BUSINESS LAW NOTES CHAPTER 1

1.0 Introduction

Law comprises a set of rules that regulate human behavior. These rules are also called norms from latin ‘norma’ a yardstick or rule. In general norms include moral codes, laws of ettiqutte fashion rules for games and sport.

Law refers to rules and regulations that govern human conduct or other societal relations and are enforceable by the state. It is the quality of enforceability by the state that distinguishes law from other rules.

What distinguishes a legal rule from any other rule is that a legal rule is one that is recognized as law and is enforceable by the state.

The relationship between law and morality

Law is law, regardless of its moral content. However most legal rules are derived from morality. This means that in such instances the law is used to enforce morality. Law makers seeking to enact new laws to regulate human conduct usually convert into law their deeply held moral convictions. Morality is the bedrock of law but it is not law.

The relationship between law and justice

Law is law regardless of whether it is just or unjust. Most legal rules are designed to achieve the ends of justice. As with morality, law makers seeking to enact laws to regulate human conduct usually justify their enactment on the basis of justice.

What is a legal system?

A legal system is the sum total of the law of a given society and includes the way it is made, how it is enforced and the institutions involved in its making and enforcement.

The Purpose and function of law

Preservation of peace and order

One of the important functions of law is to maintain peace and order in the community. Man must live in society if he is to achieve his full development. Society however, cannot exist without law, for without rules of conduct there cannot be order, and without order there cannot be peace and progress.

The preservation of peace and order must be sought with due regard to justice and respect for fundamental human rights.

Justice

Law must serve the ends of justice and this function is accepted by all legal systems.

To enforce morality

This purpose of the law is separate from that of promoting justice in one respect: justice is merely one component of morality. There are other components of morality that the concept of jusice does not embrace.

DIVISIONS OF THE LAW

Criminal law

A crime is a wrong punishable by the state and the main objective of the criminal law is

punishment of the offenders.

Although a crime is a wrong against an individual, it is considered a wrong against the state

and it has a prerogative of prosecuting.

Every legal system decides which wrongs against individual are to be regarded as wrongs

against the state that is punishable by the state. It is clear that wrong becomes a crime

solely because of the decision by the legal system that it be regarded as such that is why a

crime in one society may not be a crime in another.

A wrong may be both a crime and a civil wrong whereas virtually all crimes are civil wrongs

the reverse is not the case.

Civil law

A civil wrong is a wrong against another person and the main aspect of civil law is to

compensate the victim for the term suffered. Most civil wrongs are not crimes. Example of

civil wrongs includes breach of contract, delicts defamation, assembles and trespasses. The

prerogative of the state to pursue a criminal prosecution does not affect the civil remedies

available to a person who has been wrongful where the wrong is both a crime and a civil

wrong; it is permissible to institute both proceedings t the same time or one after another.

In a civil cases the liability of the other party need only be proved on a balance of

probabilities i.e. just above 50%. This means that people who may not be proved guilty

beyond a reasonable doubt may still b found humble on a balance of probabilities.

Accordingly, the fact that a person may be found guilty in the criminal government cannot

itself be a basis for not pursuing civil action. However, it must be clear that a person found

guilty belong a reasonable doubt is clearly have on a balance of probabilities.

The distinction between civil and criminal law is stated and by slapper and Kelly as:

Civil law is a form of private law and matches the relationship between individual citizens. It

is the legal mechanism through which individuals can assert claims against others and have

those rights adjucated and enforced. The purpose of civil law is to settle disputes between

individuals and to provide remedies; it is not concerned with punishments as such. The role

of the state in relation to civil law is to establish the general framework of legal rules and to

provide the legal institutions to operate those rights, but the activation of the civil law is

strictly a matter for the individual concerned. Contract, tort and property law are

generally aspects of civil law.

Criminal law, on the other hand is an aspect of public law and related to conduct which the

state considers with disapproval and which it seeks to control and or involves the

enforcement of particular forms of behavior and the state as the representative of society

acts positively to ensure compliance in criminal law, a prosecutor prosecutes a defendant

(the accused). In civil law, a claimant sues (brings a claim against) a defendant.

Public law

That law in which the state is a party to a relationship or the dispute. The state has direct

matters over which it is involved in the day to day life of citizens. Public law covers

constitutional law, criminal law, law of taxation and administrative law. Here the state is

involved in its capacity as a sovereign power.

Private law

Private law regulates the rights and duties of persons among themselves. Private law covers

the law of property, of obligations (contract and delict) of persons. The state may be

regulated by private law where it is involved not as a sovereign power but as an ordinary

person. Such as where it enters into a contract to purchase goods and services.

Substantive law

Substantive law deals with specific legal rights and duties of person such as the nature of

the rights and duties, how these are constituted, how they are extinguished and their legal

effect.

Procedural law

Procedural law is composed of rules that govern the enforcement of rights that is the steps

which should be taken to impose those rights. It is sometimes described as adjectival law

and includes the law of criminal procedure, civil procedure and the law of evidence.

National law

National law refers to the body of rules peculiar to a particular country or state.

International law

It refers to rules that are binding on states in their relations with each other. It is important

to emphasize that the primary focus of international law is to regulate relations among

states, not create rights for individual citizens. However, states may agree to create

individual rights for citizens and when this happens national law may be involved in the

enforcement of those rights. An individual citizen has no right of audience before the

international court of justice (ICJ).

In Zimbabwe, a rule of International law emanating from a treaty which has been ratified by Zimbabwe does not create legal rights for citizens under national law unless it has been incorporated into an Act of Parliament

Government gazettes

The government gazette of Zimbabwe is a newspaper publication describing the laws and government decisions. It is the official medium within which the government announces the passing of legislation and it is through gazettes that amendments to legislation are made known to the public.

The government’s decisions are published in these gazettes decisions such as the:

a) Issuance and invitations of state tenders

b) Notices of appointments of personnel to public offices

c) Changes of name or notarial deeds are also published through government gazettes

d) Title deeds, deeds of transfer are also made public in this method

e) Licenses issued and licenses withdrawn and liquidation of companies

f) Advertisements of government publications on sale

g) Auction and public property

h) Notice to creditors and debtors

i) Statutory instruments are also published in or alongside government gazettes proclamations, which in effect. Presidential decrees are made known to the public through gazettes.

In Zimbabwe, government gazettes are published by government printers. Gazettes are published in volumes with a volume number and year of publication.

Codes

The only code in Zimbabwe is the criminal law codification and reform act. This act consolidates all the criminal law and its aspects such as defenses and requirements for criminal liability in Zimbabwe. This codes outs the application of Roman Dutch Criminal Law in certain respects where it states so. The constitutionality of this code is yet to be tested as a majority feel that it defies the scope and import of section 82 of the constitution. This section states that the Roman Dutch Criminal Law shall only apply in Zimbabwe. But, section 3 of this code states that it shall not apply. Unless there is an ammendment to section 82 of the constitution there will always be disputes as to the constitutionality of the code. However, the code is currently in Zimbabwe since June 22 2005

CHAPTER 2 SOURCES OF LAW

Legislation

Legislation refers to the law validly enacted by the legislative authority of Zimbabwe and assented by the president of Zimbabwe. In Zimbabwe the legislative authority of Zimbabwe vests in the president and parliament of Zimbabwe.

