Law - Bacc105 PDF

ZIMBABWE OPEN UNIVERSITY
bp
Bachelor of Commerce
Bachelor of Arts (Marketing)
Bachelor of Management
Business Law 1
Module LAW102
ZOU
Published by: The Zimbabwe Open University
P.O. Box MP1119
Mount Pleasant
Harare, ZIMBABWE
Printed by:
The Zimbabwe Open University is a distance teaching

and open learning institution.
Year: 2001
Cover design: B. Pillay
Layout : H. Chikwanha
Typeset in Garamond, 12 point on auto leading
© Zimbabwe Open University. All rights reserved. No part of this

publication may be reproduced, stored in a retrieval system, or
transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior permission of
the Zimbabwe Open University.
Author: A. Gumbo
B.L. (Hons)UZ (1983)
LLM (University of London)
Co-operate & Commercial Law (1990)
Editor: E. Dingani
B.A. (UZ)
Grad CE (UZ)
Content Reviewer: K. Hodzi

B.L Hons (UZ)
LLB (UZ)
LLM( UZ)
Forewor d To the student
The demand for skills and
knowledge and the requirement to
course team approach to producing
the varied learning materials that
adjust and change with changing will holistically shape you, the
technology, places on us a need to learner to be an all-round
learn continually throughout life. performer in the field of your own
As all people need an education of choice. Our course teams comprise
one form or another, it has been academics, technologists and
found that conventional education administrators of varied
institutions cannot cope with the backgrounds, training, skills,
demand for education of this experiences and personal
magnitude. It has, however, been interests. The combination of all
discovered that distance these qualities inevitably
education and open learning, now facilitates the production of
also exploiting e-learning learning materials that teach
technology, itself an offshoot of e- successfully any student,
commerce, has become the most anywhere and far removed from
effective way of transmitting these the tutor in space and time. We
appropriate skills and knowledge emphasize that our learning
required for national and materials should enable you to
international development. solve both work-related problems
and other life challenges.
Since attainment of independence
in 1980, the Zimbabwe To avoid stereotyping and
Government has spearheaded professional narrowness, our
the development of distance teams of learning materials
education and open learning at producers come from different
tertiary level, resulting in the universities in and outside
establishment of the Zimbabwe Zimbabwe, and from Commerce
Open University (ZOU) on 1 and Industry. This openness
March, 1999. enables ZOU to produce materials
that have a long shelf life and are
ZOU is the first, leading, and sufficiently comprehensive to
currently the only university in cater for the needs of all of you, our
Zimbabwe entirely dedicated to learners in different walks of life.
teaching by distance education You, the learner, have a large
and open learning. We are number of optional courses to
determined to maintain our choose from so that the knowledge
leading position by both and skills developed suit the career
satisfying our clients and path that you choose. Thus, we
maintaining high academic strive to tailor-make the learning
standards. To achieve the leading materials so that they can suit
position, we have adopted the
Any course or programme launched by peers and tutors whom you may never
ZOU is conceived from the cross- meet in life. It is our intention to bring
pollination of ideas from consumers of the the computer, email, internet chat-rooms,
product, chief among whom are you, the whiteboards and other modern methods
students and your employers. We of delivering learning to all the doorsteps
consult you and listen to your critical of our learners, wherever they may be.
analysis of the concepts and how they are For all these developments and for the
presented. We also consult other latest information on what is taking place
academics from universities the world at ZOU, visit the ZOU website at
over and other international bodies www.zou.ac.co.zw
whose reputation in distance education
and open learning is of a very high Having worked as best we can to prepare
calibre. We carry out pilot studies of the your learning path, hopefully like John
course outlines, the content and the the Baptist prepared for the coming of
programme component. We are only too Jesus Christ, it is my hope as your Vice
glad to subject our learning materials to Chancellor that all of you, will
academic and professional criticism with experience unimpeded success in your
the hope of improving them all the time. educational endeavours. We, on our part,
We are determined to continue shall continually strive to improve the
improving by changing the learning learning materials through evaluation,
materials to suit the idiosyncratic needs transformation of delivery
of our learners, their employers, methodologies, adjustments and
research, economic circumstances, sometimes complete overhauls of both the
technological development, changing materials and organizational structures
times and geographic location, in order and culture that are central to providing
to maintain our leading position. We aim you with the high quality education that
at giving you an education that will work you deserve. Note that your needs, the
for you at any time anywhere and in learner ‘s needs, occupy a central position
varying circumstances and that your within ZOU’s core activities.
performance should be second to none.
Best wishes and success in your
As a progressive university that is studies.
forward looking and determined to be a
successful part of the twenty-first
century, ZOU has started to introduce e-
learning materials that will enable you,
our students, to access any source of
information, anywhere in the world
through internet and to communicate, _____________________
converse, discuss and collaborate Dr. Primrose Kurasha
synchronously and asynchronously, with Vice Chancellor
The Six Hour Tutorial Session At
The Zimbabwe Open University
A s you embark on your studies with the
Zimbabwe Open University (ZOU) by open
and distance learning, we need to advise you so
remain with more questions than answers. You
need someone to help you in such matters.
that you can make the best use of the learning This is where the six hour tutorial comes in.
materials, your time and the tutors who are based For it to work, you need to know that:
at your regional office. · There is insufficient time for the
tutor to lecture you
The most important point that you need to note · Any ideas that you discuss in the
is that in distance education and open learning, tutorial, originate from your
there are no lectures like those found in experience as you work on the
conventional universities. Instead, you have materials. All the issues raised above
learning packages that may comprise written are a good source of topics (as they
modules, tapes, CDs, DVDs and other referral pertain to your learning) for
materials for extra reading. All these including discussion during the tutorial
radio, television, telephone, fax and email can be · The answers come from you while
used to deliver learning to you. As such, at the the tutor’s task is to confirm, spur
ZOU, we do not expect the tutor to lecture further discussion, clarify, explain,
you when you meet him/her. We believe that give additional information, guide
that task is accomplished by the learning package the discussion and help you put
that you receive at registration. What then is together full answers for each
the purpose of the six hour tutorial for each question that you bring
course on offer? · You must prepare for the tutorial
by bringing all the questions and
At the ZOU, as at any other distance and open answers that you have found out on
learning university, you the student are at the the topics to the discussion
centre of learning. After you receive the learning · For the tutor to help you
package, you study the tutorial letter and other effectively, give him/her the topics
guiding documents before using the learning beforehand so that in cases where
materials. During the study, it is obvious that information has to be gathered,
you will come across concepts/ideas that may there is sufficient time to do so. If
not be that easy to understand or that are not the questions can get to the tutor
so clearly explained. You may also come across at least two weeks before the
issues that you do not agree with, that actually tutorial, that will create enough time
conflict with the practice that you are familiar for thorough preparation.
with. In your discussion groups, your friends
can bring ideas that are totally different from In the tutorial, you are expected and required
yours and arguments may begin. You may also to take part all the time through contributing
find that an idea is not clearly explained and you in every way possible. You can give your views,
The Six Hour Tutorial Session At The Zimbabwe Open University
even if they are wrong, (many students may hold the six hour tutorial. As stated, it should be
the same wrong views and the discussion will rare because the information needed for the
help correct the errors), they still help you learn course is found in the learning package together
the correct thing as much as the correct ideas. with the sources to which you are referred.
You also need to be open-minded, frank, Fully-fledged lectures can, therefore, be
inquisitive and should leave no stone unturned misleading as the tutor may dwell on matters
as you analyze ideas and seek clarification on any irrelevant to the ZOU course.
issues. It has been found that those who take
part in tutorials actively, do better in assignments Distance education, by its nature, keeps the
and examinations because t heir ideas are tutor and student separate. By introducing
streamlined. Taking part properly means that the six hour tutorial, ZOU hopes to help you
you prepare for the tutorial beforehand by come in touch with the physical being, who
putting together relevant questions and their marks your assignments, assesses them, guides
possible answers and those areas that cause you you on preparing for writing examinations and
confusion. assignments and who runs your general
academic affairs. This helps you to settle down
Only in cases where the information being in your course having been advised on how to
discussed is not found in the learning package go about your learning. Personal human contact
can the tutor provide extra learning materials, is, therefore, upheld by the ZOU.
but this should not be the dominant feature of
The six hour tutorials should be so structured that the

tasks for each session are very clear. Work for each
session, as much as possible, follows the structure given
below.
Session I (Two Hours)

Session I should be held at the beginning of the semester. The
main aim of this session is to guide you, the student, on how you
are going to approach the course. During the session, you will be
given the overview of the course, how to tackle the assignments,
how to organize the logistics of the course and formation of
study groups that you will belong to. It is also during this
session that you will be advised on how to use your learning
materials effectively.
The Six Hour Tutorial Session At The Zimbabwe Open University
Session II (Two Hours)

This session comes in the middle of the semester to respond to
the challenges, queries, experiences, uncertainties, and ideas that
you are facing as you go through the course. In this session,
difficult areas in the module are explained through the combined
effort of the students and the tutor. It should also give direction
and feedback where you have not done well in the first assignment
as well as reinforce those areas where performance in the first
assignment is good.
Session III (Two Hours)

The final session, Session III, comes towards the end of the
semester. In this session, you polish up any areas that you still
need clarification on. Your tutor gives you feedback on the
assignments so that you can use the experience for preparation
for the end of semester examination.
Note that in all the three sessions, you identify the areas
that your tutor should give help. You also take a very
important part in finding answers to the problems posed.
You are the most important part of the solutions to your
learning challenges.
Conclusion for this course, but also to prepare yourself to

contribute in the best way possible so that you
can maximally benefit from it. We also urge
In conclusion, we should be very clear that six you to avoid forcing the tutor to lecture you.
hours is too little for lectures and it is not
necessary, in view of the provision of fully self- BEST WISHES IN YOUR STUDIES.
contained learning materials in the package, to
turn the little time into lectures. We, therefore, ZO U
urge you not only to attend the six hour tutorials
C o n t e n t s
Overview
__________ Overview _______________________________________________________ 1
Unit One: The Nature of Law
1.0 _______ What this unit is about ___________________________________________ 3

1.1 _______ What you will learn ______________________________________________ 4
1.2 _______ The Nature of Law _______________________________________________ 4
1.3 _______ Sources of Law __________________________________________________ 5
1.4 _______ Legislation ______________________________________________________ 5
__________ Activity1A _______________________________________________________ 6
1.5 _______ Judicial Precedent _______________________________________________ 6
1.6 _______ Customary Law __________________________________________________ 6
1.7 _______ Court Structure and Jurisdiction _________________________________ 7
__________ 1.7.1 Supreme Court _____________________________________________ 7
__________ 1.7.2 High Court ________________________________________________ 7
__________ 1.7.3 Magistrates Court __________________________________________ 7
__________ 1.7.3.1 Regional Magistrate _______________________________________ 8
__________ 1.7.3.2 Provincial Magistrate _____________________________________ 8
__________ 1.7.4 Senior Magistrate __________________________________________ 8
__________ 1.7.5 Ordinary Magistrate ________________________________________ 8
__________ 1.7.6 Primary Courts ____________________________________________ 9
__________ 1.7.7 Specialist Courts ___________________________________________ 9
1.8 _______ Civil Law _______________________________________________________ 9
__________ 1.8.1 Family Law ________________________________________________ 10
__________ 1.8.2 Property Law: ______________________________________________ 10
__________ 1.8.3 Law of Succession __________________________________________ 10
__________ 1.8.4 Law of delict _______________________________________________ 10
__________ Activity 1B _____________________________________________________ 12
__________ Activity 1C _____________________________________________________ 12
1.9 _______ Summary ______________________________________________________ 12
1.10 ______ Explanatory Terms _____________________________________________ 13
__________ Essential Reading _______________________________________________ 14
Unit Two: General Principles of the Law of Contract
2.0 _______ What this unit is about __________________________________________ 15

2.1 _______ What you will Learn ____________________________________________ 16
2.2 _______ Definition of Contract __________________________________________ 16
__________ 2.2.1 Agreement ________________________________________________ 16
__________ 2.2.2 Offer ______________________________________________________ 16
__________ Activity 2A _____________________________________________________ 17
__________ 2.2.3 Acceptance ________________________________________________ 17
__________ Activity 2B _____________________________________________________ 18
2.3 _______ Termination of Offer ___________________________________________ 18
2.4 _______ Void and Voidable Contract ______________________________________ 19
__________ 2.4.1 Duress/Metus(Fear) _______________________________________ 19
__________ 2.4.2 Undue Influence ___________________________________________ 20
2.5 _______ Mistake ________________________________________________________ 20
__________ 2.5.1 Unilateral/One sided mistake ______________________________ 21
__________ 2.5.2 Common Mistake __________________________________________ 21
__________ 2.5.3 Mutual Mistake ____________________________________________ 21
2.6 _______ Misrepresentation ______________________________________________ 21
__________ 2.6.1 Requirements _____________________________________________ 22
2.7 _______ Types of Misrepresentation _____________________________________ 22
__________ 2.7.1Fraudulent Misrepresentation ______________________________ 22
__________ 2.7.2 Negligent Misrepresentation _______________________________ 22
__________ 2.7.3 Innocent Misrepresentation ________________________________ 23
2.8 _______ Remedies ______________________________________________________ 23
__________ 2.8.1Delictual Remedies _________________________________________ 27
__________ Activity 2C _____________________________________________________ 23
2.9 _______ Capacity to Contract ___________________________________________ 23
__________ 2.9.1 Minors ____________________________________________________ 24
__________ 2.9.2 When a minor is bound by unassisted acts ___________________ 24
__________ 2.9.3 Mental Capacity/Insanity __________________________________ 24
__________ 2.9.4 Intoxicated Persons ________________________________________ 25
__________ 2.9.5 Insolvency ________________________________________________ 25
__________ 2.9.6 Prodigals __________________________________________________ 26
__________ 2.9.7 Artificial Persons __________________________________________ 26
2.10 ______ What Are the Terms?/what Does the Contract Say? ________________ 26
__________ 2.10.1 Types of Terms ___________________________________________ 27
__________ 2.10.2 Conditions _______________________________________________ 27
__________ Activity 2D _____________________________________________________ 27
__________ 2.10.3 Interpretation of Terms __________________________________ 27
2.11 ______ Breach of Contract _____________________________________________ 28
2.12 ______ Remedies for Breach ____________________________________________ 28
__________ 2.12.1 Specific performance _____________________________________ 29
__________ 2.12.2 Cancellation of the contract. ______________________________ 29
__________ 2.12.3 Damages _________________________________________________ 29
__________ 2.12.4 Interdict _________________________________________________ 29
2.13 ______ Termination of Contracts must Be Distinguished from ______________
__________ Termination of Offer: ___________________________________________ 30
__________ 2.13.1 Performance _____________________________________________ 30
__________ 2.13.2 Agreement _______________________________________________ 30
__________ 2.13.3 Set-off ___________________________________________________ 30
__________ 2.13.4 Merger/confusio _________________________________________ 30
__________ 2.13.5 Supervening impossibility ________________________________ 30
__________ 2.13.6 Novation _________________________________________________ 30
__________ 2.13.7 Delegation _______________________________________________ 31
__________ 2.13.8 Cession __________________________________________________ 31
__________ 2.13.9 Prescription ______________________________________________ 31
__________ 2.13.10 Death ___________________________________________________ 31
__________ Activity 2E _____________________________________________________ 32
2.14 ______ Summary ______________________________________________________ 32
Unit Three: Purchase and Sale

