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Law Of Contract
PRINCIPLES OF LAW
LAW are rules established by authority to regulate the behaviour of members of a community, society
or country.
LAW are legal rules.
Law is a system of rules, usually enforced through a set of institutions. It shapes politics, economics
and society in numerous ways and serves as a primary social mediator of relations between people.
Law- That which is laid down, ordained, or established. A rule or method according to which phenomenon or actions
co-exist or follow each other. Law, in its generic sense, is a body of rules of action or conduct prescribed by controlling
authority, and having binding legal force
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The elements of Law and the difference between real and personal rights
PRINCIPLES OF A JUST LAW.
1. Equality
Law consist of rules, which apply to all persons in the same condition. What applies to Sam
has equal application to Jeff, provided they fall in the same classification. Rich or poor,
employer or employee, all men are the same in the eyes of Law if they fall in the same class.
If Tom drives a car, Sam walks along the road and Dick cycles, they all fall into different
categories applicable to road users and rules applying to one do not necessarily apply to
others.
Each would be subject to Laws governing the activities they are engaged in:
The fact that Jill drives a Datsun and Ben drives a Benz is immaterial to the application of
rules of negligence or Law against drunken driving.
Exceptions to equality are insanity, minors but considerations must be based on distinctions
which are objective and logical.
If B a Lawyer sexually abuses a minor and C a teacher commits the same offence, the Law
pertaining to the case will be applied equally regardless of status.
NB: these considerations must be based on distinctions which are both objective and logically
relevant.
2. Uniformity
Uniformity simply means all people in all areas should be treated uniformly. The same Law
that applies to Joe in Gokwe should apply to Tom in Mutare, provided they have committed
a similar offence. If Mr. X a Lawyer in Harare and Mr. Z a bus driver in Kwekwe commits
the same offense, the legal fate that is visited upon them is identical. The aspect of authority
of the High Court ensures the uniform application of Law as far as possible. If a person is a
foreigner and commits a crime he/she is treated applying the principles of Law in that
country.
3. Certainty
Certainty in the Law prescribes how a person must, or may, or may not act, and to that
extend it safeguards the rights and liberties of the people themselves. If X infringes Ys right,
Y will know that because the rules of Law are certain a remedy lies in the courts.
Inn the same way, people can order their affairs knowing what the legal consequences of a
particular course or courses of action will be.
Certainty also acts as a limitation on the tries of fact in that they are bound to follow the
establishment rules of law as set out beforehand and in so doing silly or arbitrary decision
making is checked.
PRINCIPLES OF LAW
e.g. if an individual who has been out of the country in search of work for years contravenes
a new law published in his absence he is nevertheless guilt of the relevant offence although
he had no possible chance of having learnt the new law.
However, this concept has been subject to criticism in that in practice so many laws are
promulgated that even lawyers cannot possibly presume to know them all. The access to the
gazettes and the level of literacy of a person to be able to comprehend the gazette are other
issues of concern.
Despite all that, as things stand at present the maxim still applies in Zimbabwe.
4. Generality
In order to be just the law must be consistant and it must be applied without distinction to
all persons of the same class and in the same circumstances. The general rule should remain
fixed as a constant and not to be varied arbitrarily from one case to the other simply because
of the magistrates or judges personal feelings.
5. Authority
This applies to the Law enforcement machinery clothed in authority by parliament to
enforce Law equally, uniformly to all races, tribes and so on. Authority signifies that all Laws
used should be applied by only bodies given the authority.
6. Reasonableness
According to VOET, (Legal Jurist), Law must order what is honourable and prohibit what
is reprehensible. This simply means law should be a code of conduct that governs society.
Law should be just in that, what is wrong to be treated as wrong and what is good to be
treated as good. Thus arbitrary, absurd and senseless rules will tend to be disobeyed. The
concept of reasonableness or the reasonable person is of wide application in our legal
system and if the law expects those to whom it applies to behave reasonably, then surely the
law itself must be seen to be reasonable.
The concept of legal personality and the difference between natural and
juristic persons
The concept of legal personality
Legal personality (also artificial personality, juridical personality, and juristic personality) is the
characteristic of a non-human entity regarded by law to have the status of a person.
A legal person (Latin persona ficta), also legal person, artificial person, juridical person, juristic
person, and body corporate) has rights, protections, privileges, responsibilities, and liabilities under
law, just as natural persons (humans) do. The concept of legal personality is perhaps one of the most
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fundamental legal fictions. It is pertinent to the philosophy of law, as well as corporations law (the law
of business associations).
Legal personality allows one or more natural persons to act as a single entity (a composite person) for
legal purposes. In many jurisdictions, legal personality allows such composite to be considered under
law separately from its individual members or shareholders. They may sue and be sued, enter into
contracts, incur debt, and have ownership over property. Entities with legal personality may also be
subject to certain legal obligations, such as the payment of tax. An entity with legal personality may
shield its shareholders from personal liability.
The concept of legal personality is not absolute. "Piercing the corporate veil" refers to a legal
decision in which the rights or duties of a corporation as the rights or liabilities of its shareholders or
directors. Legal persons may not have all the same rights as natural persons - for example, human
rights, including the right to freedom of speech.
Although the concept of a legal person is more central to Western law in both common law and civil
law countries, it is also found in virtually every legal system.
Cooperatives (co-ops), which are business organization owned and democratically operated by a group of
individuals for their mutual benefit, are legal persons.
Corporations are by definition legal persons. A corporation sole is a corporation constituted by a single member,
such as The Crown in the Commonwealth realms. A corporation aggregate is a corporation constituted by more
than one member.
Companies, a form of business association that carries on an industrial enterprise, are usually corporations,
although some companies may take forms other than a corporation, such as associations, partnership, unions,
joint stock companies, trusts, and funds. Limited liability companies are are unincorporated associations having
certain characteristics of both a corporation and a partnership or sole proprietorship. LLCs, like both
incorporated and unincorporated companies, are legal persons.
Sovereign states are legal persons.
Municipalities, as "creatures of statute" are legal persons. Other organizations or types of organizations may be
created by statute as legal persons,
In the international legal system, various organizations possess legal personality. These include
intergovernmental organizations (the United Nations, the Council of Europe) and some other international
organizations (including the Sovereign Military Order of Malta, a religious order).
Temples, in some legal systems, have separate legal personality.
Not all organizations have legal personality. For example, the board of directors of a
corporation, legislature, or governmental agency typically are not legal persons in that they
have no ability to exercise legal rights independent of the corporation or political body which
they are a part of.
1.Presevation of Order
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The Law would not be required if all people were perfect. In providing the rules of conduct,
the Law stipulates what must be done and may not be done. This is in order that the
individual and collective rights of each member of the community may be protected. The
Law tries to prevent one persons right clashing with each others rights or rights of an
individual from clashing with the rights of a community, thus preserving peace and order. If
every person did just as he wished, allowing his instincts and desires uninhibited, there could
be no society, no community and the Law of the judge would soon prevail.
2. Maintain Justice
For our purpose of Law we will consider justice to mean fairness, in other words justice is
what appears to be right to a fair-minded person. Justice is not only the Laws main object
but it is also its chief instrument in fulfilling the Laws other main object of preserving peace
and order in the community. It is obvious that peace and order reign when the members of
the community obey the Laws.
3. Settlement of Disputes
Enforcement a breach of Law often invites punishment in the form of imprisonment, fine
or compensation. Associated with punishment are the mechanism to enforce these legal
forms i.e. police, courts and other institutions were set up to effect punishment and to
enforce the Law.
NB: these are collectively referred to as the Law Enforcement Machinery.
Legislation is law laid down by an organ of the State which has the power to do so. These laws are
embodied in writing and are known as statutes (or acts). In Zimbabwe, Parliament is the highest organ
that can pass legislation at the national level. There are also other bodies, that can pass subordinate
legislation. These include the provincial legislatures which pass provincial acts and municipal councils
which pass by laws. Legislation is a powerful source of law. In principle it binds the whole society.
PRINCIPLES OF LAW
Courts are institutions that apply the law on daily basis. Judges and magistrates, like all
lawyers consult legislation and rules of common law and custom applying to the particular
case before them. Courts also take into account their previous judgements in similar cases,
because they are bound to the approach followed in the past. Previous judicial decisions
therefore constitute law and the way in which the law was applied there is authoritative. The
reason for this lies in the system of judicial precedent, also called the doctrine of stare
decisis, which applies in Zimbabwe. The application of the doctrine of precedent depends,
among other things, on reported cases.
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must be followed. Various approaches to selecting the ratio decidendi have been suggested
the ratio decidendi have been suggested by Jurists.
NB: An approach to selecting the Ratio Decidendi from a case by Dr A.L. Good-hart 1930.
Example: (Suppose) in a certain case the court finds that facts A, B and C exist. It then
excludes fact A as immaterial, and on facts B and C it reaches conclusion X. what is the ratio
decidendi of this case?.
There are two principles:
i.
ii.
In any future case in which facts are A, B and C, the Court must reach conclusion X, and;
In any future case in which the facts are B and C the Court must reach conclusion X.
In second case the absence of fact A does not affect the result, for fact A has been
held to be immaterial.
The court, therefore, creates a principle when it determines which the materials are
and which are the immaterial facts on which it bases its decision.
If in a future case further material facts in addition to B and C are found, conclusion
X will not necessarily be binding. The court may have to apply a new principle to
reach a conclusion and thus the judge may choose not to follow the former case.
If the difference is so small as to be unimportant then the precedent case is
indistinguishable and must be applied but;
If the difference between the two cases is so great that the Law laid in the precedent
case is not really relevant., then the precedent case is distinguishable and should not
be applied.
c). OBITER DICTA
These are statements said in courts by wayside in the course of judgement and these are
therefore incidental to central issues of the case or in the course of a judgement. A judge
sometimes express his opinion upon a point of Law which is not necessary for the decision
for the decision of the case such an expression of opinion is termed an Obiter Dictum. It
is practiced especially as a result of custom since judge derived facts from custom.
Such statements may be of persuasive authority in future cases. Thus in Jajbhay Vs
Cassim 1939 AD 537. Van Den Heever J.A. made the statement that in a case where two
estate agents had been employed and it was impossible to determine which of the two the
effective cuase of the sale was, both agents would be entitled to their full commission.
This statement was made Obiter, or by the way, because it was not necessary for or
applicable to the decision in that case. However, this Obiter dictum was later accepted and
formed part of the Ratio Decidendi in the case of Petersen Vs Jajbhay 1940 TPD 182.
Advantages:
It is convenient in that, instead of examining principle of Laws anew each time a case is
brought before the court previous decision can be relied upon in applying principles of Law
to the facts.
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Disadvantages:
3. Customary Law
Customary law is generally unwritten law. It is fixed practices in accordance with which
people live because they regard it as the law. Customary law therefore does not concern all
customs or practices, such as practices of polite behaviour. Old Germanic law also consisted
of customs. The same can be said of indigenous law. In modern law custom does not play
such an important role as a formative source of law. Any assertion of a custom as law has to
be proved.
CUSTOMS
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The requisite of reasonable is very important and always scrutinized by the courts. Courts
can only hold a custom to be reasonable where the custom was design to prevent disputes
among persons engaged in certain activities .e.g. fishing: Case: Van Breda Vs Jacobs.
2. Certainty
This stipulates that for a custom to be accepted it must be known. The persons to whom
the custom is claimed to have force of Law must known the existence of such a custom for
it to be accepted as binding.
3. Long establishment of custom
The custom should have been practiced for a reasonable period of time. It is necessary that
the custom must have existed for a sufficient length of time to have it become generally
known.
4. Uniformity of observance
Means that the custom must have been invaluably complied by the class of persons to whom
it applies and the custom should be obligatory and not optional.
5. Number of witnesses.
A substantiated number of witness are necessary. A Roman-Dutch Jurist suggested that
these should be not less than Ten (10).
NB: These principles were enunciated in this case:
CASE: Van Breda Vs Jacobs
FACTS:
The case concerned a custom which prevailed amongst fisherman at False Bay in the Cape
Province, S.A. it had been a standing custom known as first come first pull amongst local
fisher man at the False Bay that once fisherman had set line or nets in a beach between the
Cape points where no boats were permanently stationed. Other fisherman were not entitled
to set their lines within a reasonable distance in order to poach an others fish.
HELD:
i.
It was held by the court that this practice was reasonable in that it was designed to
prevent disputes amongst fisherman.
ii.
It was held that the custom had been Uniformly observed amongst the fisherman
at the time.
iii.
It was proved that the custom had existed for some 45 years and had been
generally observed by all the fishermen in this locality.
The court having established these facts recognized the custom as being legally binding.
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Another Example of Custom Law practiced in the Netherlands was:
The nucleus of these Custom Laws was influenced by Roman-Dutch Laws. And of these customs
were family relations, and business relations. The following Laws were to be observed:
i.
No one should be enriched to the prejudice of another;
ii.
iii.
4. Common Law
When a specific matter is not governed by legislation, common law usually applies. Zimbabwen
common law is mainly the 17th and 18th century Roman-Dutch law that was transplanted to the Cape.
This forms the basis of modern Zimbabwen law and has binding authority. Examples of common law
crimes include murder, robbery and rape, etc. Whilst Zimbabwen common law is mainly RomanDutch law, not all the principles of Roman-Dutch law were transplanted to Zimbabwe. Sometimes
English law had, by means of precedent, influenced Zimbabwen common law. Some common law
principles are, for this reason, no longer pure Roman-Dutch law. The sources of Roman-Dutch law are
the old sources which are the following:
Legislation (placaaten) - few of these still apply in Zimbabwe
Judgements of the old Dutch courts
Writings of learned authors (the so-called old authorities) such as Hugo de Groot, Voet, van Leeuwarm
and van der Linden.
5. Authoritative texts
It has already been pointed out that the writings of the old authorities on common law have binding
force as a source of law. Many academics and other lawyers write books and articles in law journals.
There are useful sources in which to find legal principles. The authors explain the whole legal position
with respect to legislation, common law and case law. Legal practitioners, the courts and students
consult these writings on regular basis. Although these writings do not have binding authority, they can
sometimes have persuasive authority. A court may decide to follow the opinion of a particular author,
or to depart from a precedents which is at variance with such an opinion. In this way modern authors
can influence legal reform.
Many black communities live according to indigenous law, which also takes on the form of written or
unwritten customary law. Indigenous law is applied in the ordinary courts. The Evidence Amendment
Act, (Act 45 of 1988) stipulates that a court can take judicial notice of indigenous law, provided that it
is not in conflict with the principles of public policy or natural justice. In some instances an expert will
have to give testimony on the content of these rules. The Black Administration Act, 1927 constitutes a
partial codification of the principles of indigenous law albeit in a distorted form. The Code of Zulu Law
is an example of codified African Customary Law. Case law on African Customary law is also applied.
The big challenge facing democratic South Africa is to free indigenous law from the effects of colonial
and apartheid domination and to develop a legal system that reflects the true values of a new
democratic South Africa. The entire South African legal system and its sources must be re-examined
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critically. All law is being subjected to critical scrutiny to reflect the new constitutional order. The
central values of the South African Constitution mainly democracy, equality, dignity and freedom
require a fresh look at South African common law, indigenous law, and religious personal law so that
the new South African legal system will reflect the plural nature of the South African society and put
and end to South Africa's colonial and apartheid past in its legal system. The process of law reform has
begun but is bound to be a long process.
Regulations made by a Minister for purposes specified in the Enabling Act of Parliament.
Bye-Laws created by specified local authorities such as Urban or Rural Councils, acting under powers
given to them by the relevant Acts of Parliament.
Proclamations issued by the President for purposes such as dissolving Parliament.
Rules of the superior Courts to facilitate procedure and their operations.
Regulations made by the President under the Presidential Powers Temporary Measures Act.
Stare decisis is the legal principle by which judges are obliged to respect the precedents established by prior decisions.
The words originate from the Latin phrase Stare decisis et non quieta movere: stand by decisions and do not disturb the
undisturbed. In a legal context, this is understood to mean that courts should generally abide by precedents and not disturb
settled matters.
Ratio decidendi is a Latin phrase meaning "the reason" or "the rationale for the decision." The ratio decidendi is "[t]he
point in a case which determines the judgment" or "the principle which the case establishes."
In other words, ratio decidendi - legal rule derived from, and consistent with, those parts of legal reasoning within a judgement
on which the outcome of the case depends.
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It is a legal phrase which refers to the legal, moral, political, and social principles used by a court to compose the rationale
of a particular judgment. Unlike obiter dicta, the ratio decidendi is, as a general rule, binding on courts of lower and later
jurisdictionthrough the doctrine of stare decisis. Certain courts are able to overrule decisions of a court of co-ordinate
jurisdictionhowever out of interests of judicial comity they generally try to follow co-ordinate rationes.
An obiter dictum is Latin for a statement "said by the way." Merriam-Webster Online Dictionary gives obiter dictum three
definitions:
"literally, something said [dictum] in passing [obiter] . . ."