The legislature of Zimbabwe can confer powers on any authority to create binding laws. Currently the legislature of Zimbabwe of Zimbabwe is a bicameral system consisting of a lower house (parliament) and an upper house (senate). Legislation brought through parliament has to be scrutinized by senate before it goes for assent to the executive president. The senate was recently ushered in through constitutional amendment 17 of 2005

It is rules reported to as statutory law covers those rules of law made directly by the

legislature. Each state has an organ responsible for law making and this is what is referred to

as the legislature. The legislative authorities of the state propagate law in various statutory

forms such as Acts of parliament, presidential decrees and ministerial; regulations. In

Zimbabwe the legislative authority is defined in the constitution as:

The legislative authority of Zimbabwe shall vest in the legislative which shall consist of the

president and parliament legislation by parliament is embodied in a specialized legal

document called an Act of Parliament.

It is only through these acts that parliament can make law. Parliament is entitled to delegate

its law making powers to the president, his/her ministers , local authorities and other state

institutions when these authorities exercise this delegated power, they create what is called

delegated legislation (subsidiary legislation) that is embodies in specialised legal documents

called statutory instruments. Accordingly there are two forms of legislation in Zimbabwe:

Acts of Parliament and statutory instruments.

The method of passing legislation is entrenched in section 511 of the constitution. All legislation is styled acts of parliament or statutes. Other authorities such as the president, acting unilaterally and ministers can pass legislation known as statutory instruments or subsidiary legislation. It consists of the following

Regulations made a minister for purposes specified in the Enabling Act of Parliament

Bye laws created by specified local authorities such as urban or rural councils acting under powers given to them by the relevant acts of parliament.

Proclamations issued by the president for purposes such as dissolving parliament.

Rules of the superior courts to facilitate procedure and their operations

Regulations made by the president under the Presidential Powers Temporary Measures Act.

A statutory instrument has the same legal status as an Act of Parliament. Except that

it must be consistent with the relevant Act of Parliament delegating the authority to

make that statutory instrument. When it is consistent with the relevant Act, it is said

to be intra vires. The relevant Act is called the Parent Act or the enabling Act. A

statutory instrument that is inconsistent with the enabling Act is said to be ultra vires

for that reason void. For a statutory instrument to be intra vires, it must meet two

requirements 1st it must be within the powers of the delegated authority. 2nd it must

not be grossly unreasonable.

Under Zimbabwean law, there is one piece of legislation that is supreme and

overrides all other laws the contrary. This is the constitution of Zimbabwe. The

constitution itself is an Act of Parliament but it is superior to all other Acts of

Parliament. Section 3 of the constitution says that this constitution shall be the

supreme law of Zimbabwe and any law which is inconsistent until it shall be void to

the extent of the inconsistency. Accordingly even an Act of Parliament that has been

duly passed and signed into law by the president is void if it is contrary to the

constitution.

Customary law

It is generally unwritten. This refers to the fixed customs and practices of tribes of Zimbabwe

which were in practice since time immemorial. The customs must be certain, reasonable

and must have attained recognition of formal law. The constitution entrenches the

recognition of African customary law

These are habits or practices observed by individuals in a society i.e. an unwritten code of

behavior. Customary law does not consist of written code of behavior. Customary does not

consist of written rules but develops from the habits of the community and is carried down

from generation to generation. In van Breda vs Jacobs 1921 AD, a local custom amongst

fisherman that once they have set their lines on a beach where no boats are permanently

stationed, for the purpose of catching a shoal of fish seen moving along the coast, no other

fisherman are entitled to set lines within a reasonable distance in front of the lines already

set, was held to be duly established by the evidence as a valid custom. It appears from this

judgement that the following requirements must be met before a customary rule will be

recognized as a legal rule:

a) It must be reasonable

b) It must have existed for a long time

c) It must be generally recognized and observed by the community

d) The contents of the customary rule must be certain and clear.

Customary law also called trade usage also plays an important role in the business and

commercial world. It is often alleged that trade usage exists within a certain trade or

business and that the parties to a contract are bound to it. The same requirements as for

those proving a rule of customary law apply.

Judicial Precedent/ Case Law

Precedent refers to past decisions of superior courts. Precedents establish the legal position of cases tried in the courts to establish the reasoning for decisions made by the judges in each particular case. Conversely, precedents therefore guide the courts in making future decisions in similar cases brought before them.

The maxim ‘stare decis et non queta movere’ best sums up the use of case law in Zimbabwe.

This maxim means to stand by old decisions and do not disturb settled points. Supreme

court decisions in Zimbabwe are binding on all inferior courts. High court ruling also binds

the lower courts such as the magistrates courts. The judgements of superior courts are one

of the most important sources of law. Theoretically the function of a judge is to state,

interpret and apply the existing law but not to make new law nevertheless, the effect of

judicial decision which gives a new interpretation to a statutory provision is in m any cases

to create law, and law so created is termed judge made law. Because a later court does not

depart highly from the decisions of an earlier court, this judge made law becomes an

established legal rule.

The doctrine of stare decisis

The words store decisis mean the decision stands. A ruling concerning the legal position

applicable in a particular set of circumstances becomes the law, when a court gives a

decision, the parties to the dispute concerned will be bound by the decision.

Ratio decidendi

The most important part of a judgement is what is called the reason for the decision and it is

the ratio decidendi of a case which is binding which is the subject of the doctrine stare

decisis. When it is said that a decision is binding, this does not mean that every sentence

uttered by the judge in deciding the case must be considered as imposing a rule of law.

The 1st step is to determine the material facts on which the judge based the decision. Once

this is done the ratio decidendi is the conclusion reached by the judge based on these

material facts and by excluding the material ones. The ratio decidendi is the principle of law

upon which the decision is based.

Obiter dictum

In a judgement it is common for a judge to make statement of law in passing which do not

form part of the reason for the decision. A statement of such a nature is called obiter

dictum. The distinction between the ratio decidendi and obiter dictum is central to the

operation of the common low. If the other requirements are satisfied, it is only the ratio

decidendi, that is binding on a future court, while an obiter dictum has no binding status but

only what may be defined persuasive value.

Advantages of judicial precedent

a) Consistency, law is not suspect to whim.

b) Certainly /predictability if the law becomes unpredictable it is not serving its purpose

(Christie).

c) Flexibility, law can be created without waiting for legislation.

Disadvantages

a) Uncertainly due to the large number of cases that can be reported or referred to.

b) Fixity resulting in injustice being perpetrated.

c) Unconstitutionality. Judges are then seen as making law instead of merely applying

it.

d) Bias arising from judges especially under conditions of rapid change.

e) Reform may be stifled.

History of Roman Dutch Law

Law applying at the Cape of Good Hope on 10 June 1891 was largely based on Roman Dutch

Law. Roman Dutch Law is a fusion of Roman law and medieval Dutch law. Holland whose

inhabitants were mainly tribes of Germanic origin, was conquered ad occupied by the

Romans under the Emperor, Julius Ceaser. The people in Holland were allowed to follow

their own customs and way of life, except in situations that the Romans regarded as either

criminal or unacceptable. However, it was inevitable that the culture and laws of the

Romans would cater to exert a great deal of influence upon them.

