CHIVANDIRE L

LEGAL
ENVIRONMENT OF
BUSINESS
COMPILED BY MR A. DUBE
LLB (UP), LLM CORPORATE LAW (UP)
Advanced Dip in Legislative drafting (UP)
LLD (Reading)

CHAPTER 1
INTRODUCTION TO LAW
What is law
Law is defined as set of rules that regulate human behaviour or Rules which state how people
are to conduct themselves or The body of rules which state or community recognises as binding
on its subjects or members and which determine those persons rights and duties

History of Zimbabwean Law

Zimbabwe is mainly dominated by Roman Dutch Law also known as Common law. Through
court decisions, a vast number of legislative enactments over the years and the introduction of
certain legislation from English, Zimbabwean law was further enriched and developed.
There is a need to trace the development of Roman law, its fusion with customary law of
Netherlands to form Roman Dutch Law and the long journey of that system into Zimbabwe.
The development of Roman Law is closely related to Constitutional History of Rome. There
are four periods that can be distinguished.
a. Monarchy period (753BC- 510BC)
During this stage, Rome was undeveloped and law consisted of customs
b. Republican Period (510BC-27BC)
The law was for the first time systematised during this period and was put into writing in the
so called 12 tables. It was inscribed on 12 tables
c. Period of the Emperors (27BC-284AD)
The empire expanded over large parts of Europe and Northern Africa
d. Principate or dominate stage
Empire was divided into Western and Eastern Roman Empire in 395AD.

The Germanic Tribes conquered the Western Roman Empire in 476AD and application of
Roman law started to decline. The empire existed in the East. Justinian ruled in this part
between 527AD and 565AD. He held Roman Law in high esteem and instructed a commission
to codify the legal system. The codification was called Corpus Luris Civilis. As the Roman
Empire and community Degenerated the legal system likewise stagnated. Roman Law did not
disappear. Justinians codification ensured that Roman Law was preserved throughout the
Middle Ages. In the 11th century, Roman Law was rediscovered and studied at Law school in
Bologna. Various law schools were founded thereafter notes and commentaries on Roman Law
were written by students. Roman law was spread throughout Europe. By the end of the middle
Ages, there was an increasing need in Europe for developed legal system. The various tribal
and provincial legal systems of North West Europe of 12th Century were suitable for a simple
agricultural Community but could not answer to the demands of a rapidly developing
commercial world. Then Roman Law was applied in addition to Indigenous Law. Various
jurists produced writing on Roman and Dutch law. Their opinions are still today acceptable as
authoritative by Zimbabwean courts. Best known writers in Holland were
Hugo De Groot
Johannes Voet
Simeon van Leeuwen
Van Bynkesshoek
Van der Kessel
Van der Linden
SOUTH AFRICAN LAW
Jan Van Riebeck brought the Roman Dutch law in 1652. Despite English Occupation in 1806,
this system remained in force in South Africa and was extended to the interior of the country.
SA law was strongly influenced by the English law. Various factors contributed to this.
a. Judges and Magistrates versed in English law were imported in England.
b. Local jurists studied in England.
c. English Court Decisions were often referred to.
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d. Many SA Acts were based on corresponding English Acts.

e. The final court of Appeal was the Privy Council in England.
ZIMBABWE
Section 89 of the Constitution of Zimbabwe states:
Subject to the provisions of any law for the time in force in Zimbabwe relating to the
application of African Customary Law, the law to be administered by the Supreme Court, the
High Court and by any courts in Zimbabwe to the High court shall be the law in force in the
Colony of the Cape of Good Hope on 10th June 1891 as modified by subsequent legislation
having in Zimbabwe the force of law.
This means that on the 10th of June 1891 all statutes then in operation at the Cape were taken
over and some are still in force e.g. General Law. It also means the wording of many of our
statutes in other countries especially south Africa and England are authoritative. So the
decisions of the courts of those countries on the interpretation of their statutes are of great
importance in interpreting ours.

CHAPTER 2
Sources of law
SOURCES OF LAW
Statute/legislation
Customary
Judgments of the courts
Old authorities (common law)
Foreign law
Textbooks
1.LEGISLATION
Legislation can be defined as rules of law promulgated by a body or persons bestowed with the
power of creating rules of law. There is a variety of such bodies and persons in Zimbabwe.
Sometimes legislation is passed by a body such as parliament, which then authorises a
particular individual such as minister or the president to promulgate subordinate legislation by
means of regulations, proclamations and by-laws in terms of the parliamentary Act. One
example of an Act of parliament is Shop licences Act 40 of 1976, Companies Act, Insolvency
Act.
Section 3 of the Constitution of Zimbabwe states that the constitution is the supreme law of
Zimbabwe and if any other law is inconsistent with this constitution, that other law shall, to the
extent of the inconsistency, be void. Legislation must pass the constitutionality test. Legislators
dont declare the whole act void but only those portions that are invalid. Rights in the
Constitution can be limited only by law of General application. Law of General Application is
law that the Society considers reasonable and justifiable. For example, killing a human being
infringing his right to life when acting in self defence is justifiable in a democratic society.

1.1 SUBORDINATE LEGISLATION

1.1.1 REQUIREMENTS FOR THE VALIDITY OF SUBORDINATE LEGISLATION
a) It must be reasonable
b) It must be impartial not discriminatory
c) It must be certain (clear) and not vague
d) It must be promulgated (proclaimed)
e) It may not be ultra-vires (not illegal or against community values)
2. CUSTOMARY LAW

These are unwritten Rules, practised over a long period of time derived from: habits of people
of a certain group/ community passed from generation to generation e.g. lobola. In Van Breda
v Jacobs 1921 AD330. A local custom amongst fisherman that once they have set their lines
on a beach where no boats are permanently stationed for purposes of catching a shoal of fish
seen moving along the coast, no other fisherman are entitled to set lines within any reasonable
distance in front of the already set, was held to be duly established by the evidence as a valid
custom.

2.1 REQUIREMENTS
a. It must be reasonable
b. It must be generally recognised and observed by the community
c. It must have existed for a long time
d. Content of the rule must be certain and clear
3. COMMON LAW
The works of old Jurists are still authoritative. Justinians Corpus iuris Civilis, Hugo De groot
and Dutch Jurists inter alia van der Kessel. The Body of law provided by the old authorities
is known as common law.

4. FOREIGN LAW
After a fruitless attempt by a judge to find law in the above sources, foreign law is consulted.
It has persuasive authority. Countries that use Roman Dutch law as its common law are
considered first for purposes of finding solution to a legal problem.
5. TEXTBOOKS
No authority, only persuasive
6. JUDGEMENTS OF THE COURTS/ CASE LAW
One legal counsel said to the Judge. I think you will do as others have done in the same case,
or else we do not know what the law is. A Judge explains his reasons by setting out the facts
of the case and the law he considers applicable to those facts. Another judge or legal
practitioner reading the judgment in the law reports will extract the essential reason for the
decision, the (Ratio-Decidendi) as opposed to observations on the law that were not essential
in the decision, or (Obiter Dictum). If facts in the present case are indistinguishable from those
in the previous case, then ratio ought to be applied. To understand Doctrine of Precedence, one
has to understand Hierarchy of Courts.

CONSTITUTIONAL COURT

SUPREME COURT OF APPEAL

HIGH COURT

MAGISTRATES COURT

CHIEF/ HEADMAN
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Only judgments of High Court and Supreme Court as reported in law reports can be used as
precedence by lower courts. Lower courts are not bound by Decisions of another.
RATIO DECIDENDI
Literally mean reasons for the Decision. That part of judgment that is binding. It is also
regarded as the basis or foundation of the Courts decision or the legal principle which
necessarily led to the conclusion reached. This doesnt mean that every sentence that a judge
says is binding.
The first step is to determine the material facts on which the judge based his decision. Ratio
Decidendi is conclusion reached by the Judge based on these material facts and by excluding
non- material ones
OBITER DICTUM
Obiter may be when.
i)

Judge Postulates and answers a hypothetical question

ii)

Raises an analogous case.

iii)

Gives illustration

Any remark which is irrelevant to the immediate setting of dispute is obiter& does not form
part of Ratio Decidendi. It is not binding on subsequent courts. However it can be of strong
persuasive authority. Once applied by a later court, it becomes Ratio Decidendi and binding.
DISTINGUISHING
This is a process by which a judge decides that the ratio decidendi is not binding on him and
that he does not have to apply it in deciding dispute before him. It is thus a technique of
avoiding following earlier Ratio Decidendi.
For example
1. Earlier court formulated principle too broadly.
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2. Facts of the later case are not covered by the principle.

3. Earlier Court overlooked a fact that would have led to a different R.D.
4. Material facts differ therefore not identical.
DOCTRINE OF STARE DECISIS
Courts Decision create a precedent in other words, the decision should be followed in future
by: Judges of the same court.
Courts of a lower order which is subordinate to that Court.
A court is bound by the Ratio decidendi of a decision, i.e. the legal principle laid down by a
court in its decision or order. Supreme Court is only bound by its own Decision and will only
deviate if it is convinced that it was wrong. High Court is bound by Supreme Court and may
not deviate therefrom. High Court is also bound by its own previous decision unless convinced
that a decision was wrong. A single judge is bound by decisions of a full bench (3 judges) and
may not deviate therefrom.
ADVANTAGES OF STARE DECISIS
a) Creates equality- people are treated the same/ fair
b) Certainty of the law
c) Predictability
d) Uniformity
e) Less time consuming
f) Convenience
g) Equality
DISADVANTAGES
1. It allows law to become a petrified forest of erroneous notions.
Once a decision is granted, it binds other courts no matter how wrong it is.

2. A strict Principle of Stare decisis prevents the development of Law to suit the changing
times and sentiments law must be stable yet it cannot stand still.
3. It promotes brain drain.
4. Following a decision of a single case limits the minds or intelligence of other people
especially judicial officer.

CHAPTER 3
INTRODUCTION TO THE SCIENCE
OF LAW
Divisions of Law
Public law and Private law.
Public Law relationship between state and citizens and subjects (VERTICAL)
Private law- Citizens in their dealings with each other. (HORIZONTAL)

Public law

Private Law

International law

Family Law

Constitutional Law

Law of Personality

Criminal law

Patrimonial Law

Law of Procedure

COMMERCIAL LAW

MEANING OF RIGHT
A right is any entitlement a legal subject has regarding a specific legal object and which is
protected by law. There can never be a right without an underlying object. There has to be a
legal subject- legal object relationship- in order to talk about a right.
WHAT ARE LEGAL SUBJECTS?
A legal subject is a human being or entity subject to law or a member of the legal community
to whom the law applies and for whose benefits the law exists. Every legal subject has legal
capacity that is the capacity to be the bearer of rights and duties. All legal subjects are called
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persons and Juristic persons. In law concepts human being and person are not synonymous.
Person and legal subject are synonymous.
NATURAL PERSON
Human being
Every human being from birth to death is a legal subject and is a bearer of rights and duties.
(nasciturus fiction law)

JURISTIC PERSON
These comprise of entities other than human beings e.g. Companies, universities,
municipalities and state. Holders of rights and powers are subject to duties. Although they are
persons, there are things that can only be done by natural persons eg Marriage and execution
of wills. It has a perpetual succession, even if members die, it continues to exist
Legal objects
A legal object is any entity which can be the object of a legal subjects claim to a right. Property,
immaterial property, aspects of personality and performance can be objects of legal subjects
claim to a right.
Subjective Rights
Relationship between legal subject and legal object and between legal subjects and other legal
subjects can be termed a right. Following categories of juridical rights can be distinguished
when rights are classified according to the particular legal object.
1. Real Right
This is a right which a legal subject has to property such as a car, pencil etc. Real rights can be
classified as follows
a)

Ownership- the most comprehensive real right

b)

Servitudes (limited real rights)-Rights over someones property

Servitudes are divided into two

i. Praedial servitude

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ii. Personal servitude

Limited Real Rights

i. Personal servitude
They confer on a person in his capacity the right of use and enjoyment of property of which
another is the owner eg usufruct
ii. Praedial Servitude They confer on the holder in his capacity as owner of an adjacent
property a limited right to the property of another e.g. servitude of grazing right of way. ZESA
pole in your yard
iii. Mortgage & Pledge (Pignus)
These give the holder a right of security over property mortgaged or pledged. Mortgagor is
entitled to sell the property mortgaged or pledged if the mortgagee is still owing him. Mortgage
applies with regard to Immovable property, Pledge (pignus) applies with regard to Movable
property
2. Immaterial Property rights/intellectual property
Fruits of intellectual endeavour, eg, authorship or inventions, subject to protection. Author or
artists right not to have work reproduced without authority thereby causing financial prejudice.
If Intellectual or artistic efforts are not protected against piracy the incentive to invent or create
is undermined. Intellectual property law embraces copyright, patent and trademark law. Basic
objectives of law in these areas is twofold:
a]

Provide ownership rights in respect of intellectual and creative work.

b]

Provide framework for enforcement of those rights by remedies for their breach. Not
every idea or invention is protected.

Companies are faced with dilemma. Benefits of innovation are obvious but why innovate if
innovation can be replicated by competitors? Failure to innovate may lead to loss of
competitiveness in market place.

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3. Personality Rights
These are rights relating to aspects of personality eg physical integrity, reputation of a person,
dignity and privacy.
4. Personal Rights
Rights to which some other conduct referred to as performance may be demanded from a
person or refraining from doing something (interdict).

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CHAPTER 4
LAW OF PROPERTY
INTRODUCTION
The law of property is concerned with the relation of persons towards material objects. The
relationships of persons towards property are controlled by means of granting and recognition
of rights over property. The nature and extent of legal power enjoyed over property depend on
the kind of real right held by that person. Different kinds of real right confer different powers
on their holders.
Real right of ownership gives the holder of the right wide powers to use the property, enjoy it,
sell it and dispose of it.
Pledge gives holder of the right only the rights to posses the property (which still belongs to
the pledgor as security for his claim against the pledgee. More than one real right can subsist
in the same property eg. A may have right of ownership over the farm, B, mortgage over the
farm, C a usufruct over the farm, D mineral rights in respect of the same farm.
A

Accordingly holders of various rights have certain powers over one and the same property.
The right of ownership is the cornerstone of all real rights.
The right of ownership
The right confers the most complete Power over property. However it does not confer unlimited
or absolute control, eg an owner may not do what he likes with his property. Public law can
restrict the right of ownership as well as rights of other people eg statutory provisions which
prohibit the division of land under certain circumstances. You cannot mine in your own land
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without the permission of the state. Ownership is always restricted in the interest of the
community. An owners right may also be restricted by his neighbours right of ownership e.g.
owner of the land may not excavate his land in such a way that his neighbours land subsides
or curves in. Right of ownership, although comprehensive, it is always limited.
Right to property in the Constitution
In terms of the constitution, property means property of any description and any right or
interest in property. Every person has the right, in any part of Zimbabwe, to acquire, hold,
occupy, use, transfer, hypothecate, lease or dispose of all forms of property, either
individually or in association with others. No person may be compulsorily deprived of
their property except where the following conditions are satisfied.
(a) The deprivation is in terms of a law of general application;
(b) The deprivation is necessary for any of the following reasons
(i) In the interests of defence, public safety, public order, public morality, public health or
town and country planning; or
(ii) In order to develop or use that or any other property for a purpose beneficial to the
community;
(c) The law requires the acquiring authority
(i) To give reasonable notice of the intention to acquire the property to everyone whose interest
or right in the property would be affected by the acquisition;
(ii) To pay fair and adequate compensation for the acquisition before acquiring the property
or within a reasonable time after the acquisition; and
(iii) If the acquisition is contested, to apply to a competent court before acquiring the property,
or not later than thirty days after the acquisition, for an order
Confirming the acquisition;

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(d) The law entitles any person whose property has been acquired to apply to a competent
court for the prompt return of the property if the court does not confirm the acquisition; and
(e) The law entitles any claimant for compensation to apply to a competent court for the
determination of
(i) The existence, nature and value of their interest in the property concerned;
(ii) The legality of the deprivation; and
(iii) The amount of compensation to which they are entitled; and to apply to the court for an
order directing the prompt payment of any compensation.
(c) the law requires the acquiring authority
(i) to give reasonable notice of the intention to acquire the property to everyone whose interest
or right in the property would be affected by the acquisition;
(ii) to pay fair and adequate compensation for the acquisition before acquiring the property or
within a reasonable time after the acquisition; and
(iii) if the acquisition is contested, to apply to a competent court before acquiring the property,
or not later than thirty days after the acquisition, for an order confirming the acquisition;
(d) The law entitles any person whose property has been acquired to apply to a competent
court for the prompt return of the property if the court does not confirm the acquisition; and
(e) The law entitles any claimant for compensation to apply to a competent court for the
determination of
(i) The existence, nature and value of their interest in the property concerned;
(ii) The legality of the deprivation; and
(iii) The amount of compensation to which they are entitled; and to apply to the court for an
order directing the prompt payment of any compensation.

Ownership and Possession

There is confusion over the terms. Ownership and possession are two different concepts in law.
A person who has the right of ownership over property is not necessarily the possessor of the
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property. For example A, the owner of the car may lend it to B for a trip to Durban; A has
ownership of the car, B has possession. Another example, X moves out of his house so Y can
repair the house, X is the owner of the house, But Y is the possessor.
When does one have possession of property?
Possession has 2 elements
1. Physical control
2. Intention to possess
In order to have physical control over property direct and immediate control over it is not
required, for example, A locks his car but takes the keys with him, he has physical control over
the car although he is far away from it. An example to illustrate the absence of required intent
to possess is the following; If D holds Ns jacket for few minutes while he works on his car, D
has physical control over the jacket but does not have intention of possessing it because he is
not exercising the physical control in his own interest but in the interests of N. In other words,
he is not holding the Jacket for himself but for someone else. D is not in possession of the
Jacket.

Acquisition of ownership
Ownership is acquired through;
1. Original method
2. Derivative method

1. Original method of acquiring ownership.

a) Occupation
If one seizes property belonging to no one with the intention of becoming its owner, one
acquires the right of ownership over the property eg where B catches a fish, he acquires right
of ownership over the property or picks up a pen one has abandoned. By occupation one cannot
become the owner of Property belonging to another. If Y loses his pen, he remains its owner,
and E will not be able to obtain ownership through occupation. If he abandons it, he has no
intention of being the owner, W can become the owner after Y has renounced his right of
occupation. Occupation is called an original method of acquiring ownership because the new
17

owner does not obtain the right of ownership from another but establishes an original right of
ownership.
b) Prescription
If you have possessed something openly for uninterrupted period of 30 yrs, you become the
owner. For example, A takes possession of a section farm by allowing his cattle to graze on it,
he may acquire ownership of that section, provided he has possessed it openly and as he were
the owner for an uninterrupted period of 30 years. Act previously unlawful becomes lawful.
Question is why is law allowing owner to lose his ownership? Law requires legal certainty. If
the owner allows another to take possession for a long period of time, the impression is created
to the outside world that the possessor is actually the owner. It is original method of ownership
because he becomes the owner after the original owner has lost his right of ownership.
Government of RSA VS Grootboom

2.Derivative Methods of Acquiring Ownership

We have seven methods
Movable Property
Delivery
Seven forms of delivery (LASSMAC)
This method applies to movables. If A and B enter into agreements of sale, B acquires
ownership when the thing is delivered to him. Entering into a contract does not cause ownership
to pass. Delivery seals ownership. Immovable Property It must also be the intention of the
transferor to transferee that right to ownership be transferred and acquired. If one party lakes
intention then ownership wont pass. If A believes he is borrowing B a car and B believes he
is being given that car, ownership wont pass. It is a Derivative method because transferee
acquires his ownership from transferor.
When selling immovable property, Payment does not lead to acquisition of ownership. Only
when it is registered in transferees name in Deeds Office does ownership pass.