3.2 _______ Essential Elements of a Contract of Sale _________________________ 36
__________ Activity 3A _____________________________________________________ 37
3.3 _______ Things which cannot be sold ____________________________________ 37
__________ Activity 3B _____________________________________________________ 38
3.4 _______ The Price/Pretium _____________________________________________ 38
__________ 3.4.1 Passing of Risk and Ownership Risk ________________________ 38
__________ Activity 3C _____________________________________________________ 39
__________ 3.4.2 Ownership ________________________________________________ 39
__________ 3.4.3 Actual delivery ____________________________________________ 40
__________ 3.4.4 Delivery with a short hand _________________________________ 40
__________ 3.4.5 Delivery with a long hand __________________________________ 40
__________ 3.4.6 Symbolic delivery __________________________________________ 40
__________ 3.4.7 Attornment ________________________________________________ 41
__________ 3.4.8 Constitutum possessorium _________________________________ 41
__________ 3.4.9 Registration _______________________________________________ 41
__________ Activity 3D _____________________________________________________ 41
3.5 _______ Duties of the Seller _____________________________________________ 42
3.6 _______ Remedies to the Buyer __________________________________________ 42
__________ 3.6.1 Actio Redhibitoria (Rescission) _____________________________ 42
__________ 3.6.2 Actio Quanti Minoris ______________________________________ 43
__________ Activity 3E _____________________________________________________ 44
3.7 _______ Obligations of the Buyer _______________________________________ 44
3.8 _______ Some Special Types of Sale ______________________________________ 44
__________ 3.8.1 F.O.R. (Free on Rail) ________________________________________ 44
__________ 3.8.2 F.O.B. (Free on Board) _______________________________________ 45
__________ 3.8.3 C.I.F. (Cost, Insurance and Freight) __________________________ 45
__________ 3.8.4 Sale on Approval ___________________________________________ 45
3.9 _______ Summary ______________________________________________________ 45
Unit Four: Agency Law

4.2 _______ The Need for an Agent ___________________________________________ 50
4.3 _______ Definition ______________________________________________________ 51
4.4 _______ Creation of Agency _____________________________________________ 52
__________ 4.4.1 By express agreement ______________________________________ 52
__________ 4.4.2 Implied agreement _________________________________________ 52
__________ 4.4.3 Ratification _______________________________________________ 52
__________ 4.4.4 Estoppel/Ostensible Authority _____________________________ 52
__________ 4.4.5 Usual Authority ____________________________________________ 53
__________ 4.4.6 Negotiorum Gestio/Agent of Necessity ______________________ 53
__________ Activity 4A _____________________________________________________ 53
4.5 _______ Rights and Duties Between Agent and Principal ___________________ 54
4.6 _______ Principal’s Duties to the Agent ___________________________________ 55
4.7 _______ Termination of Agency __________________________________________ 55
__________ Activity 4B _____________________________________________________ 56
4.8 _______ Summary ______________________________________________________ 56
4.9 _______ Explanatory Terms _____________________________________________ 57
Unit Five: Employment Law

5.1 _______ What you will learn _____________________________________________ 60
5.2 _______ Principles of Employment Contracts ____________________________ 60
5.3 _______ Vicarious Liability ______________________________________________ 61
__________ Activity 5A _____________________________________________________ 61
5.4 _______ Obligations of the Employer ____________________________________ 62
__________ 5.4.1 Payment of Wages __________________________________________ 62
__________ 5.4.2 To provide work ____________________________________________ 62
__________ 5.4.3 Sick Leave _________________________________________________ 62
__________ 5.4.4 Vacation leave _____________________________________________ 62
5.5 _______ Duties of Employee _____________________________________________ 63
__________ 5.5.1 Provide Services __________________________________________ 63
__________ 5.5.2 Obedience _________________________________________________ 63
__________ 5.5.3 Subordination _____________________________________________ 63
__________ 5.5.4 Maintain bona fides/confidentiality ________________________ 63
__________ Activity 5B _____________________________________________________ 63
5.6 _______ Termination of Contract of Employment ________________________ 64
__________ 5.6.1This is ordinarily by notice from either party ________________ 64
__________ 5.6.2 Summary termination of contract of employment ___________ 64
5.7 _______ Summary ______________________________________________________ 64
5.8 _______ Explanatory Terms _____________________________________________ 64
Unit Six: The Law of Lease

6.2 _______ Law of Lease. What is a Lease? ____________________________________ 68
6.3 _______ Essential Elements _____________________________________________ 68
6.4 _______ Formalities _____________________________________________________ 69
__________ Activity 6A _____________________________________________________ 69
6.5 _______ Duration _______________________________________________________ 69
__________ 6.5.1 Lease in Longum Tempus (Long Lease) _______________________ 69
__________ 6.5.2 Short Lease ________________________________________________ 70
6.6 _______ Requirement for Rent __________________________________________ 70
__________ Activity 6B _____________________________________________________ 71
6.7 _______ Implied Duties of the Lessor _____________________________________ 71
__________ 6.7.1 Delivery of Use and Occupation ____________________________ 71
__________ 6.7.2 Failure to deliver __________________________________________ 72
__________ 6.7.3 Guarantee the tenant undisturbed use and enjoyment ________ 72
__________ 6.7.4 To make necessary repairs __________________________________ 73
__________ 6.7.5 Payment of Taxes __________________________________________ 74
__________ Activity 6C _____________________________________________________ 74
6.8 _______ Duties of the Lessee _____________________________________________ 74
__________ 6.8.1 Failure to pay rent _________________________________________ 74
__________ 6.8.2 Lessor’s Tacit Hypothec for rent _____________________________ 75
__________ 6.8.3 Duty to use and care for the property ________________________ 75
__________ 6.8.4 Duty to restore the property ________________________________ 76
__________ 6.8.5 Subletting _________________________________________________ 76
__________ Activity 6D _____________________________________________________ 77
6.9 _______ Termination ___________________________________________________ 77
__________ 6.9.1Expiration of time _________________________________________ 77
__________ 6.9.2 Notice ____________________________________________________ 77
__________ 6.9.3 Mutual Cancellation ______________________________________ 77
__________ 6.9.4 Repudiation _______________________________________________ 77
__________ 6.9.5 Extinction of Lessor’s title _________________________________ 77
__________ 6.9.6 Merger ____________________________________________________ 78
__________ 6.9.7 Destruction of the subject matter __________________________ 78
__________ 6.9.8 Death _____________________________________________________ 78
6.10 ______ Summary ______________________________________________________ 78
Unit Seven: Assignments and Tutorial Questions

7.2 _______ Introduction ___________________________________________________ 82
7.3 _______ Problem Questions _____________________________________________ 82
__________ 7.3.1 How to approach problem questions _________________________ 83
7.4 _______ Multiple Choice ________________________________________________ 84
7.5 _______ Problem Questions _____________________________________________ 89
7.6 _______ Essay Type Questions ___________________________________________ 91
Module Overview
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Aims and Overview

Introduction
This module will help you to understand the Zimbabwean legal system.
It will also assist you to understand the basic elements of legal rules
which affect the business environment. It is expected that, by the time
you finish this Module, you will be able to offer simple solutions to
business problems in a clear and logical manner. You should be able to
apply legal rules to given factual situations.
The Module covers seven Units. The first Unit is unique in that it looks
at the Zimbabwean legal system. You ought to know what law is. There
is a difference between legal rules and other rules such as social rules
and principles of morality. The Module also looks at sources of law and
the court structure and jurisdiction. Units 2 to 6 look at specific areas
of laws. All these are civil law areas which are essentially based on
agreement between people with legal capacity. In Unit 7 we look at
different types of questions you may encounter in Business Law.
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Zimbabwe Open University
Unit 1 The Nature of Law
1 Unit One
The Nature of Law
1.0 What this Unit is About
I n this Unit we discuss what the law is. We distinguish legal rules from
other societal norms. We also look at sources of law and the Zimba-
bwean court structure and jurisdiction.
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ZimbabweOpenUniversity 3
Business Law 1 LAW102
1.1 What You Will Learn
By the time you finish this Unit you should be able to:
* describe the nature of law;
* distinguish law from societal norms, social customs,
orders or commands and morality;
* appreciate the various sources of law; and
* explain the Zimbabwean court structure.
1.2 The Nature of Law

Laws are rules established by authority to regulate the behaviour of mem-
bers of a community or country. The term law itself may be used in a
variety of contexts. As such there is no universally acceptable definition
of law.
Law refers to legal rules as opposed to moral rules. Legal rules are obliga-
tory while some moral rules may also be obligatory. Legal rules are en-
forceable by the state while moral rules need not be enforced. It is impor-
tant to note that punishment is not a distinguishing feature between the
two rules. A person may be punished in some ways for breach of a social
norm. However, for breach of a legal rule, one is punished through a
structure set up for such a purpose. The legal rules regulate conduct of
people in a given society.
Legal rules must meet certain basic principles:

Â Legal rules must be applied equally in similar cases,
Â They must be applied equally to people who are similarly
circumstanced. The law should be applied equally whether one is
rich or poor. It may not be just to treat minors and adults similarly
nor would it be fair to treat insane people in the same way as those
who are normal.
There are also some factors which make it impossible for the ideal con-
cept of equal treatment of the law to be satisfied. For example, those
with economic power will be able to engage the services of well-estab-
lished lawyers. Those with better education would be in a better position
to know their legal rights. But ignorance of the law is not an excuse.
Â Legal rules must be uniformly applied through a given territory.

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4 ZimbabweOpenUniversity
1.3 Sources of Law

Now we look at the main sources of law and the importance of each of
them.
1.4 Legislation
This is the most modern important source of law. It is also the most im-
portant and quickest method of making new law, changing existing law
amending or repealing or abrogating the law altogether. The Zimbabwean
legislature is created by the Zimbabwean Constitution. It is the constitu-
tion which states that there shall be a Parliament in Zimbabwe, and that
Parliament may make laws for peace, order and good government of Zim-
babwe.
Parliament may make any law whatsoever, as long as the law is not pro-
hibited by the constitution. The constitution lays down procedures for
change to its provisions. The Legislative authority in Zimbabwe lies with
Parliament and the Executive. Parliament has a total of 150 members
(section 38 of the Constitution). Of these, 120 are elected by the ordi-
nary votes, eight are Provincial Governors appointed by the President.
Ten are Chiefs elected in accordance with the Electoral Act and twelve
are directly appointed into Parliament by the President
In terms of the Constitution of Zimbabwe, the Executive authority is

vested in the President. The President shall take precedence over all other
persons in Zimbabwe. He shall be the Head of State and Government.
Laws are introduced in Parliament as Bills. This is usually by the Minister

concerned. The Bill has to go through several stages before it is passed to
the President for his approval and signature. The President may refuse to
approve the Bill, in which case it is referred back to Parliament. When the
Bill is approved by the President, it becomes an Act or Statute. It is then
gazetted.
Parliament simply would not have the time or expertise to deal with all
divergent social issues. Thus it delegates powers to either ministers or
other bodies to make subsidiary legislation or by-laws. These bodies can
only make such laws as authorised by Parliament. Subsidiary legislation
should not be ultra vires powers given (beyond the given powers). Leg-
islation is an authoritative source. It overrides all other laws which may
provide to the contrary.
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Activity IA
? * What are the advantages and disadvantages of

legislation as a source of law?
1.5 Judicial Precedent

Judges are not employed to make law. They are not legislators.
Judges are employed to interpret and apply the laws through the court
system. Judges of superior courts such as the Supreme Court and High
Court may find themselves making law. For example, where the judge is
faced with a novel case or where the case before him is not on all fours
covered by the existing sources of law. This may result in a subtle shift of
the law. The Supreme Court is not bound to follow its own decisions. As
a result it is possible for the Supreme Court to overrule previous deci-
sions as erroneous. This is important for the development of the law.
Note: the law is not static, though the change ought not to be too sudden.
Judges may, using their skills of interpretation, give a practical meaning
to any unclear provisions of statutes. The authoritative part of prec-
edent is the ratio decidendi. This is the reason for the decision. It is the
binding part of judicial precedent.
A judge may give his opinion on a legal rule or may comment on a set of
facts. These comments form the obita dicta by the way statements. These
are not binding, but are persuasive.
1.6 Customary Law

A custom arises out of a constant practice over a very long time. For the
practice to be accepted as a custom it must meet certain requirements.
These were clearly given in the South African case of Van Breda v Jacobs:
Â The custom must be well known.
Â It must have existed for a very long time (in the above case 45
years was taken to be adequate).
Â It must not be contrary to any statutory provisions.
Â The custom must not be contrary to acceptable morals.
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The custom must be recognised and enforced by the State. This distin-
guishes a legal custom and a social custom. The latter is similar to a rule
of fashion which may be subject to change and may or may not be fol-
lowed. Customs are largely unwritten. This is one major problem of cus-
tom as a source of law. It exists in the minds of old people. It therefore
falls to be confused with issues of evidence.
1.7 Court Structure and Jurisdiction

1.7.1 Supreme Court
Â It is the superior court of record and final court of appeal.
Â It consists of the Chief Justice who is head of the judiciary and
judges of the Supreme Court.
Â Generally this court is not a court where the case may be heard
for the first time.
It is a court of appeal from other courts unless the case is a constitutional
one. The court has unlimited jurisdiction in both criminal and civil cases.
There shall be no appeal from any judgement or order of the Supreme
Court. This is the highest court in the country. It is important to note
that the Supreme Court is not bound by any of its own judgements, rul-
ings or opinions or by those of its predecessors. This is important be-
cause the law has to develop. If a ruling is erroneous it must be changed.
Other courts are bound by the decision of the Supreme Court.
1.7.2 High Court

It is presided over by judges who are appointed according to the constitu-
tion of Zimbabwe. The High Court has full unlimited jurisdiction in both
civil and criminal cases. This Court is also a court of appeal from the
Magistratse Court. It has jurisdiction and authority to review all proceed-
ings and decisions of all inferior courts of justice. Appeals from the High
Court lie with the Supreme Court. This court can pass a death penalty or
life imprisonment judgement.
1.7.3 Magistrates Court

Is presided over by a magistrate. These are appointed by the Public Serv-
ice Commission. The person must have qualifications of a legal practi-
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tioner in Zimbabwe or is qualified in a capacity comparable to that of a

legal practitioner.
There are categories:
1.7.3.1 Regional Magistrate

All magistrates courts have no jurisdiction to try criminal cases involving
the following:
(a) treason
(b) murder
(c) any offence where the person shall be sentenced to death if
convicted.
They cannot dissolve civil law marriages. The maximum criminal juris-
diction is seven years imprisonment or a fine not exceeding twelve thou-
sand dollars.
It can impose corporal punishment on minors. The strokes shall not ex-
ceed six.
The regional magistrate has special jurisdiction as to punishment for rape,

public violence, arson, malicious injury to property or attempts to com-
mit these offences. Ten years imprisonment or a fine not exceeding fif-
teen thousand dollars may be imposed for these offences.
1.7.3.2 Provincial Magistrate

