LEGAL ENVIRONMENT OF BUSINESS

CHIVANDIRE L

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

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CHAPTER 1

INTRODUCTION TO LAW

What is law

Law is defined as set of rules that regulate human behaviour or Rules which state how people

are to conduct themselves or The body of rules which state or community recognises as binding

on its subjects or members and which determine those persons’ rights and duties

History of Zimbabwean Law

Zimbabwe is mainly dominated by Roman Dutch Law also known as Common law. Through

court decisions, a vast number of legislative enactments over the years and the introduction of

certain legislation from English, Zimbabwean law was further enriched and developed.

There is a need to trace the development of Roman law, its fusion with customary law of

Netherlands to form Roman Dutch Law and the long journey of that system into Zimbabwe.

The development of Roman Law is closely related to Constitutional History of Rome. There

are four periods that can be distinguished.

a. Monarchy period (753BC- 510BC)

During this stage, Rome was undeveloped and law consisted of customs

b. Republican Period (510BC-27BC)

The law was for the first time systematised during this period and was put into writing in the

so called 12 tables. It was inscribed on 12 tables

c. Period of the Emperors (27BC-284AD)

The empire expanded over large parts of Europe and Northern Africa

d. Principate or dominate stage

Empire was divided into Western and Eastern Roman Empire in 395AD.

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The Germanic Tribes conquered the Western Roman Empire in 476AD and application of

Roman law started to decline. The empire existed in the East. Justinian ruled in this part

between 527AD and 565AD. He held Roman Law in high esteem and instructed a commission

to codify the legal system. The codification was called Corpus Luris Civilis. As the Roman

Empire and community Degenerated the legal system likewise stagnated. Roman Law did not

disappear. Justinian’s codification ensured that Roman Law was preserved throughout the

Middle Ages. In the 11th century, Roman Law was rediscovered and studied at Law school in

Bologna. Various law schools were founded thereafter notes and commentaries on Roman Law

were written by students. Roman law was spread throughout Europe. By the end of the middle

Ages, there was an increasing need in Europe for developed legal system. The various tribal

and provincial legal systems of North West Europe of 12th Century were suitable for a simple

agricultural Community but could not answer to the demands of a rapidly developing

commercial world. Then Roman Law was applied in addition to Indigenous Law. Various

jurists produced writing on Roman and Dutch law. Their opinions are still today acceptable as

authoritative by Zimbabwean courts. Best known writers in Holland were

Hugo De Groot

Johannes Voet

Simeon van Leeuwen

Van Bynkesshoek

Van der Kessel

Van der Linden

SOUTH AFRICAN LAW

Jan Van Riebeck brought the Roman Dutch law in 1652. Despite English Occupation in 1806,

this system remained in force in South Africa and was extended to the interior of the country.

SA law was strongly influenced by the English law. Various factors contributed to this.

a. Judges and Magistrates versed in English law were imported in England.

b. Local jurists studied in England.

c. English Court Decisions were often referred to.

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d. Many SA Acts were based on corresponding English Acts.

e. The final court of Appeal was the Privy Council in England.

ZIMBABWE

Section 89 of the Constitution of Zimbabwe states:

“Subject to the provisions of any law for the time in force in Zimbabwe relating to the

application of African Customary Law, the law to be administered by the Supreme Court, the

High Court and by any courts in Zimbabwe to the High court shall be the law in force in the

Colony of the Cape of Good Hope on 10th June 1891 as modified by subsequent legislation

having in Zimbabwe the force of law.

This means that on the 10th of June 1891 all statutes then in operation at the Cape were taken

over and some are still in force e.g. General Law. It also means the wording of many of our

statutes in other countries especially south Africa and England are authoritative. So the

decisions of the courts of those countries on the interpretation of their statutes are of great

importance in interpreting ours.

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CHAPTER 2

Sources of law

SOURCES OF LAW

Statute/legislation

Customary

Judgments of the courts

Old authorities (common law)

Foreign law

Textbooks

1.LEGISLATION

Legislation can be defined as rules of law promulgated by a body or persons bestowed with the

power of creating rules of law. There is a variety of such bodies and persons in Zimbabwe.

Sometimes legislation is passed by a body such as parliament, which then authorises a

particular individual such as minister or the president to promulgate subordinate legislation by

means of regulations, proclamations and by-laws in terms of the parliamentary Act. One

example of an Act of parliament is Shop licences Act 40 of 1976, Companies Act, Insolvency

Act.

Section 3 of the Constitution of Zimbabwe states that the constitution is the supreme law of

Zimbabwe and if any other law is inconsistent with this constitution, that other law shall, to the

extent of the inconsistency, be void. Legislation must pass the constitutionality test. Legislators

don’t declare the whole act void but only those portions that are invalid. Rights in the

Constitution can be limited only by law of General application. Law of General Application is

law that the Society considers reasonable and justifiable. For example, killing a human being

infringing his right to life when acting in self defence is justifiable in a democratic society.

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1.1 SUBORDINATE LEGISLATION

1.1.1 REQUIREMENTS FOR THE VALIDITY OF SUBORDINATE LEGISLATION

a) It must be reasonable

b) It must be impartial not discriminatory

c) It must be certain (clear) and not vague

d) It must be promulgated (proclaimed)

e) It may not be ultra-vires (not illegal or against community values)

2. CUSTOMARY LAW

These are unwritten Rules, practised over a long period of time derived from: habits of people

of a certain group/ community passed from generation to generation e.g. lobola. In Van Breda

v Jacobs 1921 AD330. A local custom amongst fisherman that once they have set their lines

on a beach where no boats are permanently stationed for purposes of catching a shoal of fish

seen moving along the coast, no other fisherman are entitled to set lines within any reasonable

distance in front of the already set, was held to be duly established by the evidence as a valid

custom.

2.1 REQUIREMENTS

a. It must be reasonable

b. It must be generally recognised and observed by the community

c. It must have existed for a long time

d. Content of the rule must be certain and clear

3. COMMON LAW

The –works of old Jurists are still authoritative. Justinian’s Corpus iuris Civilis, Hugo De groot

and Dutch Jurists inter alia van der Kessel. The Body of law provided by the old authorities

is known as common law.

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4. FOREIGN LAW

After a fruitless attempt by a judge to find law in the above sources, foreign law is consulted.

It has persuasive authority. Countries that use Roman Dutch law as its common law are

considered first for purposes of finding solution to a legal problem.

5. TEXTBOOKS

No authority, only persuasive

6. JUDGEMENTS OF THE COURTS/ CASE LAW

One legal counsel said to the Judge. “I think you will do as others have done in the same case,

or else we do not know what the law is”. A Judge explains his reasons by setting out the facts

of the case and the law he considers applicable to those facts. Another judge or legal

practitioner reading the judgment in the law reports will extract the essential reason for the

decision, the (Ratio-Decidendi) as opposed to observations on the law that were not essential

in the decision, or (Obiter Dictum). If facts in the present case are indistinguishable from those

in the previous case, then ratio ought to be applied. To understand Doctrine of Precedence, one

has to understand Hierarchy of Courts.

CONSTITUTIONAL COURT

SUPREME COURT OF APPEAL

HIGH COURT

MAGISTRATES COURT

CHIEF/ HEADMAN

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Only judgments of High Court and Supreme Court as reported in law reports can be used as

precedence by lower courts. Lower courts are not bound by Decisions of another.

RATIO DECIDENDI

Literally mean reasons for the Decision. That part of judgment that is binding. It is also

regarded as the basis or foundation of the Court’s decision or the legal principle which

necessarily led to the conclusion reached. This doesn’t mean that every sentence that a judge

says is binding.

The first step is to determine the material facts on which the judge based his decision. Ratio

Decidendi is conclusion reached by the Judge based on these material facts and by excluding

non- material ones

OBITER DICTUM

Obiter may be when.

i) Judge Postulates and answers a hypothetical question

ii) Raises an analogous case.

iii) Gives illustration

Any remark which is irrelevant to the immediate setting of dispute is obiter& does not form

part of Ratio Decidendi. It is not binding on subsequent courts. However it can be of strong

persuasive authority. Once applied by a later court, it becomes Ratio Decidendi and binding.

DISTINGUISHING

This is a process by which a judge decides that the ratio decidendi is not binding on him and

that he does not have to apply it in deciding dispute before him. It is thus a technique of

avoiding following earlier Ratio Decidendi.

For example

1. Earlier court formulated principle too broadly.

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2. Facts of the later case are not covered by the principle.

3. Earlier Court overlooked a fact that would have led to a different R.D.

4. Material facts differ therefore not identical.

DOCTRINE OF STARE DECISIS

Court’s Decision create a precedent in other words, the decision should be followed in future

by: Judges of the same court.

Courts of a lower order which is subordinate to that Court.

A court is bound by the Ratio decidendi of a decision, i.e. the legal principle laid down by a

court in its decision or order. Supreme Court is only bound by its own Decision and will only

deviate if it is convinced that it was wrong. High Court is bound by Supreme Court and may

not deviate therefrom. High Court is also bound by its own previous decision unless convinced

that a decision was wrong. A single judge is bound by decisions of a full bench (3 judges) and

may not deviate therefrom.

ADVANTAGES OF STARE DECISIS

a) Creates equality- people are treated the same/ fair

b) Certainty of the law

c) Predictability

d) Uniformity

e) Less time consuming

f) Convenience

g) Equality

DISADVANTAGES

1. It allows law to become a petrified forest of erroneous notions.

Once a decision is granted, it binds other courts no matter how wrong it is.

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2. A strict Principle of Stare decisis prevents the development of Law to suit the changing

times and sentiments – law must be stable yet it cannot stand still.

3. It promotes brain drain.

4. Following a decision of a single case limits the minds or intelligence of other people

especially judicial officer.

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CHAPTER 3

INTRODUCTION TO THE SCIENCE

OF LAW

Divisions of Law

Public law and Private law.

Public Law – relationship between state and citizens and subjects (VERTICAL)

Private law- Citizens in their dealings with each other. (HORIZONTAL)

Public law Private Law

International law Family Law

Constitutional Law Law of Personality

Criminal law Patrimonial Law

Law of Procedure COMMERCIAL LAW

MEANING OF RIGHT

A right is any entitlement a legal subject has regarding a specific legal object and which is

protected by law. There can never be a right without an underlying object. There has to be a

legal subject- legal object relationship- in order to talk about a right.

WHAT ARE LEGAL SUBJECTS?

A legal subject is a human being or entity subject to law or a member of the legal community

to whom the law applies and for whose benefits the law exists. Every legal subject has legal

capacity that is the capacity to be the bearer of rights and duties. All legal subjects are called

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persons and Juristic persons. In law concepts “human being and person are not synonymous”.

Person and legal subject are synonymous.

NATURAL PERSON

Human being

Every human being from birth to death is a legal subject and is a bearer of rights and duties.

(nasciturus fiction law)

JURISTIC PERSON

These comprise of entities other than human beings e.g. Companies, universities,

municipalities and state. Holders of rights and powers are subject to duties. Although they are

persons, there are things that can only be done by natural persons eg Marriage and execution

of wills. It has a perpetual succession, even if members die, it continues to exist

Legal objects

A legal object is any entity which can be the object of a legal subject’s claim to a right. Property,

immaterial property, aspects of personality and performance can be objects of legal subjects

claim to a right.

Subjective Rights

Relationship between legal subject and legal object and between legal subjects and other legal

subjects can be termed a right. Following categories of juridical rights can be distinguished

when rights are classified according to the particular legal object.

1. Real Right

This is a right which a legal subject has to property such as a car, pencil etc. Real rights can be

classified as follows

a) Ownership- the most comprehensive real right

b) Servitudes (limited real rights)-Rights over someone’s property

Servitudes are divided into two

i. Praedial servitude

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ii. Personal servitude

Limited Real Rights

i. Personal servitude

They confer on a person in his capacity the right of use and enjoyment of property of which

another is the owner eg usufruct

ii. Praedial Servitude They confer on the holder in his capacity as owner of an adjacent

property a limited right to the property of another e.g. servitude of grazing right of way. ZESA

pole in your yard

iii. Mortgage & Pledge (Pignus)

These give the holder a right of security over property mortgaged or pledged. Mortgagor is

entitled to sell the property mortgaged or pledged if the mortgagee is still owing him. Mortgage

applies with regard to Immovable property, Pledge (pignus) applies with regard to Movable

property

2. Immaterial Property rights/intellectual property

Fruits of intellectual endeavour, eg, authorship or inventions, subject to protection. Author or

artist’s right not to have work reproduced without authority thereby causing financial prejudice.

If Intellectual or artistic efforts are not protected against piracy the incentive to invent or create

is undermined. Intellectual property law embraces copyright, patent and trademark law. Basic

objectives of law in these areas is twofold:

a] Provide ownership rights in respect of intellectual and creative work.

b] Provide framework for enforcement of those rights by remedies for their breach. Not

every idea or invention is protected.

Companies are faced with dilemma. Benefits of innovation are obvious but why innovate if

innovation can be replicated by competitors? Failure to innovate may lead to loss of

competitiveness in market place.

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3. Personality Rights

These are rights relating to aspects of personality eg physical integrity, reputation of a person,

dignity and privacy.

4. Personal Rights

Rights to which some other conduct referred to as performance may be demanded from a

person or refraining from doing something (interdict).

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CHAPTER 4

LAW OF PROPERTY

INTRODUCTION

The law of property is concerned with the relation of persons towards material objects. The

relationships of persons towards property are controlled by means of granting and recognition

of rights over property. The nature and extent of legal power enjoyed over property depend on

the kind of real right held by that person. Different kinds of real right confer different powers

on their holders.

Real right of ownership gives the holder of the right wide powers to use the property, enjoy it,

sell it and dispose of it.

Pledge gives holder of the right only the rights to posses the property (which still belongs to

the pledgor as security for his claim against the pledgee. More than one real right can subsist

in the same property eg. A may have right of ownership over the farm, B, mortgage over the

farm, C a usufruct over the farm, D mineral rights in respect of the same farm.

Accordingly holders of various rights have certain powers over one and the same property.

The right of ownership is the cornerstone of all real rights.

The right of ownership

The right confers the most complete Power over property. However it does not confer unlimited

or absolute control, eg an owner may not do what he likes with his property. Public law can

restrict the right of ownership as well as rights of other people eg statutory provisions which

prohibit the division of land under certain circumstances. You cannot mine in your own land

A B

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without the permission of the state. Ownership is always restricted in the interest of the

community. An owner’s right may also be restricted by his neighbours right of ownership e.g.

owner of the land may not excavate his land in such a way that his neighbour’s land subsides

or curves in. Right of ownership, although comprehensive, it is always limited.

Right to property in the Constitution

In terms of the constitution, “property” means property of any description and any right or

interest in property. Every person has the right, in any part of Zimbabwe, to acquire, hold,

occupy, use, transfer, hypothecate, lease or dispose of all forms of property, either

individually or in association with others. No person may be compulsorily deprived of

their property except where the following conditions are satisfied.

(a) The deprivation is in terms of a law of general application;

(b) The deprivation is necessary for any of the following reasons

(i) In the interests of defence, public safety, public order, public morality, public health or

town and country planning; or

(ii) In order to develop or use that or any other property for a purpose beneficial to the

community;

(c) The law requires the acquiring authority

(i) To give reasonable notice of the intention to acquire the property to everyone whose interest

or right in the property would be affected by the acquisition;

(ii) To pay fair and adequate compensation for the acquisition before acquiring the property

or within a reasonable time after the acquisition; and

(iii) If the acquisition is contested, to apply to a competent court before acquiring the property,

or not later than thirty days after the acquisition, for an order

Confirming the acquisition;

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(d) The law entitles any person whose property has been acquired to apply to a competent

court for the prompt return of the property if the court does not confirm the acquisition; and

(e) The law entitles any claimant for compensation to apply to a competent court for the

determination of—

(i) The existence, nature and value of their interest in the property concerned;

(ii) The legality of the deprivation; and

(iii) The amount of compensation to which they are entitled; and to apply to the court for an

order directing the prompt payment of any compensation.

(c) the law requires the acquiring authority—

(i) to give reasonable notice of the intention to acquire the property to everyone whose interest

or right in the property would be affected by the acquisition;

(ii) to pay fair and adequate compensation for the acquisition before acquiring the property or

within a reasonable time after the acquisition; and

(iii) if the acquisition is contested, to apply to a competent court before acquiring the property,

or not later than thirty days after the acquisition, for an order confirming the acquisition;

(d) The law entitles any person whose property has been acquired to apply to a competent

court for the prompt return of the property if the court does not confirm the acquisition; and

(e) The law entitles any claimant for compensation to apply to a competent court for the

determination of—

(i) The existence, nature and value of their interest in the property concerned;

(ii) The legality of the deprivation; and

(iii) The amount of compensation to which they are entitled; and to apply to the court for an

order directing the prompt payment of any compensation.

Ownership and Possession

There is confusion over the terms. Ownership and possession are two different concepts in law.

A person who has the right of ownership over property is not necessarily the possessor of the

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property. For example A, the owner of the car may lend it to B for a trip to Durban; A has

ownership of the car, B has possession. Another example, X moves out of his house so Y can

repair the house, X is the owner of the house, But Y is the possessor.

When does one have possession of property?

Possession has 2 elements

1. Physical control

2. Intention to possess

In order to have physical control over property direct and immediate control over it is not

required, for example, A locks his car but takes the keys with him, he has physical control over

the car although he is far away from it. An example to illustrate the absence of required intent

to possess is the following; If D holds N’s jacket for few minutes while he works on his car, D

has physical control over the jacket but does not have intention of possessing it because he is

not exercising the physical control in his own interest but in the interests of N. In other words,

he is not holding the Jacket for himself but for someone else. D is not in possession of the

Jacket.

Acquisition of ownership

Ownership is acquired through;

1. Original method

2. Derivative method

1. Original method of acquiring ownership.

a) Occupation

If one seizes property belonging to no one with the intention of becoming its owner, one

acquires the right of ownership over the property eg where B catches a fish, he acquires right

of ownership over the property or picks up a pen one has abandoned. By occupation one cannot

become the owner of Property belonging to another. If Y loses his pen, he remains its owner,

and E will not be able to obtain ownership through occupation. If he abandons it, he has no

intention of being the owner, W can become the owner after Y has renounced his right of

occupation. Occupation is called an original method of acquiring ownership because the new

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owner does not obtain the right of ownership from another but establishes an original right of

ownership.

b) Prescription

If you have possessed something openly for uninterrupted period of 30 yrs, you become the

owner. For example, A takes possession of a section farm by allowing his cattle to graze on it,

he may acquire ownership of that section, provided he has possessed it openly and as he were

the owner for an uninterrupted period of 30 years. Act previously unlawful becomes lawful.

Question is why is law allowing owner to lose his ownership? Law requires legal certainty. If

the owner allows another to take possession for a long period of time, the impression is created

to the outside world that the possessor is actually the owner. It is original method of ownership

because he becomes the owner after the original owner has lost his right of ownership.

Government of RSA VS Grootboom

2.Derivative Methods of Acquiring Ownership

We have seven methods

Movable Property

Delivery

Seven forms of delivery (LASSMAC)

This method applies to movables. If A and B enter into agreements of sale, B acquires

ownership when the thing is delivered to him. Entering into a contract does not cause ownership

to pass. Delivery seals ownership. Immovable Property It must also be the intention of the

transferor to transferee that right to ownership be transferred and acquired. If one party lakes

intention then ownership won’t pass. If A believes he is borrowing B a car and B believes he

is being given that car, ownership won’t pass. It is a Derivative method because transferee

acquires his ownership from transferor.