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Forms of delivery.
a) Actual delivery (De manu in Manum)
Object sold is handed physically by seller to buyer.
b) Delivery with short hand (Traditio Brevi Manu)
The buyer is already physically in possession of the object sold and delivery takes place by
change of intention of Buyer and Seller. E.g. Buyer before concluding the deed of sale, rents a
car from the seller and later decides to buy the car. No giving back of the car by the buyer to
the seller is necessary to establish delivery. The buyer remains in possession of the car and
delivery takes place through the change of intention of the parties to the contract.
c) Constitutum Possessorium
Opposite of delivery with short hand. Delivery takes place through change of intention of the
buyer and seller but the seller remains, after contract has been concluded, physically in
possession of the object sold. E.g. S sells a car to P, but at the time S and P agree that S will
rent the car from P, therefore S (the seller) remains physically in possession after the contract
has been concluded.
d) Attornment
The object sold is in possession of a third party and delivery takes place through the change of
intention of the buyer and seller. Before the deed of sale is concluded the third party concerned
keeps the object on behalf of the seller, but after the conclusion thereof the intention of the
buyer and seller is that the third party keep the object on behalf of the buyer e.g. a car is placed
by the seller in possession of a panel beater for repairs and the car is sold during this period of
repair. Before the contract is concluded the panel beater keeps the car on behalf of the seller,
but after the transfer has been concluded the panel beater keeps the car on behalf of the
purchaser. Consequently delivery has taken place through the change of intention of the parties
to the contract. Mere notice to the third party of this change of intention is sufficient and no
cooperation of the third party in respect of this change of intention is required. Vorster v
Hodgeson [1902] 19 SC 439. Thus if the buyer is to have good title in the merx, he must have
ownership not just vaccuo possessio. All sales are presumed to be for cash unless evidence
clearly proves the contrary.

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e) Symbolic Delivery
Delivery takes place when the seller places the buyer in possession of a symbol by means of
which the buyer gains control over the object sold.
E.g. a shipload of maize has been bought and the buyer is placed in possession of the bills of
lading to place him in control of the maize. Delivery thereof takes place fictitiously or
symbolically). Giving keys of the car. Cow dung
f) Delivery through marking
Delivery takes place by marking the thing or things bought or sold. E.g. where part of the flock
of sheep is bought, the sheep forming part of the object sold can be marked by a yellow mark
on the hind leg. Delivery takes place as soon as the yellow mark is on the hind leg. Delivery
takes place as soon as the yellow marks are made on the hind legs of the sheep concerned.
g) Delivery with long hand
Takes place in that the object is pointed out by the seller to the purchaser with the intention that
ownership passes
Protection of ownership and possession
Ownership
Ownership is protected primarily by granting the owner the remedy known as REI
VINDICATIO (Vindication remedy). Owner can claim it from any person who is wrongfully
in possession of it. You have to prove ownership first
Owner
A

Thief
B

Third party
C

A can institute Rei vindicatio against C because he is the owner of the car. Owner can claim
damages if his property is damaged.

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Possession is also protected

owner

B
Borrower

A takes it back
by force

If A borrows B his car and then after two weeks he decides to take it back from B, B can
institute an Action called the mandamant van spolie. In an action in which someone asks that
possession be restored, the court is not interested who the owner is. But the question is was
the applicant wrongfully deprived of possession? e.g. if you are locked out by your landlord.
After restoration of possession A can claim it by Rei vindicatio.

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CHAPTER 5
INTRODUCTION

TO

LEGAL

OBLIGATIONS
A legal obligation is a legal tie between legal subjects, recognised by law, which is created
because of certain legal facts (such as Contract or Delict) and which creates rights (personal
rights or claims) and duties which are recognised by law. Personal rights may come about
through
1. Delict
2. Contract
3. Unjustified enrichment
A legal obligation consists of two elements namely the right of the creditor to claim
performance (The right to insist that something be done or not be done)
AND
The duty of the debtor to perform accordingly. Natural obligations are those rights or duties
that are recognised but not enforced by law
Sources of obligations
A legal fact must exist before a legal obligation can be created. Legal facts are facts which
create, alter or destroy rights. Juristic acts are acts which the law gives effect according to the
intention of the parties (e.g. law gives effect to a contract of sale which the parties concluded
and intended to conclude. Non- Juristic Acts are Acts to which the law gives effect
irrespective of the intention of the parties eg a claim arising from delict or unjustified
enrichment. Juristic Acts can be divided into unilateral act (acts for which only the expression
of the will of one party is required e.g. a will) and Multilateral act- where co-operation of two
or more parties is required e.g. where parties conclude a contract of sale.

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CHAPTER 6
Unjustified enrichment
A general equitable principle that no person should be allowed to profit at another's expense
without making restitution for the reasonable value of any property, services, or other benefits
that have been unfairly received and retained.
Although the unjust enrichment doctrine is sometimes referred to as a quasi-contractual
remedy, unjust enrichment is not based on an express contract. Instead, litigants normally resort
to the remedy of unjust enrichment when they have no written or verbal contract to support
their claim for relief. In such instances litigants ask a court to find a contractual relationship
that is implied in law, a fictitious relationship created by courts to do justice in a particular
case.
Unjust enrichment has three elements. First, the plaintiff must have provided the defendant
with something of value while expecting compensation in return. Second, the defendant must
have acknowledged, accepted, and benefited from whatever the plaintiff provided. Third, the
plaintiff must show that it would be inequitable or Unconscionable for the defendant to enjoy
the benefit of the plaintiff's actions without paying for it. A court will closely examine the facts
of each case before awarding this remedy and will deny claims for unjust enrichment that
frustrate public policy or violate the law.
In some circumstances unjust enrichment is the appropriate remedy when a formally executed
agreement has been ruled unenforceable due to incapacity, mistake, impossibility of
performance, or the Statute of Frauds. In certain states, for example, contracts with minors are
Voidable at the minor's discretion because persons under the age of majority are deemed legally
incapable of entering into contracts. But if the minor has received a benefit from the other
party's performance before nullifying the contract, the law of unjust enrichment will require
the minor to pay for the fair market value of the benefit received. If the adult used duress or
Undue Influence to induce the minor to enter the contract, however, the court will deny
recovery in unjust enrichment because the adult lacked "clean hands."
In other circumstances unjust enrichment is the appropriate remedy for parties who have
entered a legally enforceable contract, but where performance by one party exceeds the precise
23

requirements of the agreement. For example, suppose a homeowner and a builder have entered
into a legally binding contract under which the builder is to construct a two-car garage. One
day the owner returns to her residence and discovers that in addition to constructing a two-car
garage, the builder has paved the driveway. The owner says nothing about the driveway but
later refuses to compensate the builder for the paving job. The builder has a claim for unjust
enrichment in an amount representing the reasonable value of the labour and materials used in
paving the driveway.
Suppose, instead, that after completing half the job, the builder tells the owner that he cannot
finish the garage as originally agreed, but that he wants to be paid for the work he has done.
The owner balks at this demand, arguing that the builder has breached his contractual
obligations and is entitled to nothing. A minority of jurisdictions would allow the builder to
recover the reasonable value of his services, minus any damages suffered by the owner as a
result of the breach. A majority of jurisdictions, however, adhere to the rule that a party who
fails to perform contractual obligations has no remedy regardless of the amount of hardship he
might endure.
The doctrine of unjust enrichment also governs many situations where the litigants have no
contractual relationship. For example, the law finds an implied promise to pay for emergency
medical treatment that is neither requested nor consented to by a patient. In some jurisdictions
the law finds an implied promise to pay for life-saving medical treatment even when a patient
objects to receiving it. The law also requires parents to reimburse a person who voluntarily
supplies necessaries such as food, shelter, and clothing to their children. As these examples
demonstrate, unjust enrichment is a flexible remedy that allows courts great latitude in shifting
the gains and losses between the parties as Equity, fairness, and justice dictate

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CHAPTER 7
1.DELICT / TORT
A delict is an unlawful or wrongful act by a person (the wrongdoer) which causes another
person damage to person or property, or injury to personality and for which a civil remedy for
recovery of damages is available.
Difference between crime and delict.
i. The purpose of a delictual action is to claim compensation from the wrongdoer for the loss
or injury caused by him.
ii. The purpose of criminal law is to maintain order in the interest of the general public.
Balance of probability vs proof beyond reasonable doubt
Elements of a delict (CPWAF)
1. Act
2. Wrongfulness
3. Fault
4. Causation
5. Patrimonial loss or impairment of personality
Act/conduct
An act is described as a persons conduct determined by his will. Where a person acts while he
is in a state of automatism or while in a trance or during an epileptic fit, the resulting conduct
is not determined by his will. Such a person cannot be held liable for the consequences of his
action. Conduct may take the form of positive conduct (omission-doing something eg hitting
someone with a brick) or negative conduct (omission-failure to do something when one has a
duty to act eg a policeman ignoring a gang of hooligans assaulting a person).

25

Wrongfulness
Any infringement upon a persons subjective right is deemed wrongful. It may be Real Right,
Immaterial property, Personality and personal right. It must be noted that there can be a clash
of rights where one protects his own right at the expense of another. Then it must be determined
whether the wrongdoers conduct was reasonable or unreasonable. Hence the development of
grounds of justification.
Grounds of Justification SN CVP
a.Self Defence
Where a person protects his or anothers interests by staving off an unlawful attack or imminent
unlawful attack, in the process causing harm to the attacked, the former does not act wrongfully.
The Requirements for self-defence were discussed in the case of Exparte Die Minister Van
Justice: re S v Van Wyk 1967 1 SA 488 (A)
a. A wrongful attack by another person, launched with the purpose of infringing upon the
subjective right.
b. The attack must have commenced or be imminent but not yet completed.
c. The act of defence must be aimed at the attacker, although the initial attack does not
necessarily have to be
d. The act must not be more harmful than is necessary.
b.Necessity
A state of necessity empowers a person to infringe the right of an innocent party to protect his
own right or anothers right e.g. you break a window to save a little boy inside a burning house.
The purpose is to protect the interests of the perpetrator or of a third party against a damaging
situation.
Requirements
a. The state of necessity must be imminent or should already have commenced.
b. A person could protect his own rights or the rights of another during the state of
necessity.
c. Conduct during state of necessity will only be justified if it is the only way in which the
threatened interest can be protected.

26

d. The interest which is infringed upon in the state of necessity should not be greater than
the interest which is protected.
Example 2
A is in the garden, and is unaware of the facts that a poisonous snake is about to bite him,
B can crash tackle A to get him away from the snake. Should A break some of his teeth in
the process he cannot claim delictually from B, as B acted in a state of necessity and did
not wrongfully cause As injuries.
c.Consent to injury
Where a person waives his rights to bodily integrity and consents to an injury being done
to him. E.g a patient who has been operated on by a medical doctor
Requirements
a. The consent must be given as a conscious expression of the injured partys will.
b. The consent must be given expressly or tacitly.
c. Injured party must have the serious intention to consent to the injury.
d. The consent must be given voluntarily and not under duress.
e. Although different points of view exist in this regard, it is required sometimes that the
injured party must have full capacity to act.
f. The consent must be lawful and not against the public interest or good morals.
g. The consenting party must be fully aware of the rights he is waiving.
h. The wrongdoer must act within the limits of the consent given by the injured party.
Example
If a patient consents to an operation, he cannot afterwards hold the doctor liable in delict
for the pain and suffering caused to him by operation.
d. Voluntary assumption of risk
The injured party merely expresses his willingness to subject himself to the risk and subsequent
injury. The injured party must have consented to run the risk. For example a boxer decides to
participate in a boxing match and accepts the risk of being injured during the fight. If his
opponent injures him, he cannot claim from his opponent in delict.

27

e.Provocation
It is when someone is threatened or incited towards injurious conduct by the actions of another.
The injured person, who provoked the other, forfeits his rights to claim damages. The
wrongfulness of the defendant is set aside.
3. FAULT(Blameworthiness)
Wrongdoer must be at fault. He is at fault if he acted intentionally or negligently. The
wrongdoer must have reached a sufficient level of mental development to be able to
comprehend the nature and consequences of his action. One cannot impute blameworthiness to
anyone without sufficient mental capacity. There are two stages in proving liability
Stage 1 Wrong Doer must have blameworthy state of mind. Insane people and children under
seven are not capable of having a blameworthy state of mind.
Stage 2 once established that he has blameworthy mind, it has to be established whether he
acted intentionally or negligently. Intention includes both knowing and deliberate infliction of
harm and cases where the main object is not the infliction of harm but recklessly engages in
some enterprise with realisation that the harm will probably or possibly occur.
Rape is also a delictual wrong based upon intentional wrongdoing. In M v N (1981) a woman
was awarded substantial damages for rape.
Regarding negligence, the conduct may still be wrongful if the wrongdoers behaviour does
not comply with the standard of care that the law requires of him. The test is an objective one
of a reasonable person. The courts have to determine how an ordinary, average, reasonably
careful Zimbabwean would have behaved in the same circumstances. If a reasonable man
would have exercised caution or acted more responsibly than the wrongdoer then fault is
imputed on the wrongdoer. If the wrongdoer was also negligent then there will be
apportionment of damages.
4. Causation
The loss or damage must be caused by the wrongful culpable act. There must be a nexus
between the act (commission or omission) and the damage suffered. Where this crucial link is
missing, the so called wrongdoer cannot be held liable in delict. In order to determine whether
a factual causal link exists, conditio sine qua non test is used. If the unlawful conduct is taken
out of the equation and the result falls away, a casual nexus exists between the Act and the

28

result. A wrongdoer cannot be held liable for all the consequences of his actions. Liability must
be limited by determining whether or not legal causation also exists between the Act and result.
The present legal position is that the wrongdoer will only be held liable for foreseeable damage
for example a person sits in a train. While still in the station waiting for the train to depart. He
finishes his cigarette and throws the butt from the window. The butt falls on explosive material
stacked on the platform next to the train, which explodes with a great bang. On the other
platform, a porter is startled by the explosion and loses concentration of his trolley which
crashes into an old lady who falls into the path of an oncoming train. The loss and damage
incurred by the latter can only be recovered from the smoker if it was foreseeable that his act
would have such a result.
Conditio cum qua non (compare with conditio sine qua non)
5. Damage or result
The result must be in a form infringement of any subjective right.
Patrimonial loss and infringement of personality right

Delictual Remedies
1.Actio Legis Aquililiae (patrimonial loss)
It is instituted to claim damages for percuniary loss caused by all forms of culpable conduct. It
can also be ceded to another person since it is concerned with recovery of patrimonial damage
to an estate.
Actio Iniuriarum (infringement of personality right)
Satisfaction for the impairment of ones personality can be claimed in the Actio Incuriariarum.
Purpose is to compensate for the intentional injury to ones bodily and mental integrity. Cannot
be ceded to another.

29

CHAPTER 8
LAW OF CONTRACT
CONTRACT DEFINED
For our purposes we shall content ourselves with a working definition of a contract: A contract
is a binding agreement, which the parties thereto create between themselves intending that it
be legally enforceable. Courts do no more than attempt to give effect to the intention of the
parties.

GLOSARY OF TERMS used in contracts

Performance
That to which the debtor binds himself to is called performance. Performance can consist of
positive conduct where debtor must do, deliver or pay something or negative conduct such as
not doing business in a certain area for a specified period of time
Unilateral contracts
Where only one of the parties acts in the capacity of debtor and the other party only acts as the
creditor, the contract is a unilateral one eg a donation and drafting a will
Reciprocal contract
Where both parties act in the capacity of creditor and debtor at the same time. E.g contract of
sale. A sells his car to B for $7000. A is a creditor when it comes to receiving $7000 but is a
debtor when it comes to delivering the car.
Nominate contract
It is a specific contract like purchase and sale
Null and void contract
Where one or more of the requirements of a valid contract are absent. No contract and no legal
obligations come into being. When a contract is said to be null and void, it actually means that
no contract has come into being.
30

Voidable contract
Where a contract did come into being but it can be set aside because of a defect. the defect
might have been present at the time of conclusion of the contract. Where the parties do reach
consensus but consensus was obtained in some or other improper manner such as duress, such
consensus can be negated. Prejudiced party may however choose to uphold the contract and is
not obliged to have it set aside.
Natural obligations
Create obligations which are recognised but not enforceable. Contract is valid but not
enforceable. E.g we are going to watch soccer today
Requirements of a valid contract LCCPF
1. Consensus
2. Capacity to Act
3. Physical possibility
4. Legality
5. Formalities

31

CHAPTER 9
Consensus Exam
Consensus is the meeting of minds between parties. Consensus is created if parties have the
following:
1. Intention to be contractually bound.
Parties must have serious intention to be contractually bound. If 2 friends agree to watch Rugby
match no intention to be bound exists. Each party must intend to be bound to perform his duties
and to hold the other party legally liable for rendering performance as promised. Contract of
sale agreement (eg) there is intention to create legal obligations.
2. Common intentions.
Meeting of minds. Parties Must intend same contractual commitments. Common intention with
regard to rights and duties to which they will be legally bound to agreement.
3. Making of intentions known.
Parties must declare their intentions to one another. The other party must assent to that intention
in some way or another. Done through offer and acceptance
Offer and acceptance
An offer is a declaration made by a person in which he indicates his intention to be contractually
bound and he sets out the rights and duties he wishes to create. An acceptance is a declaration
by offeree through which he indicates that he agrees to the terms of the offer exactly as
expounds in the offer.
Requirements of a valid offer.
1. Offer must be complete in the sense that it contains all the terms by which the offeror is
willing to abide as well as all the terms to which he wants to bind offeree.
2. Offer must include proposals regarding all the essentials of the proposed contract

32

If parties want to conclude a specific nominate contract eg Contract of sale), the offer must
contain stipulations regarding all essential characteristics of that specific contract.
3. Offer must be clear, certain and unambiguous. Intended obligations must be stated
unequivocally and unconditionally so that the rights and duties intended are determined or
ascertainable. Must not be vague and ambiguous. Offer must be of such a nature that, it can be
accepted without any further qualifications eg I am selling a car at reasonable price.
4. Offer must be made with the serious intention of creating a legal obligation.
Offeror must have the intention to be legally bound to his offer, should it be accepted by the
offeree. Where X invites Y to a concert there is no intention to be bound.
An advertisement is a declaration which is made with the intention of inviting another party to
make an offeror to negotiate. An advert in the newspaper or price tag stuck to a product in a
self service shop does not as a general rule, constitute an offer. The customer who decides to
buy something makes an offer to the shop keeper at the till. Shopkeeper can decide whether to
accept the offer or not. The purpose of such an offer is to draw a persons attention to the
possibility of the conclusion of a contract or to provide him with information. The intention of
the dealer will in each case determine whether his declaration constituted a real offer or
invitation to do business. (Crawley V Rex) 1909 TS 1106. A tender is not an offer.
5. No formalities to be complied with.
An offer can be made verbally, in writing, expressly, tacitly, through words or conduct.
If law requires formalities as requirement for validity, the offer must comply with these
formalities to be valid. Offer must come to the actual knowledge of the offeree. Offer is
complete if offeree has knowledge of the offer and its contents.
Consequences of an offer
An offer is a unilateral act, no rights and duties are created
Termination of the offer.
a. Rejection of the offer by offeree.
b. If stipulated that offer is valid only for a certain period of time, it falls away if not accepted
within that period.
33

c. If before the offer has been accepted the offeror informs the offeree that he withdraws the
offer, offer is extinguished.
d.