Criminal jurisdiction: Three years imprisonment or a fine not exceeding
five thousand dollars. The provincial magistrate has special jurisdiction
as to punishment for arson, public violence or malicious injury to prop-
erty. Five years imprisonment or a fine not exceeding seven thousand
dollars may be imposed for these offences.
1.7.4 Senior Magistrate

Criminal jurisdiction: Two years imprisonment or a fine not exceeding
three thousand dollars for ordinary offences.
1.7.5 Ordinary Magistrate

Criminal jurisdiction: Twelve months imprisonment or a fine not exceed-
ing two thousand dollars or both.
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These courts can apply either general law or customary law. These courts
have no jurisdiction to dissolve marriages other than customary law mar-
riages solemnised in terms of the Customary Marriages Act Cap 5:07.
They can however, determine cases incidental to marriages e.g. the guardi-
anship and custody of children of customary law marriages. The court
has no jurisdiction to declare the status of a person in terms of the Men-
tal Health Act.
The Magistrates Court is a court of appeal from Primary Courts.
1.7.6 Primary Courts

These courts are simple courts which are not very formal. Proceedings
are not in written form. Legal practitioners cannot represent clients in
these courts.
These courts apply customary law only. They do not have jurisdiction in
criminal cases. They cannot dissolve civil law marriages. The Community
Court may determine incidental matters e.g. custody of children, mainte-
nance etc.
The Primary Court is presided over by a presiding officer appointed by

the Minister. The maximum fine is one thousand five hundred dollars for
the primary court and three thousand dollars for the Community Courts.
1.7.7 Specialist Courts

These only deal with special areas which have been found to require a
special court e.g.
Â Labour Relations Tribunal
This deals with issues arising out of contracts of employment.
Â The Administrative Court
Deals with various issues submitted to it under various pieces of
legislation. This court can also act as the water court in terms of
the Water Act (Chapter 20:22).
Â Small Claims Courts
These are resorted to where the claim is too small and does not
exceed $2 000. Only natural persons can bring their actions before
this court. A judgement given in the small claims court is final and
cannot be appealed against except to take the proceedings on re-
view by the High Court.
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1.8 Civil Law

This is a wider term for the many branches of law which govern the
relationship between the citizens and some objects. Civil law may be
sub-divided into other categories e.g. Private law and Public law. Private
law would include the following:
1.8.1 Family Law

Â Principles governing the relation between husband and wife,
marriages, separations and divorces
Â The law of parent and child, custody of children etc
1.8.2 Property Law

This areas deals with the following:
Â concept of real rights
Â comprehensive rights
Â ownership
Â ways of acquiring ownership e.g.
i) prescription
ii) capture
iii) occupation
iv) registration
There are also limited rights such as: servitudes, mortgages and pledges.
Intellectual Property Law: This covers such topics as:

Â Copyright law
Â Patent law
Â Trade marks
Â Industrial designs
1.8.3 Law of Succession

Deals with issues of taking over of rights and obligations of another
person.
1.8.4 Law of delict

concerns actionable wrongful conduct which causes damage or loss to
another and the remedies available to the innocent party.
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Public law is concerned with the issue of power by the state and the
relationship between the state and the individual. Under public law we
find the following:
Â Constitutional law
Â Criminal law
Â Administrative law
Â International law
Now it is necessary to look at the general differences between elements
of civil and criminal law.
Civil Law Criminal Law
Regulates the conduct of Regulates conduct of individuals and

individuals. The state is not the State. The state always has an interest
involved unless as an interested because there is an unwritten contract
party. The state is an artificial between the state and the citizen that the
person with duties and obligations of its State would protect the citizen and his own.
property In return the citizen promises not to take
the law into hands and to serve the state when
called upon to do so.
The aim is to compensate the The major aim is to rehabilitate the

innocent party for wrong done offender. He is punished for his
or to declare rights and obligations. conduct. It also aims at deterring the
offender and other like-minded persons.
An action may arise even before the The act prohibited must have
wrong has been done. For example happened. There cannot be a crime
one can seek an interdict that the unless the prohibited act has
other party be prevented from happened e.g. murder,
doing something. Note The somebody must have been killed
innocent party has a duty to minimise
his loss.
An action arises even if the wrongdoer The wrongdoer must have had
had no intention to prejudice or intention to commit the offence. e.g.
injure another. murder, there must be intention to kill.
There is no need to establish that The act complained of must be

the act is unlawful. unlawful.
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Activity 1B
? * Jurisdiction refers to a court’s right to hear any matter.

Consider the jurisdiction of the various courts in
Zimbabwe.
Activity 1C
? * Explain the differences between civil and criminal law.
1.9 Summary
In this Unit you noted the following:
Â The differences between legal rules and other rules.
Â The basic principles of legal rules.
Â That some sources of law are binding or authoritative while others
are not binding but merely persuasive.
Â We looked at the hierarchy of the court system and the courts
right to determine a case.
Â We noted that civil law is different from criminal law. We also
established that in business law we are concerned with civil law
which determines our rights and obligations.
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1.10 Explanatory Terms

Legislation: Law made by parliament in the manner given in the consti-
tution.
Ratio decidendi: The binding part of judicial precedent. It is the reason for
the decision.
Obita dicta: By the way statement. This can only be persuasive to the
court.
Jurisdiction: The right of a court to determine a case.
Delict: Civil wrong entitling the wronged party to remedies.
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Essential Reading
Textbooks
Introduction to Zimbabwe Legal System, Officers of Ministry of Justice:

Government Printers, Harare.
Bamenton, D & Dury P. An Introduction to Zimbabe Business Law. Legal

Resources Foundation Printers: Harare.
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Unit 2 General Principles of the Law of Contract
2
Unit Two
General Principles of the Law of

Contract
I n this Unit we shall consider the creation of contracts which are

legally enforceable. We shall also look at situations when parties may
be allowed to withdraw from concluded contracts and why some con-
tracts are not enforceable at all.
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By the end of this Unit you should be able to:
* define a contract;
* discuss the importance of contracts in commercial
transactions;
* analyse transactions into offer and acceptance;
* distinguish between void transactions and those that are voidable;
* explain the requirements of a valid contract;
* explain how contracts are terminated.
2.2 Definition of Contract

The most important features of the definition include the following:
Â it is an agreement
Â between two or more parties
Â within their contractual capacities
Â which are possible of performance
Â the agreement should be enforceable at law.
The definition contains the essential elements of a valid contract. We
should then look at each of the essentials.
2.2.1 Agreement
This is otherwise known as consensus. It means the coming together of
the minds. To establish whether there is agreement, the transaction is
ordinarily analysed into offer and acceptance.
The person who makes an offer is the offeror and the one who accepts is
the offeree. Oral agreement is as binding as a written one.
2.2.2 Offer
It must be a valid offer. It must meet all the requirements of a valid
contract. An offer must be firm. That is, it must show that the maker has
a serious intention to be contractually bound merely by the other party
accepting it.
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An offer must define all the terms on which an agreement is sought.
With an invitation to treat one party is seeking offers from another, re-
taining the right to either accept it or not.
An offer may be made to a specific person or to the public in general.

Anyone complying with the terms of the offer accepts it.
Activity 2A
? * Paul writes to Farai requesting that he sells him his

mountain bike. He also states that Farai should
indicate his lowest cash price. Farai replies that the
lowest cash price for the mountain bike is $3 000.00. Paul
replies that he agrees to buy Farai’s mountain bike for
$3000.00.
* Is there a contract?
2.2.3 Acceptance
A contract cannot come into existence unless the offer is accepted. The
offer must be accepted by the party to whom the offer is made. This
known as privity of contract. Parties are free to choose their contractual
partners. This is also based on the concept of freedom of contract.
An acceptance must be clear and unconditional. If the offeree gives own

terms other than those given by the offeror then this does not amount to
acceptance but to a counter offer. The counter offer is open for either
acceptance or rejection by the original offeror.
When the offeror stipulates a mode of acceptance, then only the mode
would be recognised for valid acceptance. Any other method would not
be enough.
Acceptance may be by conduct. However, the offeror cannot dictate that

he would take the offeree’s silence as acceptance. When one is silent, he
does not necessarily accept or agree.
Also for acceptance to be valid, the offeree must have knowledge of the
offer. Otherwise the offeree would not intend to accept anything.
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Activity 2B
? * Give reasons why the offeror may not dictate that the
offeree’s silence would amount to acceptance?
2.3 Termination of Offer

An offer cannot exist indefinitely. It falls away in the following circum-
stances:
Â Expiration of fixed time for acceptance.
Â Expiration of reasonable time. This is where no time limit is
given. This is derived from the circumstances.
Â Rejection. Out and out clear rejection when one has rejected an
offer cannot change his mind.
Â Counter offer.
Â Revocation/withdrawal. This must be before acceptance by the
offeree. The offeree must be notified of the withdrawal.
Â Death of either party before acceptance.
It is possible to keep the offer open for a fixed time by means of an
option. An option is a concluded contract to keep the main offer open
for a given time. It has its own separate existence apart from the main
offer.
The following is an attempt to illustrate a contract of option:

Parties
Patience and Farai
makes an offer to
Patience _________________________ Farai
(1) Main offer

(2) The two agree to keep the main offer open for one month.
The second transaction is known as a contract of option. It is binding on

the parties.
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2.4 Void and Voidable Contract

A void ‘contract’ is not a contract at all. It is a legal nullity. In actual fact
it is a misnomer to talk of a void contract. Contracts may be void due to
the following:
Â Illegality
Â Lack of contractual capacity
Â Initial impossibility/subsequent impossibility
Â Mistake
A voidable contract is one which is valid per se but due to some issue, the
innocent party may at his option decide to withdraw from it.
A contract may be voidable due to the following:

Â Lack of contractual capacity e.g. a minor may withdraw from his
unassisted contract. A trustee may avoid contracts entered into
by the insolvent which have the effect of detrimentally affecting
the estate.
Â Duress
Â Undue influence
Â Misrepresentation
2.4.1 Duress/Metus(Fear)
An innocent party may withdraw from a contract which he was induced
to enter due to fear or threat of harm or injury.
The requirements are as follows:

Â The threat must be made by the other contracting party.
Â It must be a threat of harm or injury to the innocent party, his
immediate family or property.
Â The fear must be reasonably held (not fear of the unknown). It is
not sufficient for the other party to plead that the innocent party
is easily intimidated.
Â The contracting party must not have threatened what he is e n t i -
tled to. For example. If I threaten to do what I am legally e n t i -
tled to, there is no duress.
In the case Shepstone v Shepstone a husband threatened to sue for
custody of children where the ex-wife was cohabitating in sin with a mar-
ried man. The court held that there was no duress. The husband was
legally entitled to the claim:
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Â The duress must have caused the innocent party to conclude the
contract.
Â The innocent party must take steps to withdraw from the contract
as soon as the source of fear is removed.
– The law does not protect poor bargainers as such.
2.4.2 Undue Influence

This is not based on fear at all. It is based on the fact that the conduct of
the other party is improper and unfair. That one party because of his
dominant position or relation prevailed on the will of another to enter
into a contract against his will. Undue influence occurs mainly where the
parties have a special relationship e.g. doctor and patient, lawyer and cli-
ent, guardian and minor, pastor and member of church. However, the
special relationship is not a legal requirement. The existence of a special
relationship makes it easier to prove its abuse to make the will of the
other party pliable. Consensus is thus defective, making the contract void-
able. The victim would not have concluded the contract on his own free
will. A good example is the important case of an old and ailing farmer
who donated to his doctor his three farms because of undue influence.
(Preller v Jordaan, 1956 (1) SA 483).
The innocent party is allowed to withdraw from the contract.
2.5 Mistake
When a party enters into a contract and gets the thinner end of the bar-
gain, he may say, “I was mistaken in entering into the contract”. The law
does not concern itself with such a mistake. Courts do not make con-
tracts for the parties. A mistake occurs when there is some misapprehen-
sion or misunderstanding as to some material fact. This would mean that
the parties have not achieved an agreement.
It must be noted that a mistake of law has no effect on the contract

because ignorance of the law is no defence or excuse.
Mistakes have different categories:
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2.5.1 Unilateral/One sided mistake

Only one party makes a mistake, the other is aware of the obligations.
The law will not allow the unmistaken party to take advantage of the
mistake i.e. snatching at a mistake.
The mistake must be fundamental to make the contract void. All mis-
takes must be reasonable or just for the contract to be avoided. If the
mistake is unreasonable, then the law would not excuse it. This would be
affected by the Quasi mutual assent rule. This rule states that where a
party, by his words or conduct leads another (as a reasonable man) to
believe that he was assenting to the terms proposed by him, and that
party upon that belief enters into the contract with him, the man thus
conducting himself would be equally bound as if he had intended to agree
with the other party’s terms. This is known also as the Smith and Hughes
doctrine (1871 LR 6 QB 597) as it was first enunciated in the case with
that name. Also in the South African case of Collen v Rietfontein Engi-
neering Works, 1948 (1) SA 413.
2.5.2 Common Mistake

Both parties make the same mistake; e.g. in a contract of sale both parties
believe that the goods are in existence whereas they have been destroyed.
The contract is void.
2.5.3 Mutual Mistake

Here the parties have negotiated at cross purposes. The offer made is not
the one accepted; e.g. A intends to sell his Mini car to B but B thinks the
offer relates to the Pajero also owned by A. There is no meeting of the
minds. The contract is therefore void.
The mistake must be material. Material mistake would be mistake for

instance on the identity of the subject matter or its content and not mis-
take on the motive or reason for contracting.
2.6 Misrepresentation
A representation is a statement of fact made during the negotiation stage
which becomes one of the reasons that induces the other party to enter
into the contract. It becomes a misrepresentation if the facts are false. A
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statement of opinion, even if false does not amount to a misrepresenta-

tion. Everyone is entitled to his opinion.
However, if one states that he holds a certain opinion whereas he does

not, this will be a misrepresentation of his state of mind. The party can
avoid the contract.
2.6.1 Requirements
Â it must be false;
Â it must be made by the other contracting party;
Â it must be made before or at the time the contract was entered
into;
Â the statement must be material;
Â the innocent party must have contracted on the faith or basis of
the statement. When a true statement subsequently becomes un-
true, silence may amount to misrepresentation if the maker is aware
of the changed position. There is now a duty to speak.
2.7 Types of Misrepresentation

2.7.1 Fraudulent Misrepresentation
Â It involves a false statement made with full knowledge of its falsity.
Â It may involve making reckless statements without caring about
its truth. Recklessness amounts to fraud but negligence does not.
Â It also involves making a statement when in doubt about its truth
but nonetheless closing one’s eyes to all avenues of the truth. This
is fraudulent diligence in ignorance.
2.7.2 Negligent Misrepresentation