With the collapse of Rom an rule in AD476 the reception of Roman law took a new form

which involved resorting to Roman law in situations where customary law failed to provide

an answer. Bit by bit, the local customary law was reconstructed in the light of Roman law.

In 1652, Jan Van Rebeeck ad his group of Dutch settlers took charge of the Cape of Good

Hope. They brought with them introduced, the law as it applied at that time in Holland

which was Roman Dutch law. Roman Dutch Law was contained in judicial decisions and

published treaties on low written by Dutch jurists. From 1652 onwards and indeed up to this

day, the nucleus of the law of Zimbabwe and South Africa, as well as that of Botswana,

Lesotho, Namibia and Swaziland has renamed Roman Dutch. The law introduced at the Cape

in 1652 undermined some significant charges after 1795. In that year, the British took over

the Cape from the Dutch. They did not replace the Roman Dutch law, but English law began

to influence some legal aspects.

By 1 June 1891, the law applicant at the Cape was Roman Dutch Law with substantial English

law gratings. This is why section 89 of the constitution of Zimbabwe refers to the law in

force in the colony of the Cape of Good Hope and not the Roman Dutch law in force.

Authoritative (binding) sources

Legislation, Traditional customary law, General custom or trade usage, Original Roman Dutch law, Roman law and commentators

Persuasive sources

South African judicial decisions are held in the greatest respect, English judicial decisions

African, American, Continental/European, Acknowledged text books are often referred to.

Textbooks on law have a persuasive authority upon which reliance can be had in making judicial decisions. The few authoritative legal authors on Zimbabwe rely on Roman Dutch writers. They mainly write commentaries and guide to the law of Zimbabwe

Constitution of Zimbabwe

The constitution of Zimbabwe is the supreme law of the land and any other law which is inconsistent with is deemed void to the extent of that inconsistent. Therefore Zimbabwe has constitutional supremacy instead of parliamentary supremacy.

The current constitution of Zimbabwe is the result of a settlement done at Lancaster house in England in 1979. It sets off the state structure, the bill of rights, the judiciary, the legislature and other administrative organs such as the public service commission.

The constitution is the parent act of every other legislation. Therefore all acts of parliament subordinate to it must be intra vires the constitution or within the confines of constitutionality.

QUESTIONS

1) Trace the historical development of Zimbabwean law.2) Discuss custom as a source of law.3) Examine legislation as source of law using the following headings;

i) Statutory instrumentsii) The doctrine of ultra viresiii) The process of legislation

4) Describe and distinguish between authoritative and persuasive sources of law.5) Examine judicial precedent as a source of law with particular reference to the

following:i) The doctrine of stare decisis including its advantages and disadvantages.ii) Ratio decidendiiii) Obiter dicta

6) Discuss custom as a source of law using the Van Breda vs Jacobs case

CHAPTER 3

The Zimbabwean courts

The justice system in Zimbabwe comprises the following elements: the supreme court, the high court, the administrative court, magistrates court, system for the administration of the courts, the office of the Attorney General and associated public procecutors and the legal profession. Acts of Parliament define the operation of various courts as well as limits their jurisdiction ie. Type of offense

High courts and supreme courts are superior courts. Magistrates courts, community,

primary and small claims are inferior courts. High courts have jurisdiction to deal with trials

and applications on any matter. Supreme court hears appeals on any matt

The structure of the courts

Courts are classified into two broad categories namely criminal courts and civil courts. Civil

courts in turn are divided into two groups ordinary civil courts and specialized courts.

In Zimbabwe there is specific legislation that prescribes the composition and jurisdiction of

each court. The composition of a court refers to its judicial officers i.e. whether a judge or

magistrate presides , the number of presiding judicial officers required to constitute the

state, the qualifications the presiding officers must have whether there is provision for

assessors and if so, the manner in which they are selected.

The jurisdiction of the government refers to its powers and the matters over which it has

competence and also determines its position in the structure of the courts, particularly how

it relates to other courts.

Ordinary civil courts

Primary Courts

Customary law disputes may be reffered to specially set courts which have been established to preserve the application of customary law in civil disputes. There are two types of local courts namely:

Primary court which is presided over by a headman or other person appointed by the minister of justice.

Community court which is presided over by chief or other person appointed by minister of justice.

Magistrates’ courts

Jurisdiction

In civil matters, unlike criminal; cases there is no division of magistrates into 4 classes of

ordinary magistrate, senior magistrate, provincial magistrate and regional magistrate. A

magistrate’s court has jurisdiction to apply both customary law and general law in its

determination of civil cases.

There some civil cases over which the magistrate court is prohibited from exercising

jurisdiction. These are specified in section 14 of the magistrates court Act and they include:

Disputes in respect of the validity or interpretation of a written will

The statues of a person in respect to mental capacity

The dissolution of a marriage other than a marriage solemnized interims

of the customary marriages Act (Chapter 5:07).

Composition

In a civil case, the magistrate sits alone. He or she may appoint one or more persons to sit as

assessors and assist in an advisory capacity. Any such appointment requires the approval of

the minster of Justice. The person appointed must be willing to serve and have skill and

experience in any matter to be considered by the court. Assessors in a civil case merely are

to advice and have to voice in the findings of the court on both matters of fact and law.

The high court

Functions

This is situated permanently in Bulawayo and Harare, but goes on circuit to Mutare, Gweru and Masvingo. It has full original jurisdiction over all persons and all matters within Zimbabwe.

Reviews and appeals- has power to review all proceedings from inferior courts that is confirmation, alteration or setting aside of conviction.

Power to overrule legislation-applies where the legislation is inconsistent with or ultra vires either the constitution or the enabling statute. Also, in subsidiary legislation, where it is uncertain, unreasonable or contains improper delegation.

Composition

The judge sits alone. He or she may also appoint one or more persons to sit as an assessor

or assessors and assist in an advisory capacity. As in the magistrates’ court, an assessor

appointed in a civil case must be willing to serve and have skill and experience in any matter

to be considered. Section 5(2) of the High Court Act makes it clear that such an assess shall

act in an advisory capacity only and shall not be entitled to vote in the decision of the court.

Jurisdiction

Section 13 of the High Court Act states that the High Court shall have full original civil

jurisdiction over all persons and over all matters within Zimbabwe. This means that its

original jurisdiction is unlimited, there are no monetary limits to claims that may be brought

and it can hear any civil dispute whatever nature of the claim it employs what is called

inherent jurisdiction which means that the high court is deemed to have jurisdiction unless

so prohibited by some law. This kind of jurisdiction is superior to that of any other court

because all jurisdiction specifically granted by the enabling statute.