If the offeree does not accept the offer exactly as it is made but wishes to accept subject to
alterations, improvements eg of a house. This is tantamount to counter offer, offeror
becomes the offeree and offeree becomes the offeror. The original offer is extinguished.
Hyde v Wrench [1840] 49 ER 132. W offered to sell farm to H for 1000. H counter-offered
950. W rejected. H purported to accept previous offer. W was no longer keen to sell the
farm. H sued W. Held: Counter-offer amounted to rejection of the offer therefore no longer
open to acceptance.

e. If either offeror or offeree dies before offer is accepted, offer falls away. De Kock v
Executors of Van de Wall [1899] 16 SC 463 offer of donation could not be accepted after death
of offeror.
f] Loss of contractual capacity. Contractual capacity lost through insanity, insolvency, etc.

Special offers
1. Options
It is an agreement between an option grantor and option Holder, in terms of which the option
grantor keeps for acceptance an offer for a certain period of time. The option creates rights and
duties in that the option grantor must keep a certain substantive offer open for the exclusive
acceptance by the option holder for a determined or determinable period of time. If option
holder does not accept the substantive offer within the specified time period, the substantive
offer is terminated because it is rejected and the option agreement is terminated through
fulfilment. The offer can be transferred from one person to the other. It Must be distinguished
from Preferential right. This is a right which the grantor of such a right gives the holder of the
right, in terms of which the holder has the opportunity to make or receive an offer (Van Pletzen
v Henning 1913 AD 82 and Boyd v Nel 1922 AD 414). Offeror bound to keep option open for
period agreed. Failure to keep option open amounts to breach for which offeror can be sued.
Right of first refusal
Distinguish between an option and a preferential right

34

2. Offer for reward

An advert for a reward constitutes an offer. Acceptance must be in Response to the Offer for
reward. The whole idea of the analysis in terms of offer and acceptance is to emphasise the
reciprocal nature of the relationship. This is not a problem with regard to bilateral contracts
where one party makes an offer to which the other responds with an acceptance, thus
identifying the existence of a contract and its terms. In the case of a unilateral contract, i.e. an
act in reliance upon a promise, it is necessary to show that a link exists between the act and the
request that it should be performed. Thus a party can hardly accept an offer of which he / she
did not know or had forgotten.
R v Clarke(1927) 40 CLR 227 Australian High Court. A reward has been offered for anyone
giving information which led to the conviction of those responsible for the murders of
policemen. Clarke gave information which led to such arrest and conviction. However, his
claim to the reward was resisted. Clarke's motive and intention in giving the evidence was to
protect himself and to clear himself of the charge of murder. Only after arrest, conviction and
appeal by the others, did Clarke think of claiming the reward. It was held that Clarke did not
act "in reliance upon the offer or with the intention of entering into any contract" - although
clearly, the convictions would not have come about without his evidence.
Isaacs ACJ points out in his judgment the difficult case of Gibbons v Proctor (1891) where,
by contrast, a policeman was allowed to recover a reward, although he did not know of the
existence of the reward when he sent off the information. He points out that in Anson on
Contracts it was stated that that decision was wrong, and that he (Isaacs) thought it was too.
So a mere coincidence between the act required and the doing of that act is not sufficient - it
requires some mental element connecting the two - and which we would call an intention although we also know of course that in many cases, the intention involved does not go beyond
the doing of the act itself - the intention to get on the bus, seldom involves an "intention" to
create a contract, but we have no problems construing the situation as if there were such an
intention. This is often done via the "objective test" idea - which was obviously thought not to
be appropriate to this type of situation.
Carlill v Carbolic Smokeball Co - Offer can be made to the world at large
(1893) Court of Appeal - discussed in previous lecture
35

The manufacturers of an influenza remedy in their advertisements said that if anyone used their
remedy and then caught flu they would be entitled to 100. When a claim was made they said
that there was no contract. It was held that an offer made to the world at large, can become a
contract with those who fulfil the condition.
The operation of this basic requirement may be affected by an implied assent to the existence
of a contract based upon an acceptance that was not communicated.
Exam
One must be aware of the offer in order to accept it. (Bloom vs American swiss watch
co)
You must be the first one to supply the information (Lee v American swiss watch co)
The intention must be to accept the offer (R v Clarke)
Requirements for a valid acceptance.
a. Can only be made by the offeree (except in public offers)
b. Offeree must have serious intention to be bound to his acceptance.
c. Acceptance must be clear, certain and unambiguous
d. Contents of the acceptance must correspond with the contents of the offer.
e. Acceptance does not have to comply with any formalities.
f. Acceptance only complete when the offeror is notified.
Legal Consequences of acceptance
Acceptance leads to consensus and conclusion of contract, should other requirements for a
valid contract also be met. It is necessary to determine exactly where and when a contract
comes into being. So that one can determine which court has jurisdiction over a dispute
regarding the contract.

36

JURISDICTIONAL ISSUES
Time and place for conclusion of CONTRACT.
Where parties are in each others presence, no problem the contract would be concluded at a
place where they conclude the contract. Problems arise if parties are not in each others
presence. Eg the offeror is in Harare and offeree in Bulawayo eg. A who lives in Harare
telephones B in Bulawayo and offers to Buy Bs Car. They negotiate the price and eventually
agree on a certain price. The question can be asked whether the contract was concluded in
Harare or Byo. It is necessary to determine exactly where and when a contract comes into being
so that one can determine which court has jurisdiction over a dispute regarding the contract.
RIDE
a) Declaration Theory
In terms of this theory, Contract comes into existence at the time the offeree voiced or declared
his acceptance of the offer. This does not mean that the offeror received notification of the
acceptance. The offeror might be bound before he knows of the existence of a contract.
This theory has shortcomings. Critically evaluate jurisdictional theories
b) Expedition Theory.
Contract concluded where and when the acceptance made by the offeree is dispatched or
expedited to the offeror. This applies to real postal contracts. The contract is concluded on the
day the offeree posts the acceptance. In Cape Explosive Works v SA Oil and Fat Industries
Ltd. 1921 CPD 241 SA
Oil and Fat Industries [SAOFI] wrote letter to Cape Explosive Works [CEW] [Cape] offering
to sell certain quantity of glycerine. CEW posted letter of acceptance on 14/7/16. Letter
received by SAOFI. Became necessary to determine where contract was concluded to
determine which court had jurisdiction to hear dispute. Held that the contract concluded in
Cape where letter of acceptance posted.
c) Reception Theory
Contract is concluded where and when the offeror receives the acceptance and not necessarily
takes cognizance of the contents of the acceptance. You can be in a contract without knowing
(e.g email is in your inbox but you havent read it)

37

d) Information Theory
Contract concluded where and when the offeror receives notification that his offer has been
accepted by the offeree. In the previous example, Contract comes into existence in Harare
where he learns of Bs acceptance.
In the event that the contract is silent about which theory to use, we use the information theory.
Factors affecting consensus (M U D E)
1. Misrepresentation
It is a false statement of fact that something exists while in actual fact it doesnt or an untrue
statement concerning an existing state of affairs which is made by one party to the other with
the intention of inducing the other party into concluding the contract. Can be made expressly
or by conduct. Even concealment of facts constitutes misrepresentation. This would be the
case only if presenter had a duty to make certain relevant statements eg in insurance contracts.
Misrepresentation renders contract voidable, (election). A contract will be voidable as a result
of misrepresentation if following requirements are satisfied
1. Misrepresentation must be made by one party to the other contracting party. If this is done
by a third party, e.g an agent, it is not misrepresentation
2. Misrepresentation must be made during negotiations preceding the conclusion of contract.
3. Misrepresentation is unlawful even if its innocent
4. Misrepresentation must have induced the contract as it stands.
The reason for conclusion of contract was because of misrepresentation.
Misrepresentation must be distinguished from what is known as "mere puffs" or simple
commendatio [i.e. praising ones own merchandise].
In Naude v Harrison 1925 CPD 84, defendant [D] who was selling a house told plaintiff [P]
that the house in question was "well built". P bought the house and discovered that the walls
were cracking and sued D for misrepresentation. Held the statement that the house was "well
built" not a misrepresentation but mere puffing
In contract of sale, failure to disclose latent defect in merx, of which seller is aware amounts to
misrepresentation.
38

In Dibley v Furter 1951 [4] 73, P bought a piece of land from D. D knew that the piece of land
in question had been used as a graveyard but did not disclose this to P.
3 Forms of misrepresentation (I N I)
(i) Intentional misrepresentation.
Statement made with intention of inducing a contract. Misrepresenter knows that he is
misleading the other party. Party induced to enter into the contract may claim damages.
ii) Negligent Misrepresentation
Statement made negligently to induce a contract. A person neglects to find out the truth himself
and makes a false statement. If a person makes a statement he believes to be true without taking
steps a reasonable person would have taken in the circumstances to satisfy himself that the
statement was the truth. Aggrieved party may claim damages regardless his choice.
iii) Innocent misrepresentation
Not Fraudulent or negligent but one makes the misrepresentation without knowledge of its
truth. The innocent misrepresenter is not liable for damages.
2. Duress
Duress can cause a person to do something which he normally would not have done. If someone
is placed under duress with the intention of forcing a contract and he is in a mental state of
contractual incapacity, no contract exists. Renders the contract voidable
Requirements
1. Other party must have been responsible for the duress.
2. Duress must have caused the conclusion of the contract.
3. Duress must consist of a wrongful threat of damage or harm
4. The contract must be prejudicial to the party under duress.
5. The threat must be of an imminent or inevitable evil.

39

3.Undue influence
When a person exercises his influence over another which leads to the conclusion of a contract
eg where a doctor persuades a patient who is dying to conclude a contract which is prejudicial
to the patient.
Requirements
a) One party to the contract must have obtained an influence over the other party to the
contract.
b) Influence must have weakened the prejudiced partys resistance and rendered his will
pliable and open to manipulation.
c) Influence must have been used in an unscrupulous manner.
d) The influence must have convinced the prejudiced party to conclude a contract to his own
detriment.
e) The influence must have convinced the prejudiced party to reach consensus which he would
not have reached had he had the normal freedom of will
4. Error/mistake
Definition
Error is a misunderstanding or a misconception by one or more of the parties regarding certain
facts, events or circumstances.
In law we have:
a] Unilateral mistake where one party to the contract is mistaken and the other is not
b] Mutual Mistake where both parties are mistaken about each other's state of mind.
c] Common Mistake this occurs where both parties are of one mind and share the same mistake.
Effect of Mistake
If both parties labour under a material mistake = no consensus and no contract. In order to
temper the harshness of law, parties are held to their declaration of intention unless the
circumstances are such that the mistake is reasonable. If unreasonable the contract is void.
Conditions to be met before a mistake will render a contract void.
1. Mistake must relates to a fact
40

2. That fact or rule/ principle is material. (corpore, negotio, substantia, persona, motive,
nominee)
3. Mistake (whether of fact or of law) MUST be reasonable.
Error in corpore
Mistake relating to the merx (you buy a cow and you are given a donkey)
Error in negotio
Mistake relating to negotiations. One is thinking he is signing a lease contract but the other
thinks he is signing a contract of sale
Error in substantia
Mistake relating to the quality of the merx
Error in persona
Mistake relating to the identity of a person.
You interview A and B. You are impressed by A but you mistakenly call B
Error in motive
The motive why you are entering into a contract- does not void the contract. Contract
remains valid. You buy a dress on credit intending to attend a wedding, however, the
wedding is cancelled, the contract will remain valid.
Error in nominee
Mistake relating to name of the person. The contract remains valid.
1. Must relate to a fact or to legal rule or Principle.
Example of mistake in law.
A pay B $ 2000 under the mistaken belief that he owes the money to B (no obligation). A
mistake in law or fact will only invalidate a contract if it is considered to be excusable in
circumstances.
2. Mistake must concern a material fact, legal rule or principle.
Mistake which are material and can exclude consensus can be misunderstanding with respect
to identity eg a phones and gives B a job who answers the phone while A is under the
impression he is talking to C and offering C a job-error in persona no consensus. Mistake
concerning content of intended contract voids the contract. X is under the impression that he is
making an offer to buy ys house in Cape town but Y is under the impression that the offer is
being made to buy a house in Durban-error in negotio

41

Error in corpore refers to a mistake involving the identity of a particular object. For example,
if a person buys a horse believing it to be the one that s/he had already examined and ridden,
when in fact it is a different horse this amounts to error in corpore
Also theres a mistake with regard to interpretation of the law eg ownership of immovable
property
Error in substantia- mistake as to the quality of the thing.
Mistakes not material
Error in nominee
Error in motive
3. The mistake in fact or law must be reasonable
Mistake will be reasonable if the reasonable man in the circumstances would be mistaken eg
A who suffers from a hearing problem is under the impression that B is offering only R100 000
for his bicycle in fact B is offering only R100. Although there is no consensus As error cannot
be accused since a reasonable man would not simply assure that he would obtain such a high
price for an old bicycle.
No matter how material the mistake is, it will not entitle the mistaken party to repudiate the
contract if it was due to that party's own fault. Acacia Mines Ltd v Boshoff 1957 [1] 1 SA 93.
A distinction needs to be drawn between a material mistake and a fundamental mistake. A
mistake is fundamental if its very existence renders agreement non-existent to the extent that
no contract could be said to exist at all. Such a contract is void ab initio. In Maritz v Pratley
1894 [2] SC 145 a mirror and a mantelpiece were placed on top of the other at an auction. The
two were however being sold by the auctioneer as separates lots. P made a bid on them in the
mistaken belief that the constituted one lot [he was buying both]. P refused to take the
mantelpiece without the mirror and M sued him in breach of contract. It was Held that there
was no sale since there was no consensus on the subject matter of the sale.
You will get a question on consensus

42

CHAPTER 10
CAPACITY TO PERFORM JURISTIC ACTS
Capacity to perform juristic acts
Every legal subject has legal capacity. Every legal subject bears rights and duties. Not every
person who has legal capacity has capacity to act. Capacity to act refers to the capacity to
perform juristic acts, to participate in legal intercourse and to conclude valid transfers. Only
natural persons are capable to enter into juristic acts. A company cannot enter into juristic Act.
A natural person must perform juristic action of the company.
Factors Affecting Capacity (P I C A I) M
Age
Capacity
Influence of alcohol/drugs
Insolvency
Prodigality
Marriage
1.Age
Majority
18 Years and older people are capable of entering into contracts. Have full capacity to Act.
Minor
obtains full capacity to act upon marriage.
Minority
0-7
8-17

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Under the Age of 7

No capacity to enter into contracts. Cannot even accept offer of donation. If a minor wants to
enter into legal intercourse he must be assisted by a legal guardian. If he contract is detrimental
to him/her then he can change the contract within 1 year from the date he became a major, In
Zimbabwe the father of the child has guardianship over the child. For children out of wedlock,
the mother is the guardian. Spouses may exercise these rights independently of each other.
However consent of both parents is required on these contracts.
a. Contract of marriage
b. Adoption
c. Removal of the child from the republic
d. Application for passport
e. Alienation or encumbrance of immovable property or any rights of immovable property
which belongs to the minor child.
Minor over 7 years
Limited capacity to act. May conclude contracts which are exclusively to his benefit. Only
those contracts where he incurs rights and not duties. Eg donation
1.Special situations Contract binding upon minors
a. Tacit emancipation
If a minors legal guardians permit him to carry on a trade or occupation on his own account
he acquires full legal capacity in respect of the trade or occupation. A general consent, express
or tacit must be given by the parent / guardian which entitles the minor to act in certain
economic spheres minors has full contractual capacity for all juristic acts performed in these
spheres. Consent can be revoked any time. In Dama v Bera 1910 TPD 928 an Indian girl who
was a minor had been earning her living as a servant for on five years. She lived with her
parents but retained control over her income and paid a certain amount to them for board and
lodging. Following a wage dispute with her employer the question arose whether she had legal
capacity to represent herself. Held: She was tacitly emancipated and could sue her employer
for the wages due to her.

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In Grand Prix Motors v Swart 1976 [3] SA 221 the respondent whilst she was an 18 year old
student nurse had entered into a hire-purchase contract to buy a car unassisted by her guardian.
She paid a portion of her purchase price in instalments and then returned the car being unable
to continue the payments. Soon thereafter she got married and claimed repayment to her of the
amount she had paid under the hire-purchase contract as she contended that at the time, she
was still a minor and the contract was therefore not binding upon her. The appellant led
evidence establishing that at the time she was living in a student hostel and spent her salary as
she saw fit. Her parents were divorced and neither of them had any say in how she spent her
money. They argued that on the basis of these facts the Respondent was tacitly emancipated at
the time and was therefore bound by her contract. Held: The respondent was not tacitly
emancipated hence was not bound by her contract. It is clearly risky to contract with minors.
b.Minor pretends to have attained Majority.
He is bound to his acts as if he had really attained majority at the time the Act was performed.
c) Where minor obtains rights and not duties eg contract of donation
d) Where minor acts with consent or assistance of parent / guardian
e) Where the guardian acts on behalf of the minor.
Restitutio in integrum.
If a contract is concluded by or on behalf of the minor and is prejudicial to him, minor entitled
to restitutio in intergrum. Contract set aside and parties entitled to be placed in the position
they were in before conclusion of the contract.
In the following 3 instances, a minor may not claim restitution.
a. Where at the time of performance of the juristic Act, the minor fraudulently pretended to be
a major.
b. Minor ratifies the act after attaining majority. Ratification can take place expressly or by
conduct.
c. Where the action has prescribed.
The remedy of the major = unjustified enrichment-minor must return what remains in his
possession when action is instituted.

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Contracts not binding upon minors

a) Contract which minor concludes without necessary assistance in spite of his unlimited
capacity to act.
If guardian ratifies before the minor turns majority or himself after acquiring capacity. Such
ratification renders minor liable. Contract entered into by the minor without necessary
assistance is not enforceable as against minor. Minor does not incur liabilities against the other
contractual party. Unless contract is ratified it is unenforceable against the minor, not even after
minor has obtained majority. Once guardian has given his assistance he has by implications
ratified the contract rendering it enforceable the minors promised performance. If minor
institutes action against major for payment before delivery major can raise the defence that he
need not pay until minor performs.
The remedy of the major = unjustified enrichment-minor must return what remains in his
possession when action is instituted.
i) If the minor has recklessly squandered full amount he cannot be sued on the ground of
unjustified enrichment because theres nothing left and he is no longer enriched.
ii) If he has bought a luxury item, he has to surrender it or its value.
iii) If he used money to pay or provide essentials for which his guardian normally would have
to pay the minors guardian will be liable. Guardian would have been enriched.
b) Marriage
Marriage also affects capacity. Zimbabwean marriages are out of community of property.
i. Marriage in community of property
Assets joined separate assets and liabilities are consolidated so that there is only one common
joint estate. In terms of Ante-nuptial contract, parties who do not want a joint estate must
stipulate that their marriage will be out of community of property and without community of
profit and loss. Each spouse retains his separate estate and each one has capacity to act in
respect of his own estate.
ii. Agreements entered into by a spouse married in community of property

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Each spouse has full capacity to act with regard to joint estate. One can sell, dispose and incur
debts without the consent of another. Certain contracts require consent of both parties eg sale
of immovable property or burdening property. These need written consent of another. If 3rd
party does not know whether a written consent was issued, the contract is valid
c) Mental Deficiencies
A mentally deficient person is not able to understand and appreciate the nature or consequences
of his conduct such that he cannot make rational decisions or manage the particular affairs. The
contract is void. Curator is nominated by High Court. The test is whether the person was normal
or mentally deficient at the moment of concluding contract. If it is concluded during lucidum
intervalum (moment of sanity) = valid. Before certification or appointment there is a
presumption of normality and of capacity to Act. After certification, there is presumption of
incapacity.
READ CASE OF UYS VS UYS
d) Influence of alcohol or Drugs
A person who is in such a state of intoxication caused by alcohol or drugs to such an extent
that he does not appreciate the nature and consequences of his actions or unable to control his
actions is incapable of forming his will ie he is incapable of performing juristic acts. There
is a presumption of capacity though. The defendant will have to prove that he had no capacity.
He who alleges must prove.
e) Prodigals
A prodigal is a person who squanders money in an irresponsible and extravagant manner. High
Court may on application by an interested 3rd party, declare him a prodigal. A curator is
appointed. He can only enter into agreements where he derives advantage and not liability can
be entered into.
f) Insolvency
If a persons estate is sequestrated as a result of insolvency his capacity to act will be influenced
by certain provisions of insolvency Act. After sequestration, estate vests in the master then
trustee. After sequestration he loses capacity to Act with regard to the insolvent estate. Any
attempted agreement to dispose of such assets= not valid. May not enter into contract having
an effect on assets of insolvent estate without permission of his curator. The contract is voidable

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at the instance of the curator who has the power to ratify the contract. May accept any position
as employee without permission of the curator. May not be a director or bank manager

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CHAPTER 11
Physical possibility of performance
Performance to which the parties have agreed must be capable of delivery. If object of
performance does not exist at the time of conclusion of the contract, no contract comes into
existence. Eg the cow which A has exchanged for Bs horse died the previous day.