When selling immovable property, Payment does not lead to acquisition of ownership. Only

when it is registered in transferee’s name in Deeds Office does ownership pass.

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Forms of delivery.

a) Actual delivery (De manu in Manum)

Object sold is handed physically by seller to buyer.

b) Delivery with short hand (Traditio Brevi Manu)

The buyer is already physically in possession of the object sold and delivery takes place by

change of intention of Buyer and Seller. E.g. Buyer before concluding the deed of sale, rents a

car from the seller and later decides to buy the car. No giving back of the car by the buyer to

the seller is necessary to establish delivery. The buyer remains in possession of the car and

delivery takes place through the change of intention of the parties to the contract.

c) Constitutum Possessorium

Opposite of delivery with short hand. Delivery takes place through change of intention of the

buyer and seller but the seller remains, after contract has been concluded, physically in

possession of the object sold. E.g. S sells a car to P, but at the time S and P agree that S will

rent the car from P, therefore S (the seller) remains physically in possession after the contract

has been concluded.

d) Attornment

The object sold is in possession of a third party and delivery takes place through the change of

intention of the buyer and seller. Before the deed of sale is concluded the third party concerned

keeps the object on behalf of the seller, but after the conclusion thereof the intention of the

buyer and seller is that the third party keep the object on behalf of the buyer e.g. a car is placed

by the seller in possession of a panel beater for repairs and the car is sold during this period of

repair. Before the contract is concluded the panel beater keeps the car on behalf of the seller,

but after the transfer has been concluded the panel beater keeps the car on behalf of the

purchaser. Consequently delivery has taken place through the change of intention of the parties

to the contract. Mere notice to the third party of this change of intention is sufficient and no

cooperation of the third party in respect of this change of intention is required. Vorster v

Hodgeson [1902] 19 SC 439. Thus if the buyer is to have good title in the merx, he must have

ownership not just vaccuo possessio. All sales are presumed to be for cash unless evidence

clearly proves the contrary.

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e) Symbolic Delivery

Delivery takes place when the seller places the buyer in possession of a symbol by means of

which the buyer gains control over the object sold.

E.g. a shipload of maize has been bought and the buyer is placed in possession of the bills of

lading to place him in control of the maize. Delivery thereof takes place fictitiously or

symbolically). Giving keys of the car. Cow dung

f) Delivery through marking

Delivery takes place by marking the thing or things bought or sold. E.g. where part of the flock

of sheep is bought, the sheep forming part of the object sold can be marked by a yellow mark

on the hind leg. Delivery takes place as soon as the yellow mark is on the hind leg. Delivery

takes place as soon as the yellow marks are made on the hind legs of the sheep concerned.

g) Delivery with long hand

Takes place in that the object is pointed out by the seller to the purchaser with the intention that

ownership passes

Protection of ownership and possession

Ownership

Ownership is protected primarily by granting the owner the remedy known as REI

VINDICATIO (Vindication remedy). Owner can claim it from any person who is wrongfully

in possession of it. You have to prove ownership first

Owner Thief Third party

A can institute Rei vindicatio against C because he is the owner of the car. Owner can claim

damages if his property is damaged.

A B C

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Possession is also protected

If A borrows B his car and then after two weeks he decides to take it back from B, B can

institute an Action called the mandamant van spolie. In an action in which someone asks that

possession be restored, the court is not interested who the owner is. But the question is “was

the applicant wrongfully deprived of possession”? e.g. if you are locked out by your landlord.

After restoration of possession A can claim it by Rei vindicatio.

owner B

Borrower

A takes it back

by force

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CHAPTER 5

INTRODUCTION TO LEGAL

OBLIGATIONS

A legal obligation is a legal tie between legal subjects, recognised by law, which is created

because of certain legal facts (such as Contract or Delict) and which creates rights (personal

rights or claims) and duties which are recognised by law. Personal rights may come about

through

1. Delict

2. Contract

3. Unjustified enrichment

A legal obligation consists of two elements namely the right of the creditor to claim

performance (The right to insist that something be done or not be done)

AND

The duty of the debtor to perform accordingly. Natural obligations are those rights or duties

that are recognised but not enforced by law

Sources of obligations

A legal fact must exist before a legal obligation can be created. Legal facts are facts which

create, alter or destroy rights. Juristic acts are acts which the law gives effect according to the

intention of the parties (e.g. law gives effect to a contract of sale which the parties concluded

and intended to conclude. Non- Juristic Acts – are Acts to which the law gives effect

irrespective of the intention of the parties eg a claim arising from delict or unjustified

enrichment. Juristic Acts can be divided into unilateral act (acts for which only the expression

of the will of one party is required e.g. a will) and Multilateral act- where co-operation of two

or more parties is required e.g. where parties conclude a contract of sale.

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CHAPTER 6

Unjustified enrichment

A general equitable principle that no person should be allowed to profit at another's expense

without making restitution for the reasonable value of any property, services, or other benefits

that have been unfairly received and retained.

Although the unjust enrichment doctrine is sometimes referred to as a quasi-contractual

remedy, unjust enrichment is not based on an express contract. Instead, litigants normally resort

to the remedy of unjust enrichment when they have no written or verbal contract to support

their claim for relief. In such instances litigants ask a court to find a contractual relationship

that is implied in law, a fictitious relationship created by courts to do justice in a particular

case.

Unjust enrichment has three elements. First, the plaintiff must have provided the defendant

with something of value while expecting compensation in return. Second, the defendant must

have acknowledged, accepted, and benefited from whatever the plaintiff provided. Third, the

plaintiff must show that it would be inequitable or Unconscionable for the defendant to enjoy

the benefit of the plaintiff's actions without paying for it. A court will closely examine the facts

of each case before awarding this remedy and will deny claims for unjust enrichment that

frustrate public policy or violate the law.

In some circumstances unjust enrichment is the appropriate remedy when a formally executed

agreement has been ruled unenforceable due to incapacity, mistake, impossibility of

performance, or the Statute of Frauds. In certain states, for example, contracts with minors are

Voidable at the minor's discretion because persons under the age of majority are deemed legally

incapable of entering into contracts. But if the minor has received a benefit from the other

party's performance before nullifying the contract, the law of unjust enrichment will require

the minor to pay for the fair market value of the benefit received. If the adult used duress or

Undue Influence to induce the minor to enter the contract, however, the court will deny

recovery in unjust enrichment because the adult lacked "clean hands."

In other circumstances unjust enrichment is the appropriate remedy for parties who have

entered a legally enforceable contract, but where performance by one party exceeds the precise

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requirements of the agreement. For example, suppose a homeowner and a builder have entered

into a legally binding contract under which the builder is to construct a two-car garage. One

day the owner returns to her residence and discovers that in addition to constructing a two-car

garage, the builder has paved the driveway. The owner says nothing about the driveway but

later refuses to compensate the builder for the paving job. The builder has a claim for unjust

enrichment in an amount representing the reasonable value of the labour and materials used in

paving the driveway.

Suppose, instead, that after completing half the job, the builder tells the owner that he cannot

finish the garage as originally agreed, but that he wants to be paid for the work he has done.

The owner balks at this demand, arguing that the builder has breached his contractual

obligations and is entitled to nothing. A minority of jurisdictions would allow the builder to

recover the reasonable value of his services, minus any damages suffered by the owner as a

result of the breach. A majority of jurisdictions, however, adhere to the rule that a party who

fails to perform contractual obligations has no remedy regardless of the amount of hardship he

might endure.

The doctrine of unjust enrichment also governs many situations where the litigants have no

contractual relationship. For example, the law finds an implied promise to pay for emergency

medical treatment that is neither requested nor consented to by a patient. In some jurisdictions

the law finds an implied promise to pay for life-saving medical treatment even when a patient

objects to receiving it. The law also requires parents to reimburse a person who voluntarily

supplies necessaries such as food, shelter, and clothing to their children. As these examples

demonstrate, unjust enrichment is a flexible remedy that allows courts great latitude in shifting

the gains and losses between the parties as Equity, fairness, and justice dictate

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CHAPTER 7

1.DELICT / TORT

A delict is an unlawful or wrongful act by a person (the wrongdoer) which causes another

person damage to person or property, or injury to personality and for which a civil remedy for

recovery of damages is available.

Difference between crime and delict.

i. The purpose of a delictual action is to claim compensation from the wrongdoer for the loss

or injury caused by him.

ii. The purpose of criminal law is to maintain order in the interest of the general public.

Balance of probability vs proof beyond reasonable doubt

Elements of a delict (CPWAF)

1. Act

2. Wrongfulness

3. Fault

4. Causation

5. Patrimonial loss or impairment of personality

Act/conduct

An act is described as a person’s conduct determined by his will. Where a person acts while he

is in a state of automatism or while in a trance or during an epileptic fit, the resulting conduct

is not determined by his will. Such a person cannot be held liable for the consequences of his

action. Conduct may take the form of positive conduct (omission-doing something eg hitting

someone with a brick) or negative conduct (omission-failure to do something when one has a

duty to act eg a policeman ignoring a gang of hooligans assaulting a person).

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Wrongfulness

Any infringement upon a person’s subjective right is deemed wrongful. It may be Real Right,

Immaterial property, Personality and personal right. It must be noted that there can be a clash

of rights where one protects his own right at the expense of another. Then it must be determined

whether the wrongdoer’s conduct was reasonable or unreasonable. Hence the development of

grounds of justification.

Grounds of Justification SN CVP

a.Self Defence

Where a person protects his or another’s interests by staving off an unlawful attack or imminent

unlawful attack, in the process causing harm to the attacked, the former does not act wrongfully.

The Requirements for self-defence were discussed in the case of Exparte Die Minister Van

Justice: re S v Van Wyk 1967 1 SA 488 (A)

a. A wrongful attack by another person, launched with the purpose of infringing upon the

subjective right.

b. The attack must have commenced or be imminent but not yet completed.

c. The act of defence must be aimed at the attacker, although the initial attack does not

necessarily have to be

d. The act must not be more harmful than is necessary.

b.Necessity

A state of necessity empowers a person to infringe the right of an innocent party to protect his

own right or another’s right e.g. you break a window to save a little boy inside a burning house.

The purpose is to protect the interests of the perpetrator or of a third party against a damaging

situation.

Requirements

a. The state of necessity must be imminent or should already have commenced.

b. A person could protect his own rights or the rights of another during the state of

necessity.

c. Conduct during state of necessity will only be justified if it is the only way in which the

threatened interest can be protected.

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d. The interest which is infringed upon in the state of necessity should not be greater than

the interest which is protected.

Example 2

A is in the garden, and is unaware of the facts that a poisonous snake is about to bite him,

B can crash tackle A to get him away from the snake. Should A break some of his teeth in

the process he cannot claim delictually from B, as B acted in a state of necessity and did

not wrongfully cause A’s injuries.

c.Consent to injury

Where a person waives his rights to bodily integrity and consents to an injury being done

to him. E.g a patient who has been operated on by a medical doctor

Requirements

a. The consent must be given as a conscious expression of the injured party’s will.

b. The consent must be given expressly or tacitly.

c. Injured party must have the serious intention to consent to the injury.

d. The consent must be given voluntarily and not under duress.

e. Although different points of view exist in this regard, it is required sometimes that the

injured party must have full capacity to act.

f. The consent must be lawful and not against the public interest or good morals.

g. The consenting party must be fully aware of the rights he is waiving.

h. The wrongdoer must act within the limits of the consent given by the injured party.

Example

If a patient consents to an operation, he cannot afterwards hold the doctor liable in delict

for the pain and suffering caused to him by operation.

d. Voluntary assumption of risk

The injured party merely expresses his willingness to subject himself to the risk and subsequent

injury. The injured party must have consented to run the risk. For example a boxer decides to

participate in a boxing match and accepts the risk of being injured during the fight. If his

opponent injures him, he cannot claim from his opponent in delict.

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e.Provocation

It is when someone is threatened or incited towards injurious conduct by the actions of another.

The injured person, who provoked the other, forfeits his rights to claim damages. The

wrongfulness of the defendant is set aside.

3. FAULT(Blameworthiness)

Wrongdoer must be at fault. He is at fault if he acted intentionally or negligently. The

wrongdoer must have reached a sufficient level of mental development to be able to

comprehend the nature and consequences of his action. One cannot impute blameworthiness to

anyone without sufficient mental capacity. There are two stages in proving liability

Stage 1 Wrong Doer must have blameworthy state of mind. Insane people and children under

seven are not capable of having a blameworthy state of mind.

Stage 2 once established that he has blameworthy mind, it has to be established whether he

acted intentionally or negligently. Intention includes both knowing and deliberate infliction of

harm and cases where the main object is not the infliction of harm but recklessly engages in

some enterprise with realisation that the harm will probably or possibly occur.

Rape is also a delictual wrong based upon intentional wrongdoing. In M v N (1981) a woman

was awarded substantial damages for rape.

Regarding negligence, the conduct may still be wrongful if the wrongdoer’s behaviour does

not comply with the standard of care that the law requires of him. The test is an objective one

of a reasonable person. The courts have to determine how an ordinary, average, reasonably

careful Zimbabwean would have behaved in the same circumstances. If a reasonable man

would have exercised caution or acted more responsibly than the wrongdoer then fault is

imputed on the wrongdoer. If the wrongdoer was also negligent then there will be

apportionment of damages.

4. Causation

The loss or damage must be caused by the wrongful culpable act. There must be a nexus

between the act (commission or omission) and the damage suffered. Where this crucial link is

missing, the so called wrongdoer cannot be held liable in delict. In order to determine whether

a factual causal link exists, conditio sine qua non test is used. If the unlawful conduct is taken

out of the equation and the result falls away, a casual nexus exists between the Act and the

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result. A wrongdoer cannot be held liable for all the consequences of his actions. Liability must

be limited by determining whether or not legal causation also exists between the Act and result.

The present legal position is that the wrongdoer will only be held liable for foreseeable damage

for example a person sits in a train. While still in the station waiting for the train to depart. He

finishes his cigarette and throws the butt from the window. The butt falls on explosive material

stacked on the platform next to the train, which explodes with a great bang. On the other

platform, a porter is startled by the explosion and loses concentration of his trolley which

crashes into an old lady who falls into the path of an oncoming train. The loss and damage

incurred by the latter can only be recovered from the smoker if it was foreseeable that his act

would have such a result.

Conditio cum qua non (compare with conditio sine qua non)

5. Damage or result

The result must be in a form infringement of any subjective right.

Patrimonial loss and infringement of personality right

Delictual Remedies

1.Actio Legis Aquililiae (patrimonial loss)

It is instituted to claim damages for percuniary loss caused by all forms of culpable conduct. It

can also be ceded to another person since it is concerned with recovery of patrimonial damage

to an estate.

Actio Iniuriarum (infringement of personality right)

Satisfaction for the impairment of one’s personality can be claimed in the Actio Incuriariarum.

Purpose is to compensate for the intentional injury to one’s bodily and mental integrity. Cannot

be ceded to another.

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CHAPTER 8

LAW OF CONTRACT

CONTRACT DEFINED

For our purposes we shall content ourselves with a working definition of a contract: A contract

is a binding agreement, which the parties thereto create between themselves intending that it

be legally enforceable. Courts do no more than attempt to give effect to the intention of the

parties.

GLOSARY OF TERMS used in contracts

Performance

That to which the debtor binds himself to is called performance. Performance can consist of

positive conduct where debtor must do, deliver or pay something or –negative conduct such as

not doing business in a certain area for a specified period of time

Unilateral contracts

Where only one of the parties acts in the capacity of debtor and the other party only acts as the

creditor, the contract is a unilateral one eg a donation and drafting a will

Reciprocal contract

Where both parties act in the capacity of creditor and debtor at the same time. E.g contract of

sale. A sells his car to B for $7000. A is a creditor when it comes to receiving $7000 but is a

debtor when it comes to delivering the car.

Nominate contract

It is a specific contract like purchase and sale

Null and void contract

Where one or more of the requirements of a valid contract are absent. No contract and no legal

obligations come into being. When a contract is said to be null and void, it actually means that

no contract has come into being.

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Voidable contract

Where a contract did come into being but it can be set aside because of a defect. the defect

might have been present at the time of conclusion of the contract. Where the parties do reach

consensus but consensus was obtained in some or other improper manner such as duress, such

consensus can be negated. Prejudiced party may however choose to uphold the contract and is

not obliged to have it set aside.

Natural obligations

Create obligations which are recognised but not enforceable. Contract is valid but not

enforceable. E.g we are going to watch soccer today

Requirements of a valid contract LCCPF

1. Consensus

2. Capacity to Act

3. Physical possibility

4. Legality

5. Formalities

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CHAPTER 9

Consensus Exam

Consensus is the meeting of minds between parties. Consensus is created if parties have the

following:

1. Intention to be contractually bound.

Parties must have serious intention to be contractually bound. If 2 friends agree to watch Rugby

match no intention to be bound exists. Each party must intend to be bound to perform his duties

and to hold the other party legally liable for rendering performance as promised. Contract of

sale agreement (eg) there is intention to create legal obligations.

2. Common intentions.

Meeting of minds. Parties Must intend same contractual commitments. Common intention with

regard to rights and duties to which they will be legally bound to agreement.

3. Making of intentions known.

Parties must declare their intentions to one another. The other party must assent to that intention

in some way or another. Done through offer and acceptance

Offer and acceptance

An offer is a declaration made by a person in which he indicates his intention to be contractually

bound and he sets out the rights and duties he wishes to create. An acceptance is a declaration

by offeree through which he indicates that he agrees to the terms of the offer exactly as

expounds in the offer.

Requirements of a valid offer.

1. Offer must be complete in the sense that it contains all the terms by which the offeror is

willing to abide as well as all the terms to which he wants to bind offeree.

2. Offer must include proposals regarding all the essentials of the proposed contract

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If parties want to conclude a specific nominate contract eg Contract of sale), the offer must

contain stipulations regarding all essential characteristics of that specific contract.

3. Offer must be clear, certain and unambiguous. Intended obligations must be stated

unequivocally and unconditionally so that the rights and duties intended are determined or

ascertainable. Must not be vague and ambiguous. Offer must be of such a nature that, it can be

accepted without any further qualifications eg I am selling a car at reasonable price.

4. Offer must be made with the serious intention of creating a legal obligation.

Offeror must have the intention to be legally bound to his offer, should it be accepted by the

offeree. Where X invites Y to a concert there is no intention to be bound.

An advertisement is a declaration which is made with the intention of inviting another party to

make an offeror to negotiate. An advert in the newspaper or price tag stuck to a product in a

self service shop does not as a general rule, constitute an offer. The customer who decides to

buy something makes an offer to the shop keeper at the till. Shopkeeper can decide whether to

accept the offer or not. The purpose of such an offer is to draw a person’s attention to the

possibility of the conclusion of a contract or to provide him with information. The intention of

the dealer will in each case determine whether his declaration constituted a real offer or

invitation to do business. (Crawley V Rex) 1909 TS 1106. A tender is not an offer.

5. No formalities to be complied with.

An offer can be made verbally, in writing, expressly, tacitly, through words or conduct.

