CHAPTER 5: LAW OF CONTRACT

OBJECTIVES

 Define a contract
 Distinguish a contract from a social agreement and give examples of social agreements
 Identify essentials of a valid contract

5.1 DEFINITION OF CONTRACT

A contract can be defined as:

I. A lawful agreement between two or more competent parties, which establish rights
and obligations between or among the parties, breach of which gives rights to legal
enforcement.

II. A lawful agreement made by two or more persons within the limits of their contractual
capacity, with serious intention of creating a legal obligation, communicating such
intentions without vagueness, to each other and being of the same mind (consensus ad
idem) as to the subject matter to perform positive or negative acts which are possible
of performance.

Therefore agreement is the essence of a contract and is the first requirement for a valid
contract, hence when talking of a contract we are referring to an agreement.

5.2 Not all agreements are contracts; examples include gentlemen’s agreements such as;

i. Social agreements (promise) to buy a drink.

ii. A promise to buy a dress by a husband.

The objective of a contract is to change the status of the parties positively if the created
obligations are fully performed.

Gentlemen’s agreements lack the essentials of a valid contract, are based on one’s
willingness.

5.3 ESSENTIALS OF A VALID CONTRACT

1. The parties must communicate their intention to enter into an agreement with each

other.

2. The agreement must not be vague.

3. The agreement must be lawful.

4. The parties must seriously intend to contract i.e. animus contrahendi.

5. The agreement must be made within the limits of the party’s capacity.

6. The parties must be of the same mind as to the subject matter (consensus ad idem).

7. Performance must be possible.

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 8. Necessary prescribed formalities must be followed.

5.4 CLASSIFICATION OR CATEGORIES OF CONTRACTS

5.4.1 Formal and informal contracts

The distinction comes from the method used in creating the contract.

a) Formal contract-parties engage in certain formalities when contracting. Some of these

formalities are prescribed by the law.
b) Informal contract- do not require any defined procedures and may not require a seal,
such contracts may be oral, written or may be implied from the conduct of the parties.

5.4.2 Unilateral and bilateral contracts

In every contract there are two parties involved i.e. the offeror and the offeree. An offeror
promises to do something to the person to whom the offer has been made, if the offeree
complies with the offeror’s request. The offeree’s acceptance determines whether a contract is
unilateral or bilateral.

a) Unilateral contract—is a contract which a promise is one side only i.e. the offeror and
the offeree accept by doing the requested act, acceptance by conduct.
b) Bilateral contract—is a contract in which promises are made on both sides. The offer is
communicated and accepted by promising to do the requested act.

5.4.3 Valid, Void and voidable contract

a) Valid contract -Is a contract which contains all the essentials of a contract, exists in the
eyes of the law, is not characterised by defects and is recognised by the court of law. The
parties in the contract incur legal duties and enjoy rights. The contract is legally binding
and enforceable by the courts of law.

b) Void contract- Is a contract which lacks one or more essentials of a contract. It is said to
be void ab initio (from the start) and do not exist in the eyes of the law. Parties do not
incur legal duties nor enjoy rights. The contract is unenforceable through the courts of
law.

c) Voidable contract- Is a contract which the consent to enter may have been induced by
defects (flaws) such as misrepresentation, duress, undue influence. The contract is valid
and fully enforceable until the other party disaffirms it.

5.4.4 Express and implied contracts

a) Express contract- is one which the parties set their intentions specifically and definitely
either in writing or orally.
b) Implied contract- is one in which is inferred from the actions or conduct of parties.
There is no express agreement between the parties.

5.4.5 Executory and Executed contracts

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a) An Executory contract-is one which some conditions or promise has not yet been
completed by one or more of the parties in a contract.
b) An Executed contract- is one in which all conditions or promises have been fully
completed or performed.

5.4.6 Unenforceable contracts

These are contracts which cannot be enforced by legal action .The contract is valid although
unenforceable to create valid moral obligations e.g. wagering lotteries. No action can be
brought on it and impose no legal obligation. Obligation remains as a natural obligation,
having legal effect in circumstances.

5.5 DETAILED ANALYSIS OF THE ESSENTIALS OF A CONTRACT

1) The parties must communicate their intention to enter into an agreement with each other.
2) The agreement must not be vague.
3) The agreement must be lawful.
4) The parties must seriously intend to contract i.e. animus contrahendi.
5) The agreement must be made within the limits of the party’s capacity.
6) The parties must be of the same mind as to the subject matter (consensus ad idem).
7) Performance must be possible.
8) Necessary prescribed formalities must be followed.

5.5.1 PARTIES MUST COMMUNICATE THEIR INTENTIONS TO EACH

OTHER

 OBJECTIVES
 Know how a contract is formed i.e. offer and acceptance.
 Define an offer.
 Outline the requirements of a valid offer.
 Distinguish between a firm offer from an advert offer(including reward cases)

Communication is done to make each other aware of one’s intentions. The intention can be
communicated either;

Expressly-intentions are clearly stated in words, either in writing or verbally (orally) or,
impliedly- intentions are communicated by conduct (actions).

Every contract consists of an OFFER being made by one party and accepted by another party.
These intentions must be communicated; hence offer and acceptance make up a contract.

5.5.1.1 DEFINITION OF AN OFFER

An offer is a proposal made by one party known as the OFFEROR, expressing the intention
or willingness to another person (the OFFEREE) to enter into a contract that binds both
parties contractually if accepted.