The fact that the High Court`s original jurisdiction is unlimited means that all matters which

may be heard by the Magistrates Courts can class at the first instance, be heard by the High

Court A hit grant is entitled to some in the High Court, even in matters within the monetary

limit of the magistrate court. The choice of court may be dictated by costs, it is more

expensive to sue in the High Court than in the magistrate`s court. The High Court also have

appreciate jurisdiction in civil cases. An appeal only goes to the High Court if there is a

specific provision in a statute grant aright of appeal to the High Court. Appeals from the

magistrates Court go to the High Court. The High Court also has inherent review powers

over the proceedings of all inferior courts and tributes. In exercising its review powers the

High Court may set aside proceedings of an inferior court or tribunal.

The Supreme Court

Function

It is the court of first instance in constitutional matters. Its vital role is to perform the enforcement of the declaration of rights contained in the constitution. It is also an appeal court with full jurisdiction over all types of cases. It has power to: allow appeal and quash a conviction of sentence.

-alter a conviction, substitute another conviction with suitable sentence, confirm conviction or increase a sentence.

Composition

The Supreme Court is considered duly constituted it consists of not less than 3 judges. One

of whom shall be entire the Chief Justice or a permanent judge of the court. It may be

composed of two judges when hearing an appeal from any court other than the High Court,

provided this happens on the directors of the Chief justice, if an appeal involves a difficult or

important question of law, the presiding judge may direct that the appeal be heard by a

greater number of judges. In such cases the Chief Justice shall determine the size of the

reconstituted court. In a matter involving the application or interpretation of the

constitution, the Chief Justice or the Minister may direct that the Court be composed of not

less than 5 judges.

Jurisdiction

The Supreme Court has appellate jurisdiction only in civil matters, except where the issue is

brought under section 24 of the constitution. An appeal only has with the Supreme Court

where the provisions of the relevant statute say so in respect of appeals from the High Court

there is a right to appeal to the Supreme Court from any judgment even if it arises from the

High Court `s exercise of this original or appellate jurisdiction.

QUESTIONS

1) Describe the structure and jurisdiction of the Zimbabwean courts of first instance.

2) Discuss the hierarchy of the courts in Zimbabwe

3) Describe the functions of the primary, magistrate, high, and supreme courts of

Zimbabwe.

4) Describe the following Zimbabwean courts with reference to jurisdiction and

composition:

i) Primary courts

ii) Magistrates courts

iii) High courts

iv) Supreme courts

CHAPTER 4

The Law Making Process

Introduction

State organs and their powers

The power of governmental organs is limited and defined by the society that creates the government. Every society has rules that define the structure of the state and spell out their powers. These rules may be written or unwritten or a combination of both. A totality of these rules make what is called the constitution of a country. The law emanating from such rules is called constitutional law.

Zimbabwe has rules defining the structure and powers of governmental organs are embodied in its constitution. It is mainly to these documented rules that reference should be made in order to understand the powers of state organs.

Constitutional law utilizes the principle of separation of powers. This principle requires that political power should not be concentrated on one individual or organ of government. It requires that governmental organs be separated into 3 different groups each performed by 3 different persons. This is a way of creating checks and balances by one organ against another. The 3 main governmental organs are the legislature, the executive and the judiciary. Thus the organ that makes the law (the legislature) should be different from the organ which implements it (the executive) and should both be different from the organ that interprets it in the event of a dispute (the judiciary).

The legislature (law makers)

A principal function of the state is that of making laws for the proper ordering of society. This important function of the state is allocated to the legislature, which in Zimbabwe consists of parliament and the president. Parliament itself is composed of two chambers: the house of assembly (lower house) and senate (upper senate).

For law to be said to be a law made by the legislature in Zimbabwe it must pass through 2 stages 1st, it must be passed by the requisite majority in both houses of parliament. 2nd , once it has been passed by parliament, it should be assented to by the president before it becomes law.

The house of assembly is composed of 210 members all of whom are directly elected. The senate is composed of 93 members, 60 of whom are elected in 60 senatorial constituencies. The other 33 comprise the president and deputy president of the council of chiefs, 16 chiefs -2 from each of the 8 rural provinces, 10 provincial governors and 5 presidential appointees.

The house of assembly is presided over by the speaker, who is elected by members at their 1st sitting. The senate is also presided by the president of the senate, who is also elected members at their 1st sitting.

Apart from its law making functions, parliament also has power to supervise the executive arm of government, by among other things, criticising government policies. Through this role, parliament has the power to institute investigations into any activity of the state and to publicise its findings. This power can be used to ensure accountability on the part of government ministers. The most important manifestation of this power is the question and answer session in parliament where parliamentarians are entitled to ask question pertaining to the conduct of government and the latter are obliged to answer those questions truthfully.

The Executive

This arm of government is composed of the president, the cabinet and all Law enforcement agencies of the state namely the police, the military and the prison service. The ultimate authority of the executive functions of the state is vested in the president, who exercises a host of his function through the cabinet.

The role of the executive arm of government is to implement laws made by parliament and to run the affairs of the state. The executive also has the responsibility to initiate policy, and in that regard it is empowered to propose laws for consideration by parliament.

The Judiciary

The function of the judiciary is to interpret the law. One of the most important functions of the judiciary in Zimbabwe is that of adjudicating on the constitutionality of Acts of parliament or any other law which contravenes the constitution, this can be declared unlawful by the supreme court.

The Process of Law Making in Parliament

The constitution of Zimbabwe specifies the manner in which parliament legislates. Section 51 provides that ‘the power of parliament to make laws shall be exercised by bills passed by the house of assembly and the senate and assented to by the president.’

Pre- Bill Stage

This is the stage leading to the finalization of the proposals that are contained in the bill that is sent to parliament. This is exclusively a political process dominated by the executive. Legislative proposals result from a variety of sources such as political manifestos, government departments, commissions of enquiry, parliament portfolio committees, pressure groups and response to disasters.

Types of Bills

Public Bills are those that are intended to alter the general law or to deal with revenue or the administration of justice. Private bills deal with matters of a private or local nature such as legislation promoted by local authorities or relating to the property of private individuals.

Gazetting of Bills

The government gazette is the official publication of the government of Zimbabwe. It is the legal medium through which the government informs the public about its legal instruments.

Passage of Bills in Parliament

First reading. Before the first reading the minster gives notice to the house of his intention to present the bill. At the 1st reading no debate takes place and the bill is referred to the parliamentary legal committee (PLC). The PLC checks whether any provisions might violate the declaration of rights or other provisions of the Constitution. PLC reports back to the house. Any adverse report is considered and the House may accept or reject the opinion of the PLC. If the house adopts the adverse report falls away.

Second reading. The minister explains the principles of the bill. Debate is confined to the principles. After the 2nd reading the bill goes on to the committee stage

Committee stage. A member from the presiding officer’s panel chairs this. The whole house becomes one committee to consider the bill clause by clause. Amendments may be introduced without upsetting underlying principles of the bill.

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

Once passed by both houses, the bill is presented for presidential. If the president withholds his assent the bill is returned to parliament for amendments.

The Act is then published in the Government Gazette.