If law requires formalities as requirement for validity, the offer must comply with these

formalities to be valid. Offer must come to the actual knowledge of the offeree. Offer is

complete if offeree has knowledge of the offer and its contents.

Consequences of an offer

An offer is a unilateral act, no rights and duties are created

Termination of the offer.

a. Rejection of the offer by offeree.

b. If stipulated that offer is valid only for a certain period of time, it falls away if not accepted

within that period.

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c. If before the offer has been accepted the offeror informs the offeree that he withdraws the

offer, offer is extinguished.

d. If the offeree does not accept the offer exactly as it is made but wishes to accept subject to

alterations, improvements eg of a house. This is tantamount to counter offer, offeror

becomes the offeree and offeree becomes the offeror. The original offer is extinguished.

Hyde v Wrench [1840] 49 ER 132. W offered to sell farm to H for 1000. H counter-offered

950. W rejected. H purported to accept previous offer. W was no longer keen to sell the

farm. H sued W. Held: Counter-offer amounted to rejection of the offer therefore no longer

open to acceptance.

e. If either offeror or offeree dies before offer is accepted, offer falls away. De Kock v

Executors of Van de Wall [1899] 16 SC 463 offer of donation could not be accepted after death

of offeror.

f] Loss of contractual capacity. Contractual capacity lost through insanity, insolvency, etc.

Special offers

1. Options

It is an agreement between an option grantor and option Holder, in terms of which the option

grantor keeps for acceptance an offer for a certain period of time. The option creates rights and

duties in that the option grantor must keep a certain substantive offer open for the exclusive

acceptance by the option holder for a determined or determinable period of time. If option

holder does not accept the substantive offer within the specified time period, the substantive

offer is terminated because it is rejected and the option agreement is terminated through

fulfilment. The offer can be transferred from one person to the other. It Must be distinguished

from Preferential right. This is a right which the grantor of such a right gives the holder of the

right, in terms of which the holder has the opportunity to make or receive an offer (Van Pletzen

v Henning 1913 AD 82 and Boyd v Nel 1922 AD 414). Offeror bound to keep option open for

period agreed. Failure to keep option open amounts to breach for which offeror can be sued.

Right of first refusal

Distinguish between an option and a preferential right

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2. Offer for reward

An advert for a reward constitutes an offer. Acceptance must be in Response to the Offer for

reward. The whole idea of the analysis in terms of offer and acceptance is to emphasise the

reciprocal nature of the relationship. This is not a problem with regard to bilateral contracts

where one party makes an offer to which the other responds with an acceptance, thus

identifying the existence of a contract and its terms. In the case of a unilateral contract, i.e. an

act in reliance upon a promise, it is necessary to show that a link exists between the act and the

request that it should be performed. Thus a party can hardly accept an offer of which he / she

did not know or had forgotten.

R v Clarke(1927) 40 CLR 227 Australian High Court. A reward has been offered for anyone

giving information which led to the conviction of those responsible for the murders of

policemen. Clarke gave information which led to such arrest and conviction. However, his

claim to the reward was resisted. Clarke's motive and intention in giving the evidence was to

protect himself and to clear himself of the charge of murder. Only after arrest, conviction and

appeal by the others, did Clarke think of claiming the reward. It was held that Clarke did not

act "in reliance upon the offer or with the intention of entering into any contract" - although

clearly, the convictions would not have come about without his evidence.

Isaacs ACJ points out in his judgment the difficult case of Gibbons v Proctor (1891) where,

by contrast, a policeman was allowed to recover a reward, although he did not know of the

existence of the reward when he sent off the information. He points out that in Anson on

Contracts it was stated that that decision was wrong, and that he (Isaacs) thought it was too.

So a mere coincidence between the act required and the doing of that act is not sufficient - it

requires some mental element connecting the two - and which we would call an intention -

although we also know of course that in many cases, the intention involved does not go beyond

the doing of the act itself - the intention to get on the bus, seldom involves an "intention" to

create a contract, but we have no problems construing the situation as if there were such an

intention. This is often done via the "objective test" idea - which was obviously thought not to

be appropriate to this type of situation.

Carlill v Carbolic Smokeball Co - Offer can be made to the world at large

(1893) Court of Appeal - discussed in previous lecture

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The manufacturers of an influenza remedy in their advertisements said that if anyone used their

remedy and then caught flu they would be entitled to £100. When a claim was made they said

that there was no contract. It was held that an offer made to the world at large, can become a

contract with those who fulfil the condition.

The operation of this basic requirement may be affected by an implied assent to the existence

of a contract based upon an acceptance that was not communicated.

Exam

One must be aware of the offer in order to accept it. (Bloom vs American swiss watch

co)

You must be the first one to supply the information (Lee v American swiss watch co)

The intention must be to accept the offer (R v Clarke)

Requirements for a valid acceptance.

a. Can only be made by the offeree (except in public offers)

b. Offeree must have serious intention to be bound to his acceptance.

c. Acceptance must be clear, certain and unambiguous

d. Contents of the acceptance must correspond with the contents of the offer.

e. Acceptance does not have to comply with any formalities.

f. Acceptance only complete when the offeror is notified.

Legal Consequences of acceptance

Acceptance leads to consensus and conclusion of contract, should other requirements for a

valid contract also be met. It is necessary to determine exactly where and when a contract

comes into being. So that one can determine which court has jurisdiction over a dispute

regarding the contract.

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JURISDICTIONAL ISSUES

Time and place for conclusion of CONTRACT.

Where parties are in each other’s presence, no problem the contract would be concluded at a

place where they conclude the contract. Problems arise if parties are not in each other’s

presence. Eg the offeror is in Harare and offeree in Bulawayo eg. A who lives in Harare

telephones B in Bulawayo and offers to Buy B’s Car. They negotiate the price and eventually

agree on a certain price. The question can be asked whether the contract was concluded in

Harare or Byo. It is necessary to determine exactly where and when a contract comes into being

so that one can determine which court has jurisdiction over a dispute regarding the contract.

R I D E

a) Declaration Theory

In terms of this theory, Contract comes into existence at the time the offeree voiced or declared

his acceptance of the offer. This does not mean that the offeror received notification of the

acceptance. The offeror might be bound before he knows of the existence of a contract.

This theory has shortcomings. Critically evaluate jurisdictional theories

b) Expedition Theory.

Contract concluded where and when the acceptance made by the offeree is dispatched or

expedited to the offeror. This applies to real postal contracts. The contract is concluded on the

day the offeree posts the acceptance. In Cape Explosive Works v SA Oil and Fat Industries

Ltd. 1921 CPD 241 SA

Oil and Fat Industries [SAOFI] wrote letter to Cape Explosive Works [CEW] [Cape] offering

to sell certain quantity of glycerine. CEW posted letter of acceptance on 14/7/16. Letter

received by SAOFI. Became necessary to determine where contract was concluded to

determine which court had jurisdiction to hear dispute. Held that the contract concluded in

Cape where letter of acceptance posted.

c) Reception Theory

Contract is concluded where and when the offeror receives the acceptance and not necessarily

takes cognizance of the contents of the acceptance. You can be in a contract without knowing

(e.g email is in your inbox but you haven’t read it)

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d) Information Theory

Contract concluded where and when the offeror receives notification that his offer has been

accepted by the offeree. In the previous example, Contract comes into existence in Harare

where he learns of B’s acceptance.

In the event that the contract is silent about which theory to use, we use the information theory.

Factors affecting consensus (M U D E)

1. Misrepresentation

It is a false statement of fact that something exists while in actual fact it doesn’t or an untrue

statement concerning an existing state of affairs which is made by one party to the other with

the intention of inducing the other party into concluding the contract. Can be made expressly

or by conduct. Even concealment of facts constitutes misrepresentation. This would be the

case only if presenter had a duty to make certain relevant statements eg in insurance contracts.

Misrepresentation renders contract voidable, (election). A contract will be voidable as a result

of misrepresentation if following requirements are satisfied

1. Misrepresentation must be made by one party to the other contracting party. If this is done

by a third party, e.g an agent, it is not misrepresentation

2. Misrepresentation must be made during negotiations preceding the conclusion of contract.

3. Misrepresentation is unlawful even if its innocent

4. Misrepresentation must have induced the contract as it stands.

The reason for conclusion of contract was because of misrepresentation.

Misrepresentation must be distinguished from what is known as "mere puffs" or simple

commendatio [i.e. praising one’s own merchandise].

In Naude v Harrison 1925 CPD 84, defendant [D] who was selling a house told plaintiff [P]

that the house in question was "well built". P bought the house and discovered that the walls

were cracking and sued D for misrepresentation. Held the statement that the house was "well

built" not a misrepresentation but mere puffing

In contract of sale, failure to disclose latent defect in merx, of which seller is aware amounts to

misrepresentation.

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In Dibley v Furter 1951 [4] 73, P bought a piece of land from D. D knew that the piece of land

in question had been used as a graveyard but did not disclose this to P.

3 Forms of misrepresentation (I N I)

(i) Intentional misrepresentation.

Statement made with intention of inducing a contract. Misrepresenter knows that he is

misleading the other party. Party induced to enter into the contract may claim damages.

ii) Negligent Misrepresentation

Statement made negligently to induce a contract. A person neglects to find out the truth himself

and makes a false statement. If a person makes a statement he believes to be true without taking

steps a reasonable person would have taken in the circumstances to satisfy himself that the

statement was the truth. Aggrieved party may claim damages regardless his choice.

iii) Innocent misrepresentation

Not Fraudulent or negligent but one makes the misrepresentation without knowledge of its

truth. The innocent misrepresenter is not liable for damages.

2. Duress

Duress can cause a person to do something which he normally would not have done. If someone

is placed under duress with the intention of forcing a contract and he is in a mental state of

contractual incapacity, no contract exists. Renders the contract voidable

Requirements

1. Other party must have been responsible for the duress.

2. Duress must have caused the conclusion of the contract.

3. Duress must consist of a wrongful threat of damage or harm

4. The contract must be prejudicial to the party under duress.

5. The threat must be of an imminent or inevitable evil.

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3.Undue influence

When a person exercises his influence over another which leads to the conclusion of a contract

eg where a doctor persuades a patient who is dying to conclude a contract which is prejudicial

to the patient.

Requirements

a) One party to the contract must have obtained an influence over the other party to the

contract.

b) Influence must have weakened the prejudiced party’s resistance and rendered his will

pliable and open to manipulation.

c) Influence must have been used in an unscrupulous manner.

d) The influence must have convinced the prejudiced party to conclude a contract to his own

detriment.

e) The influence must have convinced the prejudiced party to reach consensus which he would

not have reached had he had the normal freedom of will

4. Error/mistake

Definition

Error is a misunderstanding or a misconception by one or more of the parties regarding certain

facts, events or circumstances.

In law we have:

a] Unilateral mistake where one party to the contract is mistaken and the other is not

b] Mutual Mistake where both parties are mistaken about each other's state of mind.

c] Common Mistake this occurs where both parties are of one mind and share the same mistake.

Effect of Mistake

If both parties labour under a material mistake = no consensus and no contract. In order to

temper the harshness of law, parties are held to their declaration of intention unless the

circumstances are such that the mistake is reasonable. If unreasonable the contract is void.

Conditions to be met before a mistake will render a contract void.

1. Mistake must relates to a fact

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2. That fact or rule/ principle is material. (corpore, negotio, substantia, persona, motive,

nominee)

3. Mistake (whether of fact or of law) MUST be reasonable.

Error in corpore

Mistake relating to the merx (you buy a cow and you are given a donkey)

Error in negotio

Mistake relating to negotiations. One is thinking he is signing a lease contract but the other

thinks he is signing a contract of sale

Error in substantia

Mistake relating to the quality of the merx

Error in persona

Mistake relating to the identity of a person.

You interview A and B. You are impressed by A but you mistakenly call B

Error in motive

The motive why you are entering into a contract- does not void the contract. Contract

remains valid. You buy a dress on credit intending to attend a wedding, however, the

wedding is cancelled, the contract will remain valid.

Error in nominee

Mistake relating to name of the person. The contract remains valid.

1. Must relate to a fact or to legal rule or Principle.

Example of mistake in law.

A pay B $ 2000 under the mistaken belief that he owes the money to B (no obligation). A

mistake in law or fact will only invalidate a contract if it is considered to be excusable in

circumstances.

2. Mistake must concern a material fact, legal rule or principle.

Mistake which are material and can exclude consensus can be misunderstanding with respect

to identity eg a phones and gives B a job who answers the phone while A is under the

impression he is talking to C and offering C a job-error in persona no consensus. Mistake

concerning content of intended contract voids the contract. X is under the impression that he is

making an offer to buy y’s house in Cape town but Y is under the impression that the offer is

being made to buy a house in Durban-error in negotio

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Error in corpore refers to a mistake involving the identity of a particular object. For example,

if a person buys a horse believing it to be the one that s/he had already examined and ridden,

when in fact it is a different horse this amounts to error in corpore

Also there’s a mistake with regard to interpretation of the law eg ownership of immovable

property

Error in substantia- mistake as to the quality of the thing.

Mistakes not material

Error in nominee

Error in motive

3. The mistake in fact or law must be reasonable

Mistake will be reasonable if the reasonable man in the circumstances would be mistaken eg

A who suffers from a hearing problem is under the impression that B is offering only R100 000

for his bicycle in fact B is offering only R100. Although there is no consensus A’s error cannot

be accused since a reasonable man would not simply assure that he would obtain such a high

price for an old bicycle.

No matter how material the mistake is, it will not entitle the mistaken party to repudiate the

contract if it was due to that party's own fault. Acacia Mines Ltd v Boshoff 1957 [1] 1 SA 93.

A distinction needs to be drawn between a material mistake and a fundamental mistake. A

mistake is fundamental if its very existence renders agreement non-existent to the extent that

no contract could be said to exist at all. Such a contract is void ab initio. In Maritz v Pratley

1894 [2] SC 145 a mirror and a mantelpiece were placed on top of the other at an auction. The

two were however being sold by the auctioneer as separates lots. P made a bid on them in the

mistaken belief that the constituted one lot [he was buying both]. P refused to take the

mantelpiece without the mirror and M sued him in breach of contract. It was Held that there

was no sale since there was no consensus on the subject matter of the sale.

You will get a question on consensus

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CHAPTER 10

CAPACITY TO PERFORM JURISTIC ACTS

Capacity to perform juristic acts

Every legal subject has legal capacity. Every legal subject bears rights and duties. Not every

person who has legal capacity has capacity to act. Capacity to act refers to the capacity to

perform juristic acts, to participate in legal intercourse and to conclude valid transfers. Only

natural persons are capable to enter into juristic acts. A company cannot enter into juristic Act.

A natural person must perform juristic action of the company.

Factors Affecting Capacity (P I C A I) M

Age

Capacity

Influence of alcohol/drugs

Insolvency

Prodigality

Marriage

1.Age

Majority

18 Years and older people are capable of entering into contracts. Have full capacity to Act.

Minor

obtains full capacity to act upon marriage.

Minority

0-7

8-17

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Under the Age of 7

No capacity to enter into contracts. Cannot even accept offer of donation. If a minor wants to

enter into legal intercourse he must be assisted by a legal guardian. If he contract is detrimental

to him/her then he can change the contract within 1 year from the date he became a major, In

Zimbabwe the father of the child has guardianship over the child. For children out of wedlock,

the mother is the guardian. Spouses may exercise these rights independently of each other.

However consent of both parents is required on these contracts.

a. Contract of marriage

b. Adoption

c. Removal of the child from the republic

d. Application for passport

e. Alienation or encumbrance of immovable property or any rights of immovable property

which belongs to the minor child.

Minor over 7 years

Limited capacity to act. May conclude contracts which are exclusively to his benefit. Only

those contracts where he incurs rights and not duties. Eg donation

1.Special situations –Contract binding upon minors

a. Tacit emancipation

If a minor’s legal guardians permit him to carry on a trade or occupation on his own account

he acquires full legal capacity in respect of the trade or occupation. A general consent, express

or tacit must be given by the parent / guardian which entitles the minor to act in certain

economic spheres minors has full contractual capacity for all juristic acts performed in these

spheres. Consent can be revoked any time. In Dama v Bera 1910 TPD 928 an Indian girl who

was a minor had been earning her living as a servant for on five years. She lived with her

parents but retained control over her income and paid a certain amount to them for board and

lodging. Following a wage dispute with her employer the question arose whether she had legal

capacity to represent herself. Held: She was tacitly emancipated and could sue her employer

for the wages due to her.

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In Grand Prix Motors v Swart 1976 [3] SA 221 the respondent whilst she was an 18 year old

student nurse had entered into a hire-purchase contract to buy a car unassisted by her guardian.

She paid a portion of her purchase price in instalments and then returned the car being unable

to continue the payments. Soon thereafter she got married and claimed repayment to her of the

amount she had paid under the hire-purchase contract as she contended that at the time, she

was still a minor and the contract was therefore not binding upon her. The appellant led

evidence establishing that at the time she was living in a student hostel and spent her salary as

she saw fit. Her parents were divorced and neither of them had any say in how she spent her

money. They argued that on the basis of these facts the Respondent was tacitly emancipated at

the time and was therefore bound by her contract. Held: The respondent was not tacitly

emancipated hence was not bound by her contract. It is clearly risky to contract with minors.

b.Minor pretends to have attained Majority.

He is bound to his acts as if he had really attained majority at the time the Act was performed.

c) Where minor obtains rights and not duties eg contract of donation

d) Where minor acts with consent or assistance of parent / guardian

e) Where the guardian acts on behalf of the minor.

Restitutio in integrum.

If a contract is concluded by or on behalf of the minor and is prejudicial to him, minor entitled

to restitutio in intergrum. Contract set aside and parties entitled to be placed in the position

they were in before conclusion of the contract.

In the following 3 instances, a minor may not claim restitution.

a. Where at the time of performance of the juristic Act, the minor fraudulently pretended to be

a major.

b. Minor ratifies the act after attaining majority. Ratification can take place expressly or by

conduct.

c. Where the action has prescribed.

The remedy of the major = unjustified enrichment-minor must return what remains in his

possession when action is instituted.

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Contracts not binding upon minors

a) Contract which minor concludes without necessary assistance in spite of his unlimited

capacity to act.

If guardian ratifies before the minor turns majority or himself after acquiring capacity. Such

ratification renders minor liable. Contract entered into by the minor without necessary

assistance is not enforceable as against minor. Minor does not incur liabilities against the other

contractual party. Unless contract is ratified it is unenforceable against the minor, not even after

minor has obtained majority. Once guardian has given his assistance he has by implications

ratified the contract rendering it enforceable the minor’s promised performance. If minor

institutes action against major for payment before delivery major can raise the defence that he

need not pay until minor performs.