"an incidental remark or observation"
"an incidental and collateral opinion that is uttered by a judge but is not binding"
In the third meaning, an obiter dictum is a remark or observation made by a judge that, although included in the body of the
court's opinion, does not form a necessary part of the court's decision. In a court opinion, obiter dicta include, but are not
limited to, words "introduced by way of illustration, or analogy or argument." Unlike the rationes decidendi, obiter dicta are not
the subject of the judicial decision, even if they happen to be correct statements of law. Under the doctrine of stare decisis,
statements constituting obiter dicta are therefore not binding, although in some jurisdictions, such as England and Wales,
they can be strongly persuasive.
An example of an instance where a court opinion may include obiter dicta is where a court rules that it lacks jurisdiction to
hear a case or dismisses the case on a technicality. If the court in such a case offers opinions on the merits of the case, such
opinions may constitute obiter dicta. Less clear-cut instances of obiter dicta occur where a judge makes a side comment in an
opinion to provide context for other parts of the opinion, or makes a thorough exploration of a relevant area of law.
Another example would be where the judge, in explaining his ruling, provides a hypothetical set of facts and explains how
he or she believes the law would apply to those facts.
```
3. Customary Law
The customary law of Zimbabwe is generally unwritten. Customary law refers to the fixed customs and
practices of the tribes of Zimbabwe which were in practice since time immemorial. The customs must be
certain, reasonable and must had attained the recognition of formal law. For example the criminalization of
incest, in the sexual offences Act and the Criminal Law (Codification and Reform) Act is the recognition of
customary law which prohibits incest or sexual relationship with certain degrees of blood affinity.
The constitution entrenches the recognition of African Customary Law. Section 89 of the Constitution of
Zimbabwe in imposing the law to be administered, sets up African customary law as part of the law to be
administered. Other Legislation, such as the:
Customary Marriages Act
Administration of Deceased Estates Act.
Customary Law and Local Courts Act.
The acts also establish the application of Customary Law in certain respect.
The Customary Law of Zimbabwe is limited in scope in its application. It has no criminal Jurisdiction
whatsoever and it governs some areas of Marriage, Inheritance and Guardianship only.
4. Common Law
Common law of Zimbabwe refers to the unwritten law or non- statutory law. Common law excludes the
African customary Law. The common law of Zimbabwe is primarily the Roman-Dutch Law as applied at the
Cape of Good Hope on the 10th of June 1891 as per the provisions of Section 89 of the Constitution of
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Zimbabwe. The Common Law was transplanted from the Cape and imposed to Zimbabwe. However, the
common law at the Cape in 1891 had been heavily influenced by English Law, hence the common law of
Zimbabwe must be said to be Anglo-Roman-Dutch Law.
A recent development in Zimbabwe ousts the application of Common Law. The recent Codification of
Zimbabwe's Criminal Law through the Criminal Law (Codification and Reform) Act jeopardizes the
application of Common Criminal law Section 3 of the Act states unequivocally that Roman-Dutch Criminal
Law no longer to apply.
5. Authoritative Texts
One cannot safely assert that authoritative text from acclaimed legal authors form part of Zimbabwe's law.
However textbooks on law have persuasive authority upon which reliance can be had in making judicial
decisions. The few authoritative legal authors in Zimbabwe rely on old Roman Dutch writers. They mainly
write commentaries and guides to the law of Zimbabwe. Professor Geoff Feltoe has several Guides to the
Laws of Zimbabwe which are widely used and referred to in litigation. His comments and assertions form
persuasive grounds upon which cases can be decided.
2) HIGH COURT
Presided over by judges who are appointed according to the constitution of
Zimbabwe.
The high court has full unlimited jurisdiction in both civil and criminal
cases.
The court is also a court of appeal from the magistrate court.
It has jurisdiction and authority to review all proceedings and decisions of
all inferior or courts below it.
Appeal from the high court lie with the Supreme Court.
This court can pass death penalty or life imprisonment.
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3) MAGISTRATES COURT e.g. regional, provincial, senior & ordinary
magistrates.
Presided over by a magistrate.
Magistrates are appointed by the Public Service Commission
All magistrates courts have no jurisdiction to try criminal cases involving
the following; treason, murder or any offence where the person shall be
sentenced to death if convicted.
They cannot dissolve civil marriages.
It can impose corporal punishment on minors. The strokes shall not exceed
six.
Regional magistrates has special jurisdiction as to punishment for rape,
public violence, arson, malicious injury to property or attempts to commit
these offences.
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Supreme Court Judge appointed as an acting High Court Judge by the Chief Justice after consultation with the
Judge President.
The Administrative Court
The Administrative court was established in 1979 by section 3 of the Administrative Court Act and has special
jurisdiction conferred on it by statute over particular matters but generally, the Court acts as a court of appeal
from a wide range of administrative tribunals.
The Administrative Court is "special" within the meaning of section 92 of the Constitution. Administrative
Court Judges, known as "Presidents", are appointed by the President after consultation with the judicial Service
Commission (section 92 (1)). The condition of service of an Administrative Court President may not be
amended during his term of office nor may his office be abolished without his consent (section 92(1)). By
virtue of the provision of section 79A (d) and79B, the judges of special courts such as the Administrative Court
are subject to the same constitutional safeguards as regards independence of a judiciary as Supreme Court and
High Court judges. However, the section 86(tenure) and 87 (removal) do not appear to apply to judges of
special courts such as the Administrative Court.
The jurisdiction of the Administrative Court includes original jurisdiction in relation to land acquisition cases
under the Land Acquisition Act and also appellate jurisdiction in matters relating to various publication laws
such as the Access to Information and Protection of Privacy Act.
Magistrates' Court
Magistrates' Courts are the courts of first instance in criminal matters and therefore occupy the important
position of deciding on bail land remand accused persons in most cases. The importance of this position is
thrown into relief when the large number of allegations of violence in police custody and the large number of
cases in which charges are not preferred or are eventually withdrawn are considered.
The System for the Administration of the Courts
The central figure in the administration of the Zimbabwe court system is the Registrar of the relevant court.
The court Registrar is responsible, inter alia, for fixing the amount of security to be lodged by an applicant
following the filing of an election petition. The Registrar had direction as to whether to allow access to court
records in the High Court and the Supreme Court. The Registrar is also the person administering the court roll
and who is therefore in control of assigning hearing dates for cases.
Messengers of the court and sheriffs are responsible for serving court process and enforcing court orders. It is
self-evident that without the service of process or the effective enforcement of court orders, much of the
purpose of litigation, both civil and criminal, is rendered otiose.
Civil Cases
Civil cases are initiated when a wronged party, the plaintiff, files a complaint with the court of
appropriate jurisdiction. The delivery of this complaint against named wrongdoers, known as
defendants, is the action known as filing a lawsuit or bringing suit. While civil cases may involve criminal
actions, these trials are completely separate from the proceedings of a criminal trial. Additionally,
civil cases cover the gamut of disputes, disagreements, and grievances a plaintiff feels cannot be
resolved sufficiently with defendants without court intervention.
Within the legal system, various types of civil cases may include:
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Divorce
Child support
Child Custody
Alimony
Contractual disputes
Personal injury tort claims
Product liability
In essence, any disagreement that is not in violation of criminal laws in a given jurisdiction is an
eligible civil case, as well as the damages stemming from some criminal cases.
In all civil cases, plaintiffs will be seeking remedy from a defendant or defendants. Remedy will often
come in the form of a court mandated judgment that attempts to rectify, through judicial ruling, the
outcome of a dispute. Additionally, remedy can be achieved in civil cases through settlement, which
may be provoked in light of the costs and potential losses stemming from an impending civil trial.
Remedies sought by plaintiffs in a civil case may take a number of forms including:
Settlement
Damages
Injunction
Declaratory judgment
CRIMINAL LAW
CIVIL LAW
Variable
1.Definition
2.Initiators
3.Summons
4.Costs
5.Judgement
CRIMINAL
CIVIL
Composed of rules
formed/organized by the state
which prohibit certain acts on pain
of punishment.
The state initiates the case.
The member of the police issues it.
Costs are met by the state
Upon conviction, the offender may
be subjected to a fine,
imprisonment, whipping, and in
extreme cases death penalties.
Offender will be liable to a fine
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6.standard of proof
7.Prosecution
8.Pleadings
9.Parties involved
10.Offence
11.Intention
12.Unlawful acts
13.Aim
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LAW OF CONTRACT
Definition of a contract
1. A contract is a lawful agreement between 2 or more
persons/parties/people within the limits of their contractual capacity,
with the serious intention of creating a legal obligation,
communicating such intentions without vagueness, each to the other
being of the same mind as to the subject matter, to perform positive
or negative acts which are possible of performance.
2. A contract is an agreement between two or more parties which, if it contains the
elements of a valid legal agreement, is enforceable by law or by binding arbitration. That is to
say, a contract is an exchange of promises with specific legal remedies for breach. These can
include Compensatory remedy, whereby the defaulting party is required to pay monies that
would otherwise have been exchanged were the contract honored, or an Equitable remedy
such as Specific Performance, in which the person who entered into the contract is required
to carry out the specific action they have reneged upon.
Ex turpi causa rule, ( "from a dishonorable cause an action does not arise") is a legal
doctrine which states that a claimant will be unable to pursue a cause of action, if it arises in
connection with his own illegal act. Particularly relevant in the law of contract, tort and
trusts, ex turpi causa is also known as the "illegality defence", since a defendant may plead that
even though, for instance, he broke a contract, conducted himself negligently or broke an
equitable duty, nevertheless a claimant by reason of her own illegality cannot sue.
MURPHY VS TENGENDE, The issue was about dealing in foreign currency,
pounds and Zimbabwe dollars. It was held that the 2 had no license to deal in forex so
their transaction was unlawful
In pari delicto rule, in equal fault (better is the condition of the possessor)" is a legal term
used to indicate that two persons or entities are equally at fault, whether the malfeasance in
question is a crime or tort.
The phrase is most commonly used by courts when relief is being denied to both parties in a
civil action because of wrongdoing by both parties. The phrase means, in essence, that since
both parties are equally at fault, the court will not involve itself in resolving one side's claim
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over the other, and whoever possesses whatever is in dispute may continue to do so in the
absence of a superior claim. The doctrine is similar to the defense of unclean hands, both of
which are equitable defenses. Comparative fault and contributory negligence are not the
same as in pari delicto, though all of these doctrines have similar policy rationales.
DUBE VS KHUMALO, the 2 were involved in an adulterous affair, which was
rendered unlawful.
2. Contractual capacity,
All majors or adults who do not suffer from any legal disability can enter into a contract. There
are certain categories of persons who have either capacity or cannot enter into a contract at all.
These are;
o Minors (kids)
o Mentally ill persons
o Insolvent persons
(Pheasant Vs Warne)
o Drunken persons
o Alien enemies
o Prodigals (Mitchell vs.
o Artificial persons
Mitchell & Others)
o Persons convicted of certain
crimes
Parties entering into an agreement must be competent and capable of entering into a contract. If
"JOHN" agrees to sell a Government property to ANGIE and ANGIE agrees to buy that
property, it could not be treated as a valid agreement as JOHN is not authorized or owner of the
property.
If any of the party is not competent or capable of entering into the agreement, that agreement
cannot be treated as a valid contract. According to the law of contract, every person is competent to
contract who is of the age of majority according to the law to which he is subject and who is of sound mind, and is
not disqualified from contracting by any law to which he is subject. So it is clear that the party must be of
sound mind and of age to enter into a valid agreement which can be treated as a valid contract.
CASES: involving Minors capacity
o EDELSTEIN VS EDELSTEIN
o DAMA VS BERA
o STATTAFORD VS OBERHOLZER
CONTRACTUAL CAPACITY
The agreement must be made within the limits of the parties contractual capacity.
While the General rule is that every person is able to contract freely within the limits of the law, the following are persons of limited
contractual capacity whose power to enter into binding agreements is subject to special rules:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Minors
Married women subject to the marital power of their husbands
Mentally ill persons
Drunk persons
Prodigals/Spendthrifts
Insolvent person
Alien enemies
Artificial Persons
Illegal Associations
In addition they may be subject to certain disqualifications under various statutes, just as persons who have been convicted of crime are.
1. MINORS
A Minor is an unmarried person under the age of 18 years. He is under the custody and lawful authority of a guardian whose
duty it is to maintain the minor until he can maintain himself, administer property and assist him in contracting. The guardian is
normally a natural guardian, i.e. the father or the mother where the father is dead, a court has awarded the sole guardianship to
her, or the child is illegitimate, but may be appointed by a deceased natural guardians will or by the High Court (the upper
guardian of a child).
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NB: When a person marries before majority age he is tacitly emancipated/acquires majority status.
UNASSISTED CONTRACTS
General Rule: a contract made by a minor without the guardians assistance is void as far as the minor is concerned and valid
as far as other party is concerned.
The authority for this proposition is the Dutch Jurist, Voet, quoted in the case of Edelstein Vs Edelstein;
from the principles of the law it is clear that a minor who contracts without the assistance of his guardian can render others
under an obligation to himself, but does not himself become obliged to them.. [as] on the minors side a contract entered
into without the assistance of his guardian is ipso jure (by the law itself) null and void.
A minor who contracts without his guardian enjoys the best of both worlds. He binds the other party to him but does not bind
himself to the other party. The option of treating the contract as void or valid rests with the minor (or, more precisely, his
guardian who acts for him). If the minor elects to treat the contract as valid, he can compel the other party to perform; he will
then also have to fulfill his own part of the contract.
If the minor prefers to treat the contract as void, the other party cannot compel him to perform his part of the bargain; a minor
who has already performed can recover from the other party whatever he has paid or delivered, but he may not keep what he
has received under the contract because this would unjustly enrich him at the other partys expense. He must restore it, though
not necessarily in full.
FACT:
A female minor whose parents were divorced ( the mother was awarded custody but the father remained the natural
guardian)entered into an ante nuptial contract with E. later in 1918, she and E were married with the implied consent of her
father, who was informed of the proposed marriage and did not object. In 1947 E died leaving over 100 000. and the wife,
considering the marriage to have been out of community of property because of the ante nuptial contract, accepted certain
benefits under Es will. In 1949, when she consulted her legal advisers with a view to drawing up her own will, the validity of
the ante nuptial contract was questioned and she sought an order declaring the marriage in community of property. Of the
parties cited as respondents, only the Commissioner for Inland Revenue opposed the order to avoid losing 33 000. death
duties.
HELD:
The wife was bound by the ante nuptial contract on the ground that, while it had excluded community of property and profit
and loss, it had conferred benefits on her through promises in it of marriage settlements by E.
HELD:
A minor is not bound by an unassisted contract even one to his benefit. The minor may elect to hold the other party bound, in
which event the minor will also have to perform his obligations. But should the minor choose to escape the contract, he is
bound only to the extent of his enrichment. Furthermore, unlike an ordinary contract, an ante nuptial contract cannot be
ratified by a minor on attaining majority as this would amount to an impermissible alteration of the matrimonial property
regime. The wife was granted the order that the marriage was in community of property.
A minor may acquire without his guardians assistance a perfectly valid obligation, which is sometimes not
contractual even though it arises in the course of attempting to contract, in the following circumstances:
a). ENRICHMENT
where a minor is unjustly enriched in terms of an unassisted contract, the contract remains void and he is not bound by it but
he is under an obligation to make restitution to the other party to the extent to which he has been enriched; he is not obligation
to restore whatever he has received pursuant to the contract, but only so much as still remains in his possession at the time of
the action or the surrogates of such residue.(Case: Edelstein Vs Edelstein).
In other words, where necessaries are supplied to a minor, he incurs an obligation to pay their value property purchased with
money, or the proceeds of property, originally received must be yielded up; money spent on necessaries which would otherwise
have had to be paid for out of the minors estate has to be accounted for. He is not liable for depreciated or destruction of
property, or for money squandered or lost.
FACTS:
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Foggitt a minor, without his guardian consent, entered into an agreement with T, the principal of a business college, to attend
typing classes for two weeks in May and the whole of April. He paid for the March lessons but then stopped attending and
refused to pay the April account.
HELD:
Foggitt benefited from the contract only to the extent of the lessons actually received and those lessons having been paid for.
There was no further obligation on him.
Where a minor fraudulently misrepresents his age or pretends he has been emancipated and so deceives another person, who is
induced to contract with the minor believing him to be of age and emancipated, the minor incurs an obligation. This obligation
is not contractual for the contract is void and the minor is not bound by it, but delictual because fraud is a delict and the minor
is bound to make good to the other party any loss he has suffered as a result of the fraud.
Moreover, the minor is precluded from obtaining the remedy of restitution by which would otherwise be entitled to reclaim
whatever he has paid or delivered in pursuance of the agreement.