Budget is brought before parliament in the form of :

The Appropriation Bill (allocation of expenditure)

The Finance Bill (methods of financing)

Delegated legislation

Parliament may delegate its law making powers to a variety of public authorities, particularly the president, ministers and local authorities. Legislation emanating from these authorities in exercise of the powers granted to them by parliament is called ‘delegated legislation’. The extent of the power to make laws in this way is regulated in each case by

the relevant Act of Parliament (enabling act or parent act section 32(2) of the constitution of Zimbabwe allows Parliament to delegate its law making powers. It makes it clear that the legislature is empowered to confer legislative functions on any person or authority. The system of delegated legislation is subject to 2 controls namely:

Delegated legislation like any other legislation, must be consistent with the constitution that is it must be intra vires the constitution

It must be consistent with the parent act that is not ultra vires the enabling act.

QUESTIONS

1) Describe the passage of a bill in parliament.2) Describe the role of the three state organs.

3) Describe the functions, the judiciary and the legislature.

CHAPTER 5 THE LAW OF CONTRACT

Introduction

A contract intends to formalize an agreement of two or more parties, in relation to a particular subject. Contracts can cover an extremely broad range of matters including the sale of goods or real property, the terms of employment or of an independent contractor relationship, the settlement of a dispute and ownership of intellectual property developed as part of work for hire.

Essential Elements of a Contract

Clear certain and communicated agreement. Meaning that the parties are consensus ad idem or are of the same mind. The parties to the contract have mutual understanding of what the contract covers, eg. In a contract for the sale of a ‘mustang’ the buyer thinks that he will obtain a car and the seller believes he is contracting to sell a horse, there is no meeting of the minds and the contract will likely be held unenforceable.

Contractual Capacity, meaning that the parties are legally capable of contracting. Only persons can contract, a person having the capacity to acquire rights and duties. But not only natural persons can do so. Our law recognizes the existence of artificial persons who can likewise acquire rights and duties. The most important of these are companies incorporated in terms of the companies act. The general rule is that every person is able to contract freely, within the limits of the law. But there are certain persons of limited contractual capacity whose power to enter into binding agreements is limited. Serious Intent, meaning the parties intend their agreement to be binding and legally enforceable. When parties enter into an agreement ‘subject to contract’ they are expressly stating that they will not be bound unless and until a formal contract is drawn up.

Necessary Formalities. In some cases , certain formalities (writing) must be observed.

Contracts which must be in the form of a deed. Certain transactions involving land require a deed that is conveyances, legal mortgages and leases for more than 3 years. A promise of a gift is not binding unless in this form.

Contracts which must be in writing a contract for the sale or other disposition of land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed. In one document or where the contracts are exchanged in each. The document must be signed by or on behalf of each party to the contract. Bills of exchange, cheques and promissory notes must be in writing.

Similarly the transfer of shares in a limited company must be in writing. Employment contracts should be in writing with terms and conditions of employment.

Possibility of performance that is performance of the contract must be possible.

Legality that is the agreement must be lawful. The purpose of the agreement must not be illegal or contrary to public policy where a contract involves some wrong doing, It will be illegal. If however, the conduct is neither immoral or blameworthy but simply undesirable the contract will be void. A court may object to an agreement either because of a rule of common law or because it is contrary to statute.

QUESTIONS ON ESSENTIAL ELEMENTS OF A VALID CONTRACT

1) Discuss the essential elements of a valid contract2) Briefly describe and distinguish the contractual capacity of ;

i) Minors under 7ii) Insolventsiii) Prodigalsiv) Artificial personsv) Lunatics and mentally illvi) Alien enemiesvii) Illegal associations

3) Write fully on the following:i) Tacit emancipationii) Contractual liability of an assisted minoriii) The effect of fraud on the contractual liability of an unassisted minor.

4) Read the following situation carefully and answer the questions that follow;Minor Joyce enrolls for a 6 months course with a business school without the consent of her guardian, though she makes no effort to conceal her minority. However after having attended and paid only for 2 months, she withdraws from the course and refuses to make any further payments.i) Advice the business on their legal positionii) Would the situation be different if;

a) Joyce had fraudulently misrepresented that she was over 18 because that was the minimum age permitted by the school?

b) Joyce was living alone running a sole proprietorship business?c) Joyce’s guardian subsequently ratifies the contract?

5) State the effect of unlawfulness on a contract. Give examples of lawful and unlawful contracts.

6) Name and define the formalities prescribed in a contract.b) give examples for which certain formalities are prescribed

c) explain the effect of non compliance with prescribed formalities on the validity of a contract.7) a) define the concept of performanceb) distinguish between initial impossibility of performanceand supervening impossibility of performance and give examples8) describe the folwing concepts and identify them in practical situationsa) terms of contract, express and implied b) conditions- suspensive and resolutivec) trade usaged) time clausese) guarantees.

Agreement

Agreement = offer + acceptance

Requirements of a valid offer

1) Offer must be definite. It must not:

Leave aspects of the agreement dependent upon the future will of parties (Kantor v Kantor)

Leave aspects of the agreement blank or open to subsequent negotiation (Bundell v Blan & King v Potgieter & Finestone v Humburg)

Contain wording which is vague

2) Offer must be made with the intention of being accepted by some other person. Excludes the following which are not offers but simply invitations to do business.

General statements of lowest price (Efroiken v Simon) Statements of lowest price in response to a specific inquiry (Harvey v

Facey) Invitations to tender (Spencer v Harding) Newspaper advertisements in general (Shepherd v Farrel Estate Agency) Advertisements by transport companies of their charges for conveying

goods (Frazer v Frank Johnson) Displays in shop windows (Crawly v Rex) Displays on self service counters (Pharmaceutical Society of Great Britain

v Boots Cash Chemists Ltd) Restaurant menus.

Reward Cases

Adverts constitutes offer (Carlill v Carbolic Smoke Co

One reward is only offered first person doing what is required is entitled to that reward. (Lee v American Swiss Watch Co.)

No reward may be claimed by anyone who fulfilled the requirement not knowing of that reward (Bloom v American Swiss Co.)

What is required must be done voluntarily.

3) Offer must not have been revoked. Offer may have been revoked or lapse in one of the following ways:

Offeree is notified that it has been revoked. Either the offeror or offeree dies. Lapse of a reasonable period of time. Supervening impossibility or illegality Rejection as where the offoree makes a counter offer which contradicts

the original offer by proposing specific alterations to the terms of that offer.

4) Offer must be one on which an optimal time limit has not expired.

Note: keeping an offer open until the offeree is in a position to accept is permissible, since the period, although unknown, is not indefinite (Hanekan v Mouton)

In the case of an option which is offered gratuitously, silence is not acceptance (Beinart v Zeffert)

The right of acceptance of an option, provided that it is also a cash sale, can be ceded. (Hersh v Nel)

Written acceptance of an oral option is only valid upon receipt regardless of the distance between the parties. (Smeiman v Volkersz)

A provisional option allows either party to withdraw before the due date, whilist an option for a limited time at the descetion of the offeror similarly allows that offeror to withdraw, as state at his discretion. (Gerson v United Tobacco Co.s)

Termination of the Offer

By acceptance- an offer which has been accepted constitutes a contract. That offer is no longer available for acceptance.