The remedy of the major = unjustified enrichment-minor must return what remains in his

possession when action is instituted.

i) If the minor has recklessly squandered full amount he cannot be sued on the ground of

unjustified enrichment because there’s nothing left and he is no longer enriched.

ii) If he has bought a luxury item, he has to surrender it or its value.

iii) If he used money to pay or provide essentials for which his guardian normally would have

to pay the minor’s guardian will be liable. Guardian would have been enriched.

b) Marriage

Marriage also affects capacity. Zimbabwean marriages are out of community of property.

i. Marriage in community of property

Assets joined – separate assets and liabilities are consolidated so that there is only one common

joint estate. In terms of Ante-nuptial contract, parties who do not want a joint estate must

stipulate that their marriage will be out of community of property and without community of

profit and loss. Each spouse retains his separate estate and each one has capacity to act in

respect of his own estate.

ii. Agreements entered into by a spouse married in community of property

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Each spouse has full capacity to act with regard to joint estate. One can sell, dispose and incur

debts without the consent of another. Certain contracts require consent of both parties eg sale

of immovable property or burdening property. These need written consent of another. If 3rd

party does not know whether a written consent was issued, the contract is valid

c) Mental Deficiencies

A mentally deficient person is not able to understand and appreciate the nature or consequences

of his conduct such that he cannot make rational decisions or manage the particular affairs. The

contract is void. Curator is nominated by High Court. The test is whether the person was normal

or mentally deficient at the moment of concluding contract. If it is concluded during lucidum

intervalum (moment of sanity) = valid. Before certification or appointment there is a

presumption of normality and of capacity to Act. After certification, there is presumption of

incapacity.

READ CASE OF UYS VS UYS

d) Influence of alcohol or Drugs

A person who is in such a state of intoxication caused by alcohol or drugs to such an extent

that he does not appreciate the nature and consequences of his actions or unable to control his

actions is incapable of forming his will ie he is incapable of performing juristic acts. There

is a presumption of capacity though. The defendant will have to prove that he had no capacity.

He who alleges must prove.

e) Prodigals

A prodigal is a person who squanders money in an irresponsible and extravagant manner. High

Court may on application by an interested 3rd party, declare him a prodigal. A curator is

appointed. He can only enter into agreements where he derives advantage and not liability can

be entered into.

f) Insolvency

If a person’s estate is sequestrated as a result of insolvency his capacity to act will be influenced

by certain provisions of insolvency Act. After sequestration, estate vests in the master then

trustee. After sequestration he loses capacity to Act with regard to the insolvent estate. Any

attempted agreement to dispose of such assets= not valid. May not enter into contract having

an effect on assets of insolvent estate without permission of his curator. The contract is voidable

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at the instance of the curator who has the power to ratify the contract. May accept any position

as employee without permission of the curator. May not be a director or bank manager

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CHAPTER 11

Physical possibility of performance

Performance to which the parties have agreed must be capable of delivery. If object of

performance does not exist at the time of conclusion of the contract, no contract comes into

existence. Eg the cow which A has exchanged for B’s horse died the previous day.

3 forms of impossibility of performance

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

No contract comes into existence.

2. Becomes impossible after conclusion of contract.

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

It must not be difficult but IMPOSSIBLE

3. Made impossible by the debtor after conclusion of contract

The contract remains in force.

Debtor commits breach of contract.

It is required that performance must be objectively impossible i.e. must be impossible for

anyone according to general human experience to perform in accordance with the contract.

If debtor finds it difficult or inconvenient to perform it will not be treated as impossibility.

Eg V lets his house to T without their being aware of it, the house was destroyed by fire the

previous day.

No contract because of impossibility. If it’s subjectively impossible eg where S sells a

thing to P. Before delivery to P, he sells it to T for a higher price and delivers the thing to

T. T acts in good faith.

The Contract between S and P is valid. P will be able to claim the thing from S, and S is

unable to deliver it. P can claim damages from S on the grounds of breach of Contract.

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Performance must be determined or determinable.

Determined

Performance will be determined if parties expressly mentioned the performance in this

agreement. Parties agree that it will buy the cow, daisy from V against payment of R500.

Identify of a cow as well as the amounts payable are specified and both performances are

determined.

Determinable

If parties agree on a criteria or formula to identify the performance or if they agree that a

specified person will determine the performance. E.g. if parties agree K will buy the 1st heifer

to be born on V’s farm, at a price to be determined by the outsider Z, the parties have laid down

a criteria to determine the subject matter of contract and a method of determining price.

Alternative and generic obligations as examples of determinable

performance

a. Alternative

A party may select the performance from 2 or more different alternatives eg either of the 2

houses. E.g. A has 2 houses he wants to let to B.

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

house.

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

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

determined.

b. Generic obligations

E.g. A agrees with B to buy a cow from B’s Jersey studs at a particular price, the

performance is determinable and the contract valid.

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

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CHAPTER 12 (exam)

LEGALITY

Contract must be lawful. It must not be contrary to public policy. If the contract is contrary to

legislative provisions or common law rules then it is unlawful. The nature of any contract and

the obligations imposed by any contract should be lawful

Consequences of an illegal contract

Contract is void. No obligations arise from the contract. Exturpi causa non oritur actio( no one

can benefit from a scandalous cause) is applicable. If money has been paid but delivery has not

taken place, the par delictum rule says, he who is in possession has a stronger right. he is not

obliged to deliver the object nor repay the money to the seller. If an athlete agrees with a

pharmacist to purchase oxandrolone tablets (anabolic steroids) and pays $1000 in advance, the

contract will be void as it contravenes section 22A of the medicines and related substances

Control Act. If the pharmacist refuses to hand over the tablets, the athlete will neither be

allowed to claim delivery of the tablets nor claim return of his money. if the pharmacist delivers

fake tablets then he cannot be able to claim for breach of contract.

Sometimes the court may relax the par delictum rule in order to do justice

Case on legality

Muguti v Uboxit Worldwide PVT LTD & others 2010 (1) ZLR

In July 2008, the defendants 12 September contracted with a freight company to transport

certain consignments from Zambia for US$6 500 of which after payment of the deposit, the

sum of US$3000 remained outstanding. At the time the contract was entered into, the official

currency of Zimbabwe was the now defunct currency. As the contract price was reflected in

USdollars, the contract was in contravention of the exchange control regulations,1996, and thus

unlawful.

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The plaintiff’s claim was dismissed. In dismissing the claim, the court stated that in the absence

of evidence, court could not hold that that the freight services were so out of proportion with

the payment made for such services that it should interfere by relaxing the rule operating

against the contract.

It was also stated by the judge that the law applicable to illegal contracts is quite clear. Where

the contract has not been performed, the courts will not compel performance by either party to

the contract. The rule is absolute and admits of no exceptions, the courts will relax the pari

delicto patior est condition possidentis rule to do simple justice between parties.

Contracts contrary to public policy

If a contract offends the public’s perceptions of justice, will be void

Common example is restraint of trade. In general, restraints are valid in our law provided that

they’re reasonable. A restraint is reasonable if it protects a substantive interest. If it is

unreasonable, it will be contrary to public policy.

ARE RESTRAINTS OF TRADE LEGAL?

Two conflicting rights and duties-

a. Right to freely trade or work at any company and duty

b. Duty to uphold the contract

Restraint of trade will only be legal if

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

It is reasonable.

SCHAWTZ V SUBEL

The defendant sold a general dealer’s business to the plaintiff. A clause in the agreement of

sale provided that “the seller was not permitted to open up a shop in opposition to the buyer’s

business within a radius of 5miles”. Soon after the agreement and payment, Subel purchased a

business 1.5 miles down the road.

HELD: Schawtz was able to obtain an interdict permanently restraining Subel from operating

the new shop. The idea was to protect the good will, which Subel had sold to Schawtz with the

inventory.

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Munyaradzi Mangwana v Brian Muparadzi & others

IN 1986/7 Munyaradzi Mangwana completed his legal studies at the University of Zimbabwe.

At the turn of the new year, he joined Brian Muparadzi & others Legal company as a qualified

assistant. He signed a convenant to the fact that should he leave the employer he will not be

allowed to practise a lawyer at his own or with others anywhere in Zimbabwe for 5 years. Soon

afterwards he took up employment in Chinhoyi. After a while he decided to form his own

company in Chinhoyi about 0.5 km down the road. The matter went to the court to determine

the question of its enforceability or otherwise.

HELD: the agreement was not enforceable because of its infinity nature (too broad in nature)

and at the same time, in the mind of a good judge fortified with the case (involving lawyers

who should actually be legal experts), he decided to invoke judicial activism at the risk of being

part to the judicial combat/arena

Morris v Saxel

Saxel was employed as a teller assistant by Morris and they agreed that should Saxel leave his

employer, he would not be allowed to practice his trade within 10km from the employer

HELD: COURT NOT CONVINCED that the case met required legal thresholds –such a

covenant should not solely aim to restrict competition. It was an anti-competition

agreement/device or trick and nothing else, and that being the case, it was contrary to public

policy and therefore unenforceable.

REQUIREMENT 5

Formalities

No formalities in general.

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

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

with.

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

Contract of sale of immovable property and suretyship

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CHAPTER 13

CAVEAT SUBSCRIPTOR RULE

LET THE SIGNOR BEWARE.

A well-known and established principle of our Law is summarized by the Latin maxim caveat

subscriptor which translated into English, means “Let the signor beware.” Simply put this

means that when a party to a written contract signs it, he is presumed to be aware of all the

terms and conditions of the contract, and is bound thereby. It will not, in general terms, avail

him to subsequently protest that he was not aware of the offending term or that he signed the

agreement without understanding the meaning and implication of the offending term, or that

the inclusion of the offending term is grossly unfair to him.

Many cases dealing with this principle have come before our Courts and, for the most part, our

Courts have applied this principle strictly and have not come to the aid of the Party seeking not

to be held bound by the offending terms and conditions of the Contract. One such case which

did come to our Courts dealt with this principle. The facts are as follows:

1. Mr A checked himself into a private hospital in order to undergo surgery for a medical

problem bedevilling him. He presented himself at the reception office and was presented with

a document which he was required to sign before being shown to his ward. This document was

the contract governing his stay in the hospital and set out the charges he would have to pay for

his stay in the hospital. One such clause provided that should any mishap befall Mr A whilst in

the hospital causing him to suffer any physical harm, the hospital would not be liable to

compensate him for the harm befalling him, irrespective as to how the mishap occurred. It

provided that if the mishap was caused by any act on the part of anyone employed by the

Hospital, no liability would attach to the Hospital to compensate him.

2. Upon being presented this document, Mr A glanced at it, signed it, and was shown to his

ward.

3. During Mr A's stay in hospital and after the surgery was performed on him, and whilst

recuperating, he needed to go to the bathroom. At this stage he was still under sedation and the

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nurse advised him that it was in order to walk unaided to the bathroom. On route he had a fall

and sustained serious injuries.

4. After his discharge from hospital, Mr A instituted an action against the Hospital in the

Transvaal Provincial Division in which he claimed compensation from the Hospital alleging it

to be liable on the grounds of the injury having been caused by the negligence of the Nurse.

The negligence of the nurse was not denied by the hospital, but it asserted it was not liable by

virtue of the existence of the clause in the written contract rendering it not liable for any injury

sustained while Mr A was in the hospital irrespective as to how the injury was caused.

5. Mr A claimed to be unaware of the existence of this clause, he did not spot it when reading

the document presented to him, and stated that had he been aware of it, or had his attention

been drawn to it, he would not have signed the contract with the inclusion of that clause. In

support of his contentions he led evidence, and it was not disputed by the Hospital, that when

presented with this contract the attending admissions Clerk did not draw its existence in the

contract to his attention.

6. The Learned Presiding Judge held that, whilst acknowledging the existence in our law of

caveat subscriptor, the offending clause and its implications were somewhat harsh and that

there existed a duty on the Hospital to ensure that its admission Clerk specifically drew the

existence of this clause to the Patient. Because it failed to do so he held the Hospital liable to

compensate Mr A for his injuries.

7. However this did not end the matter. The Hospital took this decision on Appeal to the

Supreme Court of Appeals which delivered a judgment holding that there was no duty on the

part of the Hospital to ensure that its admission Clerk specifically drew the existence of this

clause to the Patient. There was, it held, a duty on the part of Mr A to read the Contract,

understand it, and to sign it only once he agreed to be bound by the terms and conditions

contained in it. If Mr A did not read the contact through properly and carefully he should have

refused to sign it. Once he affixed his signature to the document, he was held to be bound by

its terms and conditions. The Court once more entrenched the principle of caveat subscriptor .

8. It is observed that had Mr A informed the Admissions Clerk his unwillingness to sign the

contract as presented to him because of the inclusion of this clause, it would have been most

unlikely that the Admissions Clerk would have been vested with the authority to delete it from

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the Contract. Moreover, it is observed that being understandably anxious about the surgery Mr

A was to undergo, it is unlikely that he contracted with the hospital on an equal footing with it

in that on protesting his dissatisfaction with that clause, he would have most likely been

informed that if he refused to sign the contract in the form presented to him, then he would not

have been admitted to the Hospital for the surgery he had to undergo. However this point was

not dealt with by the Supreme Court of Appeals.

GEORGE V FAIRMEAD

George a guest at a hotel signed a hotel register, which also doubled up as a contractual

document, at the same time he became a guest at the hotel.

One of the provisions, which George did not READ WAS THAT “in the event that property

was lost/damaged/stolen, the hotel owner was exempted from liability”.

When clothes were stolen from his room, George sued the hotel company, claiming a mistake

through ignorance based on justus error in that he had believed himself to be signing merely a

hotel register-not contract –and that in any event his attention had not been drawn to a written

term not included in his oral agreement

COURT: Dismissed the case on the basis of the caveat subscriptor rule

His signature bound George on such contracts “when a man is asked to put his signature to a

document, he cannot fail to realise that he is called upon to signify, by so doing, his assent to

whatever words appear above his signature.

Principle: Unless induced by misrepresentation OR fraud, one is bound under the doctrine of

caveat subscriptor by one’s signature-even if the material to which it is attached has been

neither pointed out nor read

TICKET CASES

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

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

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

conditions.

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

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Did the party issuing ticket do everything in his or her power to draw the attention of the

holder of the ticket to the fact that the words on the ticket refer to terms of the contract.

In contract law, ticket cases are a series of cases that stand for the proposition that if you are

handed a ticket or another document with terms, and you retain the ticket or document, then

you are bound by those terms. Whether you have read the terms or not is irrelevant, and in a

sense, using the ticket is analogous to signing the document. This issue is an important one due

to the proliferation of exclusion clauses that accompany tickets in everyday transactions.

The case of Parker v. The South Eastern Railway Co (1877) 2 CPD 416 illustrates restrictions

on this concept:

Knowledge of writing and of terms: If the recipient of the ticket knew that there was

writing on the ticket and also knew that the ticket contained terms, then the recipient is

bound by the terms of the contract.

Reasonable person: If the recipient did not know of the existence of the terms, then the

court will consider whether a reasonable person would have known that the ticket

contained terms. If that is so, then the ticket-holder is bound by those terms; if not, then

the court will return to the general test of whether reasonable notice of the terms was

given.

The test of whether a document fits within the description of a ticket is an objective test, that

is, whether a reasonable person in the position of the ticket-holder would perceive it to be

contractual in nature. For instance, if exclusion clauses accompany a docket, it may be held

that it is not contractual in nature since it is just a receipt.

Furthermore, Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd [1989] 1 QB 433

held that if a party wishes to incorporate onerous terms into a document that is to be just

accepted by the other party, reasonable notice must be given to make it a term of the contract.

Other ticket cases include:

L'Estrange v Graucob [1934] 2 KB 394

Olley v Marlborough Court [1949] 1 KB 532

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

EXCLUSION CLAUSES

Exclusion clauses are clauses, usually written down, that say that one party to the contract will

not be responsible for certain happenings. For example, if you join a gym, it is common for the

contract to say that the gym owner will not be responsible if you are injured while exercising.

If you arrange to park your car in a public carpark for a fee, the owner will often seek to include

in the contract a provision that they will not be responsible for damage to your vehicle, or theft

of goods from it, while it is in the carpark.

These clauses can be valid, as long as:

they have been properly included in the contract and

are not contrary to law.

To be properly included in the contract, the clause cannot be tacked on after the contract has

been made. If there is a signed contract containing the clause, this will usually have the effect

of including it. If there is no signed contract, but there are printed documents or signs posted

stating the terms, these can be included in the contract if they are brought to your attention

before the contract is made.

For example, a driver entering a car park who takes a parking ticket from a machine is only

bound by terms which are brought to their attention before taking the ticket. This is because

the contract is formed when the ticket is taken. The car park owner cannot rely on an exclusion

clause printed on the back of the ticket if they did not do anything beforehand to make the

driver aware of it, for example, by prominently displaying the exclusion clause at a point before

the ticket is taken. If the car is damaged due to insufficient care by the parking company, it will

be liable despite the exclusion clause [Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER

686].

What are reasonable steps to take in order to draw a condition to the notice of a consumer will

vary from case to case. Although most car parks now have printed signs in front of their ticket

windows stating that they accept no responsibility for cars left on their premises, (which

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probably makes it an exclusion clause that is a term of the contract) there are still ways in which

the effects of these clauses can be avoided.

The exclusion also has to be legal. There are some important obligations to a consumer that are

placed on a trader and these are implied by statute into consumer contracts and cannot be

excluded.

Courts always give exclusion clauses the narrowest reading possible, and where there is any

doubt the interpretation most favourable to the consumer is adopted. An exclusion clause will

generally not cover a breach which occurs outside the 'four corners' of a contract, such as where

a trader does something that was not authorised by the contract.

Where a trader has attempted to limit or exclude liability of an implied term a consumer should

seek legal advice as the law on this point is both complex and uncertain.

L'Estrange v Graucob [1934] 2 KB 394

The plaintiff bought a cigarette machine for her cafe from the defendant and signed a sales

agreement, in very small print, without reading it. The agreement provided that "any express

or implied condition, statement or warranty... is hereby excluded".

The machine failed to work properly. In an action for breach of warranty the defendants were

held to be protected by the clause.

court

"When a document containing contractual terms is signed, then, in the absence of fraud, or, I

will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether

he has read the document or not."

Parker v South Eastern Railway (1877) 2 CPD 416

The plaintiff deposited a bag in a cloak-room at the defendants' railway station.

He received a paper ticket which read 'See back'. On the other side were printed several clauses

including "The company will not be responsible for any package exceeding the value of £10."

The plaintiff presented his ticket on the same day, but his bag could not be found.

He claimed £24 10s. as the value of his bag, and the company pleaded the limitation clause in

defence. In the Court of Appeal, Mellish LJ gave the following opinion:

If the person receiving the ticket did not see or know that there was any writing on the ticket,

he is not bound by the conditions;

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If he knew there was writing, and knew or believed that the writing contained conditions, then

he is bound by the conditions;

If he knew there was writing on the ticket, but did not know or believe that the writing contained

conditions, nevertheless he would be bound, if the delivering of the ticket to him was in such

a manner that he could see there was writing upon it.

There was reasonable notice that the writing contained conditions.

The company was therefore not held liable

Olley v Marlborough Court [1949] 1 KB 532

The plaintiff booked in for a week's stay at the defendants' hotel.

A stranger gained access to her room and stole her mink coat.

There was a notice on the back of the bedroom door which stated that "the proprietors will not

hold themselves responsible for articles lost or stolen unless handed to the manageress for safe

custody."

The Court of Appeal held that the notice was not incorporated in the contract between the

proprietors and the guest.

The contract was made in the hall of the hotel before the plaintiff entered her bedroom and

before she had an opportunity to see the notice.

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CHAPTER 14

Terms of contract A term is a provision imposing one or more obligations to act in a specific manner or refrain.

It defines the contractual obligations between contractants. Or it stipulates time when or the

circumstances in which the obligations either become enforceable or are terminated, for

example: The car will be delivered after payment of the full price.

Different ways of incorporating terms into a Contract.