3 forms of impossibility of performance

1. Impossibility at the time of entering into the contract.

No contract comes into existence.

2. Becomes impossible after conclusion of contract.

Contract comes into existence but terminated for impossibility (Supervening impossibility)

It must not be difficult but IMPOSSIBLE

3. Made impossible by the debtor after conclusion of contract

The contract remains in force.
Debtor commits breach of contract.
It is required that performance must be objectively impossible i.e. must be impossible for
anyone according to general human experience to perform in accordance with the contract.
If debtor finds it difficult or inconvenient to perform it will not be treated as impossibility.
Eg V lets his house to T without their being aware of it, the house was destroyed by fire the
previous day.
No contract because of impossibility. If its subjectively impossible eg where S sells a
thing to P. Before delivery to P, he sells it to T for a higher price and delivers the thing to
T. T acts in good faith.
The Contract between S and P is valid. P will be able to claim the thing from S, and S is
unable to deliver it. P can claim damages from S on the grounds of breach of Contract.

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Performance must be determined or determinable.

Determined
Performance will be determined if parties expressly mentioned the performance in this
agreement. Parties agree that it will buy the cow, daisy from V against payment of R500.
Identify of a cow as well as the amounts payable are specified and both performances are
determined.
Determinable
If parties agree on a criteria or formula to identify the performance or if they agree that a
specified person will determine the performance. E.g. if parties agree K will buy the 1st heifer
to be born on Vs farm, at a price to be determined by the outsider Z, the parties have laid down
a criteria to determine the subject matter of contract and a method of determining price.

Alternative and generic obligations as examples of determinable

performance
a. Alternative

A party may select the performance from 2 or more different alternatives eg either of the 2
houses. E.g. A has 2 houses he wants to let to B.

The parties agree that A may elect which house he will let to B and that B will rent that
house.

As soon as A makes a choice the performance is determined.

As soon as he has exercised his choice, performance is no longer determinable but is

determined.

b. Generic obligations

E.g. A agrees with B to buy a cow from Bs Jersey studs at a particular price, the
performance is determinable and the contract valid.

The election lies with the debtor (B) to select the particular object from the genus or kind.

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CHAPTER 12 (exam)
LEGALITY
Contract must be lawful. It must not be contrary to public policy. If the contract is contrary to
legislative provisions or common law rules then it is unlawful. The nature of any contract and
the obligations imposed by any contract should be lawful
Consequences of an illegal contract
Contract is void. No obligations arise from the contract. Exturpi causa non oritur actio( no one
can benefit from a scandalous cause) is applicable. If money has been paid but delivery has not
taken place, the par delictum rule says, he who is in possession has a stronger right. he is not
obliged to deliver the object nor repay the money to the seller. If an athlete agrees with a
pharmacist to purchase oxandrolone tablets (anabolic steroids) and pays $1000 in advance, the
contract will be void as it contravenes section 22A of the medicines and related substances
Control Act. If the pharmacist refuses to hand over the tablets, the athlete will neither be
allowed to claim delivery of the tablets nor claim return of his money. if the pharmacist delivers
fake tablets then he cannot be able to claim for breach of contract.
Sometimes the court may relax the par delictum rule in order to do justice
Case on legality
Muguti v Uboxit Worldwide PVT LTD & others 2010 (1) ZLR
In July 2008, the defendants 12 September contracted with a freight company to transport
certain consignments from Zambia for US$6 500 of which after payment of the deposit, the
sum of US$3000 remained outstanding. At the time the contract was entered into, the official
currency of Zimbabwe was the now defunct currency. As the contract price was reflected in
USdollars, the contract was in contravention of the exchange control regulations,1996, and thus
unlawful.

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The plaintiffs claim was dismissed. In dismissing the claim, the court stated that in the absence
of evidence, court could not hold that that the freight services were so out of proportion with
the payment made for such services that it should interfere by relaxing the rule operating
against the contract.
It was also stated by the judge that the law applicable to illegal contracts is quite clear. Where
the contract has not been performed, the courts will not compel performance by either party to
the contract. The rule is absolute and admits of no exceptions, the courts will relax the pari
delicto patior est condition possidentis rule to do simple justice between parties.
Contracts contrary to public policy
If a contract offends the publics perceptions of justice, will be void
Common example is restraint of trade. In general, restraints are valid in our law provided that
theyre reasonable. A restraint is reasonable if it protects a substantive interest. If it is
unreasonable, it will be contrary to public policy.
ARE RESTRAINTS OF TRADE LEGAL?
Two conflicting rights and dutiesa. Right to freely trade or work at any company and duty
b. Duty to uphold the contract
Restraint of trade will only be legal if

It protects a substantive interest e.g protecting a trade secret

It is reasonable.

SCHAWTZ V SUBEL
The defendant sold a general dealers business to the plaintiff. A clause in the agreement of
sale provided that the seller was not permitted to open up a shop in opposition to the buyers
business within a radius of 5miles. Soon after the agreement and payment, Subel purchased a
business 1.5 miles down the road.
HELD: Schawtz was able to obtain an interdict permanently restraining Subel from operating
the new shop. The idea was to protect the good will, which Subel had sold to Schawtz with the
inventory.

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Munyaradzi Mangwana v Brian Muparadzi & others

IN 1986/7 Munyaradzi Mangwana completed his legal studies at the University of Zimbabwe.
At the turn of the new year, he joined Brian Muparadzi & others Legal company as a qualified
assistant. He signed a convenant to the fact that should he leave the employer he will not be
allowed to practise a lawyer at his own or with others anywhere in Zimbabwe for 5 years. Soon
afterwards he took up employment in Chinhoyi. After a while he decided to form his own
company in Chinhoyi about 0.5 km down the road. The matter went to the court to determine
the question of its enforceability or otherwise.
HELD: the agreement was not enforceable because of its infinity nature (too broad in nature)
and at the same time, in the mind of a good judge fortified with the case (involving lawyers
who should actually be legal experts), he decided to invoke judicial activism at the risk of being
part to the judicial combat/arena
Morris v Saxel
Saxel was employed as a teller assistant by Morris and they agreed that should Saxel leave his
employer, he would not be allowed to practice his trade within 10km from the employer
HELD: COURT NOT CONVINCED that the case met required legal thresholds such a
covenant should not solely aim to restrict competition. It was an anti-competition
agreement/device or trick and nothing else, and that being the case, it was contrary to public
policy and therefore unenforceable.
REQUIREMENT 5

Formalities

No formalities in general.

If parties agree that the contract has to be in writing then it has to be reduced to writing.

If parties stipulate that certain formalities have to be met, formalities have to be complied
with.

There are certain contracts that must comply with formalities for them to be valid, eg

Contract of sale of immovable property and suretyship

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CHAPTER 13
CAVEAT SUBSCRIPTOR RULE
LET THE SIGNOR BEWARE.
A well-known and established principle of our Law is summarized by the Latin maxim caveat
subscriptor which translated into English, means Let the signor beware. Simply put this
means that when a party to a written contract signs it, he is presumed to be aware of all the
terms and conditions of the contract, and is bound thereby. It will not, in general terms, avail
him to subsequently protest that he was not aware of the offending term or that he signed the
agreement without understanding the meaning and implication of the offending term, or that
the inclusion of the offending term is grossly unfair to him.
Many cases dealing with this principle have come before our Courts and, for the most part, our
Courts have applied this principle strictly and have not come to the aid of the Party seeking not
to be held bound by the offending terms and conditions of the Contract. One such case which
did come to our Courts dealt with this principle. The facts are as follows:
1. Mr A checked himself into a private hospital in order to undergo surgery for a medical
problem bedevilling him. He presented himself at the reception office and was presented with
a document which he was required to sign before being shown to his ward. This document was
the contract governing his stay in the hospital and set out the charges he would have to pay for
his stay in the hospital. One such clause provided that should any mishap befall Mr A whilst in
the hospital causing him to suffer any physical harm, the hospital would not be liable to
compensate him for the harm befalling him, irrespective as to how the mishap occurred. It
provided that if the mishap was caused by any act on the part of anyone employed by the
Hospital, no liability would attach to the Hospital to compensate him.
2. Upon being presented this document, Mr A glanced at it, signed it, and was shown to his
ward.
3. During Mr A's stay in hospital and after the surgery was performed on him, and whilst
recuperating, he needed to go to the bathroom. At this stage he was still under sedation and the

54

nurse advised him that it was in order to walk unaided to the bathroom. On route he had a fall
and sustained serious injuries.
4. After his discharge from hospital, Mr A instituted an action against the Hospital in the
Transvaal Provincial Division in which he claimed compensation from the Hospital alleging it
to be liable on the grounds of the injury having been caused by the negligence of the Nurse.
The negligence of the nurse was not denied by the hospital, but it asserted it was not liable by
virtue of the existence of the clause in the written contract rendering it not liable for any injury
sustained while Mr A was in the hospital irrespective as to how the injury was caused.
5. Mr A claimed to be unaware of the existence of this clause, he did not spot it when reading
the document presented to him, and stated that had he been aware of it, or had his attention
been drawn to it, he would not have signed the contract with the inclusion of that clause. In
support of his contentions he led evidence, and it was not disputed by the Hospital, that when
presented with this contract the attending admissions Clerk did not draw its existence in the
contract to his attention.
6. The Learned Presiding Judge held that, whilst acknowledging the existence in our law of
caveat subscriptor, the offending clause and its implications were somewhat harsh and that
there existed a duty on the Hospital to ensure that its admission Clerk specifically drew the
existence of this clause to the Patient. Because it failed to do so he held the Hospital liable to
compensate Mr A for his injuries.
7. However this did not end the matter. The Hospital took this decision on Appeal to the
Supreme Court of Appeals which delivered a judgment holding that there was no duty on the
part of the Hospital to ensure that its admission Clerk specifically drew the existence of this
clause to the Patient. There was, it held, a duty on the part of Mr A to read the Contract,
understand it, and to sign it only once he agreed to be bound by the terms and conditions
contained in it. If Mr A did not read the contact through properly and carefully he should have
refused to sign it. Once he affixed his signature to the document, he was held to be bound by
its terms and conditions. The Court once more entrenched the principle of caveat subscriptor .
8. It is observed that had Mr A informed the Admissions Clerk his unwillingness to sign the
contract as presented to him because of the inclusion of this clause, it would have been most
unlikely that the Admissions Clerk would have been vested with the authority to delete it from
55

the Contract. Moreover, it is observed that being understandably anxious about the surgery Mr
A was to undergo, it is unlikely that he contracted with the hospital on an equal footing with it
in that on protesting his dissatisfaction with that clause, he would have most likely been
informed that if he refused to sign the contract in the form presented to him, then he would not
have been admitted to the Hospital for the surgery he had to undergo. However this point was
not dealt with by the Supreme Court of Appeals.
GEORGE V FAIRMEAD
George a guest at a hotel signed a hotel register, which also doubled up as a contractual
document, at the same time he became a guest at the hotel.
One of the provisions, which George did not READ WAS THAT in the event that property
was lost/damaged/stolen, the hotel owner was exempted from liability.
When clothes were stolen from his room, George sued the hotel company, claiming a mistake
through ignorance based on justus error in that he had believed himself to be signing merely a
hotel register-not contract and that in any event his attention had not been drawn to a written
term not included in his oral agreement
COURT: Dismissed the case on the basis of the caveat subscriptor rule
His signature bound George on such contracts when a man is asked to put his signature to a
document, he cannot fail to realise that he is called upon to signify, by so doing, his assent to
whatever words appear above his signature.
Principle: Unless induced by misrepresentation OR fraud, one is bound under the doctrine of
caveat subscriptor by ones signature-even if the material to which it is attached has been
neither pointed out nor read
TICKET CASES

Did the holder know that certain words appeared on the contract?

Did the holder know that certain words referred to certain terms of the contract?

If the answer to both these questions is yes, the holder of the ticket is held liable to such
conditions.

If the answer is in the negative, the following question is asked

56

Did the party issuing ticket do everything in his or her power to draw the attention of the
holder of the ticket to the fact that the words on the ticket refer to terms of the contract.

In contract law, ticket cases are a series of cases that stand for the proposition that if you are
handed a ticket or another document with terms, and you retain the ticket or document, then
you are bound by those terms. Whether you have read the terms or not is irrelevant, and in a
sense, using the ticket is analogous to signing the document. This issue is an important one due
to the proliferation of exclusion clauses that accompany tickets in everyday transactions.
The case of Parker v. The South Eastern Railway Co (1877) 2 CPD 416 illustrates restrictions
on this concept:

Knowledge of writing and of terms: If the recipient of the ticket knew that there was
writing on the ticket and also knew that the ticket contained terms, then the recipient is
bound by the terms of the contract.

Reasonable person: If the recipient did not know of the existence of the terms, then the
court will consider whether a reasonable person would have known that the ticket
contained terms. If that is so, then the ticket-holder is bound by those terms; if not, then
the court will return to the general test of whether reasonable notice of the terms was
given.

The test of whether a document fits within the description of a ticket is an objective test, that
is, whether a reasonable person in the position of the ticket-holder would perceive it to be
contractual in nature. For instance, if exclusion clauses accompany a docket, it may be held
that it is not contractual in nature since it is just a receipt.
Furthermore, Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd [1989] 1 QB 433
held that if a party wishes to incorporate onerous terms into a document that is to be just
accepted by the other party, reasonable notice must be given to make it a term of the contract.
Other ticket cases include:

L'Estrange v Graucob [1934] 2 KB 394

Olley v Marlborough Court [1949] 1 KB 532

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Thornton v. Shoe Lane Parking [1971] 1 All ER 686

EXCLUSION CLAUSES
Exclusion clauses are clauses, usually written down, that say that one party to the contract will
not be responsible for certain happenings. For example, if you join a gym, it is common for the
contract to say that the gym owner will not be responsible if you are injured while exercising.
If you arrange to park your car in a public carpark for a fee, the owner will often seek to include
in the contract a provision that they will not be responsible for damage to your vehicle, or theft
of goods from it, while it is in the carpark.
These clauses can be valid, as long as:
they have been properly included in the contract and
are not contrary to law.
To be properly included in the contract, the clause cannot be tacked on after the contract has
been made. If there is a signed contract containing the clause, this will usually have the effect
of including it. If there is no signed contract, but there are printed documents or signs posted
stating the terms, these can be included in the contract if they are brought to your attention
before the contract is made.
For example, a driver entering a car park who takes a parking ticket from a machine is only
bound by terms which are brought to their attention before taking the ticket. This is because
the contract is formed when the ticket is taken. The car park owner cannot rely on an exclusion
clause printed on the back of the ticket if they did not do anything beforehand to make the
driver aware of it, for example, by prominently displaying the exclusion clause at a point before
the ticket is taken. If the car is damaged due to insufficient care by the parking company, it will
be liable despite the exclusion clause [Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER
686].
What are reasonable steps to take in order to draw a condition to the notice of a consumer will
vary from case to case. Although most car parks now have printed signs in front of their ticket
windows stating that they accept no responsibility for cars left on their premises, (which

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probably makes it an exclusion clause that is a term of the contract) there are still ways in which
the effects of these clauses can be avoided.
The exclusion also has to be legal. There are some important obligations to a consumer that are
placed on a trader and these are implied by statute into consumer contracts and cannot be
excluded.
Courts always give exclusion clauses the narrowest reading possible, and where there is any
doubt the interpretation most favourable to the consumer is adopted. An exclusion clause will
generally not cover a breach which occurs outside the 'four corners' of a contract, such as where
a trader does something that was not authorised by the contract.
Where a trader has attempted to limit or exclude liability of an implied term a consumer should
seek legal advice as the law on this point is both complex and uncertain.
L'Estrange v Graucob [1934] 2 KB 394
The plaintiff bought a cigarette machine for her cafe from the defendant and signed a sales
agreement, in very small print, without reading it. The agreement provided that "any express
or implied condition, statement or warranty... is hereby excluded".
The machine failed to work properly. In an action for breach of warranty the defendants were
held to be protected by the clause.
court
"When a document containing contractual terms is signed, then, in the absence of fraud, or, I
will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether
he has read the document or not."
Parker v South Eastern Railway (1877) 2 CPD 416
The plaintiff deposited a bag in a cloak-room at the defendants' railway station.
He received a paper ticket which read 'See back'. On the other side were printed several clauses
including "The company will not be responsible for any package exceeding the value of 10."
The plaintiff presented his ticket on the same day, but his bag could not be found.
He claimed 24 10s. as the value of his bag, and the company pleaded the limitation clause in
defence. In the Court of Appeal, Mellish LJ gave the following opinion:
If the person receiving the ticket did not see or know that there was any writing on the ticket,
he is not bound by the conditions;

59

If he knew there was writing, and knew or believed that the writing contained conditions, then
he is bound by the conditions;
If he knew there was writing on the ticket, but did not know or believe that the writing contained
conditions, nevertheless he would be bound, if the delivering of the ticket to him was in such
a manner that he could see there was writing upon it.
There was reasonable notice that the writing contained conditions.
The company was therefore not held liable
Olley v Marlborough Court [1949] 1 KB 532
The plaintiff booked in for a week's stay at the defendants' hotel.
A stranger gained access to her room and stole her mink coat.
There was a notice on the back of the bedroom door which stated that "the proprietors will not
hold themselves responsible for articles lost or stolen unless handed to the manageress for safe
custody."
The Court of Appeal held that the notice was not incorporated in the contract between the
proprietors and the guest.
The contract was made in the hall of the hotel before the plaintiff entered her bedroom and
before she had an opportunity to see the notice.