A statement must be made negligently. He who made it intends to induce
the contract. He fails to take steps which a reasonable man would have
taken in the circumstances. The maker must owe the other party a duty
of care. He must know that reliance is placed on his skill and expertise,
and that if statements are not true, the other party would suffer loss.
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2.7.3 Innocent Misrepresentation

The statement is made without intention to mislead (innocently).
2.8 Remedies
The contract is voidable in all instances, thus the innocent party has a
choice whether to uphold or rescind the contract.
2.8.1 Delictual Remedies

Damages are available for fraudulent and negligent misrepresentation.
No delictual damages for innocent misrepresentation.
Damages are/may be available whether the victim upholds or rescinds

the contract. The innocent party must be put in the same position (as far
as possible) in which would have been had the misrepresentation not
happened. Damages here are not contractual but are based on delict.
The innocent party must be put back to the position before the misrepre-
sentation. Not in the position he would have been had the contract been
properly performed - which is the basis of contractual damages.
Activity 2C
? * Explain the differences between a contract which is

void and one which is voidable.
2.9 Capacity to Contract

It is important to establish who the parties to the contract are. This is
important because some parties have no contractual capacity at all while
the ability of others to enter into contract is limited.
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2.9.1 Minors
Legal age of majority is 18 years. A child under the age of 7 years has no
capacity to act at all. He is unable to form an intention to enter into a
binding legal obligation.
Those above the age of 7 years must as a general rule have the assistance
of a guardian when entering into contracts. The guardian must give as-
sistance when the contract is being entered into or he must ratify after its
conclusion. When the guardian says the minor can do as he wishes this is
not assistance. The High Court is the upper guardian of all minors.
Contracts concluded without the guardian’s assistance are voidable at

the minor’s instance. The minor may withdraw from the contract without
incurring any obligations unless he has been unjustly enriched. His estate
cannot be benefited at another’s expense.
If the minor continues to use the subject matter after attaining majority
he will be taken to have ratified the transaction and he cannot withdraw.
The minor cannot keep the subject matter of the contract when he with-
draws from it. Unless he has used it in a manner which shows whims of
minority i.e. giving it away as a gift without any legal obligation to do so.
2.9.2 When a minor is bound by unassisted acts

Â When he is married. He cannot revert to minority even after
divorce.
Â When he is tacitly emancipated for all acts he is independent for
all purposes e.g. he has healthy finances, stays alone etc.
Â Partial emancipation. Only to do those acts related to his trade
e.g. cobbler would be allowed to purchase glue.
Â When guardian ratifies previously unassisted contract.
The law wants to balance two interests. Firstly, to protect minors from
their minority and secondly, to ensure that innocent third parties should
not suffer due to the conduct of others.
2.9.3 Mental Capacity/Insanity

Every person is presumed sane until declared insane by a competent court.
This is a requirement of the Mental Health Act. When a person is insane,
he has no capacity to conclude contracts. If he does, there would be no
right of obligations arising out of these. Such contracts are void.
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To establish whether the contract entered into by an otherwise insane

person is void, two questions have to be asked:
Â Was the person so mentally deficient that he did not know that he
was entering into a contract at all? If the answer is yes then the
contract is void as the person did not have intention to contract.
But even if the answer is no, the second question still has to be asked:
Â Was he so mentally deficient that although he knew that he was
entering into a contract, he did not appreciate the nature and
consequence of the transaction? If the answer is yes then the
contract is also void. For example, A may, due to mental defi-
ciency, know that he is entering into a contract but he may believe
that it is one of a sale when it is one of marriage!
During lucid times, an otherwise insane person can enter into valid contracts.
2.9.4 Intoxicated Persons

Alcohol or drugs may affect a person’s intention to be contractually bound.
Sometimes the effect of alcohol or drugs on a human mind is similar to
that of insanity. The same questions as on insanity have to be asked.
However, it is the person who alleges that alcohol or drugs prevented
him from forming an intention who has to prove this fact.
2.9.5 Insolvency
This is governed by the provisions of the Insolvency Act. An insolvent is
one who has been so declared by the Court. This may either be because
he has voluntarily surrendered his estate for the benefit of his creditors or
his creditor(s) have successfully had his estate compulsorily sequestrated.
The creditors would have discovered that the debtor has committed an
act which is stated in the statute to consist of an act of insolvency. They
then apply to the court for the debtor to be declared as an insolvent.
The insolvent may not dispose any of his assets so as to detrimentally

affect his estate without the consent of the trustee appointed to act on
behalf of creditors. He can however, enter into ordinary contracts to
sustain his life; e.g. contracts of employment. More on this topic is cov-
ered in Business Law II.
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2.9.6 Prodigals
This is similar to the biblical son who recklessly and extravagantly spent
his assets. He has to be declared a prodigal and a curator appointed to
manage his affairs. Somebody must prove why that person should be
declared a prodigal because the courts are not keen to interfere in per-
sonal affairs.
2.9.7 Artificial Persons

These are bodies which are given legal personality by the law. For exam-
ple companies, parastatals and the state. These have to act through duly
appointed agents. However, they are granted legal personality and can
sue and be sued in their own name so they can enter into contracts just
like natural persons. This is as far as it is competent for the artificial per-
son to enter into such contract. For example, a company cannot enter
into a marriage contract!
2.10 What Are the Terms?/what Does the Contract

Say?
In most contract disputes, parties disagree on what the terms of the con-
tract are. In the course of negotiations, various statements may be made,
some oral and others in writing. Not all statements so made are terms. A
term is a statement which has effect as part of the contract. It obliges the
party to act in a particular manner. A term defines the party’s rights and
obligations.
Terms must be distinguished from statements which are merely prelimi-

nary to negotiations. For example, those statements made before the con-
clusion of the contract are merely to lure customers: these are sales talk
or mere puffs. These are not legally important; i.e. this bicycle is the
strongest in Africa. Statements of opinion are also not actionable as eve-
ryone is entitled to his opinion.
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2.10.1 Types of Terms

Â Express terms - These are precise and certain as stated by the
parties.
Â Implied terms - Not expressed but the court may imply these from
the following:
Â Conduct of the parties.
Â Because the court believes that the parties would have agreed to
these terms if they had put their minds to them.
Â For business efficiency.
Â On the basis of custom or trade usage.
2.10.2 Conditions
These form a particular category of terms which determine whether a
contract comes into being or is terminated. They are of two types:
Â Suspensive condition/condition precedent - The flow of obliga-
tions is suspended until the condition is fulfilled. In the meantime,
there is merely a contractual relationship
Â Resolutive condition/condition subsequent - The materialisation
of the condition terminates the contract. The contract becomes
operative there and then until the happening of the uncertain
future event.
Activity 2D
? * Give two examples of suspensive conditions and two of

resolutive conditions. Explain in each case why the ex-
ample qualifies to be in that category.
2.10.3 Interpretation of Terms

We said that the courts do not make contracts for the parties. In deter-
mining what the terms of the contract are, the courts lean towards pre-
serving agreements rather than striking them down. Thus, courts prefer
an interpretation that will make the contract effective rather than one
which will cause it to fail.
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In interpreting contracts, courts take into account the intention of the

parties. This is ascertained from the words used. The contract is inter-
preted as a whole.
When a meaning must be attributed to particular words, these are given

their ordinary everyday grammatical or popular meaning. The exception
is when doing this would result in absurdity or when it can be proved that
the words were used in a technical sense. For example, the word ‘riot’
would obviously refer to the chaotic disorder by more than one person.
Where the transaction is merely ambiguous, the words would be given

the meaning which suits the agreement. One rule which is important where
there is ambiguity is the contra proferentum rule. The effect of this rule
is that any ambiguity in a written document will be interpreted against the
person who drew up the document and now purports to rely on it. This
rule is a fair one.
2.11Breach of Contract
Where a party does not perform the contract properly, this amounts to
breach. Both the debtor and the creditor may breach the contract. Breach
may be due to the following:
Â Doing what one promised not to do. This is positive malperformance.
Â Stipulating that one no longer wants to perform as agreed. This
is repudiation.
Â Showing clearly that one will not perform when time for
performance is up. This is anticipatory breach.
Â Late performance when time for performance is given and important.
However, where no time for performance is given, then the creditor should
give notice so as to make time important and therefore put the debtor in
mora/delayed performance.
2.12 Remedies for Breach

What does the innocent party do when his contract has been breached?
Where one party breaches the contract, the other is entitled to contrac-
tual remedies:
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2.12.1 Specific performance

To achieve what the parties initially intended or a substantially similar
result.
This remedy would not be granted if it is impossible to accomplish, or if

to demand this would cause undue hardship on the defaulting party. Or
where performance of a personal nature. Demanding skill or expertise of
the defaulting party
2.12.2 Cancellation of the contract

If the breach is serious, the innocent party can regard the contract as
cancelled and raise breach as a defence if sued on it.
2.12.3 Damages
The object of awarding a sum of money to the innocent party is to com-
pensate him/her for loss arising from breach. It is important that the
innocent party whose contract is breached must not just sulk, but do his
best to minimise his loss. In contract, one is not awarded damages for
hurt feelings or disappointment.
The loss or damages must not be remote. It must result from the normal
course of the breach.
Amount or quantum - the innocent party must be put in the same posi-
tion (so far as money can do so) as if the breach had not taken place.
2.12.4 Interdict
This is obtainable before breach. To prevent the other party from breach-
ing the contract one applies to court for an order.
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2.13 Termination of Contracts must Be Distinguished

from Termination of Offer
2.13.1. Performance
When parties have performed what they agreed on. There is nothing else
to do. Thus the contract is therefore terminated.
2.13.2 Agreement
A contract is a result of agreement so it can be terminated by the same.
2.13.3 Set-off
Where parties are reciprocally indebted and the debts are of the same
nature, then they are terminated by set-off. However, if one debt is
greater, then the smaller is discharged and the greater reduced by the
amount of the smaller. Both debts must be due for payment.
2.13.4 Merger/confusio
One person becomes both debtor and creditor in respect of the same
obligation e.g. tenant buys the house which was the subject of the lease -
he becomes his own land lord and the contract of lease is terminated.
You cannot contract with yourself.
2.13.5 Supervening impossibility

This terminates a contract if the contract was initially possible to per-
form, but due to no fault of both parties it then becomes impossible to
perform. This may be due to vis major act of the State or God. This is
an act beyond the control of either party. For example, if one of the
parties is declared an enemy by the State.
2.13.6 Novation
This consists of an agreement between the parties substituting the terms
of the old contract with a new one. This terminates the old contract.
Novation may be made compulsory by the court or voluntarily by the
parties.
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2.13.7 Delegation
In this case a new debtor is introduced into the transaction with the agree-
ment of the creditor. This releases the old debtor. Agreement of creditor
is important as the creditworthiness of the new debtor is a material factor.
2.13.8 Cession
This is transfer of personal rights. A new creditor is brought into the
transaction. There is no need for agreement of the debtor as it does not
matter who he pays as long as the debt remains the same. The debtor
must be notified to avoid double payment.
2.13.9 Prescription
This means the time limit has expired. It is possible to fail to enforce
rights after the passage of a certain time period. Prescription runs from
the time the claim becomes enforceable. It is also possible to acquire
rights through passage of time e.g. if one occupies another’s land openly
for over 30 years then it is possible to acquire ownership by prescription
(if other essentials are met) acquisitive prescription.
2.13.10 Death
The death of a party terminates the contract only where the obligations
are of a personal nature. If not, then the estate of the deceased would
have to bear the liability.
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Activity 2E
? * Explain whether the contract has been terminated

in each of the following situations:
1. a) John agreed to sell Dixon his race-horse. Unknown to

both parties the race-horse had died before the conclusion of
the contract.
b) As in (a) above but the race-horse was still alive but John died
before the horse was delivered.
c) As in (a) above but John now wants to deliver a breeding horse
instead. If Dixon agrees, what would this amount to?
d) As in (a) above but Dixon has directed that the horse be
delivered to Tom who would pay the purchase price.
2. What are the major differences between duress and undue
influence?
2.14 Summary
In this Unit we learnt that a contract is based on agreement. One cannot
agree on his own so there must be more than one person.
Â We also noted that people are free to choose their contracting
partners.
Â Not all agreements are enforceable. For contracts to be enforce-
able, they have to comply with certain requirements.
Â We learnt that in certain circumstances, a party can withdraw from
a concluded contract of he/she can prove grounds for avoiding or
withdrawing from it. For example duress, undue influence or mis-
representation.
Â We also looked at what amounts to breach of contract. One does
not have to wait until his contract is breached before seeking rem-
edies. We noted that at law the innocent party has a duty to mini-
mise his losses.
Â We then looked at remedies available to the innocent party when
his contract is breached. Contractual remedies aim at putting the
innocent party in the position he would have been in had the con-
tract been performed.
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Consensus: Agreement
Privity of contract: A recognised freedom to choose a contracting partner
Void: A legal nullity
Voidable: Valid but the innocent party may choose to avoid
Capacity: Ability legally to contract
Quasi-mutual assent rule: A subject test for agreement in contracts
Contra proferentum rule: An ambiguous statement is interpreted against its

author
In mora: To blame for delay
Quantum: Amount or quantity
Merger: Assuming of two titles by one person
Novation: Agreeing to vary rights and obligations
Prescription: Limit by which one may enforce rights
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Essential Reading
Textbooks
Christie R.H., (1985) Business Law in Zimbabwe, Juta & Co (Ltd)
Christie R.H., (1993) The Law of Contract in South Africa, Butterworths,
Durban.
Swanepoel JPA (1995) Introduction to Mercantile Law, Eighth Edition, Juta
& Co (Ltd)
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Unit 3 Purchase and Sale
3Unit T hree
Purchase and Sale
I n this Unit we now look at a special type of contract. This is a

contract which has its own essential requirements. This is a very com-
mon type of contract which we all enter into without much thought.
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When you come to the end of the Unit, you should be able to:
* define a contract of sale;
* distinguish between things which can and cannot be bought or sold;
* discuss requirements for ownership to pass from seller to buyer;
* explain the concept of risk in contracts of sale;
* discuss the various methods by which delivery may be effected;
* explain the duties of the buyer and seller;
* describe some special types of sale for example Cost Insurance and Freight,
Free on Board and Sale on Approval.
3.2 Essential Elements of a Contract of Sale

We must remember that a contract of sale is a contract just like any other
contract, thus it must meet all the essential elements of a contract which
have already been considered in Unit 2; that is, the agreement must be
legal, parties must have contractual capacity, terms must not be vague, it
must be enforceable etc.
Further, the contract must meet those essentials peculiar to a contract of

sale. These are:
Â Agreement must be one of sale.The courts will always look at the
transaction and call it what it amounts to despite what the parties
decide to call it.
Â For example, contracts of sale must be distinguished from gifts or
free offers or donations. They must also be distinguished from ex-
change or barter.
Â There must be an agreement on the article which is known as the
thing/merx or subject matter of the sale. This is important be-
cause some things cannot be sold and the sale of others is restricted
or subject to regulations.
Â In a contract of sale a price must be paid for the thing or the parties
must have agreed that the price will be paid in the future. Thus an
agreement to sell for free is not a sale.
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Activity 3A
* Give a list of things which cannot be sold and reasons
? why they cannot be sold.
* Also give a list of things which are sold subject to
regulations and name the regulations in each case.
3.3 Things which cannot be Sold