Where a minor is tacitly emancipated, he can incur a binding contractual obligation within the field of his emancipation. Tacit
emancipation occurs when one is allowed by his guardian to carry on business or any other occupation on his own behalf but
the minor can contract to the extent to which he has been emancipated. i.e. the guardians consent has been given in advance.
The test for determining whether the minor has been emancipated is whether the minor is economically independent and
whether his guardian allows him a measure of contractual freedom.
A separate place to live and the carrying on of his own business may be indicative that his guardian has permitted him to enter
into contracts without assistance and that he has been emancipated but these factors are not conclusive evidence.
It must be borne in mind that whilst emancipation can provide capacity to act, it is not a means of terminating minority. An
emancipated minor therefore still needs his guardians permission when he wants to get married.
He also requires the consent of his guardian if he wishes to alienate or burden any fixed property belong to him, for such
transactions he may also require the consent of the courts.
FACTS:
Bera an Indian girl nearly 16 old had been earning her living as a servant for some 4 to 5 years. She lived with her parents but
retained control of her income and paid a certain sum to them for board and lodging. The employer failed to pay the girl.
HELD:
Bera was tacitly emancipated and could sue Dama, her employer, for the wages due.
d). RATIFICATION
Where a minor contracts without his guardians consent the contract may be subsequently ratified by the minor on attaining
majority either expressly or by conduct/impliedly.
FACTS:
Oberholzer bought a motor cycle from Stuttaford on hire purchase while still a minor. After attaining his majority, shortly
afterwards he continued to use the motorcycle but when sued for the installments due he set up his minority at the time as a
defense to the action on the contract and tendered the return of the motor cycle and treats it as his own.
HELD:
A minor is entitled to contract on his own behalf under the following statutes:
Insurance Act (Cap 196 ;s 37), provides a minor without his guardians consent can effect a life policy and pay the premiums
as they fall due but shall not cede or surrender the policy while he is a minor without guardians consent.
Post Office Savings Bank Act (Cap 249;s 9), provides deposits made by or on behalf of a minor may be repaid to him after
he has attained the age of 7 years in every respect as if he were of full age.
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Building Societies Act (Cap 189;s 19), provides a minor over the age of 16 years can be a member or depositor with any
building society without his guardians consent and enjoy all the privileges and obligations attaching to the members or
depositors.
ASSISTED CONTRACTS
A minor is bound by contracts made on his behalf by his guardian or made by himself with his guardians assistance given at
the time, beforehand or afterwards.
FACTS:
Skead, a minor, with his guardians consent, signed a promissory note for 37 in payment of the first premium in a twenty-year
endowment assurance policy for 750. in favour of Skead, the note to become due eight days after he attained his majority. At
the time Skead contemplated marriage and the policy was considered the best means of his saving money.
After the due date Skead was questioned by Colonial Bank, the holder of the note, and replied that he had no funds to pay it.
HELD:
Skead was liable because as the contract had been made with the consent of his guardian acting bonafide and reasonably as it
was not to his prejudice, he was liable to pay. Since he was going to benefit even if the guardian died, the assurance policy
doesnt expire.
NB: if the contract is to the minors prejudice, he may obtain an order setting it aside, in which case the guardian may be
personally liable.
FACTS:
The father and natural guardian of Wood, a minor who had inherited a sum of money, bought on his sons behalf a house then
worth 1550 for 1750, payable in installment until majority, installments were paid out of interest on the inheritance. On
Wood attaining majority a considerable sum still owed and the installments would absorb a large portion of the interest. Wood,
until majority, had lived in the house with his parents. On attaining majority Wood sued for cancellation of the sale and return
of installments paid with interest.
HELD:
There was serious and substantial prejudice to Wood, he was entitled to restitution and the contract should be cancelled. But
Davies the seller was to be given credit for a sum of money representing the value of the use of the house during the period in
which Wood lived in it with his parents.
NB: The guardians consent may be express or tacit, or may be implied from the fact that the guardian with full knowledge of
the transaction raised no objection.
NB: A guardian need not consent to the contract before it is made; it is sufficient if, knowing of the terms, he gives his consent
after the event and so ratifies the contract.
Married women subject to the marital power of their husbands have limited power to contract. The wifes capacity is similar to
that of a minor under the guardianship of her husband. She ha no power to enter into any contract and bind herself, or her
husband, without the knowledge or consent of her husband, unless such contract is subsequently ratified by him. If she
purports to do so, the contract is void.
People marry without an ante nuptial contract in which case the subject themselves to the common law regime of community
of property, community of profit and loss and marital power, or enter into an ante nuptial contract before their marriage
excluding these common law consequences.
Community of Property
Property between spouses shall vest into a joint estate. This means that all their present and future property whether vested in
them at the time of or during marriage becomes the common or joint property of both spouses in equal undivided shares.
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Community of liabilities
All the liabilities of either spouse whether incurred by them before or during the marriage becomes the joint liability of both
spouses. The property brought into the marriage by one party may consequently be sold to pay the premarital debt of the other.
It is made by the parties before the marriage and this means agreement before the marriage. Such a contract whether, in writing
or not it is always binding on the parties themselves after the marriage but it has no force or effect against any other person
unless it has been duly registered in the Deeds Registry.
A woman married in terms of customary law Chapter 5. 07 Customary Marriage Act, is incompetent to enter into contract and
will need the assistance of the guardian or her husband. Marriages are in two forms.
Customary Law marriage is common law and the General Rule is that the marriage creates community of property, community
of profit and Loss in a joint estate of which the husband has the sole right and power of administration and the wife has no say
in this administration. The common law can be varied by ante nuptial contract entered into before marriage and properly
executed and registered. The presumption of limited legal capacity to contract is waived if the women can show that she is
emancipated. A married woman may own property acquired by her own labour.e.g. Cattle, pots and utensils and this is not
subject to the husbands control.
The following circumstances are where the Joint Estate incurs an obligation through the act of the Wife:
a). ENRICHMENT
If the wife purports the contract and the joint estate is enriched, the husband in his capacity as administrator of the joint estate
will incur an obligation based on the law of unjust enrichment.
FACTS:
Forster sued Karsten, a woman married in community of property, for 50 which Karsten had agreed to pay Forster in
considering of his singing a certain option for the sale of a farm. Karsten pleaded that the contract was void because it was
signed by her when she was married in community of property and the husband had not consented.
HELD:
Karsten and her husband had been enriched by the sale of the farm, which would not have taken place if Forster had not been
induced to sign the option and the husband was bound by the contract.
b).NECESSARIES
(Include food, clothing, medical and dental expenses and other business connected with the household)
The General Rule is that; All wives, whether married in or out of community of property, are entitled to make contracts for
household necessaries without reference to their husbands.
Where the marriage is in community of property, the Joint Estate is bound and only the husband in his capacity as its
administrator may e sued during marriage. If the marriage is dissolved before the debt is paid, the trader can sue the husband
for the whole debt or the wife for half, a husband who pays the whole debt will recover half from his ex-wife.
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Where the marriage is out of community, husband and wife are jointly and severally liable to the trader, which means he can sue
either husband or wife for the whole amount. If he collect payment from the husband, that is the end of the matter. When he
chooses to sue the wife, or if she pays voluntarily, the wife has a right of recourse against the husband for his pro-rata of the
debt, determined according to the relative means of the spouses.
When the parties are living together, even a notification to the supplier that the husband has withdrawn his wifes right to
pledge his credit has no legal effect
It is no defense to a suppliers claim for the husband to his wife had no need to buy on credit.
FACTS:
Clark sued Lynch for R122.in respect of necessaries of life and household necessaries supplied to his wife.
HELD:
The wife has power to bind the husband in respect of all those matters reasonably incidental to that organized family
establishment, whether the articles furnished are consumed or used by the husband or the wife or children or their servants or
anyone else who is living with them either permanently or temporarily as part of the joint establishment of the marriage
partners.
A notification to a supplier that the husband has withdrawn his wifes right to pledge his credit has no legal effect so long as the
wife and husband continue to live in, or during any period when they subsequently re-establish, a common household.
The husband in an action for an amount owed in respect of necessaries supplied to his wife cannot rely on the fact that his wife
has been provided with sufficient funds to make it unnecessary for her to buy on credit.
Where a wife abuses her rights her husband can terminate her authority to pledge his credit by obtaining an interdict from the
court.
FACTS:
A wife was not short of any reasonable necessity or luxury but was incurring debts which amounted to gross extravagance and
prodigality.
HELD:
The husband should be granted an interdict restraining his wife from binding his credit.
If the wife is living apart from her husband owing to his fault she can bind his credit, but not where the common household is
broken up by the wifes conduct.
FACTS:
G met his wife on the way out to settle in South Africa and married her soon after arrival. Not long after settling in
Grahamstown he grew tired of her and forced her to return to Cape Town where she bought necessaries.
HELD:
A husband is bound to support his wife who left him owing to his misconduct and is liable to pay for necessaries supplied to
her.
NB: A husband is not liable for necessary services rendered to his wife after she has unlawfully deserted her husband and is
living apart from him.
If, after the common household has broken up, the husband adequately provides for his wife and notifies a supplier that he is
doing so and will not pay for necessaries supplied to her, the supplier cannot sue the husband for the cost of necessaries
supplied after receipt of the notice.
If, although the marriage has actually been dissolved, the husband comport himself as if the marriage still exists, he will
continue to be liable.
FACTS:
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After divorce, T hired a house in which he, his children and his former wife, in the capacity of manageress of the household,
lived , to outward appearance as a married couple with children. The former wife pledged his credit for laundry work.
HELD:
T was liable on implied agency, namely authorization of his former wife to pledge his credit for household necessaries.
Whether articles bought by a wife are necessaries or not is for the court to decide and in deciding t has regarded to the social
standing and means of the parties and their habits of life in the past.
C).PUBLIC TRADER
A public trade is one in which the wife indicates to the public, expressly or impliedly, that she is open to do business with any
person, whatever the business or profession carried on.
A married woman openly carrying on any retail or wholesale trade may validly contract in all matters connected with such trade
and may consequently bind herself and her husband and sell and burden the stock of the business. (Grotius 1.5.23)
Wessels J said: It appears to e an established law that where a woman married in community of property carries on business as
a public trader she is deemed to be acting as her husbands agent in every transaction entered into by her in connection with
that business. It is equally clear that the assets and liabilities of the business do not fall outside the joint estate of the parties so
as to form part of a separate estate.
The husbands consent to the trading may be withdrawn y him or terminated by his insanity.
Where a husband is absent from the country, or unreasonably withholds his consent to his wifes contracts, the court may
authorize her to contract, either specially or generally.
A woman married in community of property can contract under the following statutes.
Insurance Act (Chp 196; s 39) provides that a married woman may effect and own a life policy, hold acquire and dispose of any
interest in a life policy, hold and dispose of any moneys, or any asset acquired with those moneys, accruing from any interest in
a life policy, in all respects as if she were a single woman of full age and capacity.
Post Office Savings Bank Act (Chp 249; s 10) provides a married woman, whether under marital power or not, may be a
depositor and with or without assistance execute all necessary documents, give all necessary aquittances and enjoy all the
privileges and be liable to all the obligations attaching to depositors.
Building Society Act (Chp 189;s 19) provides that a married woman whether under marital power or not, may be a member of
or deposit with any building society, and may, without her husbands consent or assistance, execute all necessary documents
and generally have all the privileges and obligations attaching to members or depositors.
A contract made by a mentally ill person is Void if at the time of the agreement he could not understand and appreciate the
transaction into which he entered or if his consent was motivated or influenced by an insane delusion caused by mental disease.
FACTS:
At the time of his marriage L understood the nature of the contract and appreciated the nature of the obligations he was
undertaking, but he was already suffering from a mental disease and his volition in entering into the marriage was influenced by
auditory hallucinations caused by the disease.
HELD:
The marriage should be declared null and void ab intio ( from the beginning).
NB: it is not necessary to prove that a person, owing to mental disease, did not understand or appreciate the nature of the
contract; proof that his consent was motivated or influenced by an insane delusion caused by mental disease is sufficient.
Whether or not a mentally ill person could understand and appreciate the transaction is a matter of fact in which the court will
consider all the relevant evidence.
A mentally ill person may incur an obligation on the grounds of enrichment.
Where a person has been declared mentally disordered or defective under the Mental Health Act (Act 23 of 1976), the order
operates while in force so as to create a rebuttable presumption that he is mentally ill and any contract made by him will be void
unless it be proved that at the time he was in full possession of his faculties or his state of mind was such that he was able to
understand the nature of the contract and appreciate properly the duties and responsibilities created by it.
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FACTS:
P, who had been declared of unsound mind by order of court, married C in community. At the date of the marriage the order
was still in force but P was as a fact of sound mind and entered into the contract voluntarily and fully understanding its
significance.
HELD:
4. DRUNK PERSONS
Where a person enters into a contract while so drunk that he does not know he is entering into a contract or has no idea of the
terms, the contract is void but not if the drunk person is merely more easily persuadable or more willing to conclude the
contract.
Intoxicated Persons.
Intoxicated, acute or chronic, which makes a party unaware that he is contracting or unable to appreciate the nature of the
contract, renders the contract void. Intoxication of a lesser degree will be of significance only if induced by the other party to
the contract in order to gain an unfair advantage, in which case restitution will be granted.
5. PRODIGALS.
A prodigal, who is a person declared by the court to be incapable of managing his affairs as a result of a propensity to squander
his assets, cannot contract with regard to his property and if he does so the contract is void, but apart from his property he is
entitled to contract freely.
A person who is recklessly frittering away his estate may, at the instance of a relative or other interested person, be interdicted
from contracting without the assistance of a curator appointed by the court.
FACTS:
A wife alleged that her husband to whim she had been previously married but from whom she was now divorced, was
squandering his assets and was almost continually under the influence of liquor.
HELD:
An order should be granted declaring C a prodigal, interdicting him from dealing with his property and appointing a curator
bonis to his property.
FACTS:
M had been declared incapable of managing his affairs and curator bonis had been appointed by the court. Thereafter M
without the curators consent married.
HELD:
A curator bonis deals with the estate of a person under curatorship and not with his person. In his personal relationship to
others not affecting his estate the curator has no right to interfere. If he chooses to marry, the curator cannot interfere except in
so far as it relates to his property. Where a person under curatorship has not been declared a lunatic, the curator has no locus
stand to upset his marriage merely because marriage entails maintenance.
If a prodigal contracts without his curators consent the contract may be subsequently ratified by the curator.
6. INSOLVENT PERSONS.
Insolvency is the condition of a person when his financial position reaches the stage that he is unable to pay his debts or his
liabilities exceed his assets. In such an event the condition of the debtor may be officially recognized by the law for the
protection not only of his creditors, but also of other persons. The Insolvency Act (Chp 303) provides that the court may, at
the instance of the debtor himself or of his creditors, grant an order sequestrating the estate of the debtor.
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The effect of a sequestration order is that the debtor becomes statutorily insolvent and all his property is placed under the
control of a trustee who realizes it and distributes the proceeds among the various creditors in accordance with the Insolvency
Act. The Insolvent becomes subject to legal disabilities and these continue until his estate has been finally distributed and he
has been rehabilitated.
If the Insolvent contracts in breach of these provisions, the contract is not void but remains valid until set aside by the trustee.
Also, where an insolvent without his trustees consent alienates property acquired after sequestration to a person who was not
aware and had no reason to suspect that the estate was sequestrated, the alienation shall be valid. (s 40(1)
7. ALIEN ENEMIES
An Alien enemy is a person residing or carrying on business in enemy territory and any contract made with him in times of war
is void as public policy requires that the state should not be hampered in its prosecution of the war nor the enemy in any way
assisted.
Where an enemy subject resides in Zimbabwe, he has full contractual capacity and any contract made with him is valid unless
bad as against public policy. His internment appears to make no difference unless performance becomes impossible as a result
of supervening impossibility of Performance.
8. ARTIFICIAL PERSONS
In principle an artificial persons contractual capacity is determined by its constitution. If it is created by special statute (Cold
Storage Commission or Air Zimbabwe), reference must be made to that statute; if by Royal Charter (British South African
Company) to that Charter. If it is a company registered under the Companies Act (Chp 190), its contractual capacity is
determined by the objects clause of its memorandum of association, either expressly there conferred or such as may fairly be
regarded as incidental to , or consequential upon, the specified objects.
If an artificial person enters into a contract which it has no contractual capacity to make, the contract is void and cannot be
ratified.
NB: Re Jon Beauforte (London) ltd. A company, which was authorized by its memorandum to carry on business of
costumiers and gown-makers, embarked on the business of making veneered panels and erected a factory for this purpose. The
company later went into liquidation. Three creditors, a firm of builders who constructed the factory, a firm who supplied
veneer, and a firm who supplied coke, all proved in the liquidation. The liquidator rejected their claims.
HELD:
Their claims were rightly rejected on the ground that the contractors were ultra vires (beyond the companys powers).