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CHAPTER 14
Terms of contract
A term is a provision imposing one or more obligations to act in a specific manner or refrain.
It defines the contractual obligations between contractants. Or it stipulates time when or the
circumstances in which the obligations either become enforceable or are terminated, for
example: The car will be delivered after payment of the full price.
Different ways of incorporating terms into a Contract.
1.Express terms
Articulated declarations of intent
A term is express if it is stated in so many words, whether in writing or orally.
2.Tacit terms
Not been expressed in words but is based on the parties true intentions or their intentions as
imputed by law. Based on assigned intent in respect of a given situation they had not bargained
for. Inferred by court from expressed term, and surrounding circumstances or trade usage.
The test: what the parties would have answered if, at the time of concluding the contract,
someone were to ask them what the position in respect of a specific case or problem would be.
If both parties were to answer that the position is the same as that expounded in the alleged
tacit term, then a tacit term is established eg. One enters into a public taxi to town, although
there is no express term about the taxi fare, It is a tacit term that the passenger has to pay and
the driver expects payment.
3) Implied terms
Term not expressed in words but can be incorporated into the Contract by operation of law.
When Contract has been classified as a particular contract, law imputes certain consequences
to the Contract. for example guarantee against latent defects forms part of every Contract of
sale unless excluded by parties. Usually referred to as Naturalia.

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4) Essentialia, Naturalia and Incidentalia

Are terms which are essential for the classification of contract as belonging to a particular class
of contract eg essentials for sale: the seller must deliver the object sold and buyer to pay sum
of money. If not, it cant be a Contract of sale.
4.1 Naturalia
Terms which the law attaches to every Contract of a particular class. They help to determine
Rights and duties of contracting parties and effects and consequences of their contract. The
naturalia of many Contracts known to Zimbabwean Law are based largely from Roman law,
but are adapted by our courts, legislation and trade usage.
4.2 Incidentalia
Additional terms by parties themselves.
5) Conditions
A condition is a contractual term which renders the operation and consequences of the Contract
dependant on the occurrence of a specified UNCERTAIN future event. Event must be uncertain
whether it will indeed occur. Eg A makes an offer to buy Bs house if the sun rises tomorrow
= not a condition.
5.1 Types of conditions
5.1.1. Suspensive Condition
A contractual term which suspends operation of the contractual obligation in terms of the
contract until the condition has been fulfilled. Valid contract at conclusion but rights and duties
suspended until condition are fulfilled. Condition will be fulfilled when uncertain future event
takes place e.g. I will give you the share certificate when you make full payment for the shares.
5.2. Resolutive Condition
Contractual term which renders the continued existence of the Contract dependent on the
occurrence (or non-occurrence) of a specified uncertain future event. Contractual rights and
duties become operative and are enforceable immediately. If condition is fulfilled the Contract
is dissolved and contractual rights and duties cease to exist e.g. I will lend you my car until you
buy yours or I will supply water to you until the beginning of rain season.

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6. Time Clause
Distinguished from condition
In the case of condition, Contract comes into operation or is dissolved upon the occurrence of
a specified uncertain event. Time clause (its certain). The time clause determines a specific
time when or the period within which the contract will either become operative or be dissolved
e.g. 1 January 1991, a good example is the Promulgation of Acts. The Act will become
operative from the 01 March 2011. Example 2: 6 months after conclusion of the contract,
the insurer may waive the terms of the contract
6.1 Suspensive Time Clause
Duty to perform is postponed until a determined or ascertainable moment has arrived. The
consequences of suspensive time clause are that the contract comes into being when it is
concluded so that the parties are bound to the obligations but Rendering of their performances
in terms of the Contract is postponed until the moment has arrived or when the period has
lapsed. Contractual obligations come into operation & enforceable when the specified moment
has arrived or when the specified period has ended. A undertakes that 1 month after Xs death,
he will buy B a new vehicle.
6.2 Resolutive time clause
Contract is subject to resolutive time clause if parties agree that the obligations flowing from
the contract will have effect until the arrival of a certain moment or until the expiry of a certain
period of time Contract comes into being immediately, when the moment arrives then the
obligations are extinguished. A rents Bs house for a period of 2 yrs. After 2 yrs Contract lapses
7. Supposition
A contractual term which renders the existence of a contract dependant on an event which has
already taken place or on a state of affairs which exists at the time of concluding the contract.
Contract comes into being if supposition is fulfilled. Eg A wants to purchase Bs stand if it has
a sea view. A does not know whether this is the case and is not willing to give a guarantee in
this regard. They agree that B will purchase the stand provided the house has a sea view. If the
sea is indeed visible from the house, obligations are created from the beginning.

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8. WARRANTY
It is a contractual term relating to the absence of defects in the warrantors product or service
or possibility that the warrantor is able to render the performance or to the quality or standard
of the warrantors product or service to the quantity of the performance etc. A sells his fridge
to B and guarantees to B that exterior paint of the refrigerator will retain its original colour for
3 yrs, A undertakes additional obligation. If it discolours within that period, A will be in Breach.
Some warranties are imposed by operation of laws eg warranty against latent defects or eviction
in the contract of sale
9.Modus
This is a Contractual term which burdens a contracting party. The burden can be to perform as
against a 3rd party or to do something or to refrain from doing something. e.g. A donates a
house to B, subject to the modus that B must use part of it as a nursery school. Contract is
unconditional and B can enforce As perform immediately, even if B has not yet complied with
the modus. B can claim delivery of the house immediately but if he fails to execute the charge,
he is guilty of breach of contract and A can use the ordinary contractual remedies. Eg Sam
donates his farm to his Son Subject to modus that he donates R100 000 to his sister. Modus
always refers to the future.
10. Cancellation Clause
Entitles a party to cancel in breach of contract. This is called lex commessoria
11. Penalty Clause
Law and common law attaches certain consequences to breach of Contract by affording certain
remedies to the innocent party eg if you dont pay by the 1st day of every month you will be
charged a penalty of $20 per day until you pay the full amount.
12. Forfeiture clause
Often found in lease agreement. Entitle landlord to cancel lease and eject tenants when tenant
in breach e.g. in payment of rent on the due date. In the absence of a specific provision nonpayment of rent not a material term entitling landlord to cancellation.

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CHAPTER 15
BREACH OF CONTRACT
Breach of Contract
Forms of breach (M2 P2 R)
Default by Debtor (Mora Debitoris)
Default by Creditor (Mora Creditoris)
Positive Malperformance
Repudiation
Prevention of Performance
Where a Contract creates obligation for both parties, each will in turn be a debtor and a creditor
depending on which obligation is involved
1.(Mora debitoris) Default of the Debtor
Debtor commits breach if he does not perform timeously and the delay is due to his fault. He
is in mora. This is called mora debitoris
Requirements
3. Requirements have to be met
1. Performance must be delayed
Debtor Must be late with his performance. if he renders a defective performance it is not mora
Debitoris. the term of contract may either provide for a specific day or time for performance or
no time may be specified
Where specific date or time for performance has been stipulated and the debtor fails to perform
on or before the appointed time, he is automatically in mora. This is termed mora exre. The
specific date for performance must be a day of which it is both certain that it will arrive. E.g.
31 March 2016 or immediately. Where no date is specified, creditor can determine a date by
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demanding that the debtor perform before or on a certain date. When fixing a date, creditor
must put reasonable time. Debtor is in mora if he fails to perform on the determined date.
Termed mora ex persona
2. Delay must be due to the Debtors fault
There can be breach if a party culpably does not honour his obligation. There is, no breach
where the debtor cannot perform timeously owing to bad fortune or circumstances beyond his
control e.g. viz major. When he has warranted performance at a particular time, late
performance will constitute breach of contract even if the delay was not caused by his fault.
Consequences of mora debitoris
It has an effect on the liability of the debtor should performance become impossible while in
mora. If performance becomes impossible after Debtor has fallen in mora obligations are not
extinguished. The debtor will be liable to perform.
2. Default by Creditor (Mora Creditoris)
Where the creditor causes the debtors performance to be delayed. Occurs where an obligation
is a bilateral juristic Act or where creditors co-operation is required for the debtor to be able
to render performance. eg where A & B agree that A will put tiles in Bs house and upon arrival
of A at Bs house, B is not there (and doors are locked).
Requirements
a) The performance must be dischargeable.
Performance owing to the creditor must be dischargeable. In terms of existing and valid
obligation and must be physically and legally capable of being discharged . If not yet due, no
mora creditoris.
b) Debtor must tender Performance
Debtor must tender proper performance as specified in the contract and must call upon the
creditor for his co-operation. Creditor must fail to give his co-operation. The default must be
due to the creditor
Consequences of Creditors Default
Debtors duty of care is dismissed if creditor is in mora. He is responsible only for intentional
loss and loss occasioned by gross negligence. Should the performance become impossible other
than through intention or gross negligence while the creditor is in mora, Debtor is released
from his obligation creditor remains liable for the counter performance. Eg A and B enter into
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a contract. Ito the contract, A is to give B his car in exchange of 10 beasts. B takes the beasts
to As home and upon arrival he is told that A has left for SA. Later that afternoon the lightning
strikes the beasts and all of them die, B is still entitled to get the car. In case of Reciprocal;
agreements, the debtor remains entitled to the performance due to him. However in respect of
the obligation towards the creditor, debtor still remains debtor. Obligation towards the creditor
is not as a result of mora creditoris, automatically regarded having been fulfilled. If Debtor is
in mora, it is removed by subsequent default of the creditor. Two forms of breach of Contract
cannot exist alongside each other in respect to the same obligation
4. Positive Malperformance
Occurs when the debtor commits an act which is contrary to the terms of the Contract.
2 situations to be distinguished:
a) Debtor tenders defective or improper performance.
e.g. The builder builds the house he has undertaken to build but not with the material he was
supposed to use.
b) Does something he may not do in terms of the agreement.
e.g. Instead of giving the buyer Daisy he gives him stichus.
Or He gives a cow instead of a donkey.
4. Repudiation
It is any behaviour by a party to a contract indicating that he does not intend to honour his
obligations, e.g. if the other party denies existence of the contract or Tries to withdraw from
the Contract or Gives notice that he cant or will not perform. Its possible to repudiate part of
the Contract. Innocent party has remedies for breach of contract. It is very difficult to establish
whether certain behaviour constitutes repudiation. There must be an Intention to repudiate
Test is an objective one. Repudiation can also take place without any fault Basic question is
whether the person alleged to have repudiated his obligation has behaved in such a way as to
lead a reasonable person to conclude that he does not intend to fulfil his part of the Contract.
Mere failure on the part of the debtor to perform will not constitute repudiation.

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5. Prevention of Performance
By Debtor
Where he culpably renders his own performance impossible. Debtor not released from his
obligation e.g. Debtor has to develop and print a photograph film for the creditor but
negligently exposes it to light before development is completed. Performance is impossible.
Debtor can be held liable.
Prevention of Performance by the Creditor
Where creditor commits breach of contract (BOC) in form of prevention of performance where
he culpably renders the debtors performance impossible. E.g. Debtor has to service the
creditors motor car but before this can be done, the creditor negligently causes an accident in
which the motor car is destroyed. It must be distinguished from Default of Creditor (mora
creditoris).
In the case of Prevention of performance by creditor, the debtors performance is made
impossible and consequently can never be rendered. With mora creditoris, creditor merely
delays the debtors performance but does not render it impossible, so that it is still capable of
being rendered. The debtor will be deemed to have discharged his obligation. The debtor is still
entitled to creditors performance but the debtor must bring into account any expenses he has
saved by reason of his no longer being obliged to perform. The debtor no longer services the
car but is entitled to payment of the Contract amount less any savings, eg on oil that would
have been used.

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CHAPTER 16
REMEDIES

FOR

BREACH

OF

CONTRACT (C, D, E)
1. Execution of the Contract
2. Cancellation of Contract
3. Damages
The availability of remedies is determined by the nature and seriousness of BOC.
1.Execution of Contract (P O O)
It can comprise of 3 possible orders
(a) An order for specific performance
(b) Order for reduced performance
(c) A prohibitory Interdict
a. Specific Performance
This is an Order which commands a contracting party to render performance that he has
undertaken to render. It is not made in sequestrated estates or granted in impossible
performance. Court will refuse if specific performance will affect the defendant unreasonably
harshly.
b. Orders For Reduced Performance
Court can order a Contract Party to render a reduced performance. The exceptio non adimpleti
Contractus comes into play where the parties to a Contract have to perform simultaneously. If
the plaintiff claims performance from Defendant in such a case, the Def can raise exception.
Which means that the plaintiff will not succeed with his claim if he himself has not yet
delivered or rendered his counter- performance. Exception gives Def the right to withhold his
own performance until he receives Counter- performance by the plaintiff. If plaintiff makes
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defective/partial performance and then claims counter performance from Defendant, Where
performance is divisible, Def can exercise his right to withhold his own performance in respect
of that portion of plaintiffs performance that is still outstanding. If indivisible, he can make a
defective performance, the situation is made complex. Injured party has the chance to cancel if
malperformance was substantial he may also reject delivered performance, enforce the
Contract and claim proper performance.
Where he rejects the performance and claims proper performance he will be able to ward off
any claim to counter performance with exceptio, until plaintiff has performed properly or has
tendered such performance. It could happen that malperformance is not substantial enough to
justify rejection thereof or that the Defendant decides to retain defective performance.
Defendant has the benefit of the performance but he is still able to ward off a claim for his
counter performance with the exceptio due to the fact that the plaintiff himself has not
performed properly. The question whether plaintiff should be entitled to receive counter
performance for that portion of the indivisible performance that he himself has already made
and if so, how is the extent determined. Decision of Broiling Pvt ltd V Scope Precise
Engineering Pty Ltd 1979 (1) SA 39 (A) PG 124.
2. CANCELLATION
It is an abnormal remedy for Breach of Contract. If there is a cancellation Clause, cancellation
is usually limited to certain degrees of Breach of contract. In absence of cancellation Clause,
innocent party will be entitled to cancel contract if the breach is material.
Cancellation because of mora debitoris.
In the absence of a lex Commissoria, party may cancel a Contract on the basis of mora debitoris
in 2 instances. Namely where
(a) Time is of essence
(b) He or she acquires a right to cancel the Contract.
(a).Time is of the essence
Cancellation on this ground is only possible where: Debtor is in mora exre in other words, a
date for performance was fixed in the Contract and debtor is guilty of the delay. Time is of the
essence in Contract. This means that it is crucial in specific circumstances that performance
has to be delivered on the agreed date. In essence cancellation on this ground is based on tacit
lex Commessoria which fluctuate in value, and usually for goods bought for purposes of resale
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(b). Creditor acquires Right to Cancel

Where time is not of essence, creditor may acquire a right of cancellation by delivering a notice
of re scission to the debtor. If Debtor is already in Mora exre, creditor must demand
performance within a reasonable time and notify the debtor. A reasonable time has to be
determined regarding the facts and circumstances of each case. If X builds a house for Y which
has to be completed on the 1st of November and the house is not completed on that date y will
have to send X a notice demanding that the house be completed within a reasonable time 24
hrs will be unreasonable, at least a few weeks. Where Contract does not specify a date for
performance, the creditor must 1st place the debtor in mora ex-persona by means of a letter of
demand if he fails, he can cancel.
Cancellation Because of Mora Creditors
The grounds for cancellation are the same as in the case of mora debitoris discussed above.
(a) Time is of essence and
(b) Debtor acquired a right to cancel.
Cancellation because of Positive Malperformance
In the absence of lex commisoria, injured party only entitled to cancel the Contract where malperformance is substantial. It is substantial if injured party receives something which is totally
different from that which was contemplated at the time of conclusion of Contract and he,
therefore never would have concluded the Contract had he known what kind of performance
he was to receive. In other words injured party may cancel the contract where mal-performance
is of such a serious nature that he cannot reasonably be expected to keep the performance and
be satisfied with a claim for damages.
Cancellation because of Repudiation.
One party does not have to accept repudiation but might uphold the Contract. When the Injured
party elects to accept repudiation, he acquires a right of cancellation which he normally might
not have had. If a party to a contract indicates that he is not going to fulfil his contractual
obligations at all, his repudiation is serious enough to entitle the injured party to cancel
Contract. where he indicates he is going to render partial or defective performance, facts and
circumstances of each case have to be examined in order to determine whether the reputation
is substantial enough to allow cancellation of contract. If it is not, injured party may not cancel

71

the Contract and must be satisfied with a claim for damages. If performance by repudiating
party is divisible the Contract may be cancelled only in part.
Cancellation where performance rendered impossible
Where any party to a contract renders performance impossible, specific performance and
enforcement of Contract are not possible. Where contract indivisible = cancel Contract and
Claim damages. Where it is Divisible, may resile from the Contract in respect of that part of
performance that was rendered impossible.
DAMAGES

A combination remedy.

Always combined with either specific performance or cancellation

Most common remedy for breach of contract. Whether or not the term breached sufficiently material to warrant cancellation of contract - injured party always entitled to
such damages - as can prove to have suffered as a result.

Damages assessed at time of breach of contract. Innocent party placed on same position as
would have been if in contract properly performed to the extent that this can achieve
through monetary payment without undue hardship to defaulting party,

In determining appropriate damages- following considerations decisive:

a]

The loss must result from the breach itself- causal link.

b]

Must be actual monetary loss incurred or gain not made.

c]

Natural consequence of the breach - must have been in the contemplation of the parties
at the time of contracting. Loss must have been reasonably foreseeable by the defaulter
at the time of contracting.

d]

The injured party must do all within his power to keep his damages as low as possible
[mitigate his damages]. Cannot allow damages to increase whilst doing nothing about
it.

There are different types of damages

i] Compensatory Damages
These are awarded as a measure of the actual loss suffered. e.g. if A agrees to sell 10 tonnes of
maize to B at $60 000 per tonne and A defaults, forcing B to purchase from another source
who charges him $70 000 per tonne. The compensatory damages would be the $10 000

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difference between the agreed price in buying the maize from A and the price from the
alternative supplier.
ii] Consequential Damages
For these damages to be recoverable they should have been reasonably foreseeable at the time
the contract was entered into. In Hadley v Baxendale [1845] the engine shaft of plaintiff's [P]
corn mill had broken and P hired defendant [D] to transport the shaft to the manufacturer who
was to make a new one using the broken shaft as a model. D failed to deliver the shaft within
the time promised. With the engine out of service the mill was shut down. P sued D for lost
profits during the period the mill was shut down. Held - the lost profits could not be recovered
as damages because in many cases millers sending broken shafts do not shut down their mills,
using spare shafts. Therefore damages of this kind were not reasonably foreseeable since D
was not aware of the special circumstances.
iii] Liquidated Damages
These are damages that the parties agree upon before the breach and form part of the terms of
the contract, governed by the Conventional Penalties Act. When damages are in issue the
plaintiff must prove his loss. The courts will not speculate when awarding damages.