Â The right to inheritance to a person who is still alive cannot be
sold. But a right to inheritance to a deceased person can be sold
Â Stolen property and property belonging to third parties can be val-
idly bought and sold. The reason is that in Zimbabwean law of
purchase and sale the contract of sale is kept separate from p a s s -
ing of ownership. The sale of stolen property is valid, but the seller
cannot pass ownership. This is because one cannot pass a greater
right in the property than one actually has. This is expressed by the
concept nemo dat quad non habet. The thief has no right in the
property therefore the true owner has a right to recover the goods
from whoever may be in possession. This is known as the vindicatio
right. Where the thing bought has been recovered by the true owner,
the buyer can only recover the purchase price from the seller where
he is still available. Note that the buyer should not prematurely
surrender the goods, lest he surrenders to another thief. The buyer
should afford the seller a reasonable opportunity to come to his
protection. If a buyer purchases goods with knowledge that they
were stolen or where he ought to have known from the surrounding
circumstance that they were stolen, then he is an accomplice after
the act and has no remedies
Not only tangible things can be sold - those which can be touched e.g. the
book, but intangible things can also be sold e.g. goodwill, trade marks and
patents.
Not only existing goods can be sold. These are goods already in the pos-
session of the seller. Non-existent or future goods capable of coming
into existence may be bought and sold. For example, a future harvest or
catch of fish. This is sale of hope known as Res Spei. Unascertained goods
can also be sold. These are goods which need to be counted, weighed or
measured to the buyer’s specifications.
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Activity 3B
? * What are the exceptions to the nemo dat quad non habet
rule?
3.4 The Price/Pretium

There must be agreement as to the price. The price is important as it
distinguishes a contract of sale and gifts or donations or exchange. There
can be a valid agreement to sell at a price to be determined by a third
party who agrees. If the third party does not agree, then there is no sale.
The price must be in current money not in goods. However, where the
value of goods is insignificant, the court may still call it a contract of
sale.
3.4.1 Passing of Risk and Ownership Risk

You should be able to understand the aspect of risk. This has no relation
to the aspect of ownership. Risk refers to the issue of who bears the loss
due to accidental deterioration, damage or loss to the merx/thing after the
conclusion of the contract but before delivery. The issue of risk does not
arise before the contract is concluded. It also does not arise after deliv-
ery. It is important to note that the issue of risk also entails benefits
accruing to the merx at the same time. For example, if A buys a cow from
B and there is agreement on the cow to be bought and the price, if the
cow calves before delivery and payment of the purchase price, the calf
belongs to the buyer. The general rule is that risk passes to the buyer as
soon as the contract is concluded, or is perfecta. This rule has nothing to
do with the issue of ownership.
There are exceptions to the general rule. These are as follows:

Â The parties are free to agree to the country i.e. to vary the general
rule.
Â Where the seller has delayed delivery - he is in mora if the loss
would not have occurred had he delivered timeously.
Â Where the seller is negligent in the business sense.
Â Where the sale is one of unascertained goods. Risk would only
pass when the goods have been ascertained i.e. there has been
counting, weighing and measuring the goods before risk passes.
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For example, if A buys 50 bags of maize from B, and before deliv-

ery B’s entire stock is destroyed by fire, then risk has not passed to
A because the goods have not been ascertained, weighed, counted
or measured.
Â Where the contract is subject to a suspensive condition. This is
because there is only a contractual relationship before the condi-
tion is satisfied. The obligations are suspended.
Â If the contract is void for one reason or another. Because a void
contract does not give rise to any obligations.
Activity 3C
? * Advise X in each case:

a) X contracts for the supply of a new carpet from Z
(Pvt) Ltd which has been specifically ordered for him
from a manufacturer. Before delivery, Z’s premises are destroyed
by fire and the carpet is lost.
b) As in (a) except the carpet was manufactured by Z (Pvt) Ltd
and had not been selected from the bulk of carpets earmarked
for the customers.
3.4.2 Ownership
Ownership is a bundle of rights which include among others the right of
use of the merx, the right of enjoyment, possession or the right to alienate
the item. Ownership is a real right which can be claimed against the
whole world. A person may have a right of ownership without actual
possession of the item. Conversely, a person may have possession with-
out ownership.
For ownership to pass, certain requirements must be met. These are as

follows:
Â The seller must be owner. The nemo dat quad non habet principle.
This means one cannot pass a greater right than he actually has..
Â The thing must be capable of being owned. If not, then ownership
cannot be passed. For example, air cannot be owned.
Â The seller must intend to pass ownership while the buyer must
intend to receive ownership.
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Â The purchase price must have been paid or credit must have been
given. There is a presumption that sales are for cash unless the
seller is taken to have waived or given up his right to receive cash.
Thus, in a credit sale ownership passes to the purchaser. Thus in
Hire-Purchase transactions, ownership of goods does not pass to
the purchaser until the payment of the last instalment.
Â The seller must have delivered the thing to the buyer. As a general
rule, delivery entails the seller putting the goods at the disposition
of the buyer. Thus delivery ordinarily takes place at the seller’s
place of business. We must note that at law, the seller is not obliged
to deliver the goods to the buyer’s place. Delivery is ordinarily
subject to agreement between the parties
There are however, a number of recognised ways of delivery:
3.4.3 Actual delivery

This is from hand to hand physical delivery otherwise known as manu de
manu delivery.
3.4.4 Delivery with a short hand

Known as brevi manu delivery. The buyer already possesses the merx he
buys because of a previous transaction: for example he had borrowed the
computer. When he buys it the seller does not have to redeliver.
3.4.5 Delivery with a long hand

Here the goods are bulky to be moved, or the movement of such goods
may be for the time being prohibited. The seller merely points at the
goods which shall then be taken to belong to the buyer. The is delivery
longa manu.
3.4.6 Symbolic delivery

The seller delivers something other than the goods. What is delivered
here must give the buyer exclusive control of the goods e.g. keys to a
house or bills of lading to goods still at sea.
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3.4.7 Attornment
Goods are delivered to a third party who acts as agent of the buyer.
3.4.8 Constitutum possessorium

The seller keeps the goods on behalf of the buyer. The courts do not
favour this type of delivery as it may tempt and lead to fraud.
3.4.9 Registration
Ownership in immovable property is passed by registration according to
the provisions of the Deeds Registries Act. Thus the purchaser of a house
who has paid cash without having the house registered in his name would
not become the owner.
Activity 3D
* Explain whether ownership has passed in each of the
? following:
a) Farai is paying lobola to his father-in-law. He takes
him to his cattle kraal and points out six beasts which
he says are for the payment. However, there is a regulation pre-
venting the movement of animals from one area to another and
the father-in-law cannot take the animals. Three of them are struck
by lightning and die before they are possessed by father in law.
b) Gilbert borrowed a mountain bike from Mike. Mike has migrated
to Zambia and has no intention of coming back to Zimbabwe.
The two have agreed that Gilbert buys the bike for $2 000.00.
Mike has not been paid.
c) Tafuma has bought rice from Satisfy (Pvt) Ltd a company regis-
tered in Zoland an overseas country. Tafuma has received the bills
of lading which he sells to Joe. When the rice arrives by sea, it is
found to be musty and unfit for human consumption.
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3.5 Duties of the Seller

We now look at what the seller is legally obliged to do. These duties do
not arise out of agreement with the buyer, but out of the law. This means
that the duties are implied by the law. The duties are as follows:
Duty to deliver the goods. By any method of delivery already considered.
Where the seller delays delivery he will be in mora and risk may revert
back to him.
Â To keep the goods in safe custody until delivery. If the seller is

negligent in the business sense, then he may become liable to the
buyer. If the buyer delays taking the goods, then the seller would
be liable only for wilful acts or gross negligence.
Â Duty to guarantee undisturbed possession of the goods. (vaccua pos-
sessio). Remember the seller does not guarantee that he is owner.
He only guarantees that no one with a greater title will disturb the
buyer. However, the buyer has (Loci standi) the right to take his
own legal action where his possession is disturbed by those without
any title.
Â Duty to guarantee against latent defects. Latent defects are those
which are not obvious to the naked eye. The buyer dos not have to
carry out a cruel examination of the subject matter or to employ an
expert to do the examination. The seller does not have to guaran-
tee against patent defects. These are obvious defects such as a
table with one of the legs shorter than the rest.
Â The duty would be excluded or not apply where the sale is voetstoots
i.e merx is sold as it stands. This fact has to be brought to the
attention of the buyer.
3.6 Remedies to the Buyer

Where the goods are defective the buyer has some remedies at law. We
should remember that these remedies are for latent defects only. These
are not obvious to the naked eye. The remedies are as follows:
3.6.1 Actio Redhibitoria (Rescission)

The defect must be material and not trivial. The test of materiality is an
objective one not merely that this particular buyer, due to his whims,
considers the defect to be so material. The defect must be latent.
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In this action the buyer must prove that the defect is of such a nature as
to make the merx unfit for the purposes for which it was bought. Also
that had he known of the defect, he would not have bought the item. We
must be careful not to allow the buyer who is wise after the event, to be
his own judge.
Buyer returns the merx and gets his purchase price. This is also the case
where the merx perishes due to the inherent defect. For example, if ani-
mals bought die of an unknown disease which existed at the time of the
sale, the buyer should take back the horns and get his purchase price.
If more than one item is bought i.e. major item and accessories - a defect
in the major item would entitle the buyer to actio redhibitoria whereas a
defect in the accessory may not.
If the items are bought as a unit, then a defect in one entitles rescission
of the entire unit.
Note: This action is different from the one where the buyer claims that
the wrong goods have been delivered. This would amount to breach of
contract.
3.6.2 Actio Quanti Minoris

The buyer retains the merx and claims a reduction in the purchase price.
In this case the buyer may still want the merx anyway, or he/she may no
longer be in a position to return the merx. The remedy is the difference
between the price paid and the market value of the item in its defective
state. This may be deducted from the cost of repairs.
Â Where the merx is defective, the seller does not have a legal right
to ask to be allowed to repair it. An exception is where the nature
of the contract and goods would allow such repairs, e.g. supply of
artificial teeth. A supplier may be allowed to adjust them where
they protrude. Similarly, a supplier of suits to fit would be allowed
to alter them.
Â Where the buyer suffers damage to his own material as a result of
the defective merx, this would amount to consequential losses.
Ordinarily, the seller is not liable for consequential damages.
The exceptions are:
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Â If he warranted that the merx is free of defects. Then the seller’s

liability is based on breach of warranty. Actio empto.
Â If seller knew of the existence of the defect and deliberately con-
cealed it there is fraud.
Â If the seller is a manufacturer or dealer who professes to have ex-
pert knowledge of the merx he is selling.
Both Actio Redhibitoria and Actio Quanti Minoris are known as Aedilition
Remedies.
Activity 3E
? * Explain situations when the buyer may not be entitled

to aedilition remedies.
3.7 Obligations of the Buyer

The buyer also has obligations which arise from the law. He is obliged to
do the following:
Â To pay the purchase price. This is the most important of the buy-
er’s duties. For example, the buyer must pay the purchase price.
Â The buyer is obliged to accept delivery. Where the buyer has de-
layed accepting delivery, then the seller’s duty of care is reduced.
He will be liable only for gross negligence.
Â Duty to reimburse the seller for necessary expenses.
3.8 Some Special Types of Sale

3.8.1 F.O.R. (Free on Rail)
It may be free on rail sender’s station or buyer’s station. In the former,
which is more common, the seller’s duty is to pack the goods and deliver
them to the nearest railway station and load them on trucks destined for
the buyer’s station. The railways then become the agent of the buyer.
However, if it is F.O.R. buyer’s station, then the obligations of the seller
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only end when the goods are at the buyer’s station. This means the rail-
ways become the seller’s agent. The former is a more expensive contract.
3.8.2 F.O.B. (Free on Board)

The seller delivers the goods to the harbour and puts them on board a
ship. The same rules as in F.O.R. apply.
3.8.3 C.I.F. (Cost, Insurance and Freight)

The seller must pack the goods, deliver them to the docks, load them on
a ship proceeding to the buyer’s port. He must pay for them to the port of
destination. He must get the required documents; i.e. contract of car-
riage, bill of lading, document of title and receipts. The documents must
be sent expeditiously to the buyer. They must also include the policy of
insurance.
As the bill of landing is a document of title, delivery of it to the buyer is

symbolic delivery of the goods. Ownership passes to the purchaser on
delivery of the bill of lading. The risk passes to the purchaser as soon as
the goods are on the ship. The issue of risk is not all that important as the
goods are supposed to be properly insured.
3.8.4 Sale on Approval

This is a sale which is conditional upon the merx being approved by the
buyer. This is a suspensive condition. If the approval is not given, then
the obligations do not flow.
3.9 Summary
In this Unit you learnt that a contract of sale is a special contract. This
contract must have all the essentials of a valid contract plus those essen-
tial peculiar to contracts of sale.
Â We looked at why some things are incapable of being sold and also
why at law sale of stolen property is valid. However, we noted that
the seller of stolen property cannot pass a greater right in the prop-
erty than he actually had.
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Â We looked at what happens if the property is accidentally destroyed

or damaged after the conclusion of sale but before delivery. This is
the concept of risk.
Â We also looked at the legal requirements for ownership to pass to
the purchaser. We noted that ownership would not pass to the
purchaser unless the buyer has intention to receive ownership and
seller also intends to pass it.
Â The Unit looked at common law duties of the parties. These duties
do not arise out of agreement of the parties but out of the law.