NB: Rules of unjust enrichment should apply to the rights of the parties in any ultra vires transaction.
9. ILLEGAL ASSOCIATIONS
An illegal association has no locus standi in judicio (right to appear and be heard) and any contract made by it is void and
unenforceable.
But under the doctrine of unjust enrichment a remedy lies against its members who have derived benefits at the expense of
others to which they were not entitled and any person trading with an illegal association or with its members has a liability to
pay for benefits received by him.
3. Intention to contract,
The parties entering into a contract must have an intention to create a legal relationship.
If there is no intention to create a legal relationship, that agreement cannot be treated as a
valid contract. Generally there is no intention to create a legal relationship in social and
domestic agreements. Invitation for lunch does not create a legal relationship. Certain
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agreements and obligation between father and daughter, mother and son and husband and
wife does not create a legal relationship. An agreement wherein it is clearly mentioned that
"This agreement is not intended to create formal or legal agreement and shall not be subject
to legal jurisdiction in the law of courts." cannot be treated as a contract and not valid.
CASES:
BLOOM VS AMERICAN SWISS WATCH COMPANY 1955
WATERMEYER VS MURRAY (counter offer), one party offered to sell a farm to the other
party on certain terms, the other party did not accept unconditionally but countered the offer
setting his own terms of the offer. The original offeror decided not to offer his farm.
CARLILL VS CARBOLIC SMOKEBALL COMPANY
o One of the most famous cases on forming a contract is Carlill v. Carbolic Smoke Ball Company,
decided in nineteenth century England. A medical firm advertised that its new wonder drug,
the smokeball, would cure people's flu, and if it did not, buyers would receive 100. A
significant number of people sued for their 100 when the product did not work. Fearing
bankruptcy, Carbolic argued the advertisement was not to be taken as a serious, legally
binding offer. It was merely an invitation to treat, or mere "puff," a gimmick; however, the
court of appeal held that to a reasonable man, Carbolic had made a serious offer. People had
given good "consideration" for it by going to the "distinct inconvenience" of using a faulty
product. "Read the advertisement how you will, and twist it about as you will," said Lord
Justice Lindley, "here is a distinct promise expressed in language which is perfectly
unmistakable."
CRAWLEY VS REX
KILBURN VS ESTATE KILBURN, the promise made by the husband was not a serious one
that the husband had no intention of paying his wife the sum. The intention of the husband was
that the wife should claim the sum if and when the husband went insolvent. It was held that there
was no obligation and the wife could not claim the bond.
PRINCIPLES OF LAW
MARITZ VS PLATLEY, auction - marble metal piece on which stood a
mirror, the auctioneer put it up and it was sold to Platley, when the auctioneer
later put up the mirror, Platley protested claiming that he had bought the metal
piece and the mirror.
GEORGE VS FAIRMCARD HOTEL, courts will not assist a foolish mistake
due to carelessness.
BHIKAGEE VS SOUTHERN AVIATION, even though he did not
understand the language the party entered into a contract.
The contract involves an offer (or more than one offer) to another party, who accepts the offer. For
example, in a contract for the sale of a piano, the seller may offer the piano to the buyer for
$1,000.00. The buyer's acceptance of that offer is a necessary part of creating a binding contract for
the sale of the piano.
Please note that a counter-offer is not an acceptance, and will typically be treated as a
rejection of the offer. For example, if the buyer counter-offers to purchase the piano for $800.00,
that typically counts as a rejection of the original offer for sale. If the seller accepts the counter-offer,
a contract may be completed. However, if the seller rejects the counter-offer, the buyer will not
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ordinarily be entitled to enforce the prior $1,000.00 price if the seller decides either to raise the price
or to sell the piano to somebody else.
3. Free Consent: , consent is said to be free when it is not caused by (i) coercion, (ii) undue influence (iii) fraud, (iv)
misrepresentation, or (v) mistake. If the contract made by any of the above four reason, at the option of the
aggrieved party it could be treated as a void contract. If the agreement induced by mutual mistake the
agreement would stand void or canceled. An agreement can be treated as a valid contract when the
consent of the parties are free and not under any undue influence, fear or pressure etc. The consent of the
parties must be genuine and free consent.
4. Lawful consideration: An agreement must be supported by a consideration of something in return.
That is, the agreement must be supported by some type of service or goods in return of money or goods.
However, it is not necessary the price should be always in terms of money. It could be a service or
another goods. Suppose X agrees to buy books from Y for $50. Here the consideration of X is books and
the consideration of Y is $50. It can be a promise to act (doing something) or forbearance (not doing
something). The consideration may be present, future or can be past. But the consideration must be real.
For example If John agrees to sell his car of $ 50000 to Peter for $20000. This is a valid contract if John
agrees to sell his car not under any influence or force. It can be valid only if the consideration of John is
free. An agreement is valid only when the acts are legal. Illegal works like killing another for money, or
immoral works or illegal acts are cannot be treated as a valid agreement. So, illegal works will not come
under the contract act.
5. Legal formalities: The law of contract does not insist that the agreement must be in writing, it could
be oral. But, in some cases the law strictly insists that the agreement must be in writing like agreement to
sell immovable property must be in writing and should be registered. These agreements are valid only
when they fulfill the formalities like writing, registration, signing by the both the parties are completed. If
these legal formalities are not completed, it cannot be treated as a valid contract.
Most important essentials of a valid contract are mentioned above. These elements should be present in a
contract to make it a valid contract. If any one of them is missing we cannot treat that agreement as a
valid contract.
CASES:
BLOOM VS AMERICAN SWISS WATCH COMPANY 1955 (unaware of offer of reward)
WATERMEYER VS MURRAY (counter offer), one party offered to sell a farm to the other
party on certain terms, the other party did not accept unconditionally but countered the offer
setting his own terms of the offer. The original offeror decided not to offer his farm.
CARLILL VS CARBOLIC SMOKEBALL COMPANY 1893 (reward)
CRAWLEY VS REX
LEE VS AMERICAN SWISS WATCH COMPANY (reward 1st person)
PRINCIPLES OF LAW
3. An offer should be firm and deliberate, should show that the maker has serious
intention to be contractually bound merely by the other party accepting it.
4. An offer can be made to an individual or the world at large
5. Where there is an option, the option must stay open until the expiry of the stated
period.
6. An offer can be revoked or withdrawn at any time before acceptance.
7. Where the offer stipulates method of acceptance, such offer can only be validly
accepted by adopting the stipulated method.
8. An offer must be communicated to the offeree.
9. Offers which lack animus contrahendi cannot be turned into contracts on acceptance.
10. A statement that goods are for sale at a particular price does not amount to an offer
that can be turned, into a contract by acceptance.
Termination of an offer
An offer can be terminated on the grounds of rejection on the part of the offeree, that is if the offeree
does not accept the terms of the offer.Also upon making an offer,an offeror may include as a condition
to the contract the duration in which the offer will be available.If the offeree fails to accept the offer
within this specific period then the offer will be deemed as terminated.
1.
2.
Acceptance
Is the expressed or implied signification by the offeree of his intention to be contractually
bound in terms of an offer made to him or her?
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Rules governing acceptance (valid acceptance)
1. Acceptance can only be by the person to whom the offer is made (privity of
2. contract).
3. Acceptance must be communicated to the offeror. FELTHOUSE VS BINDLEY,
letter.
4. Acceptance must be unequivocal in terms of the offer and must not venture outside
the terms of the offer.
5. Acceptance must not be vague
6. Acceptance requires knowledge of the offer.
7. Acceptance must not be subject to conditions
8. Acceptance must be in a stipulated method r manner as prescribed by the offeror.
ELIASON VS HENSHAW stipulated that the reply should be send by wagon.
9. An acceptance of an offer which is impossible to perform creates no contract.
10. Acceptance must be made during the life of the offer or during the time limit of the
offer.
11. Acceptance must be serious and should be made with the intentions that legally
binding obligations will flow. SMITH VS HUGHES.
12. Acceptance must be consistent with the essentials of a valid contract E.G. if a minor
enters into a contract, acceptance is invalid, because minors do not have contractual
capacity. EDELSTEIN VS EDELSTEIN.
The "mirror image rule" states that if you are to accept an offer, you must accept an offer exactly, without
modifications; if you change the offer in any way, this is a counter-offer that kills the original offer: Hyde v.
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Wrench (1840) 3 Beav 334. However, a mere request for information is not a counter-offer: Stevenson v.
McLean (1880) 5 Q.B.D. 346. It may be possible to draft an enquiry such that it adds to the terms of the
Often when two companies deal with each other in the course of business, they will use standard form contracts.
Often these terms conflict (e.g. both parties include a liability waiver in their form) and yet offer and acceptance
are achieved forming a binding contract. The battle of the forms refers to the resulting legal dispute of these
circumstances, wherein both parties recognize that an enforceable contract exists, however they are divided as to
whose terms govern that contract.
Under English law, the question was raised in Butler Machine Tool Co Ltd v. Ex-Cell-O Corporation
(England) Ltd [1979] WLR 401, as to which of the standard form contracts prevailed in the transaction. Lord
Denning MR preferred the view that the documents were to be considered as a whole, and the important factor
was finding the decisive document; on the other hand, Lawton and Bridge LJJ preferred traditional offeracceptance analysis, and considered that the last counter-offer prior to the beginning of performance voided all
preceding offers. The absence of any additional counter-offer or refusal by the other party is understood as an
implied acceptance. In U.S. law, this principle is referred to as the last shot rule.
Under the Uniform Commercial Code (UCC) Sec. 2-207(1), A definite expression of acceptance or a written
confirmation of an informal agreement may constitute a valid acceptance even if it states terms additional to or
different from the offer or informal agreement. The additional or different terms are treated as proposals for
addition into the contract under UCC Sec. 2-207(2). Between merchants, such terms become part of the contract
unless:
a) the offer expressly limits acceptance to the terms of the offer,
b) material alteration of the contract results,
c) notification of objection to the additional/different terms are given in a reasonable time
after notice of them is received.
Material is defined as anything that may cause undue hardship/surprise, or is a significant element of the contract.
If there is no contract under 2-207(1), then under UCC Sec. 2-207(3), conduct by the parties that recognize there
is a contract may be sufficient to establish a contract. The terms for this contract include only those that the
parties agree on and the rest via gap fillers.
As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that
the acceptance was posted (Adams v. Lindsell (1818) 106 ER 250). This rule only applies when, impliedly or
explicitly, the parties have in contemplation post as a means of acceptance. It excludes contracts involving land,
letters incorrectly addressed and instantaneous modes of communication. The relevance of this early 19th century
rule to modern conditions, when many quicker means of communication are available has been questioned, but
the rule remains for the time being.
In Australian law, there is a requirement that an acceptance is made in reliance or pursuance of an offer: see R v.
Clarke (1927) 40 C.L.R. 227.
As a rule of convenience, if the offer is accepted by post, the contract comes into
existence at the moment that the acceptance was posted (Adams v. Lindsell (1818)
106 ER 250). This rule only applies when, impliedly or explicitly, the parties have in
contemplation post as a means of acceptance. It excludes contracts involving land,
letters incorrectly addressed and instantaneous modes of communication. The
relevance of this early 19th century rule to modern conditions, when many quicker
means of communication are available has been questioned, but the rule remains for
the time being.
The posting rule (or "mailbox rule" (US), "postal rule" or "deposited acceptance rule") is an
exception to the general rule of contract law in common law countries that acceptance takes place
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when communicated. The posting rule states, by contrast, that acceptance takes effect when a letter is
posted.
One rationale given for the rule is that the offeror nominates the post office as implied agent and thus
receipt of the acceptance by the post office is regarded as that of the offeree. The main effect of the
posting rule is that the risk of acceptance being delivered late or lost in the post is placed upon the
offeror. If the offeror is reluctant to accept this risk, he can always require actual receipt as a condition
before being legally bound.
However, if the offeree mails a rejection and then sends an acceptance (or otherwise changes his mind),
whichever communication is received by the offeror first controls.
The rule was established by Anthony in the 19th century cases, starting with Adams v Lindsell
(1818) B & Ald 681, which was later confirmed in Dunlop v Higgins (1848) 1 HL Cas 381, Household
Fire Insurance Company v Grant (1879) 4 Ex D 216 and Henthorn v Fraser [1892] 2 Ch 27.
The posting rule applies only to acceptance. Other contractual letters (such as one revoking the offer)
do not take effect until the letter is delivered, as in Stevenson v McLean (1880) 5 QBD 346. The
implication of this is that it is possible for a letter of acceptance to be posted after a letter of
revocation of the offer has been posted but before it is delivered, and acceptance will be complete at
the time that the letter of acceptance was postedthe offeror's revocation would be inoperative.
Example 1:
Day 1: A makes an offer to B.
Day 2: A decides to revoke the offer and puts a letter in the mail to B revoking the offer.
Day 3: B puts a letter accepting the offer in the mail.
Day 4: B receives A's revocation letter.
The letter of revocation can be effective only when received, that is Day 4.
However, a contract was formed on Day 3 when the letter of acceptance was posted.
It is too late for A to revoke the offer.
Example 2:
Day 1: A makes an offer to B.
Day 2: B intends to reject the offer by putting a letter in the mail to A rejecting the offer.
Day 3: B changes his mind and sends a fax to A accepting the offer.
In this situation, whichever communication A receives first will govern.
Example 3:
Day 1: A makes an offer to sell a parcel of land to B.
Day 2: B mails her acceptance.
Day 3: Before A receives B's acceptance, B telephones A and states she wishes to reject the offer.
Day 4: B's original letter of acceptance arrives, A then records the contract as a sale.
B's acceptance of the offer means there is a binding contract -- she is obliged to pay for the
land or be liable for damages.
Under the posting rule, performance is a means of acceptance. If A orders 1000 blue coathangers and B ships
them out, that shipment is considered to be a conveyance of acceptance of A's offer to buy the coathangers.
Defective performance is also an acceptance, unless accompanied by an explanation. For example, if A orders
1000 blue coathangers, and B mistakenly ships 1000 red coathangers, this is still an acceptance of the contract.
However, if B ships the red coathangers with a note that they sent these because they had run out of blue
coathangers, this is not an acceptance, but rather an accommodation, which is a form of counter-offer.
An interesting implication of the operation of the posting rule is that an acceptance is complete once the letter of
acceptance is posted; it makes no difference whether the offeror actually receives the letter. This was
demonstrated in Byrne v Van Tienhoven (1880) 5 CPD 344. If a letter of acceptance were to be lost,
acceptance has still taken place. An exception to this would be if the offeree knows or has reason to know that
the letter of acceptance never reached the offeror. For example, if A brings a letter of acceptance to the local post
office and A sees the post office burn down a moment later, there is no acceptance.
Further the posting rule does not apply to instantaneous forms of communications. For example in Entores Ltd
v Miles Far East Corporation [1955] 2 QB 327, the Court held that the posting rule did not apply to an
acceptance by telex as the Court regarded it as an instantaneous form of communication. The general principle
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that acceptance takes place when communicated applies to instantaneous forms of communication. Courts have
similarly held that the posting rule does not apply to acceptances by telephone or fax.
The courts are yet to decide whether e-mail should be regarded as an instantaneous form of communication. If
the offeree were to convey acceptance by commercially unreasonable means - by cross-country pony express, for
example - the acceptance would not be effective until it had actually been received.
A letter is regarded as "posted" only when it is in the possession of the Post Office; this was established in the
case of Re London & Northern Bank [1900] 1 Ch 220. A letter of acceptance is not considered "posted" if it is
handed to an agent to deliver, such as a courier.
The posting rule does not apply to option contracts or irrevocable offers where acceptance is still effective only
upon receipt. This is because the offeree no longer needs protection against subsequently mailed revocations of
the offer.
Where parties are at distance from one another, and an offer is sent by mail, it is universally held in this country
[United States] that the reply accepting the offer may be sent through the same medium, and, if it is so sent, the
contract will be complete when the acceptance is mailed,...and beyond the acceptor's control; the theory being
that, when one makes an offer through the mail, he authorizes the acceptance to be made through the same
medium his agent to receive his acceptance; that the acceptance, when mailed, is then constructively
communicated to the offeror.
Ticket cases
In contract law, ticket cases are a series of cases that stand for the proposition that if you
are handed a ticket or another document with terms, and you retain the ticket or document,
then you are bound by those terms. Whether you have read the terms or not is irrelevant,
and in a sense, using the ticket is analogous to signing the document. This issue is an
important one due to the proliferation of exclusion clauses that accompany tickets in
everyday transactions.
The case of Parker v. The South Eastern Railway Co (1877) 2 CPD 416 illustrates restrictions on
this concept:
Knowledge of writing and of terms: If the recipient of the ticket knew that there was writing on the
ticket and also knew that the ticket contained terms, then the recipient is bound by the terms of the
contract.