1.Express terms

Articulated declarations of intent

A term is express if it is stated in so many words, whether in writing or orally.

2.Tacit terms

Not been expressed in words but is based on the parties’ true intentions or their intentions as

imputed by law. Based on assigned intent in respect of a given situation they had not bargained

for. Inferred by court from expressed term, and surrounding circumstances or trade usage.

The test: what the parties would have answered if, at the time of concluding the contract,

someone were to ask them what the position in respect of a specific case or problem would be.

If both parties were to answer that the position is the same as that expounded in the alleged

tacit term, then a tacit term is established eg. One enters into a public taxi to town, although

there is no express term about the taxi fare, It is a tacit term that the passenger has to pay and

the driver expects payment.

3) Implied terms

Term not expressed in words but can be incorporated into the Contract by operation of law.

When Contract has been classified as a particular contract, law imputes certain consequences

to the Contract. for example guarantee against latent defects forms part of every Contract of

sale unless excluded by parties. Usually referred to as Naturalia.

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4) Essentialia, Naturalia and Incidentalia

Are terms which are essential for the classification of contract as belonging to a particular class

of contract eg essentials for sale: the seller must deliver the object sold and buyer to pay sum

of money. If not, it can’t be a Contract of sale.

4.1 Naturalia

Terms which the law attaches to every Contract of a particular class. They help to determine

Rights and duties of contracting parties and effects and consequences of their contract. The

naturalia of many Contracts known to Zimbabwean Law are based largely from Roman law,

but are adapted by our courts, legislation and trade usage.

4.2 Incidentalia

Additional terms by parties themselves.

5) Conditions

A condition is a contractual term which renders the operation and consequences of the Contract

dependant on the occurrence of a specified UNCERTAIN future event. Event must be uncertain

whether it will indeed occur. Eg A makes an offer to buy B’s house if the sun rises tomorrow

= not a condition.

5.1 Types of conditions

5.1.1. Suspensive Condition

A contractual term which suspends operation of the contractual obligation in terms of the

contract until the condition has been fulfilled. Valid contract at conclusion but rights and duties

suspended until condition are fulfilled. Condition will be fulfilled when uncertain future event

takes place e.g. I will give you the share certificate when you make full payment for the shares.

5.2. Resolutive Condition

Contractual term which renders the continued existence of the Contract dependent on the

occurrence (or non-occurrence) of a specified uncertain future event. Contractual rights and

duties become operative and are enforceable immediately. If condition is fulfilled the Contract

is dissolved and contractual rights and duties cease to exist e.g. I will lend you my car until you

buy yours or I will supply water to you until the beginning of rain season.

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6. Time Clause

Distinguished from condition

In the case of condition, Contract comes into operation or is dissolved upon the occurrence of

a specified uncertain event. Time clause (its certain). The time clause determines a specific

time when or the period within which the contract will either become operative or be dissolved

e.g. 1 January 1991, a good example is the Promulgation of Acts. “The Act will become

operative from the 01 March 2011”. Example 2: “6 months after conclusion of the contract,

the insurer may waive the terms of the contract”

6.1 Suspensive Time Clause

Duty to perform is postponed until a determined or ascertainable moment has arrived. The

consequences of suspensive time clause are that the contract comes into being when it is

concluded so that the parties are bound to the obligations but Rendering of their performances

in terms of the Contract is postponed until the moment has arrived or when the period has

lapsed. Contractual obligations come into operation & enforceable when the specified moment

has arrived or when the specified period has ended. A undertakes that 1 month after X’s death,

he will buy B a new vehicle.

6.2 Resolutive time clause

Contract is subject to resolutive time clause if parties agree that the obligations flowing from

the contract will have effect until the arrival of a certain moment or until the expiry of a certain

period of time Contract comes into being immediately, when the moment arrives then the

obligations are extinguished. A rents B’s house for a period of 2 yrs. After 2 yrs Contract lapses

7. Supposition

A contractual term which renders the existence of a contract dependant on an event which has

already taken place or on a state of affairs which exists at the time of concluding the contract.

Contract comes into being if supposition is fulfilled. Eg A wants to purchase B’s stand if it has

a sea view. A does not know whether this is the case and is not willing to give a guarantee in

this regard. They agree that B will purchase the stand provided the house has a sea view. If the

sea is indeed visible from the house, obligations are created from the beginning.

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8. WARRANTY

It is a contractual term relating to the absence of defects in the warrantor’s product or service

or possibility that the warrantor is able to render the performance or to the quality or standard

of the warrantor’s product or service to the quantity of the performance etc. A sells his fridge

to B and guarantees to B that exterior paint of the refrigerator will retain its original colour for

3 yrs, A undertakes additional obligation. If it discolours within that period, A will be in Breach.

Some warranties are imposed by operation of laws eg warranty against latent defects or eviction

in the contract of sale

9.Modus

This is a Contractual term which burdens a contracting party. The burden can be to perform as

against a 3rd party or to do something or to refrain from doing something. e.g. A donates a

house to B, subject to the modus that B must use part of it as a nursery school. Contract is

unconditional and B can enforce A’s perform immediately, even if B has not yet complied with

the modus. B can claim delivery of the house immediately but if he fails to execute the charge,

he is guilty of breach of contract and A can use the ordinary contractual remedies. Eg Sam

donates his farm to his Son Subject to modus that he donates R100 000 to his sister. Modus

always refers to the future.

10. Cancellation Clause

Entitles a party to cancel in breach of contract. This is called lex commessoria

11. Penalty Clause

Law and common law attaches certain consequences to breach of Contract by affording certain

remedies to the innocent party eg if you don’t pay by the 1st day of every month you will be

charged a penalty of $20 per day until you pay the full amount.

12. Forfeiture clause

Often found in lease agreement. Entitle landlord to cancel lease and eject tenants when tenant

in breach e.g. in payment of rent on the due date. In the absence of a specific provision non-

payment of rent not a material term entitling landlord to cancellation.

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CHAPTER 15

BREACH OF CONTRACT

Breach of Contract

Forms of breach (M2 P2 R)

Default by Debtor (Mora Debitoris)

Default by Creditor (Mora Creditoris)

Positive Malperformance

Repudiation

Prevention of Performance

Where a Contract creates obligation for both parties, each will in turn be a debtor and a creditor

depending on which obligation is involved

1.(Mora debitoris) Default of the Debtor

Debtor commits breach if he does not perform timeously and the delay is due to his fault. He

is in mora. This is called mora debitoris

Requirements

3. Requirements have to be met

1. Performance must be delayed

Debtor Must be late with his performance. if he renders a defective performance it is not mora

Debitoris. the term of contract may either provide for a specific day or time for performance or

no time may be specified

Where specific date or time for performance has been stipulated and the debtor fails to perform

on or before the appointed time, he is automatically in mora. This is termed mora exre. The

specific date for performance must be a day of which it is both certain that it will arrive. E.g.

31 March 2016 or immediately. Where no date is specified, creditor can determine a date by

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demanding that the debtor perform before or on a certain date. When fixing a date, creditor

must put reasonable time. Debtor is in mora if he fails to perform on the determined date.

Termed mora ex persona

2. Delay must be due to the Debtor’s fault

There can be breach if a party culpably does not honour his obligation. There is, no breach

where the debtor cannot perform timeously owing to bad fortune or circumstances beyond his

control e.g. viz major. When he has warranted performance at a particular time, late

performance will constitute breach of contract even if the delay was not caused by his fault.

Consequences of mora debitoris

It has an effect on the liability of the debtor should performance become impossible while in

mora. If performance becomes impossible after Debtor has fallen in mora obligations are not

extinguished. The debtor will be liable to perform.

2. Default by Creditor (Mora Creditoris)

Where the creditor causes the debtor’s performance to be delayed. Occurs where an obligation

is a bilateral juristic Act or where creditor’s co-operation is required for the debtor to be able

to render performance. eg where A & B agree that A will put tiles in B’s house and upon arrival

of A at B’s house, B is not there (and doors are locked).

Requirements

a) The performance must be dischargeable.

Performance owing to the creditor must be dischargeable. In terms of existing and valid

obligation and must be physically and legally capable of being discharged . If not yet due, no

mora creditoris.

b) Debtor must tender Performance

Debtor must tender proper performance as specified in the contract and must call upon the

creditor for his co-operation. Creditor must fail to give his co-operation. The default must be

due to the creditor

Consequences of Creditor’s Default

Debtor’s duty of care is dismissed if creditor is in mora. He is responsible only for intentional

loss and loss occasioned by gross negligence. Should the performance become impossible other

than through intention or gross negligence while the creditor is in mora, Debtor is released

from his obligation creditor remains liable for the counter performance. Eg A and B enter into

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a contract. Ito the contract, A is to give B his car in exchange of 10 beasts. B takes the beasts

to A’s home and upon arrival he is told that A has left for SA. Later that afternoon the lightning

strikes the beasts and all of them die, B is still entitled to get the car. In case of Reciprocal;

agreements, the debtor remains entitled to the performance due to him. However in respect of

the obligation towards the creditor, debtor still remains debtor. Obligation towards the creditor

is not as a result of mora creditoris, automatically regarded having been fulfilled. If Debtor is

in mora, it is removed by subsequent default of the creditor. Two forms of breach of Contract

cannot exist alongside each other in respect to the same obligation

4. Positive Malperformance

Occurs when the debtor commits an act which is contrary to the terms of the Contract.

2 situations to be distinguished:

a) Debtor tenders defective or improper performance.

e.g. The builder builds the house he has undertaken to build but not with the material he was

supposed to use.

b) Does something he may not do in terms of the agreement.

e.g. Instead of giving the buyer Daisy he gives him stichus.

Or He gives a cow instead of a donkey.

4. Repudiation

It is any behaviour by a party to a contract indicating that he does not intend to honour his

obligations, e.g. if the other party denies existence of the contract or Tries to withdraw from

the Contract or Gives notice that he can’t or will not perform. It’s possible to repudiate part of

the Contract. Innocent party has remedies for breach of contract. It is very difficult to establish

whether certain behaviour constitutes repudiation. There must be an Intention to repudiate –

Test is an objective one. Repudiation can also take place without any fault Basic question is

whether the person alleged to have repudiated his obligation has behaved in such a way as to

lead a reasonable person to conclude that he does not intend to fulfil his part of the Contract.

Mere failure on the part of the debtor to perform will not constitute repudiation.

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5. Prevention of Performance

By Debtor

Where he culpably renders his own performance impossible. Debtor not released from his

obligation e.g. Debtor has to develop and print a photograph film for the creditor but

negligently exposes it to light before development is completed. Performance is impossible.

Debtor can be held liable.

Prevention of Performance by the Creditor

Where creditor commits breach of contract (BOC) in form of prevention of performance where

he culpably renders the debtor’s performance impossible. E.g. Debtor has to service the

creditor’s motor car but before this can be done, the creditor negligently causes an accident in

which the motor car is destroyed. It must be distinguished from Default of Creditor (mora

creditoris).

In the case of Prevention of performance by creditor, the debtor’s performance is made

impossible and consequently can never be rendered. With mora creditoris, creditor merely

delays the debtor’s performance but does not render it impossible, so that it is still capable of

being rendered. The debtor will be deemed to have discharged his obligation. The debtor is still

entitled to creditor’s performance but the debtor must bring into account any expenses he has

saved by reason of his no longer being obliged to perform. The debtor no longer services the

car but is entitled to payment of the Contract amount less any savings, eg on oil that would

have been used.

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CHAPTER 16

REMEDIES FOR BREACH OF

CONTRACT (C, D, E)

1. Execution of the Contract

2. Cancellation of Contract

3. Damages

The availability of remedies is determined by the nature and seriousness of BOC.

1.Execution of Contract (P O O)

It can comprise of 3 possible orders

(a) An order for specific performance

(b) Order for reduced performance

(c) A prohibitory Interdict

a. Specific Performance

This is an Order which commands a contracting party to render performance that he has

undertaken to render. It is not made in sequestrated estates or granted in impossible

performance. Court will refuse if specific performance will affect the defendant unreasonably

harshly.

b. Orders For Reduced Performance

Court can order a Contract Party to render a reduced performance. The exceptio non adimpleti

Contractus comes into play where the parties to a Contract have to perform simultaneously. If

the plaintiff claims performance from Defendant in such a case, the Def can raise exception.

Which means that the plaintiff will not succeed with his claim if he himself has not yet

delivered or rendered his counter- performance. Exception gives Def the right to withhold his

own performance until he receives Counter- performance by the plaintiff. If plaintiff makes

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defective/partial performance and then claims counter performance from Defendant, Where

performance is divisible, Def can exercise his right to withhold his own performance in respect

of that portion of plaintiff’s performance that is still outstanding. If indivisible, he can make a

defective performance, the situation is made complex. Injured party has the chance to cancel if

malperformance was substantial he may also reject delivered performance, enforce the

Contract and claim proper performance.

Where he rejects the performance and claims proper performance he will be able to ward off

any claim to counter performance with exceptio, until plaintiff has performed properly or has

tendered such performance. It could happen that malperformance is not substantial enough to

justify rejection thereof or that the Defendant decides to retain defective performance.

Defendant has the benefit of the performance but he is still able to ward off a claim for his

counter performance with the exceptio due to the fact that the plaintiff himself has not

performed properly. The question whether plaintiff should be entitled to receive counter

performance for that portion of the indivisible performance that he himself has already made

and if so, how is the extent determined. Decision of Broiling Pvt ltd V Scope Precise

Engineering Pty Ltd 1979 (1) SA 39 (A) – PG 124.

2. CANCELLATION

It is an abnormal remedy for Breach of Contract. If there is a cancellation Clause, cancellation

is usually limited to certain degrees of Breach of contract. In absence of cancellation Clause,

innocent party will be entitled to cancel contract if the breach is material.

Cancellation because of mora debitoris.

In the absence of a lex Commissoria, party may cancel a Contract on the basis of mora debitoris

in 2 instances. Namely where

(a) Time is of essence

(b) He or she acquires a right to cancel the Contract.

(a).Time is of the essence

Cancellation on this ground is only possible where: Debtor is in mora exre in other words, a

date for performance was fixed in the Contract and debtor is guilty of the delay. Time is of the

essence in Contract. This means that it is crucial in specific circumstances that performance

has to be delivered on the agreed date. In essence cancellation on this ground is based on tacit

lex Commessoria which fluctuate in value, and usually for goods bought for purposes of resale

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(b). Creditor acquires Right to Cancel

Where time is not of essence, creditor may acquire a right of cancellation by delivering a notice

of re scission to the debtor. If Debtor is already in Mora exre, creditor must demand

performance within a reasonable time and notify the debtor. A reasonable time has to be

determined regarding the facts and circumstances of each case. If X builds a house for Y which

has to be completed on the 1st of November and the house is not completed on that date y will

have to send X a notice demanding that the house be completed within a reasonable time 24

hrs will be unreasonable, at least a few weeks. Where Contract does not specify a date for

performance, the creditor must 1st place the debtor in mora ex-persona by means of a letter of

demand if he fails, he can cancel.

Cancellation Because of Mora Creditors

The grounds for cancellation are the same as in the case of mora debitoris discussed above.

(a) Time is of essence and

(b) Debtor acquired a right to cancel.

Cancellation because of Positive Malperformance

In the absence of lex commisoria, injured party only entitled to cancel the Contract where mal-

performance is substantial. It is substantial if injured party receives something which is totally

different from that which was contemplated at the time of conclusion of Contract and he,

therefore never would have concluded the Contract had he known what kind of performance

he was to receive. In other words injured party may cancel the contract where mal-performance

is of such a serious nature that he cannot reasonably be expected to keep the performance and

be satisfied with a claim for damages.

Cancellation because of Repudiation.

One party does not have to accept repudiation but might uphold the Contract. When the Injured

party elects to accept repudiation, he acquires a right of cancellation which he normally might

not have had. If a party to a contract indicates that he is not going to fulfil his contractual

obligations at all, his repudiation is serious enough to entitle the injured party to cancel

Contract. where he indicates he is going to render partial or defective performance, facts and

circumstances of each case have to be examined in order to determine whether the reputation

is substantial enough to allow cancellation of contract. If it is not, injured party may not cancel

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the Contract and must be satisfied with a claim for damages. If performance by repudiating

party is divisible the Contract may be cancelled only in part.

Cancellation where performance rendered impossible

Where any party to a contract renders performance impossible, specific performance and

enforcement of Contract are not possible. Where contract indivisible = cancel Contract and

Claim damages. Where it is Divisible, may resile from the Contract in respect of that part of

performance that was rendered impossible.

DAMAGES

A combination remedy.

Always combined with either specific performance or cancellation

Most common remedy for breach of contract. Whether or not the term breached -

sufficiently material to warrant cancellation of contract - injured party always entitled to

such damages - as can prove to have suffered as a result.

Damages assessed at time of breach of contract. Innocent party placed on same position as

would have been if in contract properly performed to the extent that this can achieve

through monetary payment without undue hardship to defaulting party,

In determining appropriate damages- following considerations decisive:

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

b] Must be actual monetary loss incurred or gain not made.

c] Natural consequence of the breach - must have been in the contemplation of the parties

at the time of contracting. Loss must have been reasonably foreseeable by the defaulter

at the time of contracting.

d] The injured party must do all within his power to keep his damages as low as possible

[mitigate his damages]. Cannot allow damages to increase whilst doing nothing about

it.

There are different types of damages

i] Compensatory Damages

These are awarded as a measure of the actual loss suffered. e.g. if A agrees to sell 10 tonnes of

maize to B at $60 000 per tonne and A defaults, forcing B to purchase from another source

who charges him $70 000 per tonne. The compensatory damages would be the $10 000

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difference between the agreed price in buying the maize from A and the price from the

alternative supplier.

ii] Consequential Damages

For these damages to be recoverable they should have been reasonably foreseeable at the time

the contract was entered into. In Hadley v Baxendale [1845] the engine shaft of plaintiff's [P]

corn mill had broken and P hired defendant [D] to transport the shaft to the manufacturer who

was to make a new one using the broken shaft as a model. D failed to deliver the shaft within

the time promised. With the engine out of service the mill was shut down. P sued D for lost

profits during the period the mill was shut down. Held - the lost profits could not be recovered

as damages because in many cases millers sending broken shafts do not shut down their mills,

using spare shafts. Therefore damages of this kind were not reasonably foreseeable since D

was not aware of the special circumstances.

iii] Liquidated Damages

These are damages that the parties agree upon before the breach and form part of the terms of

the contract, governed by the Conventional Penalties Act. When damages are in issue the

plaintiff must prove his loss. The courts will not speculate when awarding damages.

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CHAPTER 17

THE CONTRACT OF SALE

INTRODUCTION

Buying and selling is a fundamental transaction in the modern commercial world. Goods and

services are exchanged largely through the sale agreement and it is only logical that the law

provides for specific rules and regulations applicable to this transaction. A sale is basically a

contract and as such all the rules governing formation of contracts in general apply equally to

sale agreements. However, in certain instances there are additional legal principles which

govern sales specifically which are not found in other contracts.

DEFINITION

Specific, nominate, reciprocal agreement to buy and sell, in terms of which the seller has the

true intention to deliver a determined or determinable thing together with all his rights in the

thing undisturbed, to the buyer and the buyer has the true intention of paying a determined or

determinable price for the thing.