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CHAPTER 17
THE CONTRACT OF SALE
INTRODUCTION
Buying and selling is a fundamental transaction in the modern commercial world. Goods and
services are exchanged largely through the sale agreement and it is only logical that the law
provides for specific rules and regulations applicable to this transaction. A sale is basically a
contract and as such all the rules governing formation of contracts in general apply equally to
sale agreements. However, in certain instances there are additional legal principles which
govern sales specifically which are not found in other contracts.
DEFINITION
Specific, nominate, reciprocal agreement to buy and sell, in terms of which the seller has the
true intention to deliver a determined or determinable thing together with all his rights in the
thing undisturbed, to the buyer and the buyer has the true intention of paying a determined or
determinable price for the thing.
Requirements for a valid contract of sale
Ordinary 5 requirements are also applicable to contract of sale. It is concluded with the
intention of passing ownership though seller does not have to be the owner of the thing. Seller
only obliged to transfer all his rights in the thing to the buyer without interference or
disturbance. If one of these rights is ownership, seller to transfer ownership. transfer of
ownership is one of the characteristics of Contract of sale. Any clause stating that buyer will
never receive ownership of the thing sold will have an effect that Contract will not be a Contract
of sale. Mere conclusion of the Contract of sale does not result in the transfer of ownership.
Buyer obtains a personal right against seller. Other requirements have to be met eg delivery

Essentialia of Contract of Sale

1. Thing Sold
Seller and buyer must reach consensus on thing sold.
Thing must be determined /determinable at the Conclusion of Contract.
If the description is too vague to determine what is sold, contract is null and Void.
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 Can be movable or immovable, material or immaterial. must be merchantable i.e., be able

to be sold commercially
What can be sold?
Different things sold
a) Future Things
These things are only determinable at conclusion of the Contract into certain specifications or
occurrence of a certain event. If these specifications are met or if the event occurs = Thing
becomes determined eg Emptio rei speratae - where S sells next seasons crop to B for R20
per bag. The object sold only determinable and will be determined when the crop has been
fixed in units.
Emptio Spei where S sells the next seasons crop to B for a lump sum of R10 000 irrespective
of whether the crop materialises or not. This is a Contract of Chance, object sold is fixed as
soon as the contract is concluded
b.Generic Sale buying a few out of many.
where the thing sold is indicated in general and only individualised later.
eg 20 bags of cement from all bags available in the sellers store.
Object sold is determinable and will be fixed only after individualisation.
c) Res aliena
This is the thing of which the seller is not the owner. It does not affect conclusion of a valid
Contract of sale. The seller does not have to be the owner of the thing sold. Owner only has to
deliver the undisturbed use and enjoyment of all his rights in the thing to the buyer. If seller
knows that he is not the owner of the thing sold and proceeds with sale, Buyer who acts in good
faith will be able to hold seller liable for fraud or misrepresentation and criminal sanctions.
Where seller sales a res aliena, owner can claim with Rei Vindicatio. This right stems from
NEMO PLUS IURIS RULE-which provides that a person can only transfer the rights which
he has to another person. Where buyer possess a Res aliena in good faith the owner can claim
his property from buyer only if the property still exists. If buyer sold property to someone else,
one cant claim the value of the property from the former buyer. On the other hand, one will
be able to claim the value where the buyer through his negligent or intentional conduct made
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it is impossible for the owner to reclaim Prop. Where buyer buys a res aliena and acts in bad
faith the true owner can claim the value
Exam Rei Vindicatio can Not be exercised where
(i) Real owner misrepresented to the buyer that seller is the owner, Doctrine of estoppel will
prohibit the owner from invoking the real state of affairs
(ii) Object was sold in terms of an order of court and buyer acted in good faith
(iii) An object which without knowledge on the part of curator does not belong to insolvent
estate is sold by a curator who acts in good faith.
(v) Buyer has by law a lien or tacit hypothec over the object sold.
(v) Real owner has instructed another person to sell the object on his behalf and after selling
he uses purchase price for his own account.
2. Purchase Price
Seller and Buyer must reach consensus on purchase price
Requirements (A C A)
(a) Agreement on the Price
(b) The price must be certain and
C) The price must consist of acceptable currency
2.1 General
Thing sold must be determined or determinable. law will not recognise an agreement on the
price where there is a serious disproportion between the price and the value of the thing sold.
The price can be less than the value of the thing but where it is completely out of proportion
no Contract of sale exist. Valid methods of price fixing: $125 or price is determined per unit =
R120 / bag
Ineffective methods
party to fix price unilaterally,
Unnamed 3rd party to determine Price
Described as reasonable and fair
3. Agreement to buy and sell

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Duties of the Buyer (Exam)

A sale involves two parties, the buyer and the seller. The obligation of the buyer can be
summarised as follows:
i] To pay the purchase price;
ii] To pay the seller's necessary and reasonable expenses to maintaining the merx pending
delivery;
iii] To accept delivery of the merx.
Obligations of seller include:
i]

To take care of the merx [subject matter of the sale] pending delivery.

ii]

To deliver the merx to the buyer.

iii]

To pass good title to the buyer/warranty against eviction.

iv]

Duty to supply goods of the right quality/warrant against latent defects.

DUTIES OF THE SELLER

1. Safe keeping of the thing sold
Duty of seller is to take care of & protect the thing sold from the time of conclusion of the
Contract until thing is delivered to the buyer. Buyer can claim damages for Negligent Conduct
of Seller. Not liable if not Due to his fault viz major
Factors that influence Duty of safe keeping
1. Mora Creditoris & Mora Debitoris
Where buyer is in mora Debitoris or Creditoris (where he fails to pay the price or fails to receive
the thing sold. seller will only be held liable for damages caused by His Intentional/ grossly
negligent conduct. Seller in Mora Debitoris (where he fails to deliver thing sold ) = Responsible
for any damage even in the absence of fault on his part.
Passing of Risk
Doctrine determines whether seller or buyer bears the risk where accidental damage is caused
by COINCIDENCE or ACTS OF GOD and not by culpable conduct of either Party. General
Rule owner suffers loss when his property is destroyed. Doctrine of passing of risk causes
Risk to pass to B when sale is perfecta.
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A Contract is perfecta when

(a) Buyer & Seller have intention of buying and selling
(b) Purchase price is determined
(c) Contract is not subject to a suspensive condition.
Result is that Buyer bears the Risk where the thing is damaged / destroyed through coincidence
or Act of God. Buyer still has to pay the purchase price even where the seller has not delivered
the thing to him.
NB- the principles as applied to passing of risk also apply to the allocation of benefits. Eg
where a cow has a calf after date of sale but before delivery the calf belongs to Buyer.

Duty of safe keeping and passing of risk (know this diagram)

DAMAGE TO THING AFTER CONCLUSION OF CONTRACT but Before
DELIVERY

FAULT
(INTENT / NEGLIGENCE)

Duty of Safe Keeping

Seller bears Damages

NO FAULT
(COINCIDENCE / ACTS OF GOD)

Passing of Risk

Buyer bears Risk if Contract is Perfecta

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Contract is perfecta if:

Buyer and seller have an intention to buy to sell

Purchase price is determined

Contract is not subject to suspensive condition

The thing sold is determined

The above general rule on the passing of risk has several exceptions. The risk will not pass to
the buyer in the aforesaid manner in the following situations:
a]

Where there has been an express or implied agreement varying the general rule. Thus

in Jacobs v Petersen & Another [1914] CPD 705 J sold and delivered a horse and cart to P for
a price of $8 which was to be paid in instalments. The contract was subject to the condition
that ownership of the property was to pass only on payment of the full purchase price. P paid
the first instalment but the horse died soon thereafter. J sued for the balance of the purchase
price. Held the sale was subject to the suspensive condition that ownership was only going to
pass on payment of the full purchase price, hence the risk of destruction of the goods remained
with the seller until the counting or weighing is done
b]

Where the goods bought have to be measured, weighed or counted in order to fix the

price or appropriate them to the contract, i.e a generic sale. In Poppe, Schunhoff & Guttery v
Mosenthal & Company in [1879] Buch 91 the plaintiff bought from the defendant 200 cases of
brandy on 6 July 1878. Of these, 110 cases were delivered on 18 July 1878; 60 cases were
delivered on 6 August 1878 and the remaining 30 cases were delivered on 15 August 1878. On
25 July an Act imposing excise duty on brandy became law. This meant that the brandy that
had not been delivered by 25 July was liable to pay duty. The issue before the court was who
between the plaintiff and the defendant was liable for duty on the 90 cases that had not been
delivered as of 25 July. The court found that nothing had been done to distinguish the buyer's
brandy from the rest of the stock in the seller's possession. Held the risk remained with the
seller who was therefore responsible for the payment of the duty.(also case of Horn v Hutt)
c]

Where there is default on the part of the seller in making delivery.

2.WARRANTY AGAINST EVICTION

Any action by a 3rd Party who has better rights in the thing sold that deprives the buyer of the
total or partial use, enjoyment and disposal of the thing sold, constitutes eviction. It must be

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remembered that the Buyer does not become owner of the thing by mere conclusion of a valid
Contract of sale. S is not obliged to transfer.
Forms of Eviction
1. When True Owner of the thing sold claims his property from the buyer.
2. A 3rd Party obtains possession of the property and the buyer cannot claim this property from
the 3rd Party due to a defective title.
3. In terms of the Rule that lease goes before sale (Huur Gaat Voor Koop) Buyer to allow
lessee to use and enjoy property until lease expires.
4. Holder of a limited real right (eg Right of way or grazing servitude) may prevent the buyer
from having full use and enjoyment of the thing sold.
What can the buyer do when eviction is imminent
1. General Rule buyer must not surrender the thing to someone threatening him with eviction.
2. Buyer to notify seller of threatened eviction In order to put up a defence against 3rd party.
3. Where seller cannot be found or intentionally avoids notification, buyer is relieved from any
further duty of Notification.
4. As soon as seller receives notification of the threatened eviction, he can take cession of
Buyers rights and intervene and assist the buyer and furnish the necessary proof of title.
5. Be joined as a party to the lawsuit
6. Do nothing
7. If seller does not help, Buyer to put up a strong defence
BUYERS RIGHT OF RECOURSE AGAINST THE SELLER
1. TOTAL EVICTION
The buyer can cancel the Contract of sale. Claim repayment of total purchase price and Claim
of damages which can include the following, Fruits which had to be delivered to the true
Owner, legal costs of the law suit, costs for improvement and any increase in value of the thing
sold.
2. PARTIAL EVICTION
Where the eviction has left the buyer with so little a remainder of the thing sold that it cannot
be said that a reasonable man would have bought the same, the buyer may cancel the Contract,
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claim repayment of the purchase price and repayment of damages provided that he offers to
return the remains of the thing sold to the seller. Where partys eviction is not of such a
substantial nature and the remains of the thing sold can be effectively used, the Buyer may
retain the remains and claim a pro rata repayment of the purchase price as well as damages
from the seller.
Where Buyer has no OR Limited Right of Recourse
a. Seller is only liable in terms of warranty where the reason/ cause of eviction already existed
at the time of conclusion of Contract or where it was caused after conclusion of Contract due
to sellers fault. Even where the seller has excluded his liability for damages, Buyer may still
cancel the sale and reclaim the purchase price.
b. Seller will not be held liable where buyer knew that the seller was not the owner of the thing
at the time of conclusion of the Contract.
c. Where the seller was unsure at the time of conclusion of the Contract whether or not thing
belonged to him and has made this known to the buyer, the seller cannot be held liable.
d. Seller will not be held liable where buyers claim against seller has prescribed.
e. Where the eviction was caused by Vis major, buyer has no right of recourse
In the contract of sale, the seller undertakes to pass free and undisturbed possession of the thing
sold to the buyer i.e. vacuo possessio. If the buyer's vaccuo possesio is unreasonable and
unlawfully interfered with, he is protected by the implied warranty against eviction. This term
is implied by the law in a contract of sale whereby the seller undertakes that the buyer will not
b e disturbed in his use and enjoyment of the thing bought.
The warranty does not give protection against the unlawful acts of other people. Rather it
protects the buyer lawful eviction because of defective title. In Nunam v Meyer [1905] 22 SC
203 X sold three head of cattle to Y who upon being informed by Z that the cattle had been
stolen from him, handed them over to Z. Y then claimed the purchase price from X. Evidence
led proved that the cattle had indeed been stolen from Z. Held Y was entitled to succeed even
though he had handed the cattle voluntarily over to Z without any judicial process of eviction.
In similar circumstances to those in the Nunam case, the best course of action to take would be
for the buyer to inform the seller first that his possession is being threatened before voluntarily
surrendering the property. Otherwise he runs the risk of losing his right of recourse against the
seller should it later turn out that the third party's title is not incontestable [i.e. should it be
proved that the third party's title inferior to that of the seller]. In Nunam v Meyer if it had turned
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out that X's title was superior to that of Z, then Y having surrendered the cattle without seeking
protection from X first, would have lost both the cattle and the purchase price.
The implied warranty against eviction will however not apply in the following circumstances:
a] The warranty will not apply if the parties expressly agree that the seller will not be
responsible in the event of the buyer's eviction. But even in such cases, it is critical that
the seller act in good faith because if he is aware that a third party has a claim in the
merx and he does not disclose this to the buyer, the sale would be voidable at the buyer's
instance for fraudulent nondisclosure
Vlotman v Landsberg [1890] 7 SC 301.
b] 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.
c] Where the cause of deprivation of possession arises after the sale and the seller is not at fault,
the warranty will not apply because that is considered to be risk which passes to the
buyer on conclusion of the contract.
In Rood's Trustees v Scott & De Villiers [1910] TS 46. The plaintiff sold a piece of land to the
defendant. Before transfer but after the sale a new law was passed under which portion of the
land was confiscated to the state. Held the loss fell on the buyer because risk had already passed
to him.

3.THE IMPLIED WARRANTY AGAINST LATENT DEFECTS

The seller has a duty to deliver the thing sold without any defects. For patent defects [i.e. those
easily identifiable] the rules relating to breach of contract by defective performance apply. The
buyer has an option to accept or reject the article. Voetstoots does not apply in latent defects
-only applies to patent defects

REMEDIES FOR LATENT DEFECTS

ACTIO EMPTI
Grounds for institution

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a. Warrant against latent defects

seller may give the buyer an express or tacit contractual warranty. where defects are present,
the buyer may institute the actio empti.
b. Warranty for presence of special qualities
a seller may give the buyer an express or tacit warranty that certain bad characteristics are
absent and that certain good characteristics are present. these warranties are found where a
thing is bought for a specific purpose. Where the seller then sells the thing to the buyer, he is
deemed to have given the buyer a tacit warranty that the thing is suited for that specific purpose.
eg if a bull is bought for breeding purposes and the seller is told this by the buyer, the buyer
will be able to act against the seller in terms of the actio empti where the bull is found to be
sterile at the time of the conclusion of the contract.
c. Seller conceals latent defect
the seller is obliged to disclose any latent defects that he knows about to the buyer. Where the
seller intentionally conceals these defects, a fraudulent misrepresentation is made to the buyer.
The buyer may claim cancellation of the contract and /or damages with the actio empti, where
the seller intended to mislead the buyer in order to persuade him to conclude the contract
The seller must have the intention of concealing the defect and to deceive the buyer before the
buyer can act with the actio empti. A voetstoots clause in a contract will not protect the seller
against liability where he knew of the defect at the time of the conclusion of the contract. this
is also fraudulent misrepresentation
d. dealer and manufacturer
where the seller acts as a dealer, he will be held liable for all the buyers damages (including
consequential damages) due to the latent defect the following are required before a dealer
(seller) will be held liable
1. the seller must act as a dealer and
2.he must have professed in public that he has expert knowledge of the thing sold. Where the
seller is a manufacturer, he will be liable for all buyers damages (including consequential
damages). The manufacturer will be liable without any declaration whatsoever that he has

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expert knowledge regarding the thing sold. negligence or ignorance of the defect is no defence
against liability.
In Young Provisions Stores [Pty] Ltd v Van Ryneveld 1963 CPD 87 it was held that a dealer in
foodstuffs is liable for damages suffered by a consumer of his products and even if he had no
means of finding out the defect. The case concerned canned food. Similarly in Odendaal v
Bethlehem Romery Bpk 1954 [3] SA 370) bought from B a dealer almost dealing exclusively
in the sale of stock feed, a quantity of fine bonemeal for purpose of cattle feed. The bonemeal
was, unknown to either O or B contaminated with anthrax germs. As a result of eating the meal
13 of O's cattle died. O sued for the recovery of the value of these cattle from B. Held O was
entitled to full compensation
What may be claimed with the actio empty
a) cancellation of the contract of sale only where the defect is of such a nature that it cannot be
expected

of

the

buyer

to

retain

the

thing

sold,

and

/or

b) damages
YOU CAN ONLY CLAIM DAMAGES USING ACTIO EMPTI AND NOT AEDILTION
REMEDIES

AEDILITIAN ACTIONS
ACTIO REDHIBITORIA AND ACTIO QUANTI MINORIS
The actions are available to the buyer where a latent defect is present in the thing sold and no
express or tacit contractual warranty was given by the seller. Cannot claim damages with these
actions
Actio redhibitoria and actio quanti minoris.
Grounds for institution
the Aedilitian actions can be instituted where
a) the thing sold has a latent defect
b) the seller was aware of the latent defect and fraudulently concealed such fact

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c) The seller expressly or tacitly guaranteed the presence of good characteristics or the absence
of bad characteristics
What must be claimed with actio redhibitoria
PURPOSE- to place both parties in the position they were in before conclusion of the contract.
Restitution has to take place. Action can only be instituted once. Only instituted where the
defect in the thing sold is of such a nature that restitution is justified. the test is whether the
thing can be used for the purpose it was bought for

What can be claimed with Actio Quanti Minoris

The buyer may claim a pro-rata reduction of the sale price. This can be instituted more than
once should more latent defects appear in future. The exact reduction which the buyer may
claim has to be calculated as follows: the courts determine the difference between the price
paid and the total value of the thing with latent defect at the time of the action. The buyer cannot
claim any reduction in price where the thing, in spite of the defect, is worth more than the price
paid for it.
When aedilitian actions may not be instituted
a) defect arose after conclusion of contract
b) defect not latent
c) voetstoots sale
d) latent defect repaired
e) waiver - the buyer may waive the actio empti or the Aedilitian action.
f) Prescription - the actio empti and Aedilitian actions prescribe if theyre not instituted within
3 years after the claim arose. Prescription starts running after the buyer has become aware of
the latent defect
In SA Oil & Fat Industries Ltd. Park Rhynie Whaling Co Ltd. [1916] AD 400 the plaintiff
bought a quantity of whale oil that was defective from the defendant. Before becoming aware
of the defect, the plaintiff mixed other oil and fatty acids with the oil bought from the defendant.
He could therefore not return the oil bought.
When the plaintiff finally became aware of the defect, he sought through the actio redhibitoria
to cancel the contract. It was Held that since the plaintiff could not tender restitution, his prayer
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for cancellation of the contract failed and only the actio quanti minoris [reduction of the
purchase price] was available as relief. However the above rule will not apply in the following
situations:
a]

Where the goods have perished after delivery as a result of the latent defect making
restitution impossible.

b]

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. In African
Organic Fertilizers & Associated Industries Ltd v Sieling [1949] [2] SA 131 S bought
a quantity of Karoo manure from A, informing him that it was to be used on land where
flowers, vegetables and seeds were being raised. The manure delivered contained salt
rendering it unfit for the purpose for which it was bought. S being unaware of this defect
used the bulk of the manure. He tendered return of the remainder and claimed
rescission. Held S was entitled to succeed.

The seller is however not responsible for latent defects in the following circumstances:
a] Where the seller expressly contracts out of liability by agreement with the buyer i.e.
voetstoots sales But contracting out of liability will not help the seller where he sells
voetstoots knowing that the merx is latently defective, Van Der Merwe v Culhane
[1952] [3] SA 42. Effectively 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. Thus in
Hadley v Savory [1916] TPD 385. H bought a colt at a public auction of bloodstock
from S, the sale was voetstoots. To the knowledge of S the cold had previously run into
a wire and seriously injured his shoulder to the extent that he went lame and was unfit
for racing purposes. Of these facts nothing was said at the sale. Held, the colt was
latently defective and despite the purposed voetstoots clause, the buyer was entitled to
cancel the contract.
b]

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.

c]

Where the buyer is aware of the defect at the time of sale or became aware of it
consequently and expressly or impliedly accepts the position. In the case the buyer
would be taken to have waived his rights Theron Africa [1893] 10 SC 246.