Reasonable person: If the recipient did not know of the existence of the terms, then the court will
consider whether a reasonable person would have known that the ticket contained terms. If that is so,
then the ticket-holder is bound by those terms; if not, then the court will return to the general test of
whether reasonable notice of the terms was given.
The test of whether a document fits within the description of a ticket is an objective test,
that is, whether a reasonable person in the position of the ticket-holder would perceive it to
be contractual in nature. For instance, if exclusion clauses accompany a docket, it may be
held that it is not contractual in nature since it is just a receipt.
Furthermore, Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd [1989] 1
QB 433 held that if a party wishes to incorporate onerous terms into a document that is to
be just accepted by the other party, reasonable notice must be given to make it a term of the
contract.
Other ticket cases include:
SPECIAL TERMS
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Where an offer is made subject to special terms the offeree will not be bound by them unless
he has expressly or impliedly accepted them. This is illustrated by the following cases:
A). SIGNED DOCUMENTS
In general the effect of signing a contract is that the party signing is bound. This rule is
applied not only when the person signing studies the document but also when signing
carelessly or recklessly and when he fails to avail himself of an opportunity to study
provisions incorporated by reference.
These are governed by Caveat Subscriptor rule and Quasi mutual assent.
The business world has come to rely on the principle that a signature on written contract
binds the signatory to the terms of the contract, and if this principle were not upheld any
business enterprise would become hazardous in the extreme. The general rule, sometimes
known as the Caveat Subscripto Rule (let the signer be aware), is therefore that a party to a
contract is bound by his signature, whether or not he has read or understood the contract.
And this will be so even if he signed in blank, or it is obvious to the other party that he has
not read the document.
The general rule will naturally not apply if the signature was obtained by misrepresentation,
fraud, duress or undue influence, or if the contract is vitiated by illegality or mistake.
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NB: The objective of the doctrine of Quasi-mutual assent is to establish a positive
sanction for the expectation of good faith which has grown up in the mutual dealings of
men of average right mindedness.
CASE: George Vs Fairmead (Pvt) Ltd
FACTS:
George a hotel guest signed a hotel register, which contained contractual terms some of
which he completed by filling in blank space. The register had clauses written in
Afrikans and English stating that the Hotel will not be liable for loss to guests property.
George signed the register without reading some of the clauses. After a month latter the
goods were stolen and he sued the Hotel. The Hotel repudiated liability on the basis of
the clause in the register.
HELD:
It was held that the Hotel was not liable because by signing the register George had
become bound by whatever words contained in the clause. George was bound by the
terms since he knew he was signing a contractual document.
CASE: Bhikhagee Vs Southern Aviation (Pvt) Ltd
FACTS:
An experienced businessman, who was accompanied by a friend who could read the
document but was not asked to, signed a flight ticket, all of it in a language (English) he
could not understand after jokingly asking whether he was signing a death warrant. Bad
weather prevented the completion of the journey in time,and Bhikhagee had to make
alternative arrangements. The company sued him for the fare.
HELD:
The court held that by his signature he had accepted the terms of the contract hence he
was bound by the conditions.
CASE: Mothole Vs Mothole
FACTS:
A sick man who could not concentrate on the document containing latent phrases which
he obviously could not have understood because he wanted to execute the document
without desiring that it could be explained to him in a language which he could
understand.
HELD:
The sick man was bound by his signature.
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EXCEPTIONS
NB: Note that the only defense available to a person who signs a document without reading are:
1.
2.
3.
4.
5.
6.
Fraud
Misrepresentation
Duress
Illegality
Mistake
Undue Influence.
NB: But the part signing will not be bound if he has been misled as to the
Meaning of the words to which he was signifying his assent for.
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HELD:
The court held that the railways were fully liable because no reasonable notice had been
given to Mcleran at the time of contracting and Mcleran would be compensated since the
cloak man had scrapped the ticket on top so he had assumed that the words written under
were of no essence.
In testing whether a ticket contains binding terms the following factors have to be
considered.
1. Time of issue of the ticket.
2. Nature of the trade (whether the trade is worth to be given a ticket).
3. Intention to give the ticket- the question, which arises, is whether the recipient of the ticket
is bound by the terms which he had no actual knowledge.
The approach of the courts in ticket cases therefore is to ask these questions:
1. Did the person who received the ticket know that there was printing or writing on it?
If the answer is positive, the court proceeds to the next question,
2. Did the person receiving the ticket know that this writing or printing refereed to or
contained provisions of the contract in question or set out terms of the contract.
If the answers are positive then the terms form part of the contract.
If the answer to either of the questions is negative, then a third question must be asked.
3. Did the person giving the ticket did what was reasonably sufficient in the circumstances to
give the person a notice of the terms.
If the answer is Yes then the provisions are apply of the contract. If No then the provisions
do not form part of the contract.
NB: In determining what is reasonably sufficient, Innes CJ in McLaren Vs CSAR
Draws a distinction between documents which a man might reasonably suppose to contain
conditions and documents which a man cannot be reasonably held to suppose contained
conditions.
EXEMPTION CLAUSES
An exemption clause is a term in a contract, which seeks to exempt one of the parties from
liability or seeks to limit liability to a specific sum if certain events occur. They are used for
the purposes of either limiting or excluding the liability of a party to a contract in some
circumstance. These exemption clauses are very much liable to abuse hence the court steps
in to prevent the abuse of exemption clauses.
A company or public utility supplying a service to the public will want to eliminate
bargaining and uncertainty by using a standard form of contract, and its legal adviser, when
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drafting the standard form, will almost inevitably safeguard his clients interest by including
clauses exempting it from some of the liability that would attach to by common law.
Many of the Caveat Subscripto and Ticket cases are concerned with attempts by customers
to escape from the effect of such exemption clauses, and as has been seen, the necessity to
keep the wheels of business turning has left the customer strictly limited ways of escape.
These ways are supplemented by the courts setting limits on the exemptions they will permit
and interpreting them.
An undoubted limit on exemption clauses is that a party may not exempt himself from
liability for his own fraud, but may exempt himself from liability for his own negligence.
Exemption clauses only apply
i.
ii.
iii.
Terms written on dry cleaners, parking a car in the parkade, leaving a car at a garage for repairs,
Horse race courses, etc are examples of exemption clauses may be applicable.
b). RECEIPTS
A receipt is prima facie evidence of payment. when making a payment the debtor should
always demand a receipt for if he is subsequently sued on the debt and he alleges that he has
paid it, the onus is on him to prove such fact. A receipt is not a contractual document. The
person taking a receipt does not bind himself to any terms or clauses printed on the receipt.
CASE: Chapelton Vs Barry Urban District
FACTS:
Chapelton hired 2 desks and chairs from the council and paid for them and he was given a
receipt containing words to the effect that the council would not be liable for any accidents
or damage arising from the hire of the chairs. When Chapelton sat on one of the chairs, it
broke and he was injured. He sued the council for damages but the council repudiated the
liability relying on the clause on the receipt.
HELD:
The court held that the council was liable because the plaintiff who had not read the
conditions on the receipt was entitled to assume that the receipt was merely a document that
serves as a proof for the money he had paid and not a contractual document.
c). NOTICES
The General Rule is that the terms on the Notice are binding if the receiver was aware of the
notice or the Offeror had alerted the Offeree as regards the terms. Similar principles apply
when reliance is placed on a provision of the contract which is posted up in a prominent
position, such as the notice cars garaged at owners risk
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Counter Offers. If the offeree rejects the offer, the offer has been destroyed and cannot be
accepted at a future time. A case illustrative of this is Hyde v. Wrench (1840) 49 E.R. 132, where in
response to an offer to sell an estate at a certain price, the plaintiff made an offer to buy at a lower
price. This offer was refused and subsequently, the plaintiffs sought to accept the initial offer. It was
held that no contract was made as the initial offer did not exist at the time that the plaintiff tried to
accept it, the offer having been terminated by the counter offer.
Please note that a counter-offer is not an acceptance, and will typically be treated as
a rejection of the offer. For example, if the buyer counter-offers to purchase the piano for
$800.00, that typically counts as a rejection of the original offer for sale. If the seller accepts
the counter-offer, a contract may be completed. However, if the seller rejects the counteroffer, the buyer will not ordinarily be entitled to enforce the prior $1,000.00 price if the seller
decides either to raise the price or to sell the piano to somebody else.
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2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
VOIDABLE CONTRACT
A contract which is valid per se but due to some issue, the innocent party
may at his option decide to withdraw from it.
It is valid but the innocent party may choose to avoid.
A voidable contract, unlike a void contract, is a valid contract. At most,
one party to the contract is bound. The unbound party may repudiate the
contract, at which time the contract is void.
For example, depending upon jurisdiction, a minor has the right to
repudiate certain contracts. Any contract with a minor is thus a voidable
contract. If a minor were to enter into a contract with an adult, the adult
would be bound by the contract, whereas the minor could choose to
avoid performing the contract. Therefore, when entering into contracts
with a minor, people often require the co signature of an adult, preferably
a parent or legal guardian
A CONTRACT MAY BE VOIDABLE DUE TO THE FOLLOWING
1. Duress.
2. Undue influence.
3. Misrepresentation.
4. Where one party lack contractual capacity.
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In contract law a mistake is an erroneous belief, at contracting, that certain facts
are true. It may be used as grounds to invalidate the agreement. Common law has
identified two different types of mistake in contract: "unilateral mistake" and
"mutual mistake," sometimes called "common mistake."
EXCEPTIONS
1. One of factor.
The mistake must be as to a material or an essential fact, that is if the party mistaken
had known what the real state of affairs was he would never have made the contract.
Whether an error is essential or merely incidental is entirely a question of fact to be
determined by a court on the available evidence. However, in deciding the issue the
courts usually derive assistance from the following classification of mistakes according
to the element of the contract in which the mistake occurs:
o Error on negotio, John intends to hire a car, Angie intends to buy it.
o Error in corpore, error in identity of subject matter.
o Error in persona, error relating to the identity of one of the parties.
o Error in substantia
3. A reasonable mistake.
PRINCIPLES OF LAW
reasonably misled by his signature. Again in cases of Justus error there is no room for
the operation of doctrine of Quasi-Mutual Assent.
A mistake made by one party to a contract which is due to his own carelessness is not a
reasonable mistake. e.g. when a man is asked to sign a document purporting to contain
the terms of the agreement, believing that the terms are different from those expressly
set out, he cannot then be heard to say that his ignorance of what was in it was a Justus
error.(Case: George Vs Fairmead(pvt)Ltd.)
CASE: Merrington Vs Davidson & Others
FACTS:
At a sale of certain lots of grounds at Retreat, D bought lots numbers 1-28 block CC, at
6 each. A plan was available on which the various blocks and lots were marked but D
did not bother to look at it. D contended that he had intended to buy lots in block C
and not block CC, and that his mistake rendered the contract Void.
HELD:
If it was a mistake, it was certainly not a Justus error, as D ought to have inquired what
lots he was buying.
CLASSIFICATION OF MISTAKE
a.
b.
c.
d.
i.
Error on negotio, John intends to hire a car, Angie intends to buy it.
Error in corpore, error in identity of subject matter.
Error in persona, error relating to the identity of one of the parties.
Error in substantia
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ii.
iii.
ERROR IN MOTIVE:
A mistake which is merely incidental to the contract in that it relates only to the reasoning or
motivation of one of the parties and does not render a contract Void.
(CASE: Diedericks Vs Minister of Lands)
iv.
v.
vi.
PRINCIPLES OF LAW
TYPES OF MISTAKE
1. Unilateral mistake, one party makes a mistake. SMITH AND
HUGHES doctrine.
In the case of a unilateral mistake, the parties are usually at cross-purposes, due to a
misunderstanding. Either one or both of the parties are mistaken about some fact
connected with the contract (including the intention of the other party), but they do not
share the same mistake. The rule is that a unilateral mistake renders the contract void if
it is both essential (material) and reasonable (Justus error).
A contract is Void for mistake if the parties are not ad idem (of the same mind) as to
the terms of their agreement, provided-:
(a) The mistake is one of fact;
(b) It concerns a material fact;
(c) It is a reasonable mistake;
(d) The party setting up the mistake is not stopped from doing so.
The parties must have a consensus ad idem, that is, they must be of
the same mind or understanding as to the essential or material factors
of their agreement. If both parties are not of the same mind, one of
them at least must be laboring under a mistake or error, i.e. a wrong
impression of the actual facts.
If both parties labour under the same mistake, the mistake is said to
be Common, if each party is under a different impression, the
mistake is said to be Unilateral. Whether common or unilateral,
however, mistake may render a contract void if certain requirements
are met.
PRINCIPLES OF LAW
o
o
Rectification will not be ordered if the effect of such rectification will be to prejudice the third
parties.
If the common intention of the parties is clear and the document does not express that intention
then verbal agreement need not be prove
2. 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 a contract.
It becomes a misrepresentation if facts are false.
REQUIREMENTS
1. It must be false in fact as in LAMB VS WALTERS, a party to a contract of a house
assured the other that the price asked was fair and reasonable whereas in fact it was far in
excess of the value of the house. In NAUDE VS HARRISON, .. Well built... it was
held that the statement did not amount to a misrepresentation. In MAZZA AND
OTHERS VS JONES, a statement of opinion is not a misrepresentation entitling one to
restitution even if it is incorrect.
2. It must be made by the other contracting party.
3. It must be made before or at the time the contract was entered into.
4. The representation statement must be material, of such a nature it would induce a
person to contract.
5. The innocent party must have contracted on the faith or basis of the statement, as in
POOLE & MCLENNAN VS NOURSE, the other party, put inaccurate and false
statements in an advert to attract prospective buyers to see the farm were given true facts.
6. The representation was made with the intention of inducing the other party to
contract.
1. THE REPRESENTATION WAS MADE WITH THE INTETION OF INDUCING A
CONTRACT;
Intention determines whether a statement made by one party to the other before or at the
time of the contract is a term of the contract, or a representation that is an inducement but
not party of the terms of the contract, or a mere puff. A false statement made incidentally
without the intention of inducing a contract will not render any resulting contract voidable.
A mere lie, which is foolishly acted upon by others to whom it is addressed, does not
constitute s misrepresentation unless the utterer intended.
Where the parties intend the statement to be part of the contract, it is a warranty, for which
contractual responsibility is taken and in breach of which the remedies will be available.
SILENCE:
Silence will constitute misrepresentation where there is a duty to disclose. Such a contract
exist where the contract is Uberrimae Fidei (Utmost good faith) like partnership and
insurance, or in contracts of Sale in respect of Latent defect which the seller knows of, or
where the negotiation are characterized by the involuntary reliance of one party on the other
for material information, or where one party has created an erroneous belief in the mind of
the other party but fails to correct it.
Three situations where silence will give rise to an action based on non-disclosure:
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ACTIVE CONCEALMENT
The guilty party, having by a positive act or statement created an erroneous belief in the
mind of the innocent party, fails to correct it but allows it to persist until the agreement is
concluded.
DESIGNED CONCEALMENT
The circumstances of a particular case, such as the relationship of the parties or the
involuntary reliance of the one upon the other for material information, give rise to a duty to
disclose. It must be shown that the information was purposely withheld to induce the
contract or to conceal facts which, if known, would probably have resulted in the innocent
party not contracting.
SIMPLE NON-DISCLOSURE
A party without deliberation or design but by inadvertence fails to disclose to the other party
some material fact concerning the subject matter of the contract. the accepted view is that
simple non-disclosure amounts to fraud only in a contract of Sale, where there is a duty on a
seller to disclose a latent defect of which he has knowledge.
CASE: Glaston House (Pvt) Ltd Vs Inag (Pvt) Ltd.
FACTS:
When GH had purchased a dilapidated building from Inag and was unaware that part of the
building had been proclaimed a national monument. Inag, of course, had been so advised.
Inag knew the building was being purchased for redevelopment purposes but had failed to
disclose that party of the building had been declared a national monument. Soon after the
Sale GH, having learned of the proclamation, consulted the National Monument Council
and was permitted to remove the part concerned subject to it being stored and later installed
in the foyer of the new building. This put GH to considerable expense, which expense was
now claimed from Inag.
HELD:
The fact that part of the building had been proclaimed a monument constituted a latent
defect, Inag had deliberately concealed this fact and this deliberate concealment constituted
fraud entitling GH to recover the amount expended in preserving the part.
NB: A mere puff refers to a statement made during pre-contractual negotiations which is
not intended to be taken seriously and as such entails no legal consequences such as those of
fraudulent misrepresentation or warranty.
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constitute a representation. Statement of fact must clearly be distinguished from expressions
of opinion.
HELD:
The contract was not voidable for, being in possession of the true facts, P and M could not
complain that they were misled by the false statements contained in the advertisement.
TYPES OF MISREPRESENTATION
1.
PRINCIPLES OF LAW
for fraudulent misrepresentation in a tort action. Fraudulent misrepresentation is
capable of being made recklessly.
REMEDIES:
- It is a delict, damages are to put the aggrieved party in the position he would have been,
he ot been misled. This is to make good the loss suffered by the innocent party.
