks)

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Q5. Define a contract. Briefly explain an 6 characteristics of a contract other than lawfulness and contractual capacity.
(20 marks)

Q6. Define the following terms from the law point of view:
i. Offer ii. Acceptance iii. Counter offer
iv. Voidable contract v. Caveat Subscriptor rule vi. Caveat emptor rule
vii. Breach of a contract viii. Termination of contract (2 marks each)

Q7. a) What is misrepresentation? Discuss any 3 forms of misrepresentation (20 marks)

b) How can you set aside a contract on the basis of misrepresentation (4 marks)
c) What are the effects of signing a document due to misrepresentation and mistake? (10 marks)

Q8 a) List and briefly any 5 examples of persons with questionable contractual capacity (10 marks)
b) In which five (5) situations may either a minor or a woman create a valid contract (30 marks)

Q9. a) What constitute an illegal contract? (10 marks)

b) Explain rules applied by courts when presented with an illegal contract (15 marks)

Q10 What are imposed terms in a contract? Which measures are taken into considerations by courts before enforcing the
imposed terms? (20 marks)

Q11. Parties may enter into a contract which might not be clear. What is the position of the law in this regard?
(20 marks)

Q12 a) When one party in contract breaches, the innocent party may claim remedies. Discuss any four
(4) available for such remedies (16 marks)
b) On what grounds may courts refuse to grant specific performance as a remedy (8 marks)

Q13 Explain to James any five (5) means of discharging or dissolving a contract (20 marks)

Q14 a) What constitutes a contract of sale (4 marks)

b) List and explain the duties of a buyer and seller in a contract of purchase and sale. (16 marks)

Q15 Give a brief description of any five (5) means by which a seller can deliver a merx to the buyer (20 marks)
Q16 a) How is property different from human beings (5 marks)
b) How can one acquire property? Discuss any five (5) means (15 marks)

Q17 In relation to negotiable instruments:

a. Define bills of exchange, cheque, and promissory note
b. How do you negotiate an instrument
c. Distinguish bear bill from order bill and blank endorsement from special endorsement
d. What are the effects of crossing a negotiable instrument ?
e. What is the difference between a cheque and a bill of exchange ? (4 marks each)

Q18 Write brief notes on mortgage, lien and surety and forms of securities (20 marks)

Q19 How is an agent created through necessities and ratification? (20 marks)

Q20 a) What are eh duties of an agent and principal in a contract of agency? (16 marks)
b) What do you understand by the concept vicarious liability in a contract of agency? (4 marks)

Q21 Discuss duties of an employer and employee in a contract of employment (20 marks)

Q22 a) Generally the law endeavours to prevent employees from dismissal without notice. Give any 6
situations where an employee can be dismissed without notice . (12 marks)
b) State remedies available to employee when unfairly dismissed from work. (8 marks)

Q23 a) Discuss any four (4) methods which can be used to form a partnership (8 marks)
b) Differentiate ordinary partnership from extraordinary partnership (2 marks)
c) Outline any 5 duties of parties in a partnership agreement (10 marks)

B) PRACTICAL QUESTIONS
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 When answering practical or case questions, the following should be followed with clearly labelled and underlined
headings:
a. General area of law eg law of contract, contract of sale, property etc
b. Specific area of law eg Imposed terms, passing of risk etc
c. Concept of law: Here is where the what the specific law above is discussed. Its concepts are highlights
d. Linking : Is now linking the case with the specific law
e. Verdict or Advice: Is advice in relation to the case and what the law say
NB There should be a link in the items above.

Q1 John is 16 years old. He bought laptop from Linx PVt (ltd) on credit for $300. He paid $50. After using the laptop
for six months, he decides that he no longer need it. He gives it away to his girl friend, Loveness.
John has fallen in arrears with his payment with Linx (PVT) ltd. He no longer wants to be bound by the contract.
a) Advice Linx (PVT) Ltd on its legal position (25 marks)

b) What the situation would have been had John used the computer until 19 years and 8 months and then
return it to Linx asking for his refund. (25marks)

c) If John was living alone, running a sole trader business (25 marks)

Q2 Maria, a business woman and a cross boarder arrived at Zimbabwe airport when a plane was about to take off to
America. Without reading she quickly signed a document before boarding the plane after a security guard told her
that it was just a formality to know passengers in the plane in case of any accident. The plane failed to reach America
due to bad weather. Maria finished the journey using other means. She later sued for part refund of the flight
expenses but the company refused because of a clause exempting liability in case of supervening events.
Advice Maria and the air company on their legal positions. (25 marks)

Q3 Moses offered to sale his plot to Richard for $5 000. He gave him four weeks to decide whether to buy or not.
Before the expiry of the four weeks period, James offered to buy the plot at $5 500. Moses agreed to sale it to James.
In an effort to buy the plot, Richard has applied for a bank loan and incurred expenses amounting to $300. Richard
still insists should proceed in buying the plot. What is the position of law in this case? (20 marks)
Q4 K entered in to a contract with B by signing a document without going through and understanding other terms of the
document. The document prejudiced B. B now to cancel the contract on the grounds that he was disadvantaged.
What could be the position of the law if:
a) B entered the contract by mistake (10 marks)

b) B was misrepresented by K to sign the document (5 marks)

c) B was blind and not a trader (5 marks)

Q5 Mathew, 14 years, bought a bicycle for $20 form Baba Shupikai. He paid $5. He used it for 4 weeks and gave it
away to his friend Loli. Baba Shupikai approached Mathew for the balance but he cannot pay any more. Baba
Shupikai approached for advice. What could be your advice?
i. If Mathew was assisted (10 marks)

ii. If Mathew was unassisted (10 marks)

iii. If Mathew had continued to use the bicycle until the age of 19 years (10 marks)

Q6 Jacob, a farmer, entered into a contract with National Foods. In terms of the agreement, Jacob was to supply 25 tones
of maize every year to National Foods. Because of drought, Jacob managed to supply on 5 tonnes during the year
2015. National Foods intends to sue Jacob for failure to owner the contract. Before doing so you are approached by
National Foods. What is your advice? (25 marks)

Q7 Chekuchera bought a goat from Zvapera. The goat died 3 days after delivery. Postmortem established that the goat
died due to a disease which once affected Zvapera’s goats and that the goat contradicted the disease at that time. In
addition other goats belonging to Chekuchera got infected with the disease. Chekuchera incurred $20 to treat the
affected goats. Chekuchera approached Zvapera for compensation, who refused citing that risk has already passed to
Chekuchera.
What is your advice to Zvapera? (25 marks)

Q8 May boarded a bus at Mbare Musika to Mudzi. She had luggage with a value of $200.00. She paid $10 for the
luggage. She was given a ticket. Nothing was explained to her of any terms on the ticket. When she arrived at
Mudzi she noticed that luggage with a value of $100 was missing. Mary demanded compensation from the bus
company. The company refused liability referring to a close at the back of the ticket written, “Chengetai nhumbi
dzikarasika hatiripe” The bus company approached you for advice. Advice? (25 marks)

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Q9 Moses signed a document on entering Marondera hotel after being told by the hotel attendance that it was just a
formality for every visitor to do so. He was told that the hotel is well secured and everything will be alright. Within
the document there was a close exempting liability to any loss which may be incurred by the visitors during their stay.
This was not explained to him. During one of the nights he lost his laptop of $350. Moses sued Marondera Hotel for
the loss but it refused saying it was not liable making reference the close on the signed document. What is your
advice to the Hotel? (25marks)

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