Merx: Subject matter of contract of sale
Nemo dat quad non habet: One cannot pass a greater right than one actually
has
Vindicatio right: The right of owner to get back his property from an
other who has no right
Spei: Hope
Risk: Liability for accidental loss or deterioration of subject

matter after conclusion of contract but before delivery.
It also entails the concept of benefit accruing to the
subject matter at the same time
Perfecta: Concluded in all respects
Vaccua possessio: Free undisturbed possession
Latent defect: A defect not obvious to the eye
Actio Redhibitoria: Action for rescission
Actio Quanti Minoris: Action for reduction of price
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Essential Reading
Textbooks
Christie R. H. (1985) Business Law in Zimbabwe, Juta & Co. (Ltd)
Swanepoel J.P.A. (1995) Introduction to Mercantile Law. Butterworths, Durban.
Christie R.H. (1993) The Law of Contract in South Africa. Butterworths,
Durban.
Willie, (1991) Principles of south African Law, eighth Edition, Juta & Co.
(Ltd)
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Unit 4 Agency Law
4Unit Four
Agency Law
I n this Unit we look at creation of contracts

through an agent. Ordinarily the contracting people negoti-
ate directly and conclude their contract. It is also common for
people to act through others so as to conclude binding contracts.
We now look at the three sided transaction - that is the giving of
the authority or mandate to the agent, the negotiation between
the agent and the third party and the resultant relation between
the principal and the third party.
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4.1 What you will Learn

When you have finished this Unit you should be able to:
* define an agent;
* explain how an agency situation is created;
* describe rights and duties of agents and principals;
* explain how the relationship between agent and principal is terminated.
4.2 The Need for an Agent

Many business transactions are carried out through agents. The law may
require that such transactions be carried out by that special type of agent.
For example, the registration of immovable property may only be done
through a special lawyer/legal practitioner.
It may also happen that the party has limited contractual capacity and for
his contracts to be valid his legal agent must either assist or act on his
behalf. Examples would be trustees acting on behalf of the insolvent,
the guardian on behalf of a minor, a curator on behalf of a mentally
deficient person etc.
Here we are concerned with a voluntary agent, in a situation whereby the

principal can act for himself. This agent is voluntarily chosen by the
principal to act on his behalf.
The reasons for choosing to act through an agent are many. One may
arrange a holiday through a travel agent who will make contracts with
hotels, airlines and tour operators.
We may appoint agents simply because we do not have time to do the

acts ourselves. Or the agent may possess the necessary expertise within
that market. We may have difficulties ourselves because of the distance
involved. Or it may be a practice acceptable in the industry we are deal-
ing in.
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Unit 4 Agency Law
4.3 Definition
Â Agency is a contract.
Â One person (the principal) employs another (the Agent).
Â To act for the principal and enter into contractual and other
relationships.
Â The transactions would be binding between the principal and third
party.
Unlike the simple contract between two people, in agency three people
are involved and there are two contracts. These are the following:
Â The one on whose behalf the acts are done is the Principal.
Â The one who is to act is the Agent.
Â The other person the agent deals with is a third party.
There must be a contract between the agent and the principal giving the
agent the power to act on his behalf. This is a contract of Mandate.
The second contract is the one which comes out of the negotiations by
the agent with the third party but this is binding only between the princi-
pal and the third party.
Principal
Contract
Mandate
Agent Negotiation Third Party
Thus the agent must have contractual capacity so as to enter into the
contract with the principal.
But as far as third parties are concerned and their relationship with the
Principal, any person of adequate understanding may act and bind the
principal. The agent is a mere instrument of the principal, he falls out of
the picture after the conclusion of the contract between the Principal and
the Third party.
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4.4 Creation of Agency

4.4.1 By express agreement
This must be clear. Whether the authority to act is given orally or in
writing. Where express authority is given, the agent is not permitted to
exceed the four corners of the mandate.
4.4.2 Implied agreement

This is inferred from the circumstances. The test is whether a reasonable
man, when assessing the conduct of the parties, would consider that the
parties have agreed to act on a basis which can be characterised as an
agency. The existence of a special relationship; e.g. employer and em-
ployee, partner and co-partner, may assist in deciding whether there is
implied authority.
4.4.3 Ratification
Important points with ratification are:
Â The agent acted without authority.
Â He represented to the third party that he was acting on behalf of
the principal.
Â The principal then adopts the transaction so as to clothe it with
retrospective authority.
Â The principal must adopt the whole transaction and not only
advantageous parts of it.
Once ratification has taken place, the effect is to place the parties in the
position they would have been in had the agent originally had authority.
4.4.4 Estoppel/Ostensible Authority

Where a person, by words or conduct, represents (or permits it to be
represented) that another person professing to bind him has authority to
do so, he will not be permitted to deny the agency against a third party
who acts on the faith of that representation as to prejudice himself. In
this case the principal is bound by what the agent does when there is no
express, implied authority and no ratification. In fact, in estoppel the
principal would be denying the existence of authority and is prevented or
estopped from denying its existence. Note: The representation must come
from the principal and not the agent.
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Unit 4 Agency Law
4.4.5 Usual Authority

This is a result position. Where one is employed in such a position where
people employed in such positions usually do certain acts, he will bind his
principal if he does a similar act. For example, one employed as a direc-
tor may bind his company if he does those things directors ordinarily do.
Even if his power is limited by the articles of association.
4.4.6 Negotiorum Gestio/Agent of Necessity

These are acts done without authority. The courts do not look favour-
ably to unauthorised interferences in other people’s affairs. As a result
these are very limited.
They act justifiably on behalf of another in cases of emergency.
There should be no prohibition. The intention must be to benefit the

other party. They are then allowed to recover their expenses. The party
they act for is not a principal as such but is called the dominus.
The situation should be such that it is impossible or impractical to com-

municate with the dominus.
Examples would be feeding uncollected animals or taking care of per-

ishables.
Activity 4A
? *
*
Distinguish between agency by estoppel and ratification.
A is owner of a farm managed by B. A had previously
expressly forbidden B to buy any further supplies of cattle
feed on credit without A’s consent. Despite these instructions B
purchases more cattle feed on credit from J, who had supplied
previous orders and had been paid by A. Further, A sees J’s deliv-
ery van supplying the cattle feed but does nothing.
* A now refuses to pay on grounds that the purchases were
unauthorised.
* Advise A.
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4.5 Rights and Duties Between Agent and Principal

Â The duty to perform the mandate. The agent must do what he is
mandated to do. If he does not then he is not entitled to any com-
mission or he may be liable to the principal for any loss arising out
of breach of contract. The courts have decided that in some cases
substantial performance by the agent would be enough to entitle
the agent to commission.
The Agent must follow the principal’s instructions fully except where
the instructions are illegal. He must not exceed his authority.
Â The agent must exercise reasonable care, skill and diligence in the
performance of his mandate.
Â Duty to act in good faith. This is an important duty. The relation-
ship between the principal and agent is a fiduciary one. It is one
of utmost good faith. The agent binds himself to act in the interest
of the principal. He must act honestly, loyally and single-mindedly
in the principal’s interest. This duty includes the following:
– The agent must not make a secret profit in pursuing the prin-
cipal’s mandate. If he does, then the profit belongs to the
principal. For example, an Estate agent who buys the princi-
pal’s house and resells it for a profit breaches his duty.
The agent should not be bribed
– He should not allow his interests to conflict with those of the
principal. In case of risk of conflict, the agent must make
full disclosure and obtain the principals informed consent.
– The agent should not abuse confidential information.
The duty not to delegate authority. The concept of delegatus non potest
delegare means that a delegate must not sub-delegate. There are however
exceptions to this rule. For example, where it is trade, business usage or
Ministerial duties not involving the exercise of the agent’s discretion or
skill the agent may validly sub-delegate.
Duty to account. He must keep proper accounts of money received or

spent on behalf of the principal and must allow the principal access to
these books.
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Unit 4 Agency Law
4.6 Principal’s Duties to the Agent

The principal also has common law duties owed to his agent. Some of
them are as follows:
Â The duty to remunerate the agent for services. Commission is paid
according to agreement. It is only paid after substantial perform-
ance. If there is no agreement as to the amount, then courts will
look at the value of the service to the principal, time pended by
agent, his expertise and the prevailing market rates. So as to deter-
mine what commission is to be paid;
Â The duty to indemnify and reimburse the agent where the agent has
incurred liabilities or made payments on behalf of the principal,
he is entitled to indemnification and reimbursement for payments
made. These must be necessary expenses and payments. The agent
should have been acting within the scope of his authority;
Â Where the agent has performed his mandate, he falls out of the
picture. The only parties who remain are the principal and the third
party. However, the agent may not disclose the existence of the
principal. In this case the agent becomes personally liable. But if
the third party discovers that the agent was actually acting for an-
other person, he may choose to hold the undisclosed principal to
the contract.
4.7 Termination of Agency

The agency situation is terminated in several way including the
following:
Â By acts of the parties;
Express revocation of authority by the principal or express
renunciation by the agent;
Â Death of either party, insanity or insolvency of either party;
Â Supervening illegality e.g. the principal is declared an enemy alien;
Â Where appointment is for a specific time, then expiration of the
time;
Â Having completed the assignment as tasked.
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Activity 4B
? * Consider each of the following situations and give

the principles of law involved:
A. X was appointed by Y to find a buyer for Y’s car. X without
Y’s agreement purchased new mag-wheels for the car and also
instructed B to re-paint it. He has now sold the car and de-
mands a refund for the mag-wheels and the new paint-work.
B. S is a cattle rancher. T’s horses have strayed into his farm. S
does not make any effort to contact T. He buys stock feed
and feeds and waters the horses for three weeks. When one
of the horses shows signs of illness, S hires a Veterinary Sur-
geon to attend to it. He now claims his expenses from T.
C. G is appointed to do certain work by E. He has substantially
carried out the work, but has to appoint F to do part of the
work as F is more skilled than him in this field. F has pre-
sented E with an exorbitant figure as his price. E is refusing to
pay.
4.8 Summary
In this Unit we concluded that an agent concludes a juristic act on behalf
of the principal. The result is that he creates legal this between the prin-
cipal and third party.
Â We noted the rights and obligations which arise from the agent’s
negotiation accrue to the principal only.
Â We concluded that for the principal to be bound by an act of the
agent, authority has to be established in one way or another. The
principal may also be bound because he voluntarily took on the
agent’s previously unauthorised act or he is by law prevented from
refusing that the agent was his agent.
Â We also looked at the special relationship between the agent and
the principal. This relationship is of utmost good faith based on
trust and loyalty.
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Unit 4 Agency Law

Agent: A person who acts on behalf of another person
Fiduciary relationship: A relationship of trust and loyalty
Mandate: The agreement through which the agent agrees to

perform the principals instructions
Principal: The one who engages the agent
Ratification: Adoption of an act performed by another who had

not been given authority to act
Estoppel: Prevented from denying
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Essential Reading
Textbooks
Christie R.H., (1985) Business Law in Zimbabwe. Juta & Co (Ltd)
Christie R.H., (1993) The Law of Contract in South Africa. Butterworths,
Durban.
Swanepoel J.P.A. (1995) Introduction to Mercantile Law. Eighth Edition,
Juta & Co (Ltd).
Willie (1991) Principles of South African Law. Eighth Edition, Juta & Co.
Ltd.
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Unit 5 Employment Law
5Unit Five
Employment Law
I n this Unit we look at one of the most important

contracts in society. An employment contract governs the relation
between an employer and employee. We should also note that because
of the importance of this relation, the State also has an interest to pro-
tect. As a result the State; through the Labour Relations Act, regulates
this relationship between the employer and employee.
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When you come to the end of this Unit you should be able to:
* discuss the nature of a contract of employment;
* identify the differences between an employee and an independent
contractor;
* identify the situations where an employer will be liable for wrongful acts of the
employee. This is vicarious liability.
* list duties of the employer and employee;
* discuss situations when an employer is entitled to terminateemployment.
5.2 Principles of Employment Contracts

This is just an ordinary contract. One party provides his labour to another
in return for payment. The contract may be oral or written. The terms of
the contract may be expressly agreed by the parties. Where these are skimpy
or even non-existent, the terms would be implied due to the employer-
employee relationship e.g. the duty to obey lawful orders subject to the
provisions of the Labour Relations Act.
It is important to establish whether the contract is one of employment

proper. The reason is that an agreement for the provision of services per
se is not legally regarded as a contract of employment. Here there is an
independent contractor rather than an employee.
The independent contractor is not under the control of the employer in

as far as when he does his work, or how he does it. It is the degree of
control and supervision which is very important. The mere fact that one
wears company uniform or has use of the employer’s vehicles is not ma-
terial. The courts will look at the reality of the situation and decide whether
one is an employee or independent contractor. The way one has been
integrated in the employer's business may also be an important considera-
tion.
The relationship between employer and employee is extremely important

with respect to the aspect of vicarious liability in the law of delict.
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5.3 Vicarious Liability

An employer is liable (vicariously) for the wrongful act of his employee.
But not those of an independent contractor. The notion is that liability is
attached to one person although he may not be the actual wrongdoer.
The rationale is that the employer is in a better position to pay. That he is
able to control how the employee performs his work, and it is the em-
ployer who benefits from the conduct of the employee.
For the employer to be vicariously liable, the wrongful act of the em-
ployee should have been committed in the course of his employment.
The employee should largely have been doing his duties for the benefit of
the employer. He should not have deviated from his duties in terms of
time and space. Thus the employer will not be liable where the employee
commits the act while he is now on a frolic of his own. This is different
from doing one’s duties wrongly or negligently; e.g. a recovery driver de-
ciding to engage in a race with his friend and thereby knocking down a
pedestrian. The driver is still largely doing his duties though in an im-
proper manner.
The injured party may sue either the employee or employer or both of
them jointly.
Activity 5A
* Funny was employed by Fix It (Pvt) Ltd as a driver.
? He was tasked to deliver some materials to the company’s
customers. After delivering the goods, Funny decided to
proceed to Chitungwiza, twenty kilometers off his route. While
on his way he negligently drove his vehicle and injured Speed who
was crossing the road. Is Fix It (Pvt) Ltd liable?
* What are the reasons behind the concept of vicarious liability?
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5.4 Obligations of the Employer

5.4.1 Payment of Wages
The employer is obliged to pay the employee his remuneration.This is
ordinarily as agreed in their contract. In some cases statute gives the low-
est amount which an employer of a certain class of person must pay e.g.
domestic workers. In this case it is illegal to pay, less than the statutory
minimum wage.
5.4.2 To provide work

Legally the employer is not obliged to provide the employee with work.
However, where work is available, the employer should afford the em-
ployee the opportunity to do the work he was employed to do. Thus in a
case where an employer prevented his employee from doing work he was
employed to do, but still paid him his salary the court held this to be
constructive dismissal.
Where there is no work at one plant but work is available at another

location, the employer has a legitimate right to require the employee to
move to another location. This is the geographical mobility of employ-
ees.
5.4.3 Sick Leave

The employer must provide employee with sick leave. This may be as per
agreement. However, continued absence of employee, due to sickness is
a ground for dismissal.
5.4.4 Vacation leave

Employees are not legally entitled to vacation leave except those declared
by the law as public holidays.
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5.5 Duties of Employee

5.5.1 Provide Services
The employee must make personal services available to employment. A
contract of employment is one of personal service. The employee must
therefore render personal service to his employer. As a result, where there
is breach of contract by one party, the courts are unlikely to insist on
specific performance. Damages are more preferred.
5.5.2 Obedience
The employee must obey the employer’s legitimate lawful orders. The
order must be lawful. It must of course, be legitimate as far as the con-
tract is concerned. The employer may not legitimately demand that the
employee should perform work completely different from that which he
was employed to do, so as to amount to demotion or unilateral variation
of job specification.
5.5.3 Subordination
The employee must be subordinate to his employer and the line of au-
thority. Insubordination is a ground for dismissal.
5.5.4 Maintain bona fides/confidentiality

He must act in good faith in the interest of the employer. He should not
appropriate the employer’s property nor should he disclose confidential
information gained during the course of his employment.
Activity 5B
* X is employed by Kutambara Electrical (Pvt) Ltd as a
? supervisor in the electrical department. The company
has currently had difficulties in securing contracts. As a
result it is facing financial difficulties. Mr F, the Manager has re-
cently had arguments with X. The company has informed X that
due to lack of contracts, X would be demoted to a general worker
and his salary would be reduced. X has complained about this
move but has continued working for two months. Now X has found
another job. Does he have any remedies?
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5.6 Termination of Contract of Employment

5.6.1 This is ordinarily by notice from either party.
The period of notice may be as per agreement by the parties. The employ-
ment contract may provide for payment of money in place of notice.
Where no period of notice is stated in the agreement, common law pro-
vides that the notice period should be equivalent to the period when sal-
ary is paid e.g. Fortnightly salary - then fortnight is notice. Monthly salary
- month’s notice etc.
5.6.2 Summary termination of contract of employment

There are some common law grounds permitting the employer to sum-
marily terminate the contract of employment:
Â Wilful disobedience of lawful orders. This amounts to breach of
employment contract. The act must be deliberate.
Â Drunkenness so as to be unable to perform one’s duties or to inter-
fere with the work of other employees.
Â Continued/Persistent absence from work without reasonable ex-
cuse. This is misconduct justifying dismissal.
Â Dismissal for incompetence. It is taken that an employee impliedly
warrants his competence. This should amount to failure to afford
the required skill.
5.7 Summary
In this Unit we noted that the relation between employer and employee is
governed by the law of contract and the Labour Relations Act. The con-
tract of employment may be oral or written.
Â That the employer is only liable vicariously for the wrongful acts
of one who is an employee and not an independent contractor.
We noted that the wrongful act should have been committed while
the employee was in the course of his employment for the benefit
of the employer.
Â The employer has common law duties to the employee, but he is
not legally obliged to provide the employee with work.
Â We learnt that there are circumstances when the employer may
summarily dismiss the employee but in all other circumstances the
dismissal has to be after adequate notice has been given to either party.
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Employer: One who hires another to provide services to him.
Employee: One who is engaged in a contract for the provi-

sion of services in return for payment of wages.
Independent contractor:One engaged in a contract of services. He is not

closely controlled by the employer.
Vicarious liability: Employer’s liability for the wrongful act of his

employee.
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Unit 6 The Law of Lease
6Unit Six
The Law of Lease
I n this Unit we look at the letting and hiring of immovable property.