- He may claim rescission of the contract and damages.
- He may treat the contract as binding and claim damages for any loss he has suffered.
2.
had
if a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to
anotherwith the intention of inducing him to enter into a contract with him, he is under a duty to use
reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable
REMEDIES:
Negligent misrepresentation may be raised as a defence by the prejudiced to an action
brought by defendant to enforce the contract.
3.
Plaintiff may claim rescission of the contract. Damages may only be claimed if defendant
was under a duty to speak carefully.
Plaintiff may abide by the contract and claim QUANTI MINORIS damages i.e. claim a
reduction in the purchase price of the thing sold. (Purchase and Sale Law).
3. UNDUE INFLUENCE
PRINCIPLES OF LAW
Occurs mainly where the parties have a special relationship e.g. doctor and patient, lawyer and
client, guardian and minor, pastor and member of church, lecturer and student.
Consensus is defective.
For example PRELER VS JORDAAN, an old and ailing farmer who donated to his doctors
his 3 farms because of undue influence.
Undue influence (as a term in jurisprudence) is an equitable doctrine that involves one person
taking advantage of a position of power over another person. It is where free will to bargain is
not possible.
The other party to the contract should have influence over the other which exists because of
their relationship. As in PATEL VS GROBBELAAR, Grobbelaar sought the cancellation
of a mortgage bond registered against his property in favor of Patel. This had been done
under the power of attorney which, Grobbelaar had signed at Patels persuasion whilst under
Patels influence; because Grobbelaar believed that Patel had supernatural powers. But
infact, Grobbelaar owed Patel no money and would not have given him such power of
attorney for such influence. It was held that Grobbelaar could set aside the contract he had
established under undue influence.
The influence weakened the other partys power of resistance.
The other party would not have entered into such a contract had he not been subjected to
this influence.
The other party exercised his influence in an improper manner to consent in a pre-judicial
contract.
Influence was to such an extent that the other party was unable to make an independent
decision on the subject matter.
Parent/child
Guardian/ward
Priest/member of parish
Solicitor/client
Doctor/patient
In such cases, the onus of proof lies on a doctor, say, to disprove undue influence on a
patient.
Second subgroup
The second subgroup covers relationships that do not fall into the first subgroup, but on the
facts of case, there was an antecedent relationship between the parties that led to undue
influence. The test is one of whether there was a relationship of such trust and confidence
that it should give rise to such a presumption (see Johnson v. Buttress (1936) 56 CLR 113).
In GARCIA V NATIONAL AUSTRALIA BANK (1998) 194 CLR 395, the High Court of Australia
distinguished between cases of actual undue influence and situations where the transaction is set aside because
the guarantor does not understand the nature of the transaction. Although there is no presumption of undue
influence, a "lender is to be taken to have understood that, as a wife, the surety may repose trust and
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confidence in her husband in matters of business and therefore to have understood that the husband may not
fully and accurately explain the purport and effect of the transaction to his wife; and yet... did not itself take
steps to explain the transaction to the wife or find out that a stranger had explained it to her."
This influence weakened his powers of resistance and made his will pliable.
c)
The other party exercised this influence in an unscrupulous manner in order to induce him to
consent to a transaction:
Which he, with normal free will, would not have concluded.
REMEDY:
The prejudiced party should claim for delictual damages against the person
who exercised the influence. He can also claim restitution in integrum.
4. DURESS
Duress has been defined as a "threat of harm made to compel a person to do something against his or
her will or judgment; esp., a wrongful threat made by one person to compel a manifestation of
seeming assent by another person to a transaction without real volition". - Black's Law Dictionary (8th
ed. 2004)
Duress in contract law falls into two broad categories:
Physical duress, and
Economic duress
Occurs where one person or a person is induced to contract as a result of fear caused by violence or
intimidation.
Consent would be defective in the sense that it would have been improperly procured
Leading case BROODRYK VS SMUTS, Broodryk a road worker was approached by army officials
and forced to join the army. Broodryk enlisted because he feared that if he did not he would not be
able to fend for his family. It was held that the contract be set aside because, it was voidable as a result
of duress. The court said Broodryks case met the requisite elements of duress viz to avoid a contract.
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REQUIREMENTS FOR DURESS
1.
2.
3.
4.
5.
6.
7.
8.
9.
ESSENTIALS/REQUIREMENTS OF DURESS:
a) The contract was entered into as a result of actual violence or reasonable fear.
b) The fear was caused by the threat of some considerable evil to the party or his family.
c) It was a threat of imminent or inevitable evil.
d) The threat or intimidation was contra bonos mores (contrary to accepted standards of
morality.)
e) The moral pressure caused damage.
f)
a). The contract was entered into as a result of actual violence or reasonable fear.
Threat must not be merely evil or foolish but should be Justus (metus) i.e. it is to
carry weight or it must be firm. Fear should be such as would overcome the
resistance of a person of ordinary firmness, taking into account the type of the
person. e.g. whether the person is young or old.
b). The fear was caused by the threat of some considerable evil to the party or his family.
The fear must cause a family some serious evil e.g. death, serious body injury, rape
or destroy their property at night, the person must have acted on the threat of
violence to enter into the contract.
CASE: Broodryk Vs Smurts
FACTS:
B alleged that he had entered into a contract of voluntary enlistment had taken the
prescribed oath through a threat that failing such enlistment he would be regarded
as person unwilling to support the Government and would be imprisoned. At the
time of enlistment he was a road worker employed by the Government. He was
married with a minor dependent upon him. He also alleged that the threat was
made by two officials in the service of the Government who was authorized to
enlist persons for the military services. He claimed rescission of the contract, citing
General Smurts in his capacity as the Prime minister and Minister of Defence.
HELD:
Fear of imprisonment was enough/sufficient to justify duress and the contract was
void.
c). It was a threat of imminent or inevitable evil.
The evil threatened must be so near that the victim of the threat can not protect
himself against it. it can not be prevented other than agreeing to the contract.
CASE: Blackburn Vs Mitchell
FACTS:
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A ship, while lying in Table Bay, parted both anchors and grounded near the beach.
The wind was rising and the ship was in a position of increasing peril. The Captain
of a tug came to the ships assistance, he refused aid unless M, the Master, agreed
to pay 2000. M protested, but the Captain of the tug threatened to leave unless a
clean contract is signed. M ultimately signed an unconditional promise to pay the
amount, saying at the time that though he did so the money would never be paid.
The ship was towed off and taken to a place of safety.
HELD:
The agreement had been signed under duress and was voidable. However 1000.
Was awarded to the sailors, as a fair and reasonable award for their services.
d). The threat or intimidation was contra bonos mores (contrary to accepted standards of morality.)
In the case of Broodryk Vs Smurts threatening a person to enter into the army when that person
is unwilling to join the army is against public policy hence contra bonos mores.
e). The moral pressure caused damage.
In Broodryks case, the declaration alleged that the plaintiff was enlisted and attested. The result
of that is the plaintiff has become subject to obligations with which he could not otherwise have
been burdened and he has suffered the kind of damage.
PHYSICAL DURESS
1. Duress to the person
Professor Ronald Griffin, Washburn University School of Law, Topeka, KS, puts physical duress
simply: "Your money or your life." In BARTON V. ARMSTRONG [1976] AC 104, a decision
of the Privy Council, Armstrong threatened to kill Barton if he did not sign a contract, which was
set aside due to duress to the person. An innocent party wishing to set aside a contract for duress
to the person need to prove only that the threat was made and that it was a reason for entry into
the contract; the onus of proof then shifts to the other party to prove that the threat had no
effect in causing the party to enter into the contract. Duress can be made also by social influence.
Courts frown on this type of contract because there is really no manifestation of mutual assent
"meeting of the minds" or agreement to the terms. Rather, when someone is threatened and
agrees to act to avoid physical harm by the party making the offer, all you truly have is a mirror of
the other party's manifestation of mutual assent not the manifestation of mutual assent by the
party being forced or induced to assent to the terms of the contract. Therefore, the meeting of
the minds "in truth" does not exist. Since, there is no meeting of the minds there can be no
contract.
2. Duress to goods
In such cases, one party refuses to release the goods belonging to the other party until the other
party enters into a contract with them. For example, in Hawker Pacific Pty Ltd v Helicopter Charter
Pty Ltd (1991) 22 NSWLR 298, the contract was set aside after Hawker Pacific's threats to
withhold the helicopter from the plaintiff unless further payments were made for repairing a
botched paint job.
ECONOMIC DURESS
A contract is voidable if the innocent party can prove that it had no other practical choice (as
opposed to legal choice) but to agree to the contract.
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3.
4.
The threat actually induces the making of the contract. This is a subjective standard, and takes
into account the victim's age, their background (especially their education), relationship of the parties,
and the ability to receive advice.
The other party caused the financial distress. The majority opinion is that the other party must
have caused the distress, while the minority opinion allows them to merely take advantage of the
distress.
REMEDY.
Duress is a delict entitling the victim to delictual damages on the proof of patrimonial loss
whether he elects to uphold or to rescind the contract. Restitution in integrum is a contractual
remedy, however, based on defective consent, not wrongful infliction of harm, and is therefore in
principle available whether or not harm has resulted from entry into the contract.
Possibility of performance means the contract must be possible to complete because legally binding
contracts cannot be undertaken to peroform an impossible act. This is not to say that an entrepeneur
on hiring a contractor is going to be confronted at years end by the contractor stating that their subcontractors had difficulties and there was too much rain in July. No, that does not constitute a barrier
to possibility of performance in regards to the contract more likely than not, such a situation would
simply be mismanagement or bad luck. Neither of which the court is open to addressing as a get out
of jail free card for businesses.
For impossibility of performance there must be no way in living hell that the contract could be
achieved for example, you could not legally contract somebody to remove a large stadium in a week
if you knew full well that it could not be achieved in less than two weeks due to physical and process
constraints. And you cannot contract people to locate and return an item or person that does not
exist. The contract must be possible to complete, otherwise the court will not treat it as valid in the eyes
of the law.
It is worth noting, were the impossibility of performance to arise following the point the contract is
entered into then the contract would be considered frustrated and would usually be discharged. For
example, were you to contract somebody to paint the Bierchnough Bridge but after the second week
there was a disaster that destroyed the bridge well, you can see the dilemma. No bridge, no
possibiliity of performance = no contract.
PRINCIPLES OF LAW
The position is not that the contract is illegal but that performance of the contract by W is
impossible because of the bar imposed by the Ordinance against the possibility of W
obtaining the requisite approval for the subdivision of the plot in order to be able to transfer
the portion of the plot soldit follows that the contract of sale entered into by the
parties is a nullity.
b). Relative impossibility (where performance is impossible for the promisor but not for everyone)
does not render the contract void.
c). Even in cases of absolute impossibility the contract is valid if the promisor has warranted that
performance is possible.
Willes J said; cases may be conceived in which a man may undertake to do that which turn
out to be impossible, and yet he may still be bound by his agreement.a man may have
contracted to do something which in the present state of scientific knowledge may be utterly
impossible, and yet he may have so contracted as to warrant the possibility of its
performance by means of some new discovery, or be liable in damages for the nonperformance, and cannot set up by way of defence that the thing was impossible.
d). If a contract becomes impossible of performance after it has been entered into (so-called
supervening impossibility of performance) the contract is extinguished as soon as it becomes
impossible.
Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions
on freedom to conduct business. In an old leading case of MITCHELL V REYNOLDS (1711)
Lord Smith LC said,
"It is the privilege of a trader in a free country, in all matters not contrary to law, to regulate his own
mode of carrying it on according to his own discretion and choice. If the law has regulated or
restrained his mode of doing this, the law must be obeyed. But no power short of the general law
ought to restrain his free discretion."
Contractual obligations not to trade are illegal agreements on public policy grounds unless they are
reasonable in the interests of both contracting parties and of the public at large. Restraint of trade
mainly affects post-termination restrictive covenants in employment contracts, and restrictions on
competition in contracts for the sale of businesses.
A contract in restraint of trade is an agreement between two or more parties that seeks to
prevent the other party in engaging himself in a certain profession/business in a certain are
for a specific duration of time.
Or,
An agreement in restraint of trade is one which purports to restrain a person from exercising
any lawful craft or business at his own discretion and in his own way.
The general rule is that, a contract in restraint of trade is Void unless it can be shown by the
party who wishes to enforce it to be reasonable in reference to the interest of the parties and
the public.
There are 3 basic types of contracts in restraint of trade:
i.
ii.
Sale of goodwill
Trade regulating agreement
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iii.
a).SALE OF GOODWILL
This is an agreement by the seller of a business not to compete with the buyer. The attitude
of the courts was stated in the case of Maxm-Nordenfelt case as follows: it is to the
advantage of the public to allow a trader who has established a lucrative business to dispose
of it to a successor by whom it may be efficiently carried on. That object could not be
accomplished if, upon the score of public policy, the law reserved to the seller an absolute
and indefensible right to start a rival concern the day after he sold.
Accordingly, it has been determined judicially that in cases where the purchaser, for his own
protection, obtains an obligation restraining the seller from competing with him, within
bounds which having regard to the nature if the business are reasonable . The obligation is
not obnoxious to public policy, and is therefore capable of being enforced.
CASE: Nordenfeld Vs Maxim Nordenfelt Co.
FACTS:
N sold his business, which manufactured guns and ammunition, to the MN company and he
undertook he would not for twenty-five years engage either directly or indirectly (a) in the
trade or business of a manufacturer of guns, gun mountings or carriages, gunpowder
explosives or ammunition, or (b) in any business competing or liable to compete in any way
with that for the time being carried on by the company. within this period he wished to set
up in business again, so the buyers sought to enforce the restraint clause.
HELD:
The second part of the restraint was unreasonable, being wider than necessary to protect the
business as it was when bought; it was severable from the first party which was reasonable
between the parties and also in the public interest as securing for an English company the
making of guns and ammunition for foreign trade.
Applying these principles the House of the Lords decided that in the exceptional
circumstances of the nature of the armaments business and the very large sum of money,
that had been paid to Nordenfeld, the restraint was reasonable both from the point of view
of the parties and the public.
b).TRADE REGULATING AGREEMENT
This kind of agreement takes many forms, ranging from Fixing prices, Restricting
competition, to restraining a partys rights to buy or sell what he wishes.
When a contract ties the parties only during the continuance of the contract, and the
negative ties are only those which are incidental and normal to the positive commercial
arrangements at which the contract aims even though those ties exclude all dealings with
others, there is no restraint of trade within the meaning of the doctrine and no question of
reasonableness arises.
If , however, the contract ties the trading activities of trading activities of either party after its
determination, it is a restraint of trade, and the question of reasonableness arises. So, too, if
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during the contract one of the parties is too unilaterally fettered, so that the contract loses its
character of a contract for the regulation and promotion of trade and acquires the
predominant character of a contract in restraint of trade.
Tie Agreements:
A tie agreement occurs when two parties agree that one will deliver a certain commodity to
another and the other party shall always buy that commodity from the other party.
e.g. A garage owner may enter into a tie agreement with a fuel supplier Caltex, it follows that
Caltex shall always provide fuel to the garage, the garage shall always buy fuel from Caltex
and not any where else.
CASE: Rhodesian Milling Co (Pvt) Ltd Vs Super Bakery (Pvt) Ltd
FACTS:
RM, a flour miller had hired certain bakery premises and sublet them to Super Bakery in
terms of an agreement under which Super Bakery was obliged to purchase all its flour from
RM, not only for the bakery sublet to it but also for another it had and any other it might
acquire.
Super Bakery though prepared to continue to purchase all its flour from RM for the bakery
sublet to them, had started to purchase flour for its other bakery from other millers. RM
applied for an interdict.
HELD:
The agreement had the effect of rendering the agreement one which had to be held in
restraint of trade. An interdict was granted and the restraint was reasonable and therefore
enforceable.
Price fixing Agreement.
If the contract is between equal contracting parties neither of whom is in a position of
superior economic strength to the other this fact itself is strong evidence to the
reasonableness of the restraint.
CASE: Spa Food Products Ltd Vs Salif
FACTS:
An application was made to compel S to comply with the terms of a trade regulation
agreement, covering the whole of Southern Rhodesia and unlimited as to time, between
mineral water manufacturers. The agreement fixed minimum prices, which could be varied
only by an association consisting of six members, three being the applicants and the other
three being other competitors who were not parties to the agreement and could reduce their
prices at will. S had ceased to be a member of the association.
HELD:
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The restrictions in this agreement were very onerous indeed, the applicants claiming to bind
S forever and throughout the width and breath of the Country to an agreement the terms of
which might well react to his disadvantage; the fact that a restriction was too wide in space
or time was a good ground for holding that the restraint was unreasonable taking into
account the public.
c).COVENANT BETWEEN EMPOLYER AND EMPLOYEE.