By rejection- an offer is rejected if: 1) The offeree notifies the offeror that he does not wish to accept the offer. 2) The offeree attempts to

accept the offer but subject to certain conditions. 3) The offeree makes a counter offer (Hyde v Wrench)

By revocation before acceptance- an offer may be revoked (withdrawn) any time before acceptance, but will only be effective when the offeree learns about it.

If the offer lapses-the offeror may stipulate that the offer is only open for a limited period of time. Once it has lapsed any acceptance is invalid. Even if no time limit is mentioned, the offer will not remain open indefinately. It must be accepted within a reasonable period of time.

Death- if the offeror dies after having made an offer and the offeree is notified of the death any acceptance will be invalid.

Failure of a condition attached to the offer. An offer may be made subject to conditions. Such a condition may be stated expressly by the offeror or implied by the courts from the circumstances. If the condition is not satisfied, the offer is not capable of being accepted.

Requirement of a valid acceptance

Acceptance must be definite and unconditional. (Watermeyer v Murray & Jones v Reynolds) acceptance must be unequivocal and stated intention to accept is not adequate. (Boerne v Harris)

Acceptance must be communicated.

Mere stated intention to accept is insufficient. (Dietirchsen v Dietrichsen) Acceptance may be ither expressly stated or manifested by conduct. (Reid

Bros v Fisher Bearings Co) Silence can not be acceptance. (East Asiatic Co.v Midland Manufacturing Co.)

except where there is a duty expressly to repudiate as with brokers notes. (Benoni Produce & Coal Co. v Grendelfinger)

An offeror is free to dispense with the normal modes of communication to indicate alternative methods of acceptance eg by dispatch of goods (Rex v Net &Mackenzie v Farmer’s Co-op Ltd)

Where specific form of communication is demanded by the offerror acceptance by any other method is void. (Eliason v Henshaw)

Whilist an offeror may prescribe the manner of acceptance, he may not prescribe the manner of refusal.eg by taking acceptance for grantedif the offeree has not acted in a certain way by a certain time. (Felthouse v Bindley)

Acceptance by post or telegram or telephone or telex

In acceptance by post, the basic rule is that the manner of offer implies the manner of acceptance, consequently:

Where written acceptance follows a written offer, acceptance is valid at the timeof posting (Cape Explosive Works Ltd v Lever Brothers Ltd)

Where written acceptance follows an oral offer or option (Smeiman v Volkers) acceptance is only valid upon receipt regardless of the distance between the parties. But

Where offeror has demanded some other form of acceptance, written acceptance is void (Eliason v Henshaw). Note:

Acceptance to a wrong address due to the offeror’s fault, is valid unless the offeree knew or suspected without checking, but where the mistake is the offoree’s acceptance is void.

Acceptance to the correct address, where the offeror has left that address without notifying the offeree is valid. (Naude v Malcom)

Correctly addressed and posted acceptance which does not arrive is valid. (Household Fire Insurance Co. v Grant)

An address incorrectly spelt by the offeree will only postpone acceptance to the time of receipt if the error was so fundamental as to cause delay. (Levben Products Ltd v Alexander Films Ltd)

3) Acceptance must be made by person for whom the offer was intended.

Right of acceptance can not be ceded by offeree to a third party. (Blew v Snoxell & Bird v Summerville)

4) Acceptance must not be based on some justifiably mistaken. A contracting party may only avoid a contract based on his mistake if:

Justus error was present and he was therefore blameless plus Mistake was maternal and essential or important.

Ticket Cases

Unsigned document such as tickets or receipts, which contain terms waiving liability on the part of contracting party A which are unknown to the other party B. Thus B can only sue A if B is blameless and this will only be the case if all of the following apply

There was no public notice displaying the terms. The terms were not pointed out. The ticket was not of the type.

QUESTIONS ON OFFER AND ACCEPTANCE

1) Set out in detail the requirements for a valid offer in a law of contract.2) Set out in detail the requirements of a valid acceptance in a law of contract.3) Reward is the only contractual situation where an advertisement is an offer.

Discuss.4) An advertisement is not an offer. Discuss.5) Distinguish between valid offers and invitations to do business in contract law.6) Discuss the statement that in a contract acceptance must be communicated.7) Discuss the various requirements for and the timing of a valid acceptance in a

contract where acceptance is made in the form of a letter.

Contractual Capacity

Minors: a minor is a unmarried person under the age of 18. During the term of his minority he is under the custody and lawful authority of a guardian whose duty it is to maintain the minor until he can maintain himself, administer his property and assist him in contracting.

Unassisted contracts

A minor may not, as a general rule sue or be sued or contract without the assistance of his guardian should he attempt to do so the contract is void. The Roman Dutch authorities speak of such purpoted contracts as being void in one direct (that is as far as the minor is concerned) and valid in another (that is as far as the other is concerned.

A minor may, however, in certain cases acquire a perfectly valid obligation without his guardian’s assistance. These obligations are only exceptionally contractual, even though they often arise in the course of attempts to contract.

Enrichment

Wherever a minor is unjustly enriched in terms of a purpoted contract he is bound to the extent that he is enriched. He is bound to restore to the other party to the purpoted contract so much of what he has received as remains in his possession or to pay a sum of money to the value of the advantage received. But the minor is not bound by the contract, the contract remains void. His obligation arises simply because he has been enriched at someone else’s expense. (Tanne v Foggit)

Fraudulent Misrepresentation of Majority

Where a minor fraudulently misrepresents his age or pretends that he has been emancipated and by so doing deceives another person who is induced to

contract with the minor, believing him to be of full age or emancipated, the minor incurs an obligation. But once again the obligation is not contractual. The minor is not bound by the contract, which is void. But the fraud being a delict, he is bound delictually to make good to the other party any loss he suffered as a result of the fraud.

It is essential that the other person be misled, otherwise there can be no loss as a result of the fraud. It follows that a minor must be of such an age that it is possible for an innocent person to be misled.

Tacit Emancipation

Where a minor is tacitly emancipated he can incur a binding contractual obligation within the field of his emancipation. Tacit emancipation occurs where a minor is allowed by his guardian to carry on business, or any other occupation, on his own behalf. In such circumstances the minor may himself validly contract in regards to that business. He may not, however, contract outside that business without his guardian’s consent.

Ratification

Where a minor purports to contract without his guardian’s consent the contract may be subsequently ratified by either guardian, when the effect is precisely the same as if the guardian had consented at the time of the contract or the minor himself on attaining majority. Such ratification may be express or implied. It is implied eg where a person after attaining his majority, continues to use an article, which he purpoted to buy during his minority as his own, or indicates otherwise by his actions an intention to be bound. (Stuttaford & Co v Oberholzer)

Once the ratification has taken place the contract is rendered valid and effective from the time of the purpoted agreement. The authority which was lacking is supplied by the subsequent ratification.

Assisted contracts

A minor is bound either by contracts on his behalf by his guardian or by contracts made by himself with the assistance of the guardian.

Mentally ill persons

A purpoted contract made by a mentally ill person is void if at the time of agreement he could not understand and appreciate the transaction into which he purpoted to enter or if his consent was motivated or influenced by an insane decision cause by mental disease.