Owners of property may for a variety of reasons not want to use their
property themselves. They therefore would grant others the right to use
and enjoy that property in return for rent. The relationship between the
Landlord who is otherwise known as the Lessor and the tenant (Lessee)
is governed by principles of common law.
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When you come to the end of this Unit you should be able to:
* define the nature of a contract of lease;
* list the essential elements of a lease;
* describe the different types of leases and rights granted to the lessee
under type of lease;
* distinguish between duties of the lessor and the lessee;
* explain how the lease is terminated.
6.2 Law of Lease. What is a Lease?

This is based on the law of contract. The contract is a special one in that
it is concerned with immovable property only. It is a reciprocal agree-
ment between the lessor and the lessee whereby the lessor agrees to give
the lessee temporary use and enjoyment of the property in return for the
payment of rent.
A contract of lease does not confer ownership of the property on the

lessee. This distinguishes a contract of lease from a contract of sale. The
lessee is only granted a right of use and enjoyment. This means that the
lessee should not consume the subject matter of the lease. He should be
able, at the end of the period, to restore the subject matter in the same
condition in which it was. Fair or reasonable wear and tear is expected.
The deterioration should be as result of normal use.
As a result, if by its use, the subject matter would be consumed or the

lessee would not be in a position to restore it to the lessor, then a lease
cannot be created over such property.
6.3 Essential Elements

All essential elements of a contract have to be satisfied. In addition:
Â the lessor must give and the lessee must receive the temporary use
and enjoyment of the property;
Â there must be agreement on the property let;
Â there must be agreement on the rent to be paid.
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A lease is a reciprocal contract. It confers rights and imposes obligations

on both parties. These rights and obligations are a matter of terms by the
parties.
Like other contracts, a lease must be legal. For example, a lease of a

place to be used as a brothel is illegal. Such a lease would be void and
unenforceable. Thus if the lease is illegal, the court will refuse to enforce
a claim for rent.
6.4 Formalities
Writing is not a legal requirement for a contract of lease. An oral lease is
as binding as a written one. The parties may agree that the lease be in
writing. This may be intended as a record of the agreement.
Activity 6A
* Peter and Kumbi are the best of friends. Peter is a
? businessman and Kumbi is an accountant. The two
have a written agreement that Kumbi would stay in
one of Peter’s houses. In return, Kumbi would be responsible
for doing all of Peter’s business books. This is to last as long as
both parties are alive. What is the legal relationship between Peter
and Kumbi?
6.5 Duration
The lessee is only given temporary use and enjoyment of the subject matter.
Parties may agree on the duration. Basically, there are two types of leases:
6.5.1 Lease in Longum Tempus (Long Lease)

This is a lease of a period of more than ten years or for the lifetime of the
lessee. This lease gives a real right to the property. To obtain this right
over successors of the lessor, the lease must be in writing and registered
in the Deeds Registry. Where there is such registration the lessee’s right
will prevail where the property has been alienated or where the lessor
goes insolvent. The registration serves as notice upon the successors and
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creditors of the lessor. Every successor to the landlord takes the prop-
erty subject to the lease. The new owner is not entitled to terminate the
lease before the period fixed expires. He simply steps into the shoes of
the old owner and must honour all the obligations thereunder.
6.5.2 Short Lease

This runs for a period of less than ten years. This lease in practice does
not have to be registered. It may be a periodic lease which runs from
month to month. The contract of lease gives the lessee a personal right
only. Under the general law, the lessee has no right to remain in occupa-
tion against successors in title to the property unless the successor has
agreed to be bound by the lease. The lessee has some protection under
the rule Huur gaat voor koop which means hire goes before sale. This pro-
vides some security of tenure for the lessee. To benefit from this protec-
tion, the lessee must be in occupation of the property let. Again, if a
purchaser of leased property knows at the time of purchase that the prop-
erty is subject to a lease then he is bound by the lease even if it is not
registered.
6.6 Requirement for Rent

Rent is an essential element of a lease. An agreement where A simply
permits B to occupy property without rent being paid is not a lease. Simi-
larly, if the parties fail to agree on the rent there is no lease. Rent must be
in money or an ascertained quantity of produce such as fruits. Rent can-
not be in services. But it seems possible that rent can be partly in money
and partly in services.
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Activity 6B
* What advice would you give to Sarah in the following
? situations:
A. When Sarah moved into the house she is leasing from
Muzungu, the house was leaking and the window panes were bro-
ken. She notified Muzungu of the situation but he did not any-
thing. Now rain-water has damaged her property.
B. Sarah’s new neighbour has brought onto his premises vicious dogs
which continuously bark at night so as to make it difficult for Sarah
to find any sleep. The dog also wander through the leased property
upsetting rubbish bins and making the property dirty.
6.7 Implied Duties of the Lessor

Â To deliver to the tenant use and occupation of the property let.
Â Guarantee the tenant undisturbed use and enjoyment.
Â To make necessary repairs to the property.
Â To pay taxes levied on the property.
Â To guarantee against defects in that property.
Â On termination of the lease, to compensate the tenant for
improvements.
6.7.1 Delivery of Use and Occupation

Delivery here means the property is put at the disposal of the lessor at the
date agreed. In the case of a building, the lessor hands over the keys to
the building. Thus the building must be vacant at the time of delivery.
The lessee should be able to enjoy the full use of the property for the
purpose for which it was let. For example the lessee of a shop was enti-
tled to have access to an adjourning yard (owned by the lessor) to off-
load goods from vehicles at the rear entrance to the shop. (Wireless &
General v Arjoy Investments 1971 (4) SA 174). But the lessee was not
entitled to park his vehicles in the lessor’s yard as this was not a normal or
necessary incident of due enjoyment of the shop.
If the property is leased for a specific purpose, e.g. a butchery, then the
lessor must deliver the property in a condition reasonably fit for the pur-
pose for which it is let.
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6.7.2 Failure to deliver

The lessee has the ordinary remedies. He may seek an order for specific
performance by the landlord.
The order for specific performance is only made if the landlord is able to
make such delivery.
The lessee may resile/withdraw from the contract and sue for damages.
6.7.3 Guarantee the tenant undisturbed use and enjoyment

Every landlord undertakes that he will not disturb the tenant in his enjoy-
ment of use of the property leased. He also warrants that no person with
a superior title will disturb the lessee’s use and enjoyment of the property
let.
Note: The landlord does not warrant that he is owner of the property.
The lease is valid even where the landlord is not owner. Thus the lessor
is not entitled to enter premiums let by him without the lessee’s consent.
Unless such is for a legitimate purpose; for example, to inspect the premises,
but not to take any fruit.
Remedies if the lessee’s use and enjoyment is disturbed he may:

Â claim immediate reinstatement; i.e. to have his use and enjoyment
restored to him, or
Â he may accept the deprivation as repudiation of the lease and
cancel the contract, or
Â in addition he may recover damages for any loss he has sustained.
He is also free from payment of rent for the period he is deprived of use
and enjoyment.
If the lessee is disturbed by another with a greater title, he may not seek
reinstatement, but he has an action for damages against the landlord un-
less when taking the lease, he was aware of the defect in the landlord’s
title.
A lessee who is threatened with disturbance must inform the lessor so

that the latter can come to his defence.
A lessor does not warrant the lessee against disturbance by third parties
without title. As a result, a lessee disturbed by a squatter has no claim
against the lessor nor can he claim cancellation of the lease.
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6.7.4 To make necessary repairs

A lessor is obliged to maintain the premises in a condition reasonably fit
for the purpose for which it was let. He must repair doors, windows, the
roof and other parts of the premises. He must also repair structural de-
fects which substantially interfere with the tenant’s use and enjoyment of
the premises, but he need not make structural alterations or improve-
ments. If damage is caused by the tenant’s negligence the lessor has no
duty to repair these.
If repairs are urgently necessary, and the landlord cannot effect them while
the tenant is in occupation, he may require the tenant to vacate the premises
without becoming liable for damages for breach of contract. The purpose
must be to effect repairs. The landlord may not under the guise of making
repairs, require the tenant to vacate the premises so that he makes a ma-
jor alteration. Such a ‘repair’ is not reasonable or necessary. The lessee is
not to pay rent during the period he is deprived of beneficial occupation.
The landlord takes the risk of the premises depreciating through proper
use. It is the duty of the lessee to give notice to the lessor of the exist-
ence of a defect and afford him a reasonable opportunity to remedy the
defect. If the lessor fails to maintain the premises in a proper condition,
the lessee may effect the necessary repairs himself and deduct the cost
from the rent. He may only effect repairs after prior demand and notice to
the landlord. He must also have given him a reasonable opportunity to
effect the repairs. The tenant is restricted to effecting necessary repairs
but should not make structural improvements or alterations unless if the
only way of repairing is replacement; e.g. a leaking roof which may need
new materials.
The tenant can claim damages for loss caused by the existence of defects
on the leased premises. The damage should flow from the breach of the
lessor’s obligation to maintain the premises. But the lessor must have had
knowledge of the defect. The burden of proof is on the tenant or if his
trade or profession makes him an expert in matters related to buildings.
The landlord’s liability for damages caused as a result of a defect in the

leased property may be excluded by agreement.
E.g. a landlord was made liable for damage to the tenant’s property caused
as a result of rain water coming through the roof where the landlord had
notice of the fact that the roof leaked and failed to repair.
(Salmon v Dedlow 1912 TPD 971).

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6.7.5 Payment of Taxes

The lessor is the owner of the property let. In the absence of legislation
or agreement to the contrary, the lessor should pay all taxes, rates or charges
imposed by the State or municipality or any taxing authority on the prop-
erty. On the other hand, the lessee must pay tax which is imposed upon
the produce or fruits of the property.
Activity 6C
* Simba has recently been promoted at his company. He
? believes that the house he is staying in does not reflect his
new social and economic status. The house which Simba
is staying in belongs to Farukai. Simba would like Farukai to do
the following to the house:
1. Demolish and reconstruct the front view including extending
the bedroom.
2. Repaint the house.
3. Erect a durawall around the property and remove the fence
which is there.
4. Repair the doors because most of the doors are falling off.
5. Remove the asbestos roof and replace it with tiles as some of
the asbestos had developed cracks which allowed water in.
* In each case advise Simba whether he is entitled to the request
or whether he may carry out the repairs himself and recover
from the landlord.
6.8 Duties of the Lessee

6.8.1 Payment of Rent
This is the most important duty of the tenant. A lessee is under an obli-
gation to pay the lessor rent for the right to use and enjoy the property let.
Rent must be paid in time. If there is no agreement on the time, rent is
payable on the expiration of a lease or if the lease is periodic, on the
expiration of the period i.e. end of month or week as the case may be. It
must be paid at the agreed place to the person agreed.
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6.8.2 Failure to pay rent

If the lessee fails to pay rent, the lessor is entitled to claim payment as
rent becomes due. He may also claim damages suffered.
The lessor may cancel the lease. The lessee should vacate the premises
otherwise there is unjust enrichment. The landlord may also request for
an order for the lessee’s ejectment or eviction.
6.8.3 Lessor’s tacit hypothec for rent

As soon as the rent is in arrears the lessor obtains a tacit hypothec for the
amount of rent due to him. This right is to retain possession of certain
movable goods of the tenant until the rent is paid.
The hypothec attaches to all things brought or carried on to the property

- animals, tools, whatever their nature. He may also attach goods belong-
ing to a sub-tenant for the amount of rent owing to the lessee. Or goods
belonging to third parties. The onus is on him to prove his ownership
because possession of a movable creates a presumption of ownership in
the possessor. Also, by permitting his property to be on hired premises
and by failing to notify the lessor of his ownership, an owner leads the
lessor to believe that the property is the lessee’s. For example, a third
party’s animal which is allowed to graze indefinitely upon a farm by the
lessee, is subject to the lessor’s hypothec.
However, a vehicle supplied to an employee by his employer to be used

solely in the course of his employment is not subject to a lessor’s hypothec
because there is no permanence contemplated.
The hypothec comes into operation only when the rent is owing. The
landlord can only exercise the hypothec if the movables are at the leased
premises. He cannot use this right if the goods have been removed. The
landlord can then apply to court for attachment of these goods.
The lessee is entitled to a refund of the rent if he is deprived of the use

and enjoyment of the property let to him either by the lessor’s default or
through vis major or casus fortuitus. This is supervening impossibility which
extinguishes the contract.
Vis major is a superior power or force which cannot be resisted or control-

led. Casus fortuitus means an exceptional occurrence not reasonably fore-
seen.
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6.8.4 Duty to use and care for the property

It is the duty of the tenant to take care of the property let and to use it for
the purpose for which it is let. Thus a place let for use as a dwelling house
cannot be used as a workshop; causing damage to the property amounts
to improper use. The lessee must use the property let with the degree of
care expected of a reasonable man in the use of his own property. He
should not make structural alteration of the property so as to change the
character of such property.
A lessor would be entitled to an interdict restraining a lessee from using

premises for purposes for which they were not let, or for using them
improperly, damaging them or altering them.
6.8.5 Duty to restore the property