This is a covenant in a contract of employment restraining an employee from freedom of
trade after the employment has come to an end. If the contract is between unequal
contracting parties especially between employer and employee, it is only permissible to
protect the interest of the proprietor but not to stifle fair competition. An employer is only
entitled to protect his business connections, confidential information, trade secrets or against
the use of the personal skill and knowledge acquired by the employee in his employers
business.
CASE: Pest Control (Central Africa) ltd Vs Martin
FACTS:
After being given three months notice M left PCs employment and launched a company
having objects identical to PC maintained this was in breach of a clause in Ms agreement of
employment. The effect of the clause was that M was restricted from engaging in any
business in which he would be employed in agricultural, horticultural or medical pest control
in the Federation for two years from the termination of his contract.
HELD:
The court held that the restraint in the contract was put there not to stifle competition but to
protect the trade secrets of Pest Control hence the restraint was reasonable.
NB: the possibility of injury to the employers trade connection is particularly evident where
the employee is a traveler and, therefore, in direct everyday relations with his employers
customers.
In testing whether the restraint is reasonable or not, the following should be considered.
i.
ii.
iii.
Nature of restraint.
Area of restraint.
Time of restraint.
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This was merely a restraint on competition and therefore void. The restraint was
unreasonable.
Fraud
Misrepresentation
Unjust enrichment.
The General rule is that a part can not recover money or property in pursuance of
an illegal contract. Courts can not be used as instruments to perpetuate illegality.
Where the parties are equally guilty, the person who is in possession will prevail in
that where money had been paid or property delivered to an illegal contract loss lies
where it falls. The policy of this rule is to discourage illegality and immorality.
NB: The courts decline to apply the par delictum rule where only one of the parties
is in delicto (Guilty) or where one is clearly less in delicto than the other.
PRINCIPLES OF LAW
possess, and public policy should properly take into account the doing of simple justice
between man and man.
RELAXATION OF THE RULE.
CASE: Padayachey Vs Lebese 1942.
FACTS:
L, as agent, sold to P, and purported to deliver, 25 cases of condensed milk, which to the
knowledge of all the parties had been stolen. In fact, unknown to the parties, the cases
contained bricks, not condensed milk. L signed a promissory note in favour of P in refund
of purchase price. In an action on the note a magistrate granted absolution from the
instance.
HELD:
On appeal, following Jajbhay Vs Cassim, P could enforce the note because public policy
demanded a relaxation of the Par Delictum rule to prevent L being enriched at the expense
of P by being allowed to retain money for which no value had been given.
CASE: Petersen Vs Jajbhay 1940
FACTS:
J had illegally sublet a stand in the Johannesburg Malay Location to P. In similar
circumstances to those in Jajbhay Vs Cassim. In terms of the sublease P was liable to
immediate ejection if he failed to pay the monthly rent in advance. P failed to pay and J
successfully sued for his ejectment, the Witwatersrand local Division relaxing the Par
delictum Rule.
HELD:
On appeal, although the Par Delictum Rule was applicable to debar J from the relief claimed,
such rule had correctly been relaxed in Js favour in as munch as the illegal agreement had
been terminated and consideration of justice between the parties required such relaxation.
NON APPLICATION OF THE RULE.
CASE: Van Staden Vs Prinsloo 1947
FACTS:
P sold and delivered to VS a second-hand tractor for 600 when the maximum permissible
price under a price control regulation was 425. The regulation made it an offence to sell
(though not to buy) above the control price. VS paid a deposit of 110 and thereafter
refused to pay the balance because he was aware of the control price.
HELD:
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The parties are not in Pari Delicto, VS is not in Delicto at all; there is no evidence that VS
was aware of the control price at the date of the purchase; the contract was illegal on the part
of P and P only; and VS is consequently entitled to reclaim repayment of 110 paid by him
on the ground that the contract was null and void.
GAMBLING, BETTING AND WAGERING CONTRACTS
Certain forms of gambling are prohibited by statute and therefore illegal. Wagering contracts
are not on the same footing as contract to commit a crime and are not prohibited by statute
and are not unlawful in the full sense.
The General Rule says that Gambling contract are not illegal nor void but merely
unforceable.
The court looks at gambling contracts with disfavour but not enough disfavour to render
the contract void but to one can only be charge for Gambling at the wrong place and the
court cannot assist the winner to recover his winnings from an unfaithful looser.
CASE: Gibson Vs Van Der Walt
FACTS:
Gibson a bookmaker sued Van Der Walt for 197 arising out of a contract under
which he promised to pay a lost bet.
HELD:
Gibson could not recover. The test should be whether the court is asked to enforce
the unforceable claim.
However if money is paid as a result of the wager, it can not be recovered by the
payer and if the payer had handed the sum to one person for payments to another
the former may be compelled to hand the sum to the later.
CASE: Dodd Vs Hadleyt
FACTS:
A bet was placed for a horse race through an agent. When the horse won the agent
collected the money from the bookmaker but refused to give winnings to the
principal. The principal sued the agent for the winnings and the agent raised the
defence of illegality.
HELD:
H was entitled to recover the money from D.
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In the case of a sale subject to a suspensive condition, the risk of total loss remains with the seller until the
condition is fulfilled (as indicated above the risk does not pass with ownership). The reason the risk remains with
the seller is due to the effect that a suspensive condition suspends the whole sale and until such time as the
condition is fulfilled, there is no sale, thus risk cannot pass;
On the other hand, in the case of a sale subject to a resolutive condition, the risk of total loss passes to the
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buyer immediately the contract has been concluded. As indicated above, the sale operates immediately, with the
result, that if the thing is destroyed before delivery, the buyer must nevertheless pay the price in full, for the risk
has passed to the buyer.
Incidental beneficiary
An incidental beneficiary is a party who stands to benefit from the execution of the
contract, although that was not the intent of either contracting party. For example, if
party A, Andrew, hires party B, Bethany, to renovate his (Andrew's) house, and
insists that Bethany use a particular house painterparty C, Charliebecause that
house painter has an excellent reputation, then the house painter is an incidental
beneficiary. Neither Andrew nor Bethany is entering into the contract with the
particular intent to benefit Charlie. Andrew simply wants his house properly
renovated; Bethany simply wants to be paid to do the renovation. If the contract is
breached by either party in a way that results in Charlie never being hired for the job,
Charlie nonetheless has no rights to recover anything under the contract. Similarly, if
Andrew were to promise to buy Bethany a Cadillac, and were to later go back on that
promise, General Motors would have no grounds upon which to recover for the lost
sale.
Intended beneficiary
The distinction that creates an intended beneficiary is that one party - called the
promisee - makes an agreement to provide some consideration to a second party called the promisor - in exchange for the promisor's agreement to provide some
product, service, or support to the third party beneficiary named in the contract. The
promisee must have an intention to benefit the third party - but this requirement has an
unusual meaning under the law. Although there is a presumption that the promisor
intends to promote the interests of the third party in this way, if party A, Andrew,
contracts with party B, Bethany, to have a thousand killer bees delivered to the home
of Andrew's worst enemy, party C, Charlie, then Charlie is still considered to be the
intended beneficiary of that contract. (This would be illegal if the intent was to scare
his enemy, contracts are voided based on criminality.)
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There are two common situations in which the intended beneficiary relationship is
created. One is the creditor beneficiary, which is created where Andrew owes some debt
to Charlie, and Andrew agrees to provide some consideration to Bethany in
exchange for Bethany's promise to pay Charlie some part of the amount owed.
The other is the donee beneficiary, which is created where Andrew wishes to make a gift
to Charlie, and Andrew agrees to provide some consideration to Bethany in
exchange for Bethany's promise to pay Charlie the amount of the gift. Under old
common law principles, the donee beneficiary actually had a greater claim to the
benefits this created; however, such distinctions have since been abolished.
Vesting of rights
Once the beneficiary's rights have vested, the original parties to the contract are both
bound to perform the contract. Any effort by the promisor or the promisee to
rescind or modify the contract at that point are void. Indeed, if the promisee
changed his mind and offered to pay the promisor money not to perform, the third
party could sue the promisee for tortious interference with the third party's contract
rights.
There are three tests used to determine whether the third party beneficiary's rights have
vested:
if the beneficiary knows of and has detrimentally relied on the rights created;
if the beneficiary expressly assented to the contract at the request of one of the parties; or
if the beneficiary files a lawsuit to enforce the contract
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A donee beneficiary can sue the promisor directly to enforce the promise. (SEAVER V.
RANSOM, 224 NY 233, 120 NE 639 [1918]). A donee beneficiary is when a
contract is made expressly for giving a gift to a third party, the third party is known
as the donee beneficiary. The most common donee beneficiary contract is a life
insurance policy.
Liabilities
Continuing liability of assignor
Assignor remains liable unless there is an agreement to the contrary. An agreement
must manifest intent to transfer rights, it may not necessarily be in writing, words
will do, and the rights assigned must be certain. The effect of a valid assignment is to
extinguish privity between the assignor and the obligor and create privity between
the obligor and the assignee.
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right to legal representation to another party. Note however, that party A can assign
her right to sue under the same claim she contracted with the attorney to pursue.
Requirement of a writing
There are certain situations in which the assignment must be in writing.
1.
2.
3.
4.
Assignment of wages
Assignment of any interest in real property
Assignment of choses of action worth over $5,000
Assignment as collateral for a loan or debt
For more information about contractual writing requirements see Statute of frauds.
Novation
Novation replaces the original party with a new party. For a valid novation, (i) all
parties must assent to novation, (ii) there must be a previously valid contract, (iii) the
duties provided for in the contract be extinguished immediately, and (iv) a new,
enforceable contract need be created.
Revocability
Assignments made for consideration are irrevocable, meaning that the assignor
permanently gives up the legal right to take back the assignment once it has been
made. Donative assignments, on the other hand, are generally revocable, either by
the assignor giving notice to the assignee, taking performance directly from the
obligor, or making a subsequent assignment of the same right to another. There are
some exceptions to the revocability of a donative assignment:
1.
2.
3.
The assignment can not be revoked if the obligor has already performed
The assignment can not be revoked if the assignee has received a token chose (chose being derived from
the French word for "thing", as in a chose of action) - a physical object that signifies a right to collect,
such as a stock certificate or the passbook to a savings account.
The assignment can not be revoked if the assignor has set forth in writing the assignment of a simple
chose - a contract right embodied in any form of token.
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4.
Estoppel can prevent the revocation of a donative assignment if the assignee changed their position in
reliance on the assignment.
Finally, the death or declaration of bankruptcy by the assignor will automatically revoke the
assignment by operation of law.
Successive assignments
Occasionally, an unscrupulous assignor will assign the exact same rights to multiple
parties (usually for some consideration). In that case, the rights of the assignee
depend on the revocability of the assignment, and on the timing of the assignments
relative to certain other actions.
In a quirk left over from the common law, if the assignment was donative, the last
assignee is the true owner of the rights. However, if the assignment was for
consideration, the first assignee to actually collect against the assigned contract is the true
owner of the rights. Under the modern American rule, now followed in most U.S.
jurisdictions, the first assignor with equity (i.e. the first to have paid for the
assignment) will have the strongest claim, while remaining assignees may have other
remedies. In some countries, the rights of the respective assignees are determined by
the old common law rule in Dearle v Hall.
1.
2.
3.
Earlier donative assignees for whom the assignment was revocable (because it had not been made irrevocable by
any of the means listed above) have no cause of action whatsoever.
Earlier donative assignees for whom the assignment was made irrevocable can bring an action for the tort of
conversion, because the assignment was technically their property when it was given to a later assignee.
Later assignees for consideration have a cause of action for breaches of the implied warranty discussed above.
Delegation
This the process by which a debtor assumes liability to another in place of original creditor.
Delegation of duties requires the consent of the creditor.
A parallel concept to assignment is delegation, which occurs when one party transfers his duties
or liabilities under a contract to another. A delegation and an assignment can be accomplished
at the same time, although a non-assignment clause also bars delegation.
Cession
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This is a yielding up, or release.
Transfer of an incorporeal right or transfer of a right under a contract.
Termination of contracts
A contract can be terminated on the following grounds;
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Performance
Agreement
Set off
Merger or confusio.
Supervening impossibility
Novation
Delegation
Cession
Prescription
Death
Breach of contract
Insolvency
Judgement
Vis major an act of God or the state.
1)
PERFOMANCE:
A contract is terminated when both parties have fully performed their obligations under the contract.
for payment of a money debt to discharge the debtor, the following rules must be satisfied.
a) Payment must be made by the debtor or someone on her/his behalf.
b) Payment must be made to the creditor or an agent having authority to receive payment.
c) Payment must be unconditional, in full and in the manner (as regards time, place etc.)
expressly or impliedly provided in the contract.
In a cash sale, the creditor can refuse installments and the payment must be in legal tender.
Payment by cheque is not legal tender and a creditor can generally refuse a cheque and insist
on a cash payment.
It must be remembered that payment by cheque, should the creditor accept it, is only
conditional payment and the debtor is not freed until the cheque is met on presentation at
the bank.
2) MUTUAL AGREEMENT
a) RELEASE
This is bilateral (two-way) legal act in terms of which the parties agree that their contract
shall come to an end without the debtor having made performance or full performance.
Since release is an agreement, it follows that if the creditor revokes the offer of release
before the debtor has accepted it, the debtor will have to perform. No formalities are
required.
b) WAIVER.
Waiver, as opposed to release, is a unilateral act and consists of the renunciation or
abandonment of a right by the creditor.
c) CANCELLATION
A contract which has not yet been fully performed may be terminated by the parties
mutually agreeing to cancel or rescind the contract. where neither party has yet performed,
the contract is simply dissolved without any further consequences. However, where one or
both parties have party performed there is an obligation to return what was given. Where
that cannot be done, compensation should be paid.
d) NOVATION.
This is the substitution of a new obligation for an old one- the old obligation being
extinguished as if by payment. Third parties may be brought into the contract either by
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delegation or by assignment. Cession is not really a form of novation., but is usually
discussed together with delegation and assignment.
NOVATION PROPER
This occurs where the parties to a contract enter into a new contract in substitution
for their existing contract. this has the effect of terminating the old contract.
DELEGATION, CESSION, AND ASSIGNMENT.
These are ways of transferring rights and obligation in the contract to a third party.
You should note that each party to a contract is at the same time a debtor and a
creditor; in other words each party has obligations and right in terms of the
contract.
DELEGATION:
Substitutes a third party in the capacity of debtor (i.e. a transfer of obligations only);
CESSION:
Has the effect of substituting a third party for one of the parties to a contract in the
capacity of a creditor (i.e. a transfer of rights only);
ASSIGNMENT:
Substitutes a third party in the capacity of both debtor and creditor (i.e. a transfer
of both rights and obligations).
e) COMPROMISE.
A compromise is an agreement for the settlement of a matter in dispute, each party abating
some of his previous demands.
Example: if X alleges that Y has committed a breach of contract and owes $500, which X
then claims, Y may deny the breach, but rather than going to court, agrees to pay $250. X
thinks it is better to accept this amount rather than litigate and perhaps lose, and so a
compromise is reached.
3) SUPERVENING IMPOSSIBILITY:
When performance of a contract obligation becomes impossible of performance through VIS
MAJOR ( act of God or state) or CASUS FORTUITUS ( inevitable accident) i.e. through an event
which cannot be avoided even if ordinary precautions are taken, the obligation is in general discharged
as if it had been impossible from the inception.
A contract is not terminated by supervening impossibility of performance in the following
circumstances:
I.
Where performance has become impossible as a direct result of the debtors own wrongful
act.
II.
When the debtor has taken upon himself the risk of performance becoming impossible.
III.
When performance is more difficult or costly but not impossible.
IV.
Where the impossibility is partial, in which case the obligation remains in existence in so far
as the part that is still possible is concerned.
V.
Where the debtor is only temporarily disabled from fulfilling his obligation.
4) EXTINCTIVE PRESCRIPTION:
In terms of the Prescription Act, no 31 of 1975, a debt (S13(1)), and any subsidiary debt arising there
from S 13 (2), is extinguished after the lapse of the relevant period.
Although a debt is extinguished by prescription, payment by the debtor subsequent to that extinction
is regarded as payment of the debt (S13 (3) (a) ), and an agreement made by the debtor to pay a debt
after its extinction shall be enforceable (S13 (3) (6)).
The Act is silent on the question of set-off and cession of prescribed debts. As the debt is mow
extinguished by prescription it seems clear that after prescription such a debt cannot be set off or
ceded.
A court may not of its own motion, take notice of prescription. (S19 (1)), Prescription should be
pleaded by the party wishing to invoke it, but provision is made for a court to allow it to be raised at
any stage in the proceedings. (S 19 (2)).
I.
PERIODS OF PRESCRIPTION OF DEBTS:
Section 14 provides for the following periods of prescription.
30 years in the case of a debt secured by mortgage bond, a judgment, a debt in
respect of taxation, a debt owed to the state in respect of the right to mine minerals
or other substances.