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d]

Where the seller makes a dictum et promissum which is unfounded, the buyer can
invoke the aedilitian remedies against the seller. A dictum et promissum is a statement
made by the seller during the negotiations preceding the contract which bears upon the
quality or value of the thing sold and which can reasonably be constructed as intended
to be acted upon by the buyer.

e]

Where there is wilful nondisclosure of a latent defect, the seller acts fraudulently. But
mere nondisclosure of a defect known to the seller does not necessarily amount to fraud
without evidence to show that the nondisclosure was calculated to induce the buyer not
to refrain from entering into the contract. Thus intention must be proved.

SPECIAL SALES
1.

Sales by Description. This is a sale of unascertained goods in which the parties agree
that the item sold will be of a particular type. The sale contains an express warranty by
the seller that the goods will meet the description given.

Sale by Sample. This is a sale in which parties agree that the goods will be of the same
quality as the exhibited sample.

3.

Free of Board [F O B]. This is a form of sale where it is the duty of the seller to place
the goods free on board on a ship named by the buyer. In this type of contract risk passes
to the buyer of shipment of the goods. Once the goods are on board, the seller is deemed
to have delivered them to the buyer.

4.

Cost, Insurance and Freight [C. I. F.] Sales. With this type of export sale, the price is to
include cost, insurance and freight. The seller must ship the goods and within a
reasonable time he must tender the shipping document to the buyer i.e. the invoice, bill
of landing and the insurance policy.

5.

Auction Sales. This is a sale by an agent [auctioneer] on behalf of the seller. The item
should be sold to the highest bona fide bidder. The sale is subject to "conditions of sale"
and the buyers are taken to have assented to these whether or not they read them
Hofmeyer & Son v Luyt 1921 CPD 837. Sales by auction can be with or without reserve.
An auction with reserve is one in which ordinary rules of offer and acceptance applies.
Bidders offer to buy at the reserved price or more and the auctioneer on behalf of the

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sell may accept an offer or reject the bid at his option. An auction without reserve is
one where the seller must allow the thing to be taken by the highest bona fide bidder.

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Chapter 19
THE CONTRACT OF INSURANCE
HISTORY AND SOURCES OF THE LAW OF INSURANCE
The Nature and Basics of the contract of Insurance
An insurance contract is a reciprocal contract between an insurer and an insured in terms of
which the insured undertakes to pay the insured an amount of money or its equivalent, in
exchange of payment of a monetary premium, should the risk borne by the insurer on behalf of
the insured, materialize by the happening of an event in which the insured has an interest.
An insurance contract serves to protect the formation, preservation and development of the
insureds estate against risks. In practice one effects insurance by contributing to a fund to
which other persons who are exposed to the same risks, contribute as well. The risks that
endanger the formation, preservation and development of the insureds estate are those
distributed amongst a group of people who are equally at risk.
DIFFERENT TYPES OF INSURANCE
1. Indemnity Insurance and non-indemnity Insurance
a. Indemnity
In indemnity insurance, the insurer undertakes to make good the damage which the insured
may suffer through the occurrence of an event insured against. The amount of damages claimed
is directly proportional to the loss suffered or the amount of the insurance where it is less than
the loss suffered. The amount of insurance which the insured cannot receive, cannot exceed
the amount of actual damages incurred. Where an insured insurers his car (worth USD15 000)
for USD 15 000, and damage caused to the car in an accident amounts to USD10 000 the
insured will never be able to claim more than the actual damages being USD10 000. If the
same car was insured for only $8 000, the insureds claim would be for USD8 0000 or even
less. Examples of indemnity insurance are property insurance e.g. marine, fire, theft and motor
vehicle insurance.
b. Non indemnity insurance
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In the case of non-indemnity insurance, the loss suffered and the amount paid by the insurer
are not proportionate. The insurer undertakes to pay the insured or the beneficiary a fixed
sum or amount of money if the event insured against takes place. Non-indemnity
insurance includes life and personal accident insurance e.g insurer A agrees with B that he
will pay $20 000 to Bs wife when B dies.
from A.

B dies and his wife can claim the $20 000

When the risk occurs the insurer is liable to pay only a specific contractually

agreed amount to be ensured.

3 practical differences exist between indemnity and non-indemnity insurance;
1. In the case of indemnity insurance the insurable interest (that which is insured) has
to exist at the time of loss or damage, but in the case of non-indemnity insurance it
must already exist at the time of the conclusion of the insurance contract.
2. The rules of contribution and subrogation only apply to indemnify insurance and
not to non-indemnity insurance.
3. The Insurers liability in the case of indemnity insurance is limited to the amount
of damages actually incurred, while this is not the case with non-indemnity
insurance.
2

Short term, long term and third party insurance

Short term defines short term policies e.g. liability policy, miscellaneous policy and defines
life policy, fund policy, sinking fund etc. 3rd party, is for claims against road accidents for
personal injuries caused by driving of motor vehicles.
3. Liability Insurance
It insurers ones liabilities incurred due to contract delicit or other obligations. It is of the
same nature as indemnity insurance.

The best known forms of liability insurance are

professional liability insurance, obtained by attorneys, auctions, engineers etc. e.g. the
Zimbabwean Law Society Compensation Fund.
4.Re-insurance
Where an insurer takes out insurance with another insurer to make good the claims which
the former had to pay out to the insured

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REQUIREMENTS FOR VALIDITY OF AN INSURANCE CONTRACT

The General requirements for the conclusion of any contract namely consensus, contractual
capacity, legality, physical possibility and formalities, also have to be met for the
conclusion of insurance contracts. However, for a valid nominate insurance contract,
consensus through a process of offer and acceptance must be reached on the required
essentialia.
Essentialia of the Insurance Contract
The essentialia of a contract are those characteristics of a particular contract which
distinguish it from other types of contracts. The following attach to the insurance Contract.
1. Insurable Interest
The insured must have an interest in the non-occurrence of the uncertain risk.

The insured

must have a proprietary interest which he evidences to insure against certain risks. This means
that the interest must be of economic value to him. The continued existence of the interest
must offer an economical value or benefit or rather the loss or damage of the interest must
cause an economic loss.
In indemnity insurance the insured must at least have a financial interest in the non-occurrence
of the risk. There is also the point of view that the financial interest must have some legal
authority or foundation e.g. the interest must depend on a right in the object at risk such as a
proprietary right or a personal right. When an insured has the required financial interest he
will suffer damage on occurrence of the event and will therefore be entitled to compel the
insurer to honour his obligation to pay a sum of money. The time at which the interest must
exist is also clear if the above is kept in mind; the interest must exist at the moment the loss or
damage occurs. It is therefore not necessary for the interest to exist at the moment when the
contract is concluded.
With non-indemnity insurance a distinction must be drawn between insurance on the life of a
spouse on the one hand and the life of any other person on the other hand. In the first case an
unlimited interest is presumed. Where time life of another is insured the law requires an
insurable interest in the sense of financial or pecuniary interest. A creditor therefore has an
insurable interest in the life of his debtor. The time at which the existence of an insurable
interest is required in the case of non-indemnity insurance is the movement the contract is
concluded. Even though the interest might not exist at the moment the risk occurs the insured
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or the beneficiary is entitled to claim the amount payable in terms of the contract. (Macaura V
Northern Assurance Company)
2. The Risk
The uncertain event insured against is known as the risk. Description of the risk in the contract
is important, because the insurer must know precisely the nature of the risk and the insured the
extent of his cover. The parties always agree to insure against the occurrence of a specific (or
determinable) event. The insurers obligations are always coupled with some event which must
cause the result mentioned in the contract e.g. a fire which damages the insureds house. The
description of the risk must include:
a) The object insured, e.g. a car or a persons life.
b) The hazard insured against e.g. theft.
c) Circumstances affecting the risk e.g. limitation of the insurance to theft of a motor car
while it is parked in a specific place.
Only the specific (contracts) risks passed onto the insurer are therefore specified in the
contract. The parties must also agree that the risk passes from the insured to the insurer.
Risk must materialize from or due to an uncertain future event. Where the risk is certain,
the contract could be a wager or a gamble rather than an insurance contract. The uncertainty
in life insurance lies in the time of death, although death itself is certain.
The difference between insurance contracts and wagering contracts
As far as the event insured against is concerned, there is uncertainty on when and in the case
of indemnity insurance, also whether the event will occur. The element of uncertainty which
is associated with risk is the one aspect which a contract of insurance has in common with a
wagering contract or agreement. Both are contracts of chance, depending on an uncertain event
or contingency and both contain an element of risk. The differences between wagering and
insurance contracts are that;
a) A wagering contract is unenforceable in court.

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b) In wagering contracts, the parties choose an arbitrary event, on the occurrence of which
one party wins and the other loses. The parties thus create their interest in the event
themselves whereas the parties in an insurance contract have an insurable interest in the
non- occurrence of the event.
c) An insurance contract does not itself create the risk of loss.
d) The intention with which the parties conclude an insurance contract can be of the
greatest importance in distinguishing it from a wagering contract. The purpose of an
insurance contract is to protect the estate while that of a wager is to increase the estate.
CAUSATION

Causa proxima rule

Loss must be caused by peril insured against

Words in consequence of and occasioned by followed by a particular peril had been

held not to mean directly caused by.

Loss arising incidentally out of peril is also included

INVOLUNTARY ACTS

Where peril is caused by involuntary act of the insured, insurer held liable

Suicide committed by insane person=insurer liable except if excluded

Drunk=insurer liable

NEGLIGENCE

One of the objects of insurance is to indemnify insured against loss occassioned by

negligence e.g. 3rd party insurance

Rouwkoop caterers v incorporated general insurance

An exclusion clause provided that policy did not ensure against any loss or damage to
money other than in actual transit or contained in a locked safe situated in an office locked.

Defendant contended that there was an implied term that plantiff was to take reasonable
precautions to safe keep the keys of the safe

He had breached a term of contract by leaving keys in an accessible place.

Held: negligence of the insured is not a bar.

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His duties extend no further than to refrain from intentionally causing the happening of the
risk

Company should have excluded if this was not covered

RECKLESSNESS

Nathan v ocean accident & guarantee corporation

Insured ignored a traffic officers order to stop his car

He was pursued by another officer sounding a siren

Collided with a stationary car and plunged into a bank

Insurer contended that it did not intend to cover unlawful acts of insured recklessness

Held-insurer knew he was a bad risk, had two convictions and that his car was highly
powered

He was therefore charged high premiums

Insurer entered into the contract with eyes wide open

Made a bed and should lie on it.

Can recklessness and negligence be treated similarly??

If the conduct is (dolus eventualis) insurer not liable

Nicolaisen v Permanente

An insured, a prison warder pulled the triger of a revolver under his chin two times

The second time he pulled a trigger he shot himself and died

Whether he committed suicide?

Therefore, liability excluded
The insurer managed to prove intention
And the court held that such intention included dolus eventualies
And therefore intentional
INTENTIONAL ACTS
Where he caused the event covered, he cannot claim
Beresford v Royal insurance
Insured shot himself in a taxi few minutes before policies valued at 50 000 pounds and
which had been in force for 10 years were due to expire because he could not pay the
premiums
His purpose was to make the proceeds available to his creditors
Assured cannot cause the event upon which the insurance money is payable
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Even if he burns his house, destroys his ship

There is an implied term in insurance excluding liability for intentional acts
INTENTIONAL MISCONDUCT
An offender in terms of the criminal law is not allowed to benefit from his criminal
conduct
Where he is executed for a capital offence, his estate cant benefit
Murderer of assured cannot inherit by succession
PARITY V MARESCIA
A passenger in a vehicle paid a reward for being conveyed to carrier not authorised under
the act.
He knew that by such payment, the act of conveyance became an offence under that act.
He was injured and claimed compensation
Held: conscious participation in a crime precluded his covering.
Even civil wrongs included
DUTY TO AVERT RISK HAPPENING
-

It is an implied duty to avert happening of risk

If he sees his house burning, he cannot just fold his hands and watch.

Loss due to omission may carry the same consequences as if he intentionally caused the
risk

Such conduct may amount to fraud.

Loss caused while removing goods in a burning house is covered.

3.

Premium

The insured undertakes to pay a premium. This is usually a sum of money, but may also consist
of something else. Although the actual payment of the premium is not a requirement for time
creation of the contract, an undertaking to pay is sufficient. Payment is usually a condition for
the policy to take effect. The premium is usually actuarially calculated by taking into account
the scope of the risk, the term for which insurance cover is provided as well as the extent of the
insurers possible liability in terms of the contract should the risk materialize. Premiums are
normally paid in advance, although in practice parties sometimes agree for payment in arrears.
The risk would normally pass to the insurer as soon as the insured pays his first premium to the
insurer.
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4.

An undertaking by the insurer to pay a sum of money

In the case of non-indemnity insurance, the sum payable will be a predetermined amount.
Where for example, a person insures his life for $10 000, (the insured amount) the insurer will
have to pay that amount to the estate of the insured or the beneficiary.
In the case of indemnity insurance the insurers obligation is to pay a determinable sum of
money. The exact amount of the payment is determined after the occurrence of the event
insured against, by determining the extent of the damage. The value of the claim or the measure
of indemnity in respect of the loss of the risk-object is determined, not by its cost, but by its
value at the date and place of the loss. The insurer must be placed in the same financial position
he was in- but not a better financial position before the occurrence of the event insured against.
The sentimental value of the object is thus ignored and only the present value of the object is
considered irrespective of whether the objects value had appreciated or depreciated since the
conclusion of the contract.
For example, if a house valued at $50 000 is insured against fire and at the time of its subsequent
destruction by fire it is worth $70 000, then the insureds loss which he may recover from the
insurer is $70 000. Normally however a maximum value of compensation is stipulated in the
insurance contract. In such a case the insurer is liable only for the amount of the insureds loss
or the maximum insured value, whichever is the lesser.
Where the object has only been damaged the insurer will be liable for the amount of partial
loss suffered. The extent of partial loss suffered is usually taken to be the cost of repairing the
risk object. The following principles which are applicable to indemnity insurance in relation
to the undertaking by the insurer to pay a sum of money must be noted;
(a) Valued and unvalued policies
In order to eliminate difficulties regarding proof of the value of the risk object, the parties
may agree at the time of concluding the contract on the value of the risk object. Such
policies are known as valued policies in contract to unvalued policies.
(b) The Insurers right to repair
An insurer often reserves the right in an insurance contract to have the damaged risk-object
repaired, instead of compensating the insured. If the claim has been made under the
contract, the insurer must choose, within a reasonable time after the occurrence of the event
96

insured against, whether he wishes to repair the risk object rather than to compensate the
insured. Once he has elected to repair he cannot change his mind later on. He must then
have the risk object completely repaired within a reasonable time.
(c) The insurers right of subrogation
Where the insured has a claim against a 3rd party who has caused the damage to the risk
object, the insured may recover compensation only once. He is not allowed to make a profit
from the fact that he is insured. Accordingly once the insurer has compensated the insured,
the insurer has the right of subrogation that it is to say the insurer himself may enforce
the insureds claim against the third party in the name of the insured.
(d) Insuring with several insurers
An insured has the right to insure the same risk object with as many insurers as he wishes.
In the event of a loss occurring, the insured may however, only recover the full amount of
his loss and no more. Thus where he is over-insured by double insurance, he must choose
whether to recover his total loss from one insurer or a pro-rata portion from each of the
insurers concerned. Where an insurer pays more than his pro-rata share of the amount
claimed, he has on the grounds, of the principle of contribution a right of recourse against
the other insurers of the same risk-object for a pro-rata contribution toward the
compensation paid to the insured.
(e) Over and under insurance
There is nothing to prevent an insured from insuring for a larger amount than as necessary
to secure full compensation in the event of loss of the insured risk- object. In the case of
indemnity insurance, however, time insured may recover no more than the total value of
his loss. Where an insured insures for an amount less than the actual value of the insured
object he is under-insured. Contracts of insurance often contain an average clause in
terms of which the insured is regarded as an insurer for the uninsured balance and
consequently must himself bear a proportion of his loss. For example if his car is valued at
$10 000, is insured for $6 000, and the car is damaged then according to whether the amount
of the damage is $10 000, $7 000 or $5 000, the insured will be able to recover only $6 000,
$4 200 or $3 000 respectively, in other words, as he insured for only six tenths of the value,
he can recover only 6/10 (six tenths) of his loss. This aspect is of particular importance
with respect to insured objects of fluctuating value.
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(f) Excess Clauses

It may be agreed in an insurance contract that the insured may recover only a specified
proportion of his loss. In motor vehicle or liability insurance, so called excess clauses are
common. In terms of these clauses, the insured must bear a specific proportion of the loss
himself e.g. the first $200 of the loss.
The Duty to disclose
Due to the prospective insureds intimate knowledge of all facts regarding the risk which
he wants to transfer to the insurer, a legal duty required him to disclose all relevant material
information within his actual or constructive knowledge, to the insurer. This enables the
insurer to decide whether he is prepared to accept the transfer of risk from the insured and
to reach consensus with the insured.
See mutual & Federal Insurance Co Ltd v Oudtshoom Municipality 1985(1) SA419 (A)
Anderson Shipping v Guardian National Insurance 1987 (3) SA 506
Qilingile v SA Mutual Life Assurance Society 1993(1) SA619(A).
Who bears the duty to disclose?
The duty to disclose rests primarily on the prospective insured, although Jourbet JA in the
Mutual and Federal Case (432E) went further and mentioned the possibility that an insurer
might also be subject to this duty. The insured must disclose all information which could
increase the risk. It could then reasonably be expected of the insurer to disclose to the insurer
all which could decrease or increase or even exclude the risk.
The insurer can be expected to disclose all information to the insured which is to the latters
benefit and could be used to the latters advantage.
When must the information be disclosed?
The information must be disclosed to the insurer (or the insured) to enable him to decide
whether he is prepared to conclude a contract of insurance with the insured (and vice versa
should the insurers duty to disclose the accepted in future). This makes it a pre-contractual
duty. This duty is created by operation of law and not due to a legal tie or legal obligation
created between the parties.

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It is possible to expand the duty contractually and to make it a continuous duty which has to be
complied with which the contract remains in force. The parties have to specifically agree in
the contract that any material information which is discovered after conclusion of the contract,
has to be disclosed.
An example: A failure by X to disclose to an insurance company that he is HIV positive, when
taking life insurance may lead to breach of contract once discovered upon tests being at the
instruction of the insurance company.
However in the case of life insurance, the duty to disclose is a once-off duty as these contracts
are normally of a continuous nature, unless the parties agree otherwise.
What must be disclosed?
The duty to disclose consists of both a positive and negative duty. The positive duty requires
time prospective insured to answer all questions put to him by the insurer, honestly and in good
faith. The negative duty requires the insured to disclose all other material information of which
he has knowledge or should have had constructive knowledge, even though it has not been
pertinently asked of him. If the insured gives false information, does not answer a question at
all or refrains from disclosing material information, he makes a misrepresentation, which
influences consensus and makes the contract voidable.
A number of case where decided with regards the duty of the insured to disclose information,
although no satisfactory solution was given to the problem. The problem concerns the question
as to which test has to be applied in order to determine whether or not information is material
and has to be disclosed.
In Mutual & Federal Insurance Co Ltd case (supra) the court decided that all information which
would, to the reasonable man appear to be material, had to be disclosed. The court rejected the
idea that the reasonable insured or the reasonable insurer should be used as a criterion.
However in the Qilingile case (supra) the courts reformulated this test and stated that those
facts which, in the view of the reasonable man are necessary for an insurer to enable him to
determine whether or not to accept the specific risk must be disclosed. The test of the
reasonable man as applied in the Mutual & Federal case was therefore expanded.