All persons are presumed to be sane, unless they have been declared mentally disordered by an expert in the medical field. The contract is presumed void unless it can be shown that it was entered into at a time when the person concerned was in full possession of his faculties. (Prisloo’s Curators v Crafford & Prinsloo) or that his state of mind was such that he was able to understand the nature of the contract into which he entered and to appreciate properly the duties and responsibilities which were created by that contract.

Drunk Persons

Where a person enters into a purpoted contract while so drunk that he does not know he is entering into a contract or he has no idea of the terms of the contract, the contract is void. The fact of drunken ness will not prevent the person concerned from incurring an obligation on the ground of enrichment.

Prodigals

A prodigal (that is a person declared by the court to be incapable of managing his affairs as a result of a propensity to squander his assets) cannot contract with regard to his property. If he purports to do so the contract is void. Ut outside the field of his property he is entitled to contract freely. He may marry. The court in declaring a person to be prodigal appoints a curator bonis whose duties are to administer the affairs of the prodigal, subject to the overriding approval of the courts.

Insolvent Persons

The sequestration of the estate of insolvent divests him of his estate and vests it, after appointment in a trustee. Property which he subsequently acquires before rehabilitation also vests in the trustee with certain exceptions.

Certain restrictions are place on his freedom to contract, but he is in all other respects fully capable of contracting

The restrictions are:

-an insolvent may not contract in such a way as to purport to dispose of any property of his insolvent estate.

-he may not without the written consent of his trustee enter into any contract whereby his estate is likely to be adversely affected.

-he may not without the written consent of his trustee have any interest in or be employed in the business of a trader who is a general dealer.

Should the insolvent, however purpot to contract in breach of these provisions of the act the contract is not void. It remains valid until it is set aside by the trustee.

Persons who have been convicted of Crime

In certain cases, which do not require setting out in detail, ad which vary dependency on the crime committed and the sentence, imposed convicted persons are subject to various disqualification eg if convicted of theft, fraud, forgery or perjury and sentenced to imprisonment, they are disqualified from being appointed company directed.

Alien Enemies

An alien enemy (namely a person residing or carrying on business in enemy territory) may not sue on our courts and all commercial relations with him is prohibited.

QUESTIONS ON CONTRACTUAL CAPACITY

1) Describe the following in terms of contractual capacity:a) Unjust enrichmentb) Fraudulent misrepresentation of majorityc) Tacit emancipationd) Ratification

2) Name and briefly describe the categories of contractual capacity.3) State the general rule regarding the contractual capacity of the following

persons:a) Minorsb) Married womenc) Insane personsd) Intoxicated personse) Prodigalsf) Insolvent persons

Contracts illegal at common law

a) Contracts to commit crimes or civil wrongs eg a contract to assassinate someone or to defraud Zimra

b) Contracts involving sexual immorality

c) Contracts tending to promote corruption eg contract to bribe an official.

d) Contracts trading with an enemy of the state

e) Contracts directed against the welfare of a friendly foreign state.

f) Contract prejudicial to the administration of justice eg contract not to prosecute a person for an offence concerning the public.

Genuineness of Consent

The agreement must have been entered into freely and involves a meeting of the minds. The agreement must not be invalidated by a number of factors, mistake, misrepresentation, duress and undue influence.

Mistake

The general rule is that mistake does not affect the validity of a contract. The guiding principle is the caveat emptor which means ‘let the buyer beware.’ So if a person agrees to pay $1000 for a car which in reality is only worth $500, the contract is valid and he must stand the loss. It should be noted that a mistake at law will not invalidate a contract, since everyone is presumed to know the law.

There are , however some kinds of mistake which so undermine the agreement that the contract is void. If this is the case, no rights of ownership can pass and any goods which have changed hands can be recovered. A mistake will invalidate the contract in the following situations.

a) Mistakes as to the subject matter of the contract. The parties may be mistaken as to the identity of the subject matter. If a seller makes an offer in respect of one thing and the buyer accepts, thinking of something else, the parties are clearly talking at cross purposes and there is no contract.

b) - mistake as to the identity of one of the parties. This may invalidate the contract where the identity of the party to the contract is material to the contract, a mistake will result in the contract being void. Where the identity of the party is not material, the contract will be valid until the mistaken party avoids the contract for misrepresentation.

c) Mistaken signing of a written document. As a general rule, a person who signs a document is assumed to have read, understood and agreed to its contents. Exceptionally, a person may not be able to plead ‘nonest factum’- ‘it is not my deed.’ 3 factors must be present if the contract is to be avoided, the signature must have been induced by fraud, the document signed must be fundamentally different from that thought to be signed and the signer must not have acted negligently.

Rescission of terms

The court may be prepared to set aside an agreement provided the parties accept the conditions imposed by the court for a fairer solution to the problem

Rectification

If a mistake is made in reducing an oral agreement into writing, the court may rectify the document so that it expresses the true intention of the parties.

Specific performance

A court may refuse to grant an order for specific performance against a party who made a mistake, if it would be unfair to enforce the contract against him.

VOIDABLE CONTRACTS

a) Misrepresentation

The formation of a contract is often preceded by a series of negotiations between the parties. Some of the statements made may turn out to be false. The nature of the statement will determine whether a remedy is available and if it is what type of remedy. A false stamen which is not incorporated into the contract is known as misrepresentation. A misrepresentation is a false statement made by one party to induce the other to enter into a contract. It must be shown that the statement has induced the person to whom it was made to enter into a contract.

Kinds of misrepresentation and their effects

There are 3 kinds of misrepresentation; fraudulent, negligent or innocent. In each case the contract is voidable.

i) Fraudulent Misrepresentation

If the person making the statement knows that what he said is false, he will be liable for fraud. The injured party may rescind the contract and also sue for damages for the deceit.

ii) Negligent Misrepresentation

This is where the person making the false statement has reasonable grounds for believing it to be true. Damages may be awarded for a negligent misstatement.

iii) Innocent Misrepresentation

Is a false statement made by a person who had reasonable grounds to believe that it was true, not only when it was made, but also when the contract was entered into. The basic remedy is rescission of the contract.

Rescission

It aims to restore the parties to their pre contractual positions. Money or goods which have changed hands must be returned.

b) Duress and Undue Influence

The general rule of law is that a contract will only be valid if the parties entered into it freely and voluntarily. Where a party to a contract or his family is subjected to threats of violence, the contract may be avoided on the grounds of duress.

In undue influence, the relationship between the parties may be such that one occupies a position of dominance and influence over the other. There are several relationships such as doctor and patient, solicitor and client, parent and child where it is automatically assumed that undue influence has been at work. The contract will be set aside unless the dominant person can prove that the complainant had independent advice. Where there is no special relationship between the parties the complainant must prove that pressure was applied.

QUESTIONS ON VOIDABLE CONTRACTS.

1) Define the following concepts fully:a) Valid contractb) Void contractc) Voidable contract

2) Explain the difference between a void and voidable contract. Refer to decided cases.

3) Discuss the various forms of mistake and misrepresentation.4) Give meaning of each of the following concepts and discuss the requirements of

each:a) Mistakeb) Misrepresentationc) Duressd) Undue influence

5) Using decided cases, describe the main features of each of the following clearly showing the difference between them:a) Duressb) Misrepresentationc) Undue influence.