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II.
15 years in the case of a debt owed to the state in respect of an advance or loan of
money or a sale or lease of land unless the period of 30 years is applicable under
the above situation.
6 years in the case of a debt on a negotiable instrument or notarial contract or
owed to the state unless the period of 30 or 15 years are applicable under the above
situation.
3 years in the case of any other debt unless another period is provided by any
enactment.
The periods begin to run as soon as the debt is due. (S 15 (1)).
DELAY IN THE COMPLETION OF PRESCRIPTION:
Delay in the completion of prescription occurs where prescription would in the ordinary
course have been completed but certain impediments set out in (S16 (1)) exist. If the period
of prescription would in the ordinary course have been completed before, on or within one
year after the date on which the impediment ceased to exist, the period of prescription will
not be completed before a year has elapsed from that date.
THE IMPEDIMENTS SET OUT IN (S (16)(1) ARE:
The creditor is a minor or insane or a person under curatorship or a person whose
behavior or physical or mental condition justifies his being placed under
curatorship or is prevented by superior force or any enactment or order of court
from interrupting the running of the prescription in terms of (S18(1)), below, or is
a juristic person and the debtor is a member of the governing board of such juristic
person.
The creditor and the debtor are married to each other or are partners and the debt
which arose out of the partnership relationship.
The debtor is outside Zimbabwe.
The debt is the subject matter of a dispute submitted to arbitration, or is the
subject matter of a claim filled against the estate of a debtor who is deceased or
against the estate of a debtor or against a company in Liquidation or against and
under the Agricultural Assistance Scheme set out in the third schedule to the
Agricultural Finance Corporation Act (Chapter 101).
The creditor or the debtor is deceased and an executor of the estate in question has
not yet been appointed.
III.
INTERRUPTION OF PRESCRIPTION
If the debtor acknowledges the debt, expressly or impliedly, the running of prescription is
interrupted (S17(1)) and the period begins again on the day on which the interruption takes
place (S17(2)(a)). If the parties postpone the due date of a debt the period begins again on
the date on which the debt again becomes due (S 17(2)(b)).
5) INSOVENCY
An insolvents contractual rights and duties are affected in various ways by the sequestration of his
estate. Generally the form of compulsory assignment takes place quite independent the will of the
insolvent or persons who are in contractual relationship with him, even if such persons may in fact be
responsible for the sequestration and the sequestration is for the benefit of creditors. The insolvents
right and duties vested automatically in the Master of the High Court until the appointment of a
trustee when they vets in the trustee. (S25 of the Insolvency Act, Chp 203).
In general, the effect of sequestration on a contract entered by the insolvent and not yet discharged is
that the trustee set into the insolvents shoes without assuming his legal identity. If the trustee wishes
the contract to continue he must perform the insolvents contractual duties in full and must notify the
other party. If he does not notify him the other party may cancel the contract as repudiated and claim
as creditor for damages suffered.
The rehabilitation of an insolvent has the effect of discharging all debts due by him before his
sequestration which did not arise out of any fraud on his party (S 146).
6) DEATH.
As a general rule the death of a party to a contract does not terminate the contract as in the case of
insolvency, a form of compulsory assignment takes place and the deceaseds rights and duties, other
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than in terms of contracts involving personal skill, pass to the executor. Contracts involving special
personal qualities of the deceased are discharged by supervening impossibility of performance.
7) ESTOPPEL
Where on party to a contract through his conduct has led other to believe in the existence of a certain
state of affairs for example that he will not enforce a term of the contract between them, and the
other party reasonably relying on the representation so made has altered his position to his detriment
he will be stopped from enforcing his contractual rights.
Impossibility of Performance
Performance means that each party to the contract has performed its obligations; the exchange of promises has
been completed and each side has received what it has bargained for. Once the contract has been completed,
neither party owes the other party any further obligation. For example, if you make a contract to perform at a
concert, and you appear, perform, and get paid, ordinarily the obligations of the parties to the contract are over.
Impossibility of performance can terminate a contract if an unforeseen contingency prevents the performance of
the contract. For example, you contract with a famous painter to do your portrait and the famous painter dies. The
obligation to paint your portrait cannot be completed. The contract to paint your portrait is terminated by
impossibility of performance.
Rescission
Rescission may terminate the obligations of a contract in a variety of circumstances. One party may have the legal right to
rescind the contract, or the parties together agree to terminate the contract. For example, a minor has the right to rescind
contracts because a minor lacks competence to make them.
Breach of Contract
Breach of a contract may terminate the obligations of the contract. Either one party or both parties have failed to perform an obligation as
expected under the contract. A breach may occur when a party:
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Specific performance, to achieve what the parties initially intended or a substantially similar
result.The court may make an order of what is called "specific performance," requiring that the
contract be performed. In some circumstances a court will order a party to perform his or her
promise (an order of "specific performance") or issue an order, known as an "injunction," that a party
refrain from doing something that would breach the contract. A specific performance is obtainable
for the breach of a contract to sell land or real estate on such grounds that the property has a unique
value.
2. Cancellation of the contract if breach is serious, the innocent party can regard the contract
as cancelled and raises breach as a defence if sued on it.
3. Sue or claim for damages, must result from the normal course of the breach e.g. if he was
involved in business, the profits, he would have gained if the contract had not been
breached.
There are three different types of damages.
i.
Compensatory damages which are given to the party which was detrimented by the
ii.
iii.
breach of contract. With compensatory damages, there are two kinds of branches,
consequential damages and direct damages.
Nominal damages which include minimal dollar amounts (often sought to obtain a
legal record of who was at fault).
Punitive damages which are used to punish the party at fault. These are not usually
given regarding contracts but possible in a fraudulent situation.
4. Seek an interdict, obtainable before breach. To prevent the other party from breaching the
contract one applies to court for an order.
FORMS OF BREACH:
1. MORA DEBITORIS
Mora debitoris is the culpable failure of a debtor to make timeous performance of a contractual
obligation which is due and enforceable.
Requirements to be met before the debtor is in Mora:
a. The debt must be due and enforceable, i.e. the creditor must have a valid right to claim
performance forthwith, against which the debtor can raise no valid defence, such as
prescription, non-fulfillment of a suspensive condition, etc.
b.
The debtor must have failed to perform timeously. Thus the debtor can fall into Mora only
when a definite time for performance has been fixed, either in the contract itself (Mora ex
re) or by the creditor subsequently making a demand (interpellation) on the debtor to
perform by a specific date that is reasonable in the circumstances (Mora ex persona).
c.
The delay must have been due to the fault of the debtor. The must have been due to the
fault of the debtor. If e.g. performance was rendered temporarily impossible by vis major or
casus fortuitous, or if the debtor could not reasonably have been expected to know that he
had to perform, or how much to perform, there is no Mora. The onus of proving the
absence of fault rest on the debtor.
(CASE: Broderick Properties ltd Vs Rood)
2. MORA CREDITORIS
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Where the co-operation of the creditor is necessary to enable the debtor to perform his contractual
obligation the creditor is obliged so to co-operate. Should he fail to do so timeously, without repudiating the
contract or rendering performance by the debtor impossible, he commits a form of breach called Mora
creditoris.
Requirements for Mora creditoris:
a. The debtor must be under an obligation to make the performance to the creditor, but the obligation
need be neither enforceable nor due, since a debtor may discharge his debt before the due date for
performance.
b.
The co-operation of the creditor must be essential for the due performance by the debtor of his
obligation, thus e.g. there can be no question of mora creditoris in respect of an obligation not to do
something.
c.
The debtor must take whatever steps towards performance that are possible without the creditors cooperation before calling on the creditor to accept the performance, otherwise the creditor is entitled
to reject it.
d.
The creditor must delay in accepting performance. Again, this presupposes a fixed time for
performance. If no such time has been fixed in the contract, or if the debtor wishes to discharge his
debt before the time fixed in the contract he must notify the creditor of the time when he wishes to
perform, allowing him a reasonable opportunity to prepare to receive the performance.
e.
The delay must be due to the fault of the creditor; if it is occasioned by Vis Major or Casus fortuitous,
e.g. or if the creditor is entitled to reject the offered performance, there is no mora creditoris.
3. POSITIVE MALPERFOMANCE
It relates to the content of the performance made. It may take one of the two forms, depending on
whether the duty in question is positive or negative. Where the duty is to do something positive
malperfomance occurs when the debtor duly performs, but his performance is incomplete or
defective in some respect; e.g. A seller delivers the wrong type of goods, a carpenter makes a cabinet
using inferior wood, or an employee is repeatedly late for work.
In case of a negative obligation, positive malperformance occurs when the debtor does the act that he
is bound to refrain from doing; e.g. a lessee sublets the property, or hangs his washing from the
windows, in contravention of a term in the lease.
CASE: Southern Rhodesia Government Irrigation Dept. Vs Hein
FACTS:
S undertook to build a dam of 6 million gallons capacity on Heins farm. The dam was built but
before Hein had made use of it the wall subsided because of the type of material used in its
construction to an extent which made it unsafe to impound 6 million gallons of water. Hein having
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declined to accept the dam in its then state, stepped in and reduced the height of the spillway with the
result that the dam capacity became 2 million gallons only. S sued Hein for 193. Representing the
balance of cost tractor hire and cost of work done.
HELD:
After an appeal by S the appeal was dismissed with the evidence that the dam wall had not been
constructed to specification. The defect in it was substantial and went to the root of the contract and
S was not entitled recover the contract price, nor in the circumstances anything by way of quantum
meruit ( so much as he earned).
4. REPUDIATION
A party to a contract commits this form of breach when , by his words or conduct, and without lawful
justification, he manifests an unequivocal intention no longer to be bound by the contract.
It is a form of anticipatory breach, because it predict another form of breach: the repudiating party
indicates in advance of the due date for performance that he will not perform or accept performance,
or that his performance will be late, defective, or incomplete. However, a party may also repudiate his
obligations on or after the stipulated time for performance.
Examples of repudiation: a denial of existence of the contract; a refusal to perform or to accept
performance and pay for it; notification of inability to perform; an unjustified attempt to canel the
contract; the offer of incomplete or defective performance as full performance; giving insufficient
notice of termination in contracts of a continuing nature; and the unjustified refusal by an employer to
allow his employee to perform his work.
CASE: In re Bronze and Metal Co ltd. Vs Vos
FACTS:
In November 1915 R appointed V general manger of its works for three years at a fixed salary and a
commission on the net profits. In January 1917 R purported to suspend V and took from him his
business keys and informed him that he must not return to the works as he was not wanted. As a
result of these acts V elected to treat the contract as repudiated by R and claimed damages for
wrongful dismissal.
HELD:
R had wrongfully repudiated their contract, and V was therefore entitled to damages in as much as R
absolutely forbade him to fulfill any of his duties.
Where the breach is of a non-material term the injured party may only claim damages.
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Where a party to a contract wishes to prevent a threatened breach of a contract, or seeks to enforce a negative
provision in the contract, or wants to prohibit interference with other rights of his after a contract has been
terminated, this is done by means of an interdict.
The court may be prepared to make an order declaration of the rights of parties.
The injured party may in certain circumstances have a defensive remedy when he himself is called upon to
perform.
1) SPECIFIC PERFORMANCE.
Specific performance of a contractual obligation is performance, by the person obliged, in the very
terms agreed upon by the parties or implied by the law. Where one of the parties has refused or failed
to make due performance the chief remedy of the other party is to obtain from the court an order or a
decree for specific performance of his obligation by the defaulting party.
In general, the injured party has the right to claim specific performance if ready to carry out his own
obligation under it, but the court has a discretion to order it or not. The exercise of the courts
discretion was considered fully in this case:
CASE: Haynes Vs Kingwilliamstown Municipality
FACTS:
K was bound by an agreement made in 1911 with Mrs. H to release 250 000 gallons of water a day
from their storage dam. K honoured its obligations under the agreement from 1911 to 22 April 1949,
from which date it released a daily flow of only 1 500 to 2 000 gallons. The reason for this was the
fact that there was an unprecedented drought and that full compliance with the agreement would have
resulted not only in great hardship but a positive danger to the health of the in habitants of
kingwilliamstown. Mrs. H, who had an adequate supply of water from other sources, sought an order
of specific performance against K.
HELD:
The court refused to grant an order of specific performance because this would cause hardship not
only to the respondent but the citizens of kingwilliamstown to whom the respondent owed a public
duty to render an adequate supply of water. Of which shortage of water would have resulted in
positive danger to the health of the community and might have disrupted the life of the town.
THE FOLLOWING CASES /CIRCUMSTANCES WHICH DECREES OF SPECIFIC
PERFOMANCE HAVE BEEN REFUSED:
i.
Where specific performance is impossible. e.g. where the contract is one of master and
servant, factors such as the closeness and confidentiality of the relationship is considered.
ii.
iii.
(CASE: Swartz & Son (Pvt) ltd Vs Wolmaransstad Town Council 1960)
Where it would be difficult for the court to enforce its order. e.g. disability or insolvency of
either of the contracting parties.
iv.
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PRINCIPLES OF LAW
v.
Where the subject of the contract is rendering of services of a personal nature. e.g.
prostitution.
vi.
Where the result of the order would be to impose great hardship on the defaulting party.
(Case: Haynes Vs Kingwilliamstown Municipality.)
iii.
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PRINCIPLES OF LAW
iv.
If the injured party declines to cancel a contract and sues for specific performance and is awarded his
decree it may happen that the decree cannot be enforced. In such a case he may cancel the contract.
to avoid to bring two actions he may claim in the alternative in the first action.
Cancellation, failing which, specific performance.
An injured party who considers that a court may find that the breach is not a material one, and to
whom performance of part of the other partys obligation is due, may claim cancellation, failing
which, specific performance of that part of the other partys obligation which is due.
NB: The above remedies are discussed in the following case.
CASE: Bonne Fortune Beleggings Bpk Vs Kalahari Salt Works (Pvt) Ltd & Others.
FACTS:
As B, the purchaser of immovable properties along with movables, had not paid all the payments due
under the deed of Sale, the Sellers K cancelled the contract and issued a summons claiming; (a) an
order confirming that the agreement had been cancelled; (b) an order obliging B to vacate the
immovable properties; (c) an order obliging B to return the movables or their value; and (d) payment
of an amount being the alleged amount of the damages which K had suffered less the amount which
B had paid off the purchase price.
B consented to the grant of an order in respect to (a). judgment by default was granted in terms of (b)
and (c) and B was granted leave to enter appearance in regard to the balance within two weeks of the
date of judgment. B appealed.
HELD:
K was only entitled to judgment in terms of (b) and (c) against repayment of the purchase price
already paid; K could not utilize their unliquidated claim for damages for the purpose of set-off.
The loss must be actual monetary loss incurred or monetary gain not made. The loss for
which the injured party must compensate must be pecuniary loss. No Damages are claimed
in an action on contract for sentimental loss or injured feelings.
CASE: Jockie Vs Meyer
FACTS:
Jockie a Chinese and second officer on a British Ship reserved accommodation at Meyers
Victoria West Hotel was allocated the key of Room 309 and took occupation. Meyers agent
a few minutes later sent for Jockie, told him that there was a mistake as to the room number
and asked him to return the key. Jockie did so and was then told that the Hotel was full and
that there was no room for him. Jockie sued for damages under 3 headings:
I.
Disbursements in finding other accommodation.
II.
III.
PRINCIPLES OF LAW
c.
d.
HELD:
Jockie was not entitled to damages under heading III.
The consequence must be natural or within the contemplation of parties. The loss suffered
by the injured party must have been reasonably foreseeable by the defaulter at the time of
making the contract.
(CASE: Bower Vs Sparks, Young and Farmers Industries)-see notes on warranties.
Mitigation of damages. The injured party must do all in his power to mitigate the loss. i.e.
injured party can not allow the damages to increase day by day and do nothing about it. He
must do all that is reasonably necessary to minimize his loss. The extent of his liability
depends on the facts of each particular case, but he is not required to take any steps which a
reasonable and prudent man would not ordinarily take in the course of his business.
4) INTERDICT.
Where one party is breaching or threatening to breach the contract, the other party to the contract
may seek an order of court prohibiting the specified act or acts from being carried out. This order is
known as an Interdict and disobedience is treated as contempt of court.
Example: X having bought goods from B but not yet having taken delivery, discovers that Y is about
to sell the same goods to Z. X can apply to court for an Interdict to prevent Y from disposing of the
goods to Z.
Circumstances in which an Interdict will be granted:
I.
Where a party to a contract has good reasons, to fear a breach of contract by the other party,
to prevent the threatened breach;
II.
III.
5) QUANTUM MERUIT
This means as much as he deserves or how much it is worth. Where either work has been done
or things accepted under a void contract or where one party abandons a contract, the injured party
instead of claiming damages may claim payment for what has been done under the contract. The
claim is not based on the original contract, but on an implied promise by the other party arising from
the acceptance of executed consideration.
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