Requirements for a valid contract of sale

Ordinary 5 requirements are also applicable to contract of sale. It is concluded with the

intention of passing ownership though seller does not have to be the owner of the thing. Seller

only obliged to transfer all his rights in the thing to the buyer without interference or

disturbance. If one of these rights is ownership, seller to transfer ownership. transfer of

ownership is one of the characteristics of Contract of sale. Any clause stating that buyer will

never receive ownership of the thing sold will have an effect that Contract will not be a Contract

of sale. Mere conclusion of the Contract of sale does not result in the transfer of ownership.

Buyer obtains a personal right against seller. Other requirements have to be met eg delivery

Essentialia of Contract of Sale

1. Thing Sold

Seller and buyer must reach consensus on thing sold.

Thing must be determined /determinable at the Conclusion of Contract.

If the description is too vague to determine what is sold, contract is null and Void.

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Can be movable or immovable, material or immaterial. must be merchantable i.e., be able

to be sold commercially

What can be sold?

Different things sold

a) Future Things

These things are only determinable at conclusion of the Contract into certain specifications or

occurrence of a certain event. If these specifications are met or if the event occurs = Thing

becomes determined eg Emptio rei speratae - where S sells next season’s crop to B for R20

per bag. The object sold only determinable and will be determined when the crop has been

fixed in units.

Emptio Spei – where S sells the next season’s crop to B for a lump sum of R10 000 irrespective

of whether the crop materialises or not. This is a Contract of Chance, object sold is fixed as

soon as the contract is concluded

b.Generic Sale-

buying a few out of many.

where the thing sold is indicated in general and only individualised later.

eg 20 bags of cement from all bags available in the seller’s store.

Object sold is determinable and will be fixed only after individualisation.

c) Res aliena

This is the thing of which the seller is not the owner. It does not affect conclusion of a valid

Contract of sale. The seller does not have to be the owner of the thing sold. Owner only has to

deliver the undisturbed use and enjoyment of all his rights in the thing to the buyer. If seller

knows that he is not the owner of the thing sold and proceeds with sale, Buyer who acts in good

faith will be able to hold seller liable for fraud or misrepresentation and criminal sanctions.

Where seller sales a res aliena, owner can claim with Rei Vindicatio. This right stems from

NEMO PLUS IURIS RULE-which provides that a person can only transfer the rights which

he has to another person. Where buyer possess a Res aliena in good faith the owner can claim

his property from buyer only if the property still exists. If buyer sold property to someone else,

one can’t claim the value of the property from the former buyer. On the other hand, one will

be able to claim the value where the buyer through his negligent or intentional conduct made

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it is impossible for the owner to reclaim Prop. Where buyer buys a res aliena and acts in bad

faith the true owner can claim the value

Exam Rei Vindicatio can Not be exercised where

(i) Real owner misrepresented to the buyer that seller is the owner, Doctrine of estoppel will

prohibit the owner from invoking the real state of affairs

(ii) Object was sold in terms of an order of court and buyer acted in good faith

(iii) An object which without knowledge on the part of curator does not belong to insolvent

estate is sold by a curator who acts in good faith.

(v) Buyer has by law a lien or tacit hypothec over the object sold.

(v) Real owner has instructed another person to sell the object on his behalf and after selling

he uses purchase price for his own account.

2. Purchase Price

Seller and Buyer must reach consensus on purchase price

Requirements (A C A)

(a) Agreement on the Price

(b) The price must be certain and

C) The price must consist of acceptable currency

2.1 General

Thing sold must be determined or determinable. law will not recognise an agreement on the

price where there is a serious disproportion between the price and the value of the thing sold.

The price can be less than the value of the thing but where it is completely out of proportion

no Contract of sale exist. Valid methods of price fixing: $125 or price is determined per unit =

R120 / bag

Ineffective methods

party to fix price unilaterally,

Unnamed 3rd party to determine Price

Described as reasonable and fair

3. Agreement to buy and sell

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Duties of the Buyer (Exam)

A sale involves two parties, the buyer and the seller. The obligation of the buyer can be

summarised as follows:

i] To pay the purchase price;

ii] To pay the seller's necessary and reasonable expenses to maintaining the merx pending

delivery;

iii] To accept delivery of the merx.

Obligations of seller include:

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

ii] To deliver the merx to the buyer.

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

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

DUTIES OF THE SELLER

1. Safe keeping of the thing sold

Duty of seller is to take care of & protect the thing sold from the time of conclusion of the

Contract until thing is delivered to the buyer. Buyer can claim damages for Negligent Conduct

of Seller. Not liable – if not Due to his fault – viz major

Factors that influence Duty of safe keeping

1. Mora Creditoris & Mora Debitoris

Where buyer is in mora Debitoris or Creditoris (where he fails to pay the price or fails to receive

the thing sold. seller will only be held liable for damages caused by His Intentional/ grossly

negligent conduct. Seller in Mora Debitoris (where he fails to deliver thing sold ) = Responsible

for any damage even in the absence of fault on his part.

Passing of Risk

Doctrine determines whether seller or buyer bears the risk where accidental damage is caused

by COINCIDENCE or ACTS OF GOD and not by culpable conduct of either Party. General

Rule – owner suffers loss when his property is destroyed. Doctrine of passing of risk causes

Risk to pass to B when sale is perfecta.

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A Contract is perfecta when

(a) Buyer & Seller have intention of buying and selling

(b) Purchase price is determined

(c) Contract is not subject to a suspensive condition.

Result is that Buyer bears the Risk where the thing is damaged / destroyed through coincidence

or Act of God. Buyer still has to pay the purchase price even where the seller has not delivered

the thing to him.

NB- the principles as applied to passing of risk also apply to the allocation of benefits. Eg

where a cow has a calf after date of sale but before delivery the calf belongs to Buyer.

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

DAMAGE TO THING AFTER CONCLUSION OF CONTRACT but Before

DELIVERY

FAULT NO FAULT

(INTENT / NEGLIGENCE) (COINCIDENCE / ACTS OF GOD)

Duty of Safe Keeping Passing of Risk

Seller bears Damages Buyer bears Risk if Contract is Perfecta

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Contract is perfecta if:

Buyer and seller have an intention to buy to sell

Purchase price is determined

Contract is not subject to suspensive condition

The thing sold is determined

The above general rule on the passing of risk has several exceptions. The risk will not pass to

the buyer in the aforesaid manner in the following situations:

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

in Jacobs v Petersen & Another [1914] CPD 705 J sold and delivered a horse and cart to P for

a price of $8 which was to be paid in instalments. The contract was subject to the condition

that ownership of the property was to pass only on payment of the full purchase price. P paid

the first instalment but the horse died soon thereafter. J sued for the balance of the purchase

price. Held the sale was subject to the suspensive condition that ownership was only going to

pass on payment of the full purchase price, hence the risk of destruction of the goods remained

with the seller until the counting or weighing is done

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

price or appropriate them to the contract, i.e a generic sale. In Poppe, Schunhoff & Guttery v

Mosenthal & Company in [1879] Buch 91 the plaintiff bought from the defendant 200 cases of

brandy on 6 July 1878. Of these, 110 cases were delivered on 18 July 1878; 60 cases were

delivered on 6 August 1878 and the remaining 30 cases were delivered on 15 August 1878. On

25 July an Act imposing excise duty on brandy became law. This meant that the brandy that

had not been delivered by 25 July was liable to pay duty. The issue before the court was who

between the plaintiff and the defendant was liable for duty on the 90 cases that had not been

delivered as of 25 July. The court found that nothing had been done to distinguish the buyer's

brandy from the rest of the stock in the seller's possession. Held the risk remained with the

seller who was therefore responsible for the payment of the duty.(also case of Horn v Hutt)

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

2.WARRANTY AGAINST EVICTION

Any action by a 3rd Party who has better rights in the thing sold that deprives the buyer of the

total or partial use, enjoyment and disposal of the thing sold, constitutes eviction. It must be

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remembered that the Buyer does not become owner of the thing by mere conclusion of a valid

Contract of sale. S is not obliged to transfer.

Forms of Eviction

1. When True Owner of the thing sold claims his property from the buyer.

2. A 3rd Party obtains possession of the property and the buyer cannot claim this property from

the 3rd Party due to a defective title.

3. In terms of the Rule that lease goes before sale (Huur Gaat Voor Koop) – Buyer to allow

lessee to use and enjoy property until lease expires.

4. Holder of a limited real right (eg Right of way or grazing servitude) may prevent the buyer

from having full use and enjoyment of the thing sold.

What can the buyer do when eviction is imminent

1. General Rule – buyer must not surrender the thing to someone threatening him with eviction.

2. Buyer to notify seller of threatened eviction In order to put up a defence against 3rd party.

3. Where seller cannot be found or intentionally avoids notification, buyer is relieved from any

further duty of Notification.

4. As soon as seller receives notification of the threatened eviction, he can take cession of

Buyer’s rights and intervene and assist the buyer and furnish the necessary proof of title.

5. Be joined as a party to the lawsuit

6. Do nothing

7. If seller does not help, Buyer to put up a strong defence

BUYER’S RIGHT OF RECOURSE AGAINST THE SELLER

1. TOTAL EVICTION

The buyer can cancel the Contract of sale. Claim repayment of total purchase price and Claim

of damages which can include the following, Fruits which had to be delivered to the true

Owner, legal costs of the law suit, costs for improvement and any increase in value of the thing

sold.

2. PARTIAL EVICTION

Where the eviction has left the buyer with so little a remainder of the thing sold that it cannot

be said that a reasonable man would have bought the same, the buyer may cancel the Contract,

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claim repayment of the purchase price and repayment of damages provided that he offers to

return the remains of the thing sold to the seller. Where party’s eviction is not of such a

substantial nature and the remains of the thing sold can be effectively used, the Buyer may

retain the remains and claim a pro rata repayment of the purchase price as well as damages

from the seller.

Where Buyer has no OR Limited Right of Recourse

a. Seller is only liable in terms of warranty where the reason/ cause of eviction already existed

at the time of conclusion of Contract or where it was caused after conclusion of Contract due

to seller’s fault. Even where the seller has excluded his liability for damages, Buyer may still

cancel the sale and reclaim the purchase price.

b. Seller will not be held liable where buyer knew that the seller was not the owner of the thing

at the time of conclusion of the Contract.

c. Where the seller was unsure at the time of conclusion of the Contract whether or not thing

belonged to him and has made this known to the buyer, the seller cannot be held liable.

d. Seller will not be held liable where buyer’s claim against seller has prescribed.

e. Where the eviction was caused by Vis major, buyer has no right of recourse

In the contract of sale, the seller undertakes to pass free and undisturbed possession of the thing

sold to the buyer i.e. vacuo possessio. If the buyer's vaccuo possesio is unreasonable and

unlawfully interfered with, he is protected by the implied warranty against eviction. This term

is implied by the law in a contract of sale whereby the seller undertakes that the buyer will not

b e disturbed in his use and enjoyment of the thing bought.

The warranty does not give protection against the unlawful acts of other people. Rather it

protects the buyer lawful eviction because of defective title. In Nunam v Meyer [1905] 22 SC

203 X sold three head of cattle to Y who upon being informed by Z that the cattle had been

stolen from him, handed them over to Z. Y then claimed the purchase price from X. Evidence

led proved that the cattle had indeed been stolen from Z. Held Y was entitled to succeed even

though he had handed the cattle voluntarily over to Z without any judicial process of eviction.

In similar circumstances to those in the Nunam case, the best course of action to take would be

for the buyer to inform the seller first that his possession is being threatened before voluntarily

surrendering the property. Otherwise he runs the risk of losing his right of recourse against the

seller should it later turn out that the third party's title is not incontestable [i.e. should it be

proved that the third party's title inferior to that of the seller]. In Nunam v Meyer if it had turned

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out that X's title was superior to that of Z, then Y having surrendered the cattle without seeking

protection from X first, would have lost both the cattle and the purchase price.

The implied warranty against eviction will however not apply in the following circumstances:

a] The warranty will not apply if the parties expressly agree that the seller will not be

responsible in the event of the buyer's eviction. But even in such cases, it is critical that

the seller act in good faith because if he is aware that a third party has a claim in the

merx and he does not disclose this to the buyer, the sale would be voidable at the buyer's

instance for fraudulent nondisclosure

Vlotman v Landsberg [1890] 7 SC 301.

b] Where the buyer is aware that a third party is the owner of the article, he has no right of

recourse against the seller in the event of eviction. By proceeding to buy the property,

the buyer voluntarily assumes the risk of eviction by the owner.

c] Where the cause of deprivation of possession arises after the sale and the seller is not at fault,

the warranty will not apply because that is considered to be risk which passes to the

buyer on conclusion of the contract.

In Rood's Trustees v Scott & De Villiers [1910] TS 46. The plaintiff sold a piece of land to the

defendant. Before transfer but after the sale a new law was passed under which portion of the

land was confiscated to the state. Held the loss fell on the buyer because risk had already passed

to him.

3.THE IMPLIED WARRANTY AGAINST LATENT DEFECTS

The seller has a duty to deliver the thing sold without any defects. For patent defects [i.e. those

easily identifiable] the rules relating to breach of contract by defective performance apply. The

buyer has an option to accept or reject the article. Voetstoots does not apply in latent defects

-only applies to patent defects

REMEDIES FOR LATENT DEFECTS

ACTIO EMPTI

Grounds for institution

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a. Warrant against latent defects

seller may give the buyer an express or tacit contractual warranty. where defects are present,

the buyer may institute the actio empti.

b. Warranty for presence of special qualities

a seller may give the buyer an express or tacit warranty that certain bad characteristics are

absent and that certain good characteristics are present. these warranties are found where a

thing is bought for a specific purpose. Where the seller then sells the thing to the buyer, he is

deemed to have given the buyer a tacit warranty that the thing is suited for that specific purpose.

eg if a bull is bought for breeding purposes and the seller is told this by the buyer, the buyer

will be able to act against the seller in terms of the actio empti where the bull is found to be

sterile at the time of the conclusion of the contract.

c. Seller conceals latent defect

the seller is obliged to disclose any latent defects that he knows about to the buyer. Where the

seller intentionally conceals these defects, a fraudulent misrepresentation is made to the buyer.

The buyer may claim cancellation of the contract and /or damages with the actio empti, where

the seller intended to mislead the buyer in order to persuade him to conclude the contract

The seller must have the intention of concealing the defect and to deceive the buyer before the

buyer can act with the actio empti. A voetstoots clause in a contract will not protect the seller

against liability where he knew of the defect at the time of the conclusion of the contract. this

is also fraudulent misrepresentation

d. dealer and manufacturer

where the seller acts as a dealer, he will be held liable for all the buyer’s damages (including

consequential damages) due to the latent defect the following are required before a dealer

(seller) will be held liable

1. the seller must act as a dealer and

2.he must have professed in public that he has expert knowledge of the thing sold. Where the

seller is a manufacturer, he will be liable for all buyer’s damages (including consequential

damages). The manufacturer will be liable without any declaration whatsoever that he has

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expert knowledge regarding the thing sold. negligence or ignorance of the defect is no defence

against liability.

In Young Provisions Stores [Pty] Ltd v Van Ryneveld 1963 CPD 87 it was held that a dealer in

foodstuffs is liable for damages suffered by a consumer of his products and even if he had no

means of finding out the defect. The case concerned canned food. Similarly in Odendaal v

Bethlehem Romery Bpk 1954 [3] SA 370) bought from B a dealer almost dealing exclusively

in the sale of stock feed, a quantity of fine bonemeal for purpose of cattle feed. The bonemeal

was, unknown to either O or B contaminated with anthrax germs. As a result of eating the meal

13 of O's cattle died. O sued for the recovery of the value of these cattle from B. Held O was

entitled to full compensation

What may be claimed with the actio empty

a) cancellation of the contract of sale only where the defect is of such a nature that it cannot be

expected of the buyer to retain the thing sold, and /or

b) damages

YOU CAN ONLY CLAIM DAMAGES USING ACTIO EMPTI AND NOT AEDILTION

REMEDIES

AEDILITIAN ACTIONS

ACTIO REDHIBITORIA AND ACTIO QUANTI MINORIS

The actions are available to the buyer where a latent defect is present in the thing sold and no

express or tacit contractual warranty was given by the seller. Cannot claim damages with these

actions

Actio redhibitoria and actio quanti minoris.

Grounds for institution

the Aedilitian actions can be instituted where

a) the thing sold has a latent defect

b) the seller was aware of the latent defect and fraudulently concealed such fact

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c) The seller expressly or tacitly guaranteed the presence of good characteristics or the absence

of bad characteristics

What must be claimed with actio redhibitoria

PURPOSE- to place both parties in the position they were in before conclusion of the contract.

Restitution has to take place. Action can only be instituted once. Only instituted where the

defect in the thing sold is of such a nature that restitution is justified. the test is whether the

thing can be used for the purpose it was bought for

What can be claimed with Actio Quanti Minoris

The buyer may claim a pro-rata reduction of the sale price. This can be instituted more than

once should more latent defects appear in future. The exact reduction which the buyer may

claim has to be calculated as follows: the courts determine the difference between the price

paid and the total value of the thing with latent defect at the time of the action. The buyer cannot

claim any reduction in price where the thing, in spite of the defect, is worth more than the price

paid for it.

When aedilitian actions may not be instituted

a) defect arose after conclusion of contract

b) defect not latent

c) voetstoots sale

d) latent defect repaired

e) waiver - the buyer may waive the actio empti or the Aedilitian action.

f) Prescription - the actio empti and Aedilitian actions prescribe if they’re not instituted within

3 years after the claim arose. Prescription starts running after the buyer has become aware of

the latent defect

In SA Oil & Fat Industries Ltd. Park Rhynie Whaling Co Ltd. [1916] AD 400 the plaintiff

bought a quantity of whale oil that was defective from the defendant. Before becoming aware

of the defect, the plaintiff mixed other oil and fatty acids with the oil bought from the defendant.

He could therefore not return the oil bought.

When the plaintiff finally became aware of the defect, he sought through the actio redhibitoria

to cancel the contract. It was Held that since the plaintiff could not tender restitution, his prayer

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for cancellation of the contract failed and only the actio quanti minoris [reduction of the

purchase price] was available as relief. However the above rule will not apply in the following

situations:

a] Where the goods have perished after delivery as a result of the latent defect making

restitution impossible.

b] Where the goods have been consumed in the course of normal use to which the seller

knew they would be applied and the buyer had no knowledge of the defect. In African

Organic Fertilizers & Associated Industries Ltd v Sieling [1949] [2] SA 131 S bought

a quantity of Karoo manure from A, informing him that it was to be used on land where

flowers, vegetables and seeds were being raised. The manure delivered contained salt

rendering it unfit for the purpose for which it was bought. S being unaware of this defect

used the bulk of the manure. He tendered return of the remainder and claimed

rescission. Held S was entitled to succeed.