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Of particular significance to note is the fact that Non-Disclosure amounts to a misrepresentation

by the prospective insured. (De Waal v Metropolitan hewens Bpk 1994 (1) SA 818 (0).
Facts which need not to be disclosed
The insured does not have to disclose every single fact within his knowledge. Due to their
nature certain facts do not need to be disclosed e.g
(a) Facts of which the insurer was or should have been aware. These in particular include facts
which are general knowledge or obvious.
(b) Facts in respect of which the insurer has waived his right of disclosure.
(c) Facts which do reduce and do not increase the risk.
(d) Facts covered by a warranty in the insurance contract itself.
Consequences of non compliance with duty to disclose
Non compliance with a pre-contractual duty to disclose amounts to misrepresentation. The
misrepresentation can be made by positive actions (such as the disclosure of false information)
or by commission (where the insured does not reply to a question or withholds material
information. The misrepresentation can be intentional negligent or innocent.
Misrepresentation influences consensus, as a result of which the contract is voidable at the
option of the party prejudiced by the misrepresentation. This will be effect irrespective of
whether the misrepresentation is made innocently or with a degree of fault. The contract
remains valid and enforceable until the prejudiced party exercises has election and decides to
void the contract.

If the contract is set aside, restitution has to take place.

If the

misrepresentation is made intentionally or negligently, the prejudiced party can also institute
an additional action for damage in delict.
See De Waal No v Metropolitan hewens Bpk 1994 (1) SA 8/8

(0)

Where the misrepresentation made negligently or intentionally the prejudiced party can also
institute an additional claim for delictual damages. It is however clear that he cannot claim
contractual damages where the contract is void ab initio.

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CHAPTER 20
Contract of employment
Definition of Employment Contract
It is a reciprocal agreement in terms of which the employee makes available his services for a
determined period and usually for remuneration under the authority of the employer.
EMPLOYER
Is a person or body who exercises authority over an employee in terms of an employment contract where
the employee has made available his services to the employer for a determined period and usually for
remuneration

EMPLOYEE
Is a person who in terms of the employment contract makes available to the employer his
services usually for remuneration and for a determined period under the authority of the
employer
ELEMENTS OF EMPLOYMENT CONTRACT
1.Voluntary agreement between the parties
Forced labour and slavery are prohibited. A clear and unequivocal offer and acceptance must
exist
2.Services are rendered in respect of a subordinate relationship
This means that there is control and supervision when the services are rendered. The employer
also provides guidance during the rendering of the services
3. Remuneration of employee
In the absence of agreement, remuneration is payable after services have been rendered.
Remuneration is usually agreed in the contract. If not agreed then a reasonable remuneration is
paid to the employee

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EMPLOYMENT CONTRACT DISTINGUISHED FROM RELATED CONTRACTS

It is distinguished from mandate, agency, independent contracting and so forth. It is important
to distinguish the employment contract from other legal contracts for purposes of
a) determining whether the labour relations Act applies or not
b) determining the vicarious liability of the employer
c) determining whether wage regulating measures are applicable to certain employees or not.
CRITERIA FOR DISTINGUISHING BETWEEN EMPLOYMENT CONTRACT AND
OTHER RELATED CONTRACTS
1.ORGANISATIONAL TEST
The test is whether the person concerned was part of the organisational structure of business or
company and whether his functions formed an integral part of the business
2.SUPERVISION AND CONTROL TEST
It is the essence of a contract of a master and servant that the servant should submit to the
direction of his employer and obey his employers instructions not only in the things he has to
do but as to the time and manner in which he has to do them.
3.DOMINANT IMPRESSION TEST, MULTIPLE TEST OR COMPOSITE TEST
This is the test favoured by the courts. Under this test, one looks at the various factors that
traditionally revealed a contract of employment viz those showing a contract for the
independent contractor, weigh up these multiple factors to come with the dominant impression,
namely the person is an independent contractor or employee
SOUTHAMPTON ASSURANCE COMPANY V MUTUMA 1990 (1) ZLR 12
The employer had dismissed the employees without an approval of the minister arguing that
they were contractors. The court weighed up factors which they believed were part of a contract
of employment eg
1.were given list of customers
2.provided office space
3.were members of the companys medical aid scheme
4.were not allowed to work for another insurance company
5.they worked under a hierarchy of managers on the other hand, factors that demonstrated they
were independent contractors
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1. they were described as independent contractors

2.had flexible working hours
3.paid by commission
The court ruled that the dominant impression test showed that they were independent
contractors. The decision was criticised.
IN CHIWORESE V RIXI TAXI SERVICES
A taxi driver had flexible working hours, was paid by commission, was described as an
independent contractor and the court ruled that he was an employee.
DUTIES OF THE EMPLOYER
Duties of the employer are derived from:
Common law
Constitution
Labour relations Act
International labour treaties
Employment contract
1. CONSTITUTION
a. Refrain from forced labour or slavery sec 14
b. Refrain from inhuman and degrading treatment of employees sec 15. A penalty like
whipping would be unlawful
c. Adi alterum partem rule sec 18
d. Refrain from unlawful discrimination sec 19&23
e. Not to violate employees freedom of association, assembly, movement and expression
2 DUTIES UNDER THE ACT
a. duty to respect employees entitlement to membership of trade union
b. duty to refrain from forced labour
c.

duty

to

refrain

from

unlawful

discrimination

grounds

of

discrimination:

gender, tribe,HIV,race, marital status,disability

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d. Duty to adhere to fundamental fair labour standards

e. Duty to adhere to prescribed maximum working conditions. Maximum of 8 hours a day and
40 hours a week
f. Duty to provide safe and healthy working conditions. Worker also has to exercise due care.
Workers in inherently dangerous environments are assumed at common law as voluntarily
assumed risk of reasonably foreseen dangers. Employer not liable if he took reasonable steps
g. Duty to pay remuneration
h. Duty not to commit unfair labour practices
i. Duty not to commit sexual harassment
j. Duty to grant sick leave
Sick leave is 90 days per year on full pay. Additional 90 days on half salary after providing a
certificate from the doctor
K. Duty to provide vacation leave 30 days a year
L. Duty to provide special leave 12 days per year
m. Maternity leave and benefits 90 days
VICARIOUS LIABILITY OF THE EMPLOYER
The general rule is that the employer is liable for any delictual conduct committed by his
employee during the course and scope of his employment
REQUIREMENTS FOR VICARIOUS LIABILITY
1. Existence of employment contract
2. Commission of a wrongful act
3. Employment must have acted in the course and scope of his employment.
RATIONALE BEHIND VICARIOUS LIABILITY
employers are held liable not because of any morally irreprehensible conduct on their part but
for a number of reasons including that:
1.The employer operates his business through his employees and makes profits.
2.theyre the ones who have created the risk that has resulted in the harm to innocent third
parties.
3.employers are in a much better position to compensate the third parties than the employees
4.The employer, which is often a sizeable enterprise rather than a single individual, can far
better absorb losses of this description by taking out insurance and by way of distribution of
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costs to customers by increasing the price of prodicts or services (i.e., the employer can afford
insurance whereas the employee often cannot).
OWN BENEFIT
If the employee does something which is entirely for his own benefit and which does not form
part of his duties as an employee in that business, the employer will not be held liable.
For example, if D employs a person as a worker on a car assembly line and during work hours
he steals from another employee or assaults him, the employer will not be vicariously liable.
The test for whether the employee is acting within the scope of his or her employment is not
whether the employee is acting within the scope of his or her employment at the time but
whether his/her act or omissions constituted negligent performance of the work entrusted to
him or her. This is highlighted in the case of Nott v ZANU (PF) (1984).
In the present case Robert Moyos main duty was to deliver goods with a van to various
customers in Harare and then to return the vehicle to his place of work in Graniteside. Although
Robert drove to Mabvuku, 25 km away from his place of work and spent two hours, Nelion
Dube is still liable vicariously for the accident caused by his employee. The facts of this case
are at par with those in the Zimbabwean case of National Social Security Authority v
Dobropoulos & Sons (Private) Limited (2002) where the Supreme Court held the employer to
be liable for the delicts committed by the employees.
There are similarities between the facts given and this case. Both the drivers were employed to
effect deliveries. Both were in the process of returning their respective vehicles to the
employer.s premises when they were involved in collisions. Both deviated from their routes.
In the National Social Security case the accident occurred some five and half to six hours late
but nonetheless the court found the employer liable. It should be noted that the given facts bear
very striking resemblance to the facts of the National Social Security Authority (supra) and
Feldman (Pvt) Ltd v Mall (1945). In both cases the court held the employer vicariously liable.
In Hendricks v Cutting (1947), the employee was a lorry driver. While he was doing his work
he stopped at a filling station for fuel. He lit a cigarette, causing a fire in which the pump
attendant was injured and the employer was held liable. And in Minister of Justice v Khoza
(1966) two police constables were going about their work. They were, inter alia, guarding
prisoners, one of the constables aimed a pistol at the other in jest, the pistol went off and the
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second constable was injured. The employer was held liable. Sometimes, considerations of
social justice have led courts to adopt the approach that the degree of deviation from the
masters instructions has to be to a major extent before they will decide that the servant was
not acting in the course of his employment. For example, where the employee is partially
promoting the interests of the employer and partially his own, the employer will also be liable.
In Feldman v Mall (1945) the employee had to deliver goods and return immediately to his
place of work. On the way back he deviated from the route to partake of a drink with his friends.
Later on his way back to his place of work, he knocked down and killed someone. The court
decided that he had left his work only partially to promote his interests. He was, however, still
promoting the interests of the employer because he retained control of the vehicle and took it
back to work later. The employer was liable.

FAWCETT SECURITY OPERATIONS V ROSE

The court held that the employer of a security guard who had stolen goods entrusted to him to
guard was not liable because the guard had acted outside his mandate. This decision was
criticised greatly.
Criticism
Employers are held liable not because of any morally irreprehensible conduct on their part but
for a number of reasons including that theyre the ones who have created the risk that has
resulted

in

the

harm

to

innocent

third

parties.

Employers are in a much better position to compensate the third parties than the employees.
The scope of employment may include acts done after hours or outside the mandate instructed
by the employer
ACTS BENEFITING EMPLOYER
If the employee is doing something which is neither part of his employment duties nor
reasonably incidental thereto.
Thus, in one case a person employed as a baker had an accident whilst driving the van of the
employer in order to deliver some confectionery.

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As it is not part of the employees duties to drive the delivery truck, the employer is not held
liable, even though the employee is attempting to benefit the employers business.

INCIDENTAL ACTS
The employer may still be liable if, although the thing done by his employee is not directly part
of his duties it is reasonably incidental thereto.
Thus, in one case it was held that the cooking of food on the roadside was reasonably incidental
to the duties of the employees as they were long distance wagon drivers and it was to be
expected that they would stop and cook their own food along the way.

DEVIATION
If the employee, whilst about his employers business, temporarily diverts from that business
to do something for his own purposes, the courts will ask the question: was the deviation of
such a degree in terms of time and distance that it cannot reasonably be said that he was still
exercising the functions for which he was employed?
D instructed his delivery driver to deliver certain items and then to return the delivery van to
his premises.
If, having done his delivery rounds the driver drives to his own home to pick up some of his
personal possessions before returning the van to D and he drives negligently and has an
accident either on the way to his home or on his way from his home to Ds premises, the
question is whether D will be vicariously liable for the harm caused, and this will depend upon
the extent of the deviation.
DOES PROHIBITED ACT
Where employee is in the course of employment, but whilst performing his duties, he does
something that he was expressly instructed the not to do. For instance, D runs a haulage
company that transports goods and D employs a driver to drive his lorry or a certain route.

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D has given his driver strict instructions never to pick up hitchhikers whilst driving his lorry.
What if the driver disobeys this express instruction and picks up an unauthorised passenger and
the, due to his negligence crashes the lorry causing injuries to the passenger?
D would not be held vicariously liable for the passengers injuries because the courts would
hold that the employees scope of employment was circumscribed by the instruction and, whilst
he was in the course of employment in driving the lorry, it was not part of his employment to
carry passengers (i.e. he was employed to carry goods not passengers).

BITI V MINISTER OF STATE SECURITY

Involved a driver who was not actively on duty, but who was on call and required to look after
a company vehicle overnight as well as to collect some employees in the morning. On the
occasion in question, the worker, possibly drunk, rammed into another car causing serious
injury to the driver of that car

It was held that the employer by entrusting a motor vehicle to a relatively low paid employee
overnight had placed an enormous temptation in the drivers way.

DUTIES OF THE EMPLOYEE

To
Duty

provide
of

Duty

competence
of

service
and

efficiency
subordination

Duty of good faith

UNFAIR DISMISSAL

Dismissal must be substantively and procedurally fair. Any dismissal that is not procedurally
and substantively fair is unfair. Substantive fairness means there must be a reason for dismissal.
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Termination must be a sanction of last resort. Procedural fairness requires that all procedures
have to be complied with in terms of the Act, code or any other regulations.

TERMINATION OF CONTRACT OF EMPLOYMENT

1. By agreement through:
a. Effluxion of time
b. Notice of termination
2. Impossibility of performance, death of employer or employee, insolvency of the employer.
3. Cancellation of employment because of misconduct
4. Retrenchment of employees

Contract cases
BLOOM v. THE AMERICAN SWISS WATCH COMPANY

Innes C.J. On 19th March 1913, a robbery was perpetrated at the Cape Town premises of the
defendant company and jewellery to the value of $5 00000 was forcibly removed. In the press
of the following day appeared a notice in these terms: 'Mr. J. Hirchsohn of the American Swiss
Watch Company called at the Argus office this afternoon and stated that he was prepared to
pay to any person a reward of $500 for information to be given to the C.I.D. which would lead
to the arrest of the thieves and the recovery of the diamonds, jewellery, etc., stolen from the
premises on the 19th instant. If the information leads to the recovery of a portion only of the
property, the reward will be paid proportionately'. Information reached the police authorities
from various sources; the culprits were arrested, and the bulk of the property was recovered.
Thereupon proceedings were commenced by different persons claiming the reward, The
actions were heard together, and the trail Judge came to the conclusion that it was the
information furnished by the plaintiff which led in due course to the arrest of the thieves and
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the recovery of the goods. But he also found as a fact that the plaintiff when he communicated
his information to the police was unaware that a reward had been offered; and upon that ground
he entered judgement for the defendant. The matter is now before us on appeal from that
decision.

SPENCER AND OTHERS v. HARDING AND OTHERS

The defendant through their agents sent out a circular to the plaintiff, and to other persons in
the wholesale trade, as follows:
"We are instructed to offer to the wholesale trade for sale by tender the stock in trade of Messrs.
G. Eilbeck & Co., of No. 1 Milk Street, amounting as per stockbook to $2 50313 and which
will be sold at a discount in one lot. Payment to be made in cash. The stock may be viewed on
the premises, No. 1, Milk Street, up to Thursday, the 20th instant, on which day at 12 o'clock at
noon precisely, the tenders will be received and opened at our offices. Should you tender and
not attend the sale, please address to us sealed and enclosed, "Tender for Eilbeck's stock"
Stockbook may be had at our office on Tuesday morning.
The plaintiff contended that the circular was an offer to sell the stock to the highest tenderer
for cash. They had submitted the highest tender, but the defendants declined to accept it and to
sell

the

goods

to

them.

Spencer

Harding

Law

Rep.

C.

P.

561

The defendants advertised a sale by tender of the stock in trade belonging Eilbeck & co. The
advertisement specified where the goods could be viewed, the time of opening for tenders and
that the goods must be paid for in cash. No reserve was stated. The claimant submitted the
highest

tender

but

the

defendant

refused

to

sell

to

him.

Held:
Unless the advertisement specifies that the highest tender would be accepted there was no
obligation to sell to the person submitting the highest tender. The advert amounted to an
invitation to treat, the tender was an offer, the defendant could choose whether to accept the
offer or not.

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PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v. BOOTS CASH CHEMISTS

[SOUTHERN] LTD.
At their Edgware branch, Boots displayed for sale a number of drugs, or substances containing
them, the sale of which was prohibited under the Pharmacy and Poisons Act, 1933, except
under the supervision of a registered pharmacist. The shop was a 'selfservice' shop, the
customers selecting the articles they wanted and placing them in a wire basket provided before
paying at the cash desk at the exit. A registered pharmacist was on duty near the cash desk to
prevent the removal of a drug from the shop by a customer if he thought fit. The court was
asked to decide whether Boots had contravened the Act by selling a listed poison otherwise
than under the supervision of a registered pharmacist.
In the court of first instance, Lord Goddard C.J. held that the sale took place when the cashier
accepted payment and that it was under proper supervision. The Pharmaceutical Society
appealed and it was held that the customer is the one who makes an offer not the pharmacist.so
the company was not guilty.

CARLILL v. CARBOLIC SMOKE BALL CO.

The defendants, who were the proprietors and vendors of a medical preparation called 'The
Carbolic Smoke Ball', inserted in the Pall Mall Gazette of 13th November, 1891, and in other
newspapers, the following advertisements:
$100 reward will be paid by the Carbolic Smoke Ball Company to any person who contract the
increasing epidemic influenza, colds or any disease caused by taking cold, after having used
the ball three times daily for two weeks according to the printed directions supplied with each
ball $1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the
matter.
During the last epidemic of influenza many thousand carbolic smoke balls were sold as
preventives against his disease, and in no ascertained case was the disease contracted by those
using the carbolic smoke ball.
One carbolic smoke ball will last a family several months, making it the cheapest remedy in
the world at the price, $1, post free. The ball can be refilled at a cost of 5ocents. Address,
Carbolic Smoke Ball Company, 27 Princes Street, Hanover Square, London.
111

CASES

LEE v. AMERICAN SWISS WATCH CO.

This was an application for leave to appeal in forma pauperis from the decision of the Cape
Provincial Division referred to in Bloom v American Swiss Watch Co., 1915 A.D. 100 [Case
No. 3 above]. The applicant had given information to the police after the information given by
Bloom. The trial judge had held that, as Bloom's information was the first applicants were not
entitled to the reward.

BYRNE & CO. v. LEON VAN TIENHOVEN & CO.

The defendant, in Cardiff, posted a letter on the 1st October 1879, to the plaintiff, in New York,
offering to sell 1,000 boxes of tinplates. The offer was accepted by the plaintiffs by telegram
on 11th October. Meanwhile, on the 8th October, the defendants posted a letter to the plaintiff
withdrawing their offer; but this letter only reached the plaintiffs on the 20th October.

HYDE v. WRENCH
The defendant offered to sell his farm to the plaintiff for $1, 000. The plaintiff immediately
made a counteroffer of $950. After considering the matter, the defendant advised the plaintiff
that the counteroffer was not acceptable. The plaintiff thereupon purported to accept the
original offer to sell at $1,000. The defendant refused to sell. The defendant was taken to court
where the court confirmed that by making a counter offer, he had rejected the offer of $1000.
NO BREACH OF CONTRACT

DUTIES OF EMPLOYER
VICARIOUS LIABILITY
CRITERIA

DISTINGUISHING

EMPLOYMENT

CONTRACT

FROM

OTHER

CONTRACTS
112

DADOO LTD VS KRUGERSDOORP

ULTRA VIRES RULE JUSTIFICATION

DOCTRINE OF CONSTRUCTIVE NOTICE
TURQUAND RULE

113