BREACH OF CONTRACT

This may occur in a number of ways. It may be an anticipatory or actual breach.

a) Anticipatory Breach

This is where a party states in advance that he does not intend to carry out his side of the contract or puts himself in a position whereby he will be unable to perform. The injured party may sue immediately for breach of contract or alternatively wait for the time for performance to arrive to see whether the other party is prepared to carry out the contract.

b) Actual Breach

One party may completely fail to perform his side of the bargain or he may fail to carry out one or some of his obligations. Not every breach of contract has the effect of discharging the parties from their contractual obligations. The terms of the contract may be divided into those terms which are important (conditions) and the less important terms (warranties). A breach of a condition does not automatically terminate the contract. The injured party has a choice: he may wish to be discharged from the contract and claim damages for the breach. A breach of warranty only entitles the injured party to sue for damages.

Remedies

Every breach of contract will give the injured party the right to recover damages (financial compensation) other remedies such as specific performance and injunction, may be granted at the discretion of the court as part of its equitable jurisdiction.

Damages

In the business world it is quite common for the parties to agree in advance the damages that will be payable in the event of a breach of contract. These are known as liquidated damages. If there is no prior agreement as to the sum to be paid, the amount of damages is said to be unliquidated damages.

a) Liquidated Damages

The parties establish at the outset of their relationship the financial consequences of failing to live up to their bargain. Provided the parties have made a genuine attempt to estimate the likely loss, the courts will accept the relevant figure as the damages

payable knowing the likely outcome of any legal action, the party at fault will simply pay up without argument.

b) Unliquidated Damages

The aim is to put the injured party in the position he would have been if the contract had been carried out properly. Damages are designed to compensate for the loss. If no loss has been suffered, the court will only award nominal damages: a small sum to mark the fact that there had been a breach of contract.

c) Equitable Remedies

The normal remedy for breach of contract is an award of damages at common law. There are some situations, however where damages would neither be adequate nor appropriate. Equity developed other forms of relief to ensure that justice is done. The more important of these equitable remedies are specific performance and injunction.

d) Specific Performance

A decree of specific performance is an order of the court requiring the party in breach to carry out his contractual obligations. Failure to comply with the directions of the court, lays the defendant open to imposition of penalties for contempt of court.

e) Injunction

This is an order of the court requiring the party at fault not to break the contract. Its main use is to enforce the negative promises that can that can occassionaly be found in employment contracts. The employee may agree eg not to work in a similar capacity for a rival employer during the period of his contract.

QUESTIONS ON BREACH OF CONTRACT

1) Name and define the different forms of breach of contract.2) Discuss the remedies applicable to each form of breach of contract.

CANCELLATION OF THE CONTRACT

The parties to a contract may expressly agree that breach of a certain term will entitle one of them to cancel the contract. Such express terms entitling cancellation may take any form, but the most common are forefeiture clauses, fore closure clauses and the lex commissoria.

A forefeiture clause in a contract of letting and hiring is a clause which entitles the landlord to cancel the lease and have the tenant ejected. If the tenant is in breach of certain specified terms one of which is usually the payment of rent on the due date. In the absence of such a forefeiture cluse, a term governing the payment of the rent on a particular date is not material term and the land lord canot therefore terminate the contract merely on the ground that the lesee is in arrear with the rent.

A foreclosure clause in a mortgage is a clause entitling the mortgagee to call up the bond where the mortgagor is in default usually by non payment of interest on due date.

A lex commissoria is a provision in a contract of sale that the seller is entitled to cancel the contract on breach of one or other of the terms of the contract usually non payment of an instalment in the case of a sale where payment is made by instalments. Such a lex commissoria may, and usually does, contain valid penal provisions entitling the seller to retain so much of the purchase price as had already been paid to him, despite his cancellationof the contract and recovery of the subject matter of the sale.

TERMINATION OF CONTRACTS

a) Performance

A contract is terminated by the performance of the reciprocal obligations of the parties.

b) Set off

Where 2 parties are in debt to each other and the debts are due and liquidated, both debts are automatically extinguished if they are of the same amount. If one is larger than the other, the smaller is extinguished and the larger automatically reduced by the amount of the smaller debt.

c) Merger

It is the concurrence of the debtor and creditor in the same person and in respect of the same obligation. It destroys the obligations in respect of which it operates. Thus if x is the tenant of y and he purchases the property from y, the lease comes to an end and for the capacities of landlord and tenant are merged in x.

d) Agreement

The parties may by agreement put an end to contractual obligations by waiver or novation. In both cases the express or implied agreement of both parties is necessary.

e) Waiver

Is the abandonment of rights by one or both parties to a contract. It is itself a contract which requires offer and acceptance in the ordinary way. Agreement to waive may be implied, but the courts will not lightly infer the abandonment of a right. It must appear clearly from the words or conduct of the parties. The person who waives a right can only effectively do so if he has full knowledge of the right. If he purports to waive a right while ignorant of its extent even as a result of ignorance of the law the waiver is ineffective, despite the rule ignoratia uris haud excusat, provided the ignorance is probable and justifiable. The abandonment may be of all rights under the contract, which is in other words cancelled by mutual agreement, or of only certain of the rights eg waiver of one party only.

f) Novation

It occurs where the parties agree to a new contract which replaces the only one completely. The original contract is therefore terminated a new contract comes into being. The new contract, may indeed bring third parties to the original contract into the new one as parties (eg assignment and delegation)

Cession on the other hand is really something different. There is not a rule to the new contract and therefore no novation. The original contract remains in existence but the right to receive performance is ceded by the cedent to the cessionary.

Compromise is an agreement between persons for the settlement of a matter in dispute, each party abating some of its previous demands. If parties to a contract dispute each other’s rights in terms of the contract and subsequently they compromise their rights are regulated by the compromise and not by the original contract which falls away. In such a case, as the parties enter into a new contract which replaces the old one, it is clear that compromise is a form of novation and the ordinary rules apply eg a compromise requires strict proof, the presumption being against it.

f) Insolvency

The contractual rights and duties of an insolvent are affected in various ways by the sequestration of his estate. The majority of the rights and duties of the

insolvent vest automatically in the master of the supreme court until the appointment of a trustee when they vest in the trustee.

It is the duty of the trustee to recover all debts due to the estate, to liquidate the estate and to distribute the proceeds among the creditors who have proved claims against the estate.

Insolvency is terminated by rehabilitation by court order. Rehabilitation discharges all debts of the insolvent, which were due, or the cause of which had arisen before sequestration.

g) Death

Death of a party does not terminate the contract. A form of compulsory assignment takes place and the rights and duties of the deceased, other than in terms of contracts involving personal skill which are terminated, pass to the executor.

h) Supervening Impossibility of Performance

Has the effect of extinguishing a contract.

QUESTIONS

1) Explain the following remedies:a) Specific performanceb) Cancellationc) Damagesd) Penalty clausee) Interdict

2) Describe the following ways of terminating contractsa) Proper performanceb) Prescriptionc) Set offd) Mergere) Supervening impossibility of performancef) Insolvencyg) Death.