The seller is however not responsible for latent defects in the following circumstances:

a] Where the seller expressly contracts out of liability by agreement with the buyer i.e.

voetstoots sales But contracting out of liability will not help the seller where he sells

voetstoots knowing that the merx is latently defective, Van Der Merwe v Culhane

[1952] [3] SA 42. Effectively the seller must not be silent about latent defects of which

he is aware. Where he does so, even a voetstoots clause will not avail him. Thus in

Hadley v Savory [1916] TPD 385. H bought a colt at a public auction of bloodstock

from S, the sale was voetstoots. To the knowledge of S the cold had previously run into

a wire and seriously injured his shoulder to the extent that he went lame and was unfit

for racing purposes. Of these facts nothing was said at the sale. Held, the colt was

latently defective and despite the purposed voetstoots clause, the buyer was entitled to

cancel the contract.

b] If the defect does not exist at the time of sale. In such cases the ordinary rules on passing

of risk will apply and the loss lies with the buyer. The onus is on the buyer to prove that

the defect existed at the time of the sale.

c] Where the buyer is aware of the defect at the time of sale or became aware of it

consequently and expressly or impliedly accepts the position. In the case the buyer

would be taken to have waived his rights Theron Africa [1893] 10 SC 246.

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d] Where the seller makes a dictum et promissum which is unfounded, the buyer can

invoke the aedilitian remedies against the seller. A dictum et promissum is a statement

made by the seller during the negotiations preceding the contract which bears upon the

quality or value of the thing sold and which can reasonably be constructed as intended

to be acted upon by the buyer.

e] Where there is wilful nondisclosure of a latent defect, the seller acts fraudulently. But

mere nondisclosure of a defect known to the seller does not necessarily amount to fraud

without evidence to show that the nondisclosure was calculated to induce the buyer not

to refrain from entering into the contract. Thus intention must be proved.

SPECIAL SALES

1. Sales by Description. This is a sale of unascertained goods in which the parties agree

that the item sold will be of a particular type. The sale contains an express warranty by

the seller that the goods will meet the description given.

2 Sale by Sample. This is a sale in which parties agree that the goods will be of the same

quality as the exhibited sample.

3. Free of Board [F O B]. This is a form of sale where it is the duty of the seller to place

the goods free on board on a ship named by the buyer. In this type of contract risk passes

to the buyer of shipment of the goods. Once the goods are on board, the seller is deemed

to have delivered them to the buyer.

4. Cost, Insurance and Freight [C. I. F.] Sales. With this type of export sale, the price is to

include cost, insurance and freight. The seller must ship the goods and within a

reasonable time he must tender the shipping document to the buyer i.e. the invoice, bill

of landing and the insurance policy.

5. Auction Sales. This is a sale by an agent [auctioneer] on behalf of the seller. The item

should be sold to the highest bona fide bidder. The sale is subject to "conditions of sale"

and the buyers are taken to have assented to these whether or not they read them

Hofmeyer & Son v Luyt 1921 CPD 837. Sales by auction can be with or without reserve.

An auction with reserve is one in which ordinary rules of offer and acceptance applies.

Bidders offer to buy at the reserved price or more and the auctioneer on behalf of the

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sell may accept an offer or reject the bid at his option. An auction without reserve is

one where the seller must allow the thing to be taken by the highest bona fide bidder.

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Chapter 19

THE CONTRACT OF INSURANCE

HISTORY AND SOURCES OF THE LAW OF INSURANCE

The Nature and Basics of the contract of Insurance

An insurance contract is a reciprocal contract between an insurer and an insured in terms of

which the insured undertakes to pay the insured an amount of money or its equivalent, in

exchange of payment of a monetary premium, should the risk borne by the insurer on behalf of

the insured, materialize by the happening of an event in which the insured has an interest.

An insurance contract serves to protect the formation, preservation and development of the

insured’s estate against risks. In practice one effects insurance by contributing to a fund to

which other persons who are exposed to the same risks, contribute as well. The risks that

endanger the formation, preservation and development of the insured’s estate are those

distributed amongst a group of people who are equally at risk.

DIFFERENT TYPES OF INSURANCE

1. Indemnity Insurance and non-indemnity Insurance

a. Indemnity

In indemnity insurance, the insurer undertakes to make good the damage which the insured

may suffer through the occurrence of an event insured against. The amount of damages claimed

is directly proportional to the loss suffered or the amount of the insurance where it is less than

the loss suffered. The amount of insurance which the insured cannot receive, cannot exceed

the amount of actual damages incurred. Where an insured insurers his car (worth USD15 000)

for USD 15 000, and damage caused to the car in an accident amounts to USD10 000 the

insured will never be able to claim more than the actual damages being USD10 000. If the

same car was insured for only $8 000, the insured’s claim would be for USD8 0000 or even

less. Examples of indemnity insurance are property insurance e.g. marine, fire, theft and motor

vehicle insurance.

b. Non indemnity insurance

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In the case of non-indemnity insurance, the loss suffered and the amount paid by the insurer

are not proportionate. The insurer undertakes to pay the insured or the beneficiary a fixed

sum or amount of money if the event insured against take’s place. Non-indemnity

insurance includes life and personal accident insurance e.g insurer A agrees with B that he

will pay $20 000 to B’s wife when B dies. B dies and his wife can claim the $20 000

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

agreed amount to be ensured.

3 practical differences exist between indemnity and non-indemnity insurance;

1. In the case of indemnity insurance the insurable interest (that which is insured) has

to exist at the time of loss or damage, but in the case of non-indemnity insurance it

must already exist at the time of the conclusion of the insurance contract.

2. The rules of contribution and subrogation only apply to indemnify insurance and

not to non-indemnity insurance.

3. The Insurer’s liability in the case of indemnity insurance is limited to the amount

of damages actually incurred, while this is not the case with non-indemnity

insurance.

2 Short term, long term and third party insurance

Short term defines short term policies e.g. liability policy, miscellaneous policy and defines

life policy, fund policy, sinking fund etc. 3rd party, is for claims against road accidents for

personal injuries caused by driving of motor vehicles.

3. Liability Insurance

It insurers one’s liabilities incurred due to contract delicit or other obligations. It is of the

same nature as indemnity insurance. The best known forms of liability insurance are

professional liability insurance, obtained by attorneys, auctions, engineers etc. e.g. the

Zimbabwean Law Society Compensation Fund.

4.Re-insurance

Where an insurer takes out insurance with another insurer to make good the claims which

the former had to pay out to the insured

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REQUIREMENTS FOR VALIDITY OF AN INSURANCE CONTRACT

The General requirements for the conclusion of any contract namely consensus, contractual

capacity, legality, physical possibility and formalities, also have to be met for the

conclusion of insurance contracts. However, for a valid nominate insurance contract,

consensus through a process of offer and acceptance must be reached on the required

essentialia.

Essentialia of the Insurance Contract

The essentialia of a contract are those characteristics of a particular contract which

distinguish it from other types of contracts. The following attach to the insurance Contract.

1. Insurable Interest

The insured must have an interest in the non-occurrence of the uncertain risk. The insured

must have a proprietary interest which he evidences to insure against certain risks. This means

that the interest must be of economic value to him. The continued existence of the interest

must offer an economical value or benefit or rather the loss or damage of the interest must

cause an economic loss.

In indemnity insurance the insured must at least have a financial interest in the non-occurrence

of the risk. There is also the point of view that the financial interest must have some legal

authority or foundation e.g. the interest must depend on a right in the object at risk such as a

proprietary right or a personal right. When an insured has the required financial interest he

will suffer damage on occurrence of the event and will therefore be entitled to compel the

insurer to honour his obligation to pay a sum of money. The time at which the interest must

exist is also clear if the above is kept in mind; the interest must exist at the moment the loss or

damage occurs. It is therefore not necessary for the interest to exist at the moment when the

contract is concluded.

With non-indemnity insurance a distinction must be drawn between insurance on the life of a

spouse on the one hand and the life of any other person on the other hand. In the first case an

unlimited interest is presumed. Where time life of another is insured the law requires an

insurable interest in the sense of financial or pecuniary interest. A creditor therefore has an

insurable interest in the life of his debtor. The time at which the existence of an insurable

interest is required in the case of non-indemnity insurance is the movement the contract is

concluded. Even though the interest might not exist at the moment the risk occurs the insured

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or the beneficiary is entitled to claim the amount payable in terms of the contract. (Macaura V

Northern Assurance Company)

2. The Risk

The uncertain event insured against is known as the risk. Description of the risk in the contract

is important, because the insurer must know precisely the nature of the risk and the insured the

extent of his cover. The parties always agree to insure against the occurrence of a specific (or

determinable) event. The insurer’s obligations are always coupled with some event which must

cause the result mentioned in the contract e.g. a fire which damages the insured’s house. The

description of the risk must include:

a) The object insured, e.g. a car or a person’s life.

b) The hazard insured against e.g. theft.

c) Circumstances affecting the risk e.g. limitation of the insurance to theft of a motor car

while it is parked in a specific place.

Only the specific (contracts) risks passed onto the insurer are therefore specified in the

contract. The parties must also agree that the risk passes from the insured to the insurer.

Risk must materialize from or due to an uncertain future event. Where the risk is certain,

the contract could be a wager or a gamble rather than an insurance contract. The uncertainty

in life insurance lies in the time of death, although death itself is certain.

The difference between insurance contracts and wagering contracts

As far as the event insured against is concerned, there is uncertainty on when and in the case

of indemnity insurance, also whether the event will occur. The element of uncertainty which

is associated with risk is the one aspect which a contract of insurance has in common with a

wagering contract or agreement. Both are contracts of chance, depending on an uncertain event

or contingency and both contain an element of risk. The differences between wagering and

insurance contracts are that;

a) A wagering contract is unenforceable in court.

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b) In wagering contracts, the parties choose an arbitrary event, on the occurrence of which

one party wins and the other loses. The parties thus create their interest in the event

themselves whereas the parties in an insurance contract have an insurable interest in the

non- occurrence of the event.

c) An insurance contract does not itself create the risk of loss.

d) The intention with which the parties conclude an insurance contract can be of the

greatest importance in distinguishing it from a wagering contract. The purpose of an

insurance contract is to protect the estate while that of a wager is to increase the estate.

CAUSATION

Causa proxima rule

Loss must be caused by peril insured against

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

held not to mean directly caused by.

Loss arising incidentally out of peril is also included

INVOLUNTARY ACTS

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

Suicide committed by insane person=insurer liable except if excluded

Drunk=insurer liable

NEGLIGENCE

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

negligence e.g. 3rd party insurance

Rouwkoop caterers v incorporated general insurance

An exclusion clause provided that policy did not ensure against “any loss or damage to

money other than in actual transit or contained in a locked safe situated in an office locked.

Defendant contended that there was an implied term that plantiff was to take reasonable

precautions to safe keep the keys of the safe

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

Held: negligence of the insured is not a bar.

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

risk

Company should have excluded if this was not covered

RECKLESSNESS

Nathan v ocean accident & guarantee corporation

Insured ignored a traffic officer’s order to stop his car

He was pursued by another officer sounding a siren

Collided with a stationary car and plunged into a bank

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

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

powered

He was therefore charged high premiums

Insurer entered into the contract with eyes wide open

Made a bed and should lie on it.

Can recklessness and negligence be treated similarly??

If the conduct is (dolus eventualis) insurer not liable

Nicolaisen v Permanente

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

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

Whether he committed suicide?

Therefore, liability excluded

The insurer managed to prove intention

And the court held that such intention included dolus eventualies

And therefore intentional

INTENTIONAL ACTS

Where he caused the event covered, he cannot claim

Beresford v Royal insurance

Insured shot himself in a taxi few minutes before policies valued at 50 000 pounds and

which had been in force for 10 years were due to expire because he could not pay the

premiums

His purpose was to make the proceeds available to his creditors

Assured cannot cause the event upon which the insurance money is payable

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Even if he burns his house, destroys his ship

There is an implied term in insurance excluding liability for intentional acts

INTENTIONAL MISCONDUCT

An offender in terms of the criminal law is not allowed to benefit from his criminal

conduct

Where he is executed for a capital offence, his estate can’t benefit

Murderer of assured cannot inherit by succession

PARITY V MARESCIA

A passenger in a vehicle paid a reward for being conveyed to carrier not authorised under

the act.

He knew that by such payment, the act of conveyance became an offence under that act.

He was injured and claimed compensation

Held: conscious participation in a crime precluded his covering.

Even civil wrongs included

DUTY TO AVERT RISK HAPPENING

- It is an implied duty to avert happening of risk

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

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

risk

- Such conduct may amount to fraud.

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

3. Premium

The insured undertakes to pay a premium. This is usually a sum of money, but may also consist

of something else. Although the actual payment of the premium is not a requirement for time

creation of the contract, an undertaking to pay is sufficient. Payment is usually a condition for

the policy to take effect. The premium is usually actuarially calculated by taking into account

the scope of the risk, the term for which insurance cover is provided as well as the extent of the

insurer’s possible liability in terms of the contract should the risk materialize. Premiums are

normally paid in advance, although in practice parties sometimes agree for payment in arrears.

The risk would normally pass to the insurer as soon as the insured pays his first premium to the

insurer.

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4. An undertaking by the insurer to pay a sum of money

In the case of non-indemnity insurance, the sum payable will be a predetermined amount.

Where for example, a person insures his life for $10 000, (the insured amount) the insurer will

have to pay that amount to the estate of the insured or the beneficiary.

In the case of indemnity insurance the insurer’s obligation is to pay a determinable sum of

money. The exact amount of the payment is determined after the occurrence of the event

insured against, by determining the extent of the damage. The value of the claim or the measure

of indemnity in respect of the loss of the risk-object is determined, not by its cost, but by its

value at the date and place of the loss. The insurer must be placed in the same financial position

he was in- but not a better financial position before the occurrence of the event insured against.

The sentimental value of the object is thus ignored and only the present value of the object is

considered irrespective of whether the object’s value had appreciated or depreciated since the

conclusion of the contract.

For example, if a house valued at $50 000 is insured against fire and at the time of its subsequent

destruction by fire it is worth $70 000, then the insured’s loss which he may recover from the

insurer is $70 000. Normally however a maximum value of compensation is stipulated in the

insurance contract. In such a case the insurer is liable only for the amount of the insured’s loss

or the maximum insured value, whichever is the lesser.

Where the object has only been damaged the insurer will be liable for the amount of partial

loss suffered. The extent of partial loss suffered is usually taken to be the cost of repairing the

risk object. The following principles which are applicable to indemnity insurance in relation

to the undertaking by the insurer to pay a sum of money must be noted;

(a) Valued and unvalued policies

In order to eliminate difficulties regarding proof of the value of the risk object, the parties

may agree at the time of concluding the contract on the value of the risk object. Such

policies are known as valued policies in contract to unvalued policies.

(b) The Insurer’s right to repair

An insurer often reserves the right in an insurance contract to have the damaged risk-object

repaired, instead of compensating the insured. If the claim has been made under the

contract, the insurer must choose, within a reasonable time after the occurrence of the event

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insured against, whether he wishes to repair the risk object rather than to compensate the

insured. Once he has elected to repair he cannot change his mind later on. He must then

have the risk object completely repaired within a reasonable time.

(c) The insurer’s right of subrogation

Where the insured has a claim against a 3rd party who has caused the damage to the risk

object, the insured may recover compensation only once. He is not allowed to make a profit

from the fact that he is insured. Accordingly once the insurer has compensated the insured,

the insurer has the right of “subrogation” that it is to say the insurer himself may enforce

the insured’s claim against the third party in the name of the insured.

(d) Insuring with several insurers

An insured has the right to insure the same risk object with as many insurers as he wishes.

In the event of a loss occurring, the insured may however, only recover the full amount of

his loss and no more. Thus where he is over-insured by double insurance, he must choose

whether to recover his total loss from one insurer or a pro-rata portion from each of the

insurers concerned. Where an insurer pays more than his pro-rata share of the amount

claimed, he has on the grounds, of the “principle of contribution” a right of recourse against

the other insurers of the same risk-object for a pro-rata contribution toward the

compensation paid to the insured.

(e) Over and under insurance

There is nothing to prevent an insured from insuring for a larger amount than as necessary

to secure full compensation in the event of loss of the insured risk- object. In the case of

indemnity insurance, however, time insured may recover no more than the total value of

his loss. Where an insured insures for an amount less than the actual value of the insured

object he is under-insured. Contracts of insurance often contain an “average clause” in

terms of which the insured is regarded as an insurer for the uninsured balance and

consequently must himself bear a proportion of his loss. For example if his car is valued at

$10 000, is insured for $6 000, and the car is damaged then according to whether the amount

of the damage is $10 000, $7 000 or $5 000, the insured will be able to recover only $6 000,

$4 200 or $3 000 respectively, in other words, as he insured for only six tenths of the value,

he can recover only 6/10 (six –tenths) of his loss. This aspect is of particular importance

with respect to insured objects of fluctuating value.

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(f) Excess Clauses

It may be agreed in an insurance contract that the insured may recover only a specified

proportion of his loss. In motor vehicle or liability insurance, so called excess clauses are

common. In terms of these clauses, the insured must bear a specific proportion of the loss

himself e.g. the first $200 of the loss.

The Duty to disclose

Due to the prospective insured’s intimate knowledge of all facts regarding the risk which

he wants to transfer to the insurer, a legal duty required him to disclose all relevant material

information within his actual or constructive knowledge, to the insurer. This enables the

insurer to decide whether he is prepared to accept the transfer of risk from the insured and

to reach consensus with the insured.

See mutual & Federal Insurance Co Ltd v Oudtshoom Municipality 1985(1) SA419 (A)

Anderson Shipping v Guardian National Insurance 1987 (3) SA 506

Qilingile v SA Mutual Life Assurance Society 1993(1) SA619(A).

Who bears the duty to disclose?

The duty to disclose rests primarily on the prospective insured, although Jourbet JA in the

Mutual and Federal Case (432E) went further and mentioned the possibility that an insurer

might also be subject to this duty. The insured must disclose all information which could

increase the risk. It could then reasonably be expected of the insurer to disclose to the insurer

all which could decrease or increase or even exclude the risk.

The insurer can be expected to disclose all information to the insured which is to the latter’s

benefit and could be used to the latter’s advantage.

When must the information be disclosed?

The information must be disclosed to the insurer (or the insured) to enable him to decide

whether he is prepared to conclude a contract of insurance with the insured (and vice versa

should the insurer’s duty to disclose the accepted in future). This makes it a pre-contractual

duty. This duty is created by operation of law and not due to a legal tie or legal obligation

created between the parties.

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It is possible to expand the duty contractually and to make it a continuous duty which has to be

complied with which the contract remains in force. The parties have to specifically agree in

the contract that any material information which is discovered after conclusion of the contract,

has to be disclosed.

An example: A failure by X to disclose to an insurance company that he is HIV positive, when

taking life insurance may lead to breach of contract once discovered upon tests being at the

instruction of the insurance company.

However in the case of life insurance, the duty to disclose is a once-off duty as these contracts

are normally of a continuous nature, unless the parties agree otherwise.

What must be disclosed?

The duty to disclose consists of both a positive and negative duty. The positive duty requires

time prospective insured to answer all questions put to him by the insurer, honestly and in good

faith. The negative duty requires the insured to disclose all other material information of which

he has knowledge or should have had constructive knowledge, even though it has not been

pertinently asked of him. If the insured gives false information, does not answer a question at

all or refrains from disclosing material information, he makes a misrepresentation, which

influences consensus and makes the contract voidable.

A number of case where decided with regards the duty of the insured to disclose information,

although no satisfactory solution was given to the problem. The problem concerns the question

as to which test has to be applied in order to determine whether or not information is material

and has to be disclosed.

In Mutual & Federal Insurance Co Ltd case (supra) the court decided that all information which

would, to the reasonable man appear to be material, had to be disclosed. The court rejected the

idea that the reasonable insured or the reasonable insurer should be used as a criterion.