Upon termination of the lease, the lessee must restore the property to the
lessor. The property must be restored in the same condition in which it
was delivered to him - subject to reasonable wear and tear.
The fact that the premises are in a damaged condition upon termination
of a lease does not entitle a lessor to refuse to accept redelivery of them.
He merely has a claim for damages i.e. the reasonable cost of repairs for
the property. In addition to his claim for damages to the premises, the
lessor may have a claim for loss of rent during the period he is unable to
let them because of their damaged condition.
6.8.6 Subletting
This is where the lessee lets property which is hired. The lessee becomes
a sort of lessor and creates another lessee. The lease between the original
lessor and lessee is not affected by a sublease, and the original lessor and
lessee remain bound to each other. This means that a sublease does not
create a contractual relationship between the sublessee and the original
lessor. The lessor cannot claim rent from the sublessee. Payment of rent
under the original lease remains the responsibility of the lessee.
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Activity 6D
? * Explain the legal relationship created between the sub-

lessee and the lessor where the leased property has been
sub-let.
6.9 Termination
6.9.1 Expiration of time
If time is given the lease terminates upon expiration of time. No notice
of termination is needed.
6.9.2 Notice
A periodic lease is terminable by either party giving the other notice of
termination.
6.9.3 Mutual Cancellation

Mutual agreement to cancel. Or when there is breach which entitles the
innocent party to cancel. The other party may make an election to accept
cancellation.
6.9.4 Repudiation
A party indicates an intention not to be bound by the contract. This
repudiation may also be inferred from conduct; e.g. the lessee vacating
the premises and returning the keys. Remember repudiation is a form of
breach and the innocent party has remedies.
6.9.5 Extinction of Lessor’s title

A lessee derives his right to occupy and enjoy the property let from the
lessor. Thus where the lessor’s right in the property terminates, the lease
comes to an end except where the lessee is protected by the rule huur gaat
voor koop.
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6.9.6 Merger
One cannot be his own creditor. Where the lessee acquires by sale or
inheritance, the property let, this results in termination of the lease.
6.9.7 Destruction of the subject matter

This is total destruction without fault of either party. If destruction is
due to lessee’s fault, the lease is not terminated and the lessee remains
liable for rent for the unexpired period of lease. He must also pay the
lessor the value of the property destroyed.
6.9.8 Death
This does not terminate a lease. The estate of the deceased party is bound
except where the contract provides that the lease will terminate on death
of either party.
6.10 Summary
In this Unit we noted that a contract lease can only be effected on im-
movable property such as buildings. We also learnt that the lessee should,
at the end of the lease, be in a position to hand back the subject matter of
the lease to the lessor.
Â The lessee is only granted the right to use but not to consume the
subject matter
Â We looked at how the lessee is protected when the leased property
is sold. We noted that the lessee should not simply be evicted by
the new owner of the property
Â We concluded that both the lessee and the lessor have rights and
duties which arise out of the law and not by agreement of the par-
ties. For example the lessee’s right to undisturbed use and enjoy-
ment of the leased property and the lessor’s entitlement to pay-
ment of rent at the agreed time
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Lessor: One who makes available to another, the use and

enjoyment of property
Lessee: The one who uses another’s property in return for

payment of rent
Long lease: A lease for a period of ten years or more or for a

period adding up to more than ten years or for the
whole life of the lessee
Short lease: Lease for less than ten years
Huur gaat voor koop: Hire goes before sell. A maxim which protects a les
see where the lease is not registered i.e. a short lease
Sub-letting: Lessee lets another person to use part of the leased

property
Tacit Hypothec: A right to retain possession of lessee’s property by

the lessor until payment of rent arrears
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Essential Reading
Textbooks
Christie R.H., (1985) Business Law in Zimbabwe. Juta & Co (Ltd)
Christie R.H., (1993) The Law of Contract in South Africa. Butterworths,
Durban.
Swanepoel J.P.A. (1995) Introduction to Mercantile Law. Eighth Edition, Juta
& Co (Ltd).
Willie (1991) Principles of South African Law.. Eighth Edition, Juta & Co.
Ltd.
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Unit 7 Assignments and Tutorial Questions
7
Unit Seven
Assignments and Tutorial

Questions
I n this Unit we shall discuss methods of answering business law ques-

tions. We shall look at how business law students are expected to
apply the principles of law to answer given questions.
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By the end of this Unit, you should be able to know:

* What you are expected to know when answering questions;
* That there are three different types of questions;
* That problem type questions are more complex and require you to be
analytical and argumentative;
* That you should identify the legal issues arising from problem questions;
* That you should always answer the question asked or comply with the instruction given.
7.2 Introduction
Questions in most law subjects are normally in three forms:
Â Straight forward essay questions
Â Problem type questions
Â There may also be an option for multiple choice questions.
This Unit contains these three forms of questions. There are twenty sim-
plified problem questions, twenty straight forward essay questions and
twenty multiple choice type questions.
The objective is to discover whether you have understood well the basic
concepts in each topic covered. You should then be in a position to ex-
plain, analyse or discuss issues given. It is important to remember that in
law, one should always support an argument with reference to legal prin-
ciples, cases or statutes.
7.3 Problem Questions

Most of you are familiar with essay and multiple choice questions. Prob-
lem questions are exercises where one is given a fictional factual situa-
tion. This may cover a number of legal aspects of any topic. The ques-
tion may then require that you discuss the legal issues arising out of the
given facts, or they may require you to give advice to a party. You may
also be required to discuss remedies available, if any. You should appre-
ciate the substantive law involved and apply the law to the facts so as to
come to a conclusion which is the solution to the problem.
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7.3.1 How to approach problem questions

Â The first step is to analyse the facts. This is isolating important
facts which will help you in identifying the issues. Take the facts
as given, do not make your own.
Â From the important facts, identify the issues. You must note that
there may be more than one legal issue in a problem question.
Â Apply the law to the issues. You have to find the relevant law to
each issue and apply the law so as to arrive at a conclusion.
Â Summarise your various conclusions in such a way that you answer
the question asked.
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7.4 Multiple Choice

1. The Zimbabwean legislative consists of:
A House of Assembly and the Executive President
B House of Assembly, Senate and President
C The Judiciary, House of Assembly, Senate and the President
2. The term privity of contracts means:
A Terms of contracts are standard
B Parties are free to choose their contractual partners
C A void contract is not enforceable
3. The head of the Judiciary in Zimbabwe is:
A The President
B The Chief Justice
C The Attorney-General
4. Consensus ad idem means:
A The parties are at one, there is agreement
B The parties are at cross-purposes
C The contract is voidable
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5. Merger in the law of contract means:
A The coincidence of capacities so as to extinguish obligations
B Agreement by novation
C Acquisition of property which was unoccupied
6. A negotiorum gesto is
A A lessee who has sub-let property.
B An agent of necessity.
C An agent required by the courts.
7. An independent contractor is:
A One not under control of the employer as to what he does and how he does it.
B One who is under the control of the employer as to what he does and how he
does it.
C One who is vicariously liable for the acts of his worker.
8. A suspensive condition:
A Suspends the operation of the contract until the materialisation of the event
B Terminates the contract
C Makes a contract voidable at the option of the innocent party
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9. Unascertained goods are:
A Goods which do not exist.
B Goods which need counting, weighing or measuring.
C Goods incapable of being owned.
10. One of the following is not a lessor's duty:
A To protect the lessee’s possession from strangers.
B Not to disturb the use and enjoyment of the property.
C To deliver use and enjoyment of the leased premises.
11. In a sale voetstoots means:
A The merx is sold as it is, with all its defects.
B The seller must guarantee against latent defects.
C The sale is subject to a condition.
12. The nemo dat quad non habet doctrine means:
A One cannot sell stolen property.
B One cannot pass a greater right in the property that he actually has.
C The owner of stolen property can recover his property from anyone who has it.
13. Duress vitiates the following:
A Intention to enter into the contract.
B Capacity to contract.
C Legality of the contract.

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14. Which statement is correct:
A The Supreme Court is bound by its own decisions.
B The Supreme Court is not bound by its own decisions.
C Is only a court of appeal.
15. A misrepresentation makes a contract:
A Void
B Voidable
C Illegal
16. Which statement is correct about a Primary Court:
A It is presided over by a judge.
B It can hear both civil and criminal cases.
C It can only apply customary law.
17. An agent is merely to facilitate conduct between the principal and the third party. He must
himself:
A Have contractual capacity.
B Does not need to have contractual capacity.
C Be solvent.
18. The golden rule of interpretation means:
A If a word is ambiguous, it is interpreted against its maker.
B Words are given their ordinary everyday meaning.
C Contracts are interpreted so as to given them efficiency.

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19. Delivery longa manu means:
A The buyer already has the goods, the seller does not have to re-deliver.
B The seller delivers to the buyer’s agent.
C The seller merely points at the goods thus putting them at the disposal of the buyer.
20. Actio redhibitoria entails:
A Cancellation of the contract and putting the parties to status quo.
B Reduction of the purchase price.
C Giving damages for consequential losses.
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7.5 Problem Questions

21. Identify and explain the legal issues involved in the following problems:
Hazvinei is 16 years old. He bought a Macintosh computer from Fix It (Pvt) Ltd
on credit. Hazvinei’s father, Chenjerai has had problems with him before. He
believes his son is too intelligent and has said he can do as he pleases. After using
the computer for six months, Hazvinei decides that he no longer needs it. He gives away
the computer to his girl friend Lovejoy.
Hazvinei has fallen in arrears with his payments with Fix It (Pvt) Ltd. He no longer wants
to be bound by the contract.
a) Advise Fix It on the legal position.
b) Would the situation have been any different if Hazvinei had used the computer
until the age of 18 years 6 months and returned it to Fix Fit asking for his
refund?
c) If Hazvinei was living alone running a sole trader business.
22. What are the essentials of a valid contract? Discuss the legal requirements of each element.
23. Explain the concept of judicial precedent as a source of law.
24. What are the differences between civil and criminal law.
25. Funny bought a bicycle from Style for $2 000. Unknown to him, the bicycle had
been stolen from Rider, a security guard with a local firm. On his way to work,
Funny is stopped by Quisy who claims that the bicycle is his. A crowd quickly
gathers at the scene and Funny, not wanting to attract attention, surrenders the
bicycle to Quisy who quickly rides off and disappears. It is established that Quisy
is not the owner.
What is the legal position?
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26. X bought six pigs from Y for human consumption. When he slaughtered three of them,
he found them to be inflicted with measles and unfit for human consumption. The
remaining three die each after the other as a result of the measles.
What are his remedies?
27. Tendai is a member of a newly established church in Zimbabwe. The church preaches a
doctrine of virtuousness, cleanliness and total self-denial. The message is that its follow
ers should be totally poor so as to enjoy happiness in a future life. Tendai sold her house to
the church as each time Chiedza, a pastor, preached, she would feel that she is born again.
Tendai now regrets the move.
What is the legal position?
28. Explain the differences between rules applicable to the passing of risk and those
with regard to the passing of ownership.
29. Discuss the disadvantages and advantages of custom as a source of law.
30. What are the circumstances when the employer may summarily dismiss his employee?
31. Generally, a principal has to give the agent authority to do business for him beforehand.
Explain situations where the principal may be bound without having given the agent initial
authority.
32. A tenant’s duties at law are not onerous at all. Explain these duties.
33. X is employed as a driver by the Zimbabwe Popular Party, a new political party in Zimbabwe.
He has been tasked to ferry members of the executive committee to their homes. On his
way back he engages in a race with a commuter omnibus. He fails to control the vehicle
and hits a pedestrian who is seriously injured.
The pedestrian has incurred large medical bills and has lost income as a result of
hospitalisation.
Advise the pedestrian.
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7.6 Essay Type Questions

34. What are the differences between mistake and misrepresentation in the law of contract?
35. Jack leases a house from Sam. One day when he is coming from work he finds a notice on
his door that a squatter occupies one of the rooms and he intends to stay there permanently.
He also finds another notice in his letter box advising that Mr Nomatter, the child of the
landlord wants to move into the house next month.
What should Jack do?
36. Explain the seller’s duty to warranty against latent defects.
37. What remedies are available to an innocent party where his contract is breached?
38. Explain the rights of the landlord where the tenant has failed to pay rent.
39. Discuss the agent’s duty of utmost good faith.
40. Write short notes on the following:
a) Contractual capacity of an insolvent
b) The Quasi-mutual assent rule
c) The doctrine of estoppel
d) Concept of vicarious liability.
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ZIMBABWE OPEN UNIVERSITY

P.O. Box MP1119

The Zimbabwe Open University is a distance teaching

Cover design: B. Pillay

Typeset in Garamond, 12 point on auto leading

© Zimbabwe Open University. All rights reserved. No part of this

Content Reviewer: K. Hodzi

The six hour tutorials should be so structured that the

Session I (Two Hours)

Session II (Two Hours)

Session III (Two Hours)

Conclusion for this course, but also to prepare yourself to

__________ Overview _______________________________________________________ 1

Unit One: The Nature of Law

1.0 _______ What this unit is about ___________________________________________ 3

2.0 _______ What this unit is about __________________________________________ 15

Unit Three: Purchase and Sale

3.0 _______ What this unit is about __________________________________________ 35

4.0 _______ What this unit is about __________________________________________ 49

Unit Five: Employment Law

5.0 _______ What this unit is about __________________________________________ 59

6.0 _______ What this unit is about __________________________________________ 67

7.0 _______ What this unit is about __________________________________________ 81

Aims and Overview

The Nature of Law

1.0 What this Unit is About

1.1 What You Will Learn

1.2 The Nature of Law

Legal rules must meet certain basic principles:

Â Legal rules must be uniformly applied through a given territory.

1.3 Sources of Law

In terms of the Constitution of Zimbabwe, the Executive authority is

Laws are introduced in Parliament as Bills. This is usually by the Minister

? * What are the advantages and disadvantages of

1.5 Judicial Precedent

1.6 Customary Law

1.7 Court Structure and Jurisdiction

1.7.2 High Court

1.7.3 Magistrates Court

tioner in Zimbabwe or is qualified in a capacity comparable to that of a

There are categories:

1.7.3.1 Regional Magistrate

The regional magistrate has special jurisdiction as to punishment for rape,

1.7.3.2 Provincial Magistrate

1.7.4 Senior Magistrate

1.7.5 Ordinary Magistrate

The Magistrates Court is a court of appeal from Primary Courts.

1.7.6 Primary Courts

The Primary Court is presided over by a presiding officer appointed by

1.7.7 Specialist Courts

1.8 Civil Law

1.8.1 Family Law

1.8.2 Property Law

Intellectual Property Law: This covers such topics as:

1.8.3 Law of Succession

1.8.4 Law of delict

Regulates the conduct of Regulates conduct of individuals and

The aim is to compensate the The major aim is to rehabilitate the

There is no need to establish that The act complained of must be

Overview _____________________________________________ 1

1.0 _ What this unit is about _____________________________________ 3

2.0 _ What this unit is about ____________________________________ 15

3.0 _ What this unit is about ____________________________________ 35

4.0 _ What this unit is about ____________________________________ 49

5.0 _ What this unit is about ____________________________________ 59

6.0 _ What this unit is about ____________________________________ 67

7.0 _ What this unit is about ____________________________________ 81