However in the Qilingile case (supra) the courts reformulated this test and stated that those

facts which, in the view of the reasonable man are necessary for an insurer to enable him to

determine whether or not to accept the specific risk must be disclosed. The test of the

reasonable man as applied in the Mutual & Federal case was therefore expanded.

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

by the prospective insured. (De Waal v Metropolitan hewens Bpk 1994 (1) SA 818 (0).

Facts which need not to be disclosed

The insured does not have to disclose every single fact within his knowledge. Due to their

nature certain facts do not need to be disclosed e.g

(a) Facts of which the insurer was or should have been aware. These in particular include facts

which are general knowledge or obvious.

(b) Facts in respect of which the insurer has waived his right of disclosure.

(c) Facts which do reduce and do not increase the risk.

(d) Facts covered by a warranty in the insurance contract itself.

Consequences of non –compliance with duty to disclose

Non compliance with a pre-contractual duty to disclose amounts to misrepresentation. The

misrepresentation can be made by positive actions (such as the disclosure of false information)

or by commission (where the insured does not reply to a question or withholds material

information. The misrepresentation can be intentional negligent or innocent.

Misrepresentation influences consensus, as a result of which the contract is voidable at the

option of the party prejudiced by the misrepresentation. This will be effect irrespective of

whether the misrepresentation is made innocently or with a degree of fault. The contract

remains valid and enforceable until the prejudiced party exercises has election and decides to

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

misrepresentation is made intentionally or negligently, the prejudiced party can also institute

an additional action for damage in delict.

See De Waal No v Metropolitan hewens Bpk 1994 (1) SA 8/8 (0)

Where the misrepresentation made negligently or intentionally the prejudiced party can also

institute an additional claim for delictual damages. It is however clear that he cannot claim

contractual damages where the contract is void ab initio.

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CHAPTER 20

Contract of employment

Definition of Employment Contract

It is a reciprocal agreement in terms of which the employee makes available his services for a

determined period and usually for remuneration under the authority of the employer.

EMPLOYER

Is a person or body who exercises authority over an employee in terms of an employment contract where

the employee has made available his services to the employer for a determined period and usually for

remuneration

EMPLOYEE

Is a person who in terms of the employment contract makes available to the employer his

services usually for remuneration and for a determined period under the authority of the

employer

ELEMENTS OF EMPLOYMENT CONTRACT

1.Voluntary agreement between the parties

Forced labour and slavery are prohibited. A clear and unequivocal offer and acceptance must

exist

2.Services are rendered in respect of a subordinate relationship

This means that there is control and supervision when the services are rendered. The employer

also provides guidance during the rendering of the services

3. Remuneration of employee

In the absence of agreement, remuneration is payable after services have been rendered.

Remuneration is usually agreed in the contract. If not agreed then a reasonable remuneration is

paid to the employee

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EMPLOYMENT CONTRACT DISTINGUISHED FROM RELATED CONTRACTS

It is distinguished from mandate, agency, independent contracting and so forth. It is important

to distinguish the employment contract from other legal contracts for purposes of

a) determining whether the labour relations Act applies or not

b) determining the vicarious liability of the employer

c) determining whether wage regulating measures are applicable to certain employees or not.

CRITERIA FOR DISTINGUISHING BETWEEN EMPLOYMENT CONTRACT AND

OTHER RELATED CONTRACTS

1.ORGANISATIONAL TEST

The test is whether the person concerned was part of the organisational structure of business or

company and whether his functions formed an integral part of the business

2.SUPERVISION AND CONTROL TEST

It is the essence of a contract of a master and servant that the servant should submit to the

direction of his employer and obey his employer’s instructions not only in the things he has to

do but as to the time and manner in which he has to do them.

3.DOMINANT IMPRESSION TEST, MULTIPLE TEST OR COMPOSITE TEST

This is the test favoured by the courts. Under this test, one looks at the various factors that

traditionally revealed a contract of employment viz those showing a contract for the

independent contractor, weigh up these multiple factors to come with the dominant impression,

namely the person is an independent contractor or employee

SOUTHAMPTON ASSURANCE COMPANY V MUTUMA 1990 (1) ZLR 12

The employer had dismissed the employees without an approval of the minister arguing that

they were contractors. The court weighed up factors which they believed were part of a contract

of employment eg

1.were given list of customers

2.provided office space

3.were members of the company’s medical aid scheme

4.were not allowed to work for another insurance company

5.they worked under a hierarchy of managers on the other hand, factors that demonstrated they

were independent contractors

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1. they were described as independent contractors

2.had flexible working hours

3.paid by commission

The court ruled that the dominant impression test showed that they were independent

contractors. The decision was criticised.

IN CHIWORESE V RIXI TAXI SERVICES

A taxi driver had flexible working hours, was paid by commission, was described as an

independent contractor and the court ruled that he was an employee.

DUTIES OF THE EMPLOYER

Duties of the employer are derived from:

Common law

Constitution

Labour relations Act

International labour treaties

Employment contract

1. CONSTITUTION

a. Refrain from forced labour or slavery sec 14

b. Refrain from inhuman and degrading treatment of employees sec 15. A penalty like

whipping would be unlawful

c. Adi alterum partem rule sec 18

d. Refrain from unlawful discrimination sec 19&23

e. Not to violate employee’s freedom of association, assembly, movement and expression

2 DUTIES UNDER THE ACT

a. duty to respect employee’s entitlement to membership of trade union

b. duty to refrain from forced labour

c. duty to refrain from unlawful discrimination grounds of discrimination:

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

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d. Duty to adhere to fundamental fair labour standards

e. Duty to adhere to prescribed maximum working conditions. Maximum of 8 hours a day and

40 hours a week

f. Duty to provide safe and healthy working conditions. Worker also has to exercise due care.

Workers in inherently dangerous environments are assumed at common law as voluntarily

assumed risk of reasonably foreseen dangers. Employer not liable if he took reasonable steps

g. Duty to pay remuneration

h. Duty not to commit unfair labour practices

i. Duty not to commit sexual harassment

j. Duty to grant sick leave

Sick leave is 90 days per year on full pay. Additional 90 days on half salary after providing a

certificate from the doctor

K. Duty to provide vacation leave 30 days a year

L. Duty to provide special leave 12 days per year

m. Maternity leave and benefits 90 days

VICARIOUS LIABILITY OF THE EMPLOYER

The general rule is that the employer is liable for any delictual conduct committed by his

employee during the course and scope of his employment

REQUIREMENTS FOR VICARIOUS LIABILITY

1. Existence of employment contract

2. Commission of a wrongful act

3. Employment must have acted in the course and scope of his employment.

RATIONALE BEHIND VICARIOUS LIABILITY

employers are held liable not because of any morally irreprehensible conduct on their part but

for a number of reasons including that:

1.The employer operates his business through his employees and makes profits.

2.they’re the ones who have created the risk that has resulted in the harm to innocent third

parties.

3.employers are in a much better position to compensate the third parties than the employees

4.The employer, which is often a sizeable enterprise rather than a single individual, can far

better absorb losses of this description by taking out insurance and by way of distribution of

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costs to customers by increasing the price of prodicts or services (i.e., the employer can afford

insurance whereas the employee often cannot).

OWN BENEFIT

If the employee does something which is entirely for his own benefit and which does not form

part of his duties as an employee in that business, the employer will not be held liable.

For example, if D employs a person as a worker on a car assembly line and during work hours

he steals from another employee or assaults him, the employer will not be vicariously liable.

The test for whether the employee is acting within the scope of his or her employment is not

whether the employee is acting within the scope of his or her employment at the time but

whether his/her act or omissions constituted negligent performance of the work entrusted to

him or her. This is highlighted in the case of Nott v ZANU (PF) (1984).

In the present case Robert Moyo’s main duty was to deliver goods with a van to various

customers in Harare and then to return the vehicle to his place of work in Graniteside. Although

Robert drove to Mabvuku, 25 km away from his place of work and spent two hours, Nelion

Dube is still liable vicariously for the accident caused by his employee. The facts of this case

are at par with those in the Zimbabwean case of National Social Security Authority v

Dobropoulos & Sons (Private) Limited (2002) where the Supreme Court held the employer to

be liable for the delicts committed by the employees.

There are similarities between the facts given and this case. Both the drivers were employed to

effect deliveries. Both were in the process of returning their respective vehicles to the

employer.s premises when they were involved in collisions. Both deviated from their routes.

In the National Social Security case the accident occurred some five and half to six hours late

but nonetheless the court found the employer liable. It should be noted that the given facts bear

very striking resemblance to the facts of the National Social Security Authority (supra) and

Feldman (Pvt) Ltd v Mall (1945). In both cases the court held the employer vicariously liable.

In Hendricks v Cutting (1947), the employee was a lorry driver. While he was doing his work

he stopped at a filling station for fuel. He lit a cigarette, causing a fire in which the pump

attendant was injured and the employer was held liable. And in Minister of Justice v Khoza

(1966) two police constables were going about their work. They were, inter alia, guarding

prisoners, one of the constables aimed a pistol at the other in jest, the pistol went off and the

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second constable was injured. The employer was held liable. Sometimes, considerations of

social justice have led courts to adopt the approach that the degree of deviation from the

master’s instructions has to be to a major extent before they will decide that the servant was

not acting in the course of his employment. For example, where the employee is partially

promoting the interests of the employer and partially his own, the employer will also be liable.

In Feldman v Mall (1945) the employee had to deliver goods and return immediately to his

place of work. On the way back he deviated from the route to partake of a drink with his friends.

Later on his way back to his place of work, he knocked down and killed someone. The court

decided that he had left his work only partially to promote his interests. He was, however, still

promoting the interests of the employer because he retained control of the vehicle and took it

back to work later. The employer was liable.

FAWCETT SECURITY OPERATIONS V ROSE

The court held that the employer of a security guard who had stolen goods entrusted to him to

guard was not liable because the guard had acted outside his mandate. This decision was

criticised greatly.

Criticism

Employers are held liable not because of any morally irreprehensible conduct on their part but

for a number of reasons including that they’re the ones who have created the risk that has

resulted in the harm to innocent third parties.

Employers are in a much better position to compensate the third parties than the employees.

The scope of employment may include acts done after hours or outside the mandate instructed

by the employer

ACTS BENEFITING EMPLOYER

If the employee is doing something which is neither part of his employment duties nor

reasonably incidental thereto.

Thus, in one case a person employed as a baker had an accident whilst driving the van of the

employer in order to deliver some confectionery.

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As it is not part of the employee’s duties to drive the delivery truck, the employer is not held

liable, even though the employee is attempting to benefit the employer’s business.

INCIDENTAL ACTS

The employer may still be liable if, although the thing done by his employee is not directly part

of his duties it is reasonably incidental thereto.

Thus, in one case it was held that the cooking of food on the roadside was reasonably incidental

to the duties of the employees as they were long distance wagon drivers and it was to be

expected that they would stop and cook their own food along the way.

DEVIATION

If the employee, whilst about his employer’s business, temporarily diverts from that business

to do something for his own purposes, the courts will ask the question: was the deviation of

such a degree in terms of time and distance that it cannot reasonably be said that he was still

exercising the functions for which he was employed?

D instructed his delivery driver to deliver certain items and then to return the delivery van to

his premises.

If, having done his delivery rounds the driver drives to his own home to pick up some of his

personal possessions before returning the van to D and he drives negligently and has an

accident either on the way to his home or on his way from his home to D’s premises, the

question is whether D will be vicariously liable for the harm caused, and this will depend upon

the extent of the deviation.

DOES PROHIBITED ACT

Where employee is in the course of employment, but whilst performing his duties, he does

something that he was expressly instructed the not to do. For instance, D runs a haulage

company that transports goods and D employs a driver to drive his lorry or a certain route.

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D has given his driver strict instructions never to pick up hitchhikers whilst driving his lorry.

What if the driver disobeys this express instruction and picks up an unauthorised passenger and

the, due to his negligence crashes the lorry causing injuries to the passenger?

D would not be held vicariously liable for the passenger’s injuries because the courts would

hold that the employee’s scope of employment was circumscribed by the instruction and, whilst

he was in the course of employment in driving the lorry, it was not part of his employment to

carry passengers (i.e. he was employed to carry goods not passengers).

BITI V MINISTER OF STATE SECURITY

Involved a driver who was not actively on duty, but who was on call and required to look after

a company vehicle overnight as well as to collect some employees in the morning. On the

occasion in question, the worker, possibly drunk, rammed into another car causing serious

injury to the driver of that car

It was held that the employer by entrusting a motor vehicle to a relatively low paid employee

overnight had placed an enormous temptation in the driver’s way.

DUTIES OF THE EMPLOYEE

To provide service

Duty of competence and efficiency

Duty of subordination

Duty of good faith

UNFAIR DISMISSAL

Dismissal must be substantively and procedurally fair. Any dismissal that is not procedurally

and substantively fair is unfair. Substantive fairness means there must be a reason for dismissal.

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Termination must be a sanction of last resort. Procedural fairness requires that all procedures

have to be complied with in terms of the Act, code or any other regulations.

TERMINATION OF CONTRACT OF EMPLOYMENT

1. By agreement through:

a. Effluxion of time

b. Notice of termination

2. Impossibility of performance, death of employer or employee, insolvency of the employer.

3. Cancellation of employment because of misconduct

4. Retrenchment of employees

Contract cases

BLOOM v. THE AMERICAN SWISS WATCH COMPANY

Innes C.J. On 19th March 1913, a robbery was perpetrated at the Cape Town premises of the

defendant company and jewellery to the value of $5 00000 was forcibly removed. In the press

of the following day appeared a notice in these terms: 'Mr. J. Hirchsohn of the American Swiss

Watch Company called at the Argus office this afternoon and stated that he was prepared to

pay to any person a reward of $500 for information to be given to the C.I.D. which would lead

to the arrest of the thieves and the recovery of the diamonds, jewellery, etc., stolen from the

premises on the 19th instant. If the information leads to the recovery of a portion only of the

property, the reward will be paid proportionately'. Information reached the police authorities

from various sources; the culprits were arrested, and the bulk of the property was recovered.

Thereupon proceedings were commenced by different persons claiming the reward, The

actions were heard together, and the trail Judge came to the conclusion that it was the

information furnished by the plaintiff which led in due course to the arrest of the thieves and

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the recovery of the goods. But he also found as a fact that the plaintiff when he communicated

his information to the police was unaware that a reward had been offered; and upon that ground

he entered judgement for the defendant. The matter is now before us on appeal from that

decision.

SPENCER AND OTHERS v. HARDING AND OTHERS

The defendant through their agents sent out a circular to the plaintiff, and to other persons in

the wholesale trade, as follows:

"We are instructed to offer to the wholesale trade for sale by tender the stock in trade of Messrs.

G. Eilbeck & Co., of No. 1 Milk Street, amounting as per stockbook to $2 50313 and which

will be sold at a discount in one lot. Payment to be made in cash. The stock may be viewed on

the premises, No. 1, Milk Street, up to Thursday, the 20th instant, on which day at 12 o'clock at

noon precisely, the tenders will be received and opened at our offices. Should you tender and

not attend the sale, please address to us sealed and enclosed, "Tender for Eilbeck's stock"

Stockbook may be had at our office on Tuesday morning.

The plaintiff contended that the circular was an offer to sell the stock to the highest tenderer

for cash. They had submitted the highest tender, but the defendants declined to accept it and to

sell the goods to them. Spencer v Harding Law Rep. 5 C. P. 561

The defendants advertised a sale by tender of the stock in trade belonging Eilbeck & co. The

advertisement specified where the goods could be viewed, the time of opening for tenders and

that the goods must be paid for in cash. No reserve was stated. The claimant submitted the

highest tender but the defendant refused to sell to him.

Held:

Unless the advertisement specifies that the highest tender would be accepted there was no

obligation to sell to the person submitting the highest tender. The advert amounted to an

invitation to treat, the tender was an offer, the defendant could choose whether to accept the

offer or not.

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PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v. BOOTS CASH CHEMISTS

[SOUTHERN] LTD.

At their Edgware branch, Boots displayed for sale a number of drugs, or substances containing

them, the sale of which was prohibited under the Pharmacy and Poisons Act, 1933, except

under the supervision of a registered pharmacist. The shop was a 'selfservice' shop, the

customers selecting the articles they wanted and placing them in a wire basket provided before

paying at the cash desk at the exit. A registered pharmacist was on duty near the cash desk to

prevent the removal of a drug from the shop by a customer if he thought fit. The court was

asked to decide whether Boots had contravened the Act by selling a listed poison otherwise

than under the supervision of a registered pharmacist.

In the court of first instance, Lord Goddard C.J. held that the sale took place when the cashier

accepted payment and that it was under proper supervision. The Pharmaceutical Society

appealed and it was held that the customer is the one who makes an offer not the pharmacist.so

the company was not guilty.

CARLILL v. CARBOLIC SMOKE BALL CO.

The defendants, who were the proprietors and vendors of a medical preparation called 'The

Carbolic Smoke Ball', inserted in the Pall Mall Gazette of 13th November, 1891, and in other

newspapers, the following advertisements:

$100 reward will be paid by the Carbolic Smoke Ball Company to any person who contract the

increasing epidemic influenza, colds or any disease caused by taking cold, after having used

the ball three times daily for two weeks according to the printed directions supplied with each

ball $1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the

matter.

During the last epidemic of influenza many thousand carbolic smoke balls were sold as

preventives against his disease, and in no ascertained case was the disease contracted by those

using the carbolic smoke ball.

One carbolic smoke ball will last a family several months, making it the cheapest remedy in

the world at the price, $1, post free. The ball can be refilled at a cost of 5ocents. Address,

Carbolic Smoke Ball Company, 27 Princes Street, Hanover Square, London.

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CASES

LEE v. AMERICAN SWISS WATCH CO.

This was an application for leave to appeal in forma pauperis from the decision of the Cape

Provincial Division referred to in Bloom v American Swiss Watch Co., 1915 A.D. 100 [Case

No. 3 above]. The applicant had given information to the police after the information given by

Bloom. The trial judge had held that, as Bloom's information was the first applicants were not

entitled to the reward.

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

The defendant, in Cardiff, posted a letter on the 1st October 1879, to the plaintiff, in New York,

offering to sell 1,000 boxes of tinplates. The offer was accepted by the plaintiffs by telegram

on 11th October. Meanwhile, on the 8th October, the defendants posted a letter to the plaintiff

withdrawing their offer; but this letter only reached the plaintiffs on the 20th October.

HYDE v. WRENCH

The defendant offered to sell his farm to the plaintiff for $1, 000. The plaintiff immediately

made a counteroffer of $950. After considering the matter, the defendant advised the plaintiff

that the counteroffer was not acceptable. The plaintiff thereupon purported to accept the

original offer to sell at $1,000. The defendant refused to sell. The defendant was taken to court

where the court confirmed that by making a counter offer, he had rejected the offer of $1000.

NO BREACH OF CONTRACT

DUTIES OF EMPLOYER

VICARIOUS LIABILITY

CRITERIA DISTINGUISHING EMPLOYMENT CONTRACT FROM OTHER

CONTRACTS

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DADOO LTD VS KRUGERSDOORP

ULTRA VIRES RULE JUSTIFICATION

DOCTRINE OF CONSTRUCTIVE NOTICE

TURQUAND RULE