Types of offers

(1) Option
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This is when two parties agree to keep an offer open for a specified period of time. If the
offeree does not accept the offer within the stipulated time, then the offer can lapse and the
offeror can make an offer to a 3rd party. But if the offeror offers a 3rd party before the
stipulated time elapses, he will be in breach of the offer and he will be liable to pay damages.

(2) Right of first refusal or pre-emptive right

This occurs where one party does not want to make an offer but promises the other party that
in the event of him deciding to offer, he will offer the other party first. If he offers another
party at the material time, then he will be considered to be in breach of the pre-emptive right
and will be liable to pay damages.

5.5.1.2 ESSENTIALS OF A VALID OFFER

a) Must be consistent with all other essentials of a contract

b) Must define all the terms on which the agreement is sought . Therefore it must not be vague,
LEVENSTEIN V LEVENSTEIN 1955 (3) SA 615 (SR)
All terms of the proposal must be disclosed. If the proposal is incomplete, acceptance does not
create a contract. Leaving out certain points will invalidate an offer and acceptance.

c) Must be definite and clear and unconditional. See KANTOR VS KANTOR 1962 (3) SA 207 (T)

d) Must not leave aspects of the agreement dependent upon the future will of one of the
parties.

e) Must be final.
An offer must be firm and deliberated with the intention of being accepted. Mere
invitations to do business do not amount to an offer e.g. Advertisements

f) Must be communicated to the person to whom it is intended that the contract should be
made.The offeree must have knowledge of the offer if his acceptance is to constitute a valid
contract Bloom v American Swiss Watch Company 1914 AD 100. It was held that there was no
offer made to the plaintiff when he volunteered the information and did not know that there was an
offer of reward money

g) Must be made with the intention of being accepted by some other person.
See Crawley V Rex 1909 TS 1105 & Balfour v Balfour [1919] KB (2) 571.
h) Must be made to a specific person or group of people and cannot be accepted by a third
party

i) Must not have been revoked.

The offeror must take reasonable steps to find and inform the offeree of the revocation
BRYNE AND CO Vs LEAN VAN TIENHOVEN AND CO 1880 KB.
Revocation is not effective until the offeree is aware of it. An offer can be revoked to any
stage before it is accepted

j) Must be one on which an optional time limit has not expired.

Where an offer was accompanied by an option, the latter must not have expired. An option
is a separate contract to keep the contract open for a specific period. The offer must be
accepted within the stipulated period Boyd v Nel 1922 AD 414.

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5.5.1.3 DOES AN ADVERT OFFER CONSTITUTE A FIRM OFFER

THE GENERAL RULE REGARDING AN ADVERT OFFER

An advert offer such as, Catalogue advertisement or Declaration of the intention to hold an
auction does not constitute a firm offer, but a mere invitation to come and negotiate a contract
or an invitation to treat.

Differences between an Offer and Invitation

Offer Invitation
1. Offer is final. 1. Lacks finality.
2. Not subject to negotiations. 2. Is subject to negotiations.
3. Unconditional. 3. Conditional.
4. Serious intention. 4. No serious intention.

Case supporting General rule

CRAWLEY v REX 1909. A shopkeeper advertised tobacco at a special price. He had a

placard outside his shop. One evening, Crawley (a customer) entered the shop and bought a
pound of tobacco. He left the shop and within five minutes came back for some more tobacco.
This time, the shopkeeper refused to sell him the tobacco. Crawley refused to leave the shop
without the tobacco and the shopkeeper had to call a constable to remove him. Crawley was
then charged with trespassing. His contention was that the shopkeeper had made an offer
which he accepted. The Court had this to say in that case:

“In the present case it seems to me there is no contract. The mere fact that a tradesman
advertises the price at which he sells goods does not appear to me to be an offer to any
member of the public to enter the shop and purchase goods, nor do I think that a contract is
constituted when any member of the public comes in and tenders the price mentioned in the
advertisement. It would lead to most extraordinary results – … There is nothing as far as I
know which obliges a tradesman to sell to any customer who chooses to present himself in his
shop …”

FISHER V BELL 1961 (1) OB 394

It was an offense to offer for sale flick knives. A shopkeeper displayed a flick knife for sale on
his shop window. He was charged with the offense of offering it for sale. The court found him
not guilty and held that displaying the knife on the window was simply an invitation to treaty
as opposed to an offer.

EXCEPTIONS TO THE GENERAL RULE REGARDING ADVERT

OFFER
In certain circumstances however some advertisements are really offers where by its
appearance the advertisement is so serious that what the offeree has to do is just accept not to
go for negotiations. This has been held to be so especially where a reward is offered for doing
a certain act. By merely doing the act then there should be a contract.
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Thus, a valid contract can be created through advertisements and auctions
where:
a) The general offer is made to do business with whoever shall perform certain acts.

As in the case of Carlill v Carbolic Smoke Ball Company, the company was selling smoke balls.
They placed an advertisement in the newspaper to the effect that anyone who uses the smoke balls for
21 days and contracts influenza will be compensated by the company. The advertisement had the
statement “anyone who uses our smoke balls per instruction and contracts influenza will be paid 120
pounds as compensation. 1000 pounds has been deposited into the bank to show our sincerity in this
matter.” The court had to decide whether this advertisement amounted to an offer. The court held that
it did since the company had committed itself to pay the affected parties by depositing 1 000 pounds
into a bank account.

b) It is a reward offer
For the offer to be firm, the following requirements must be present:
1) The offeree must be the first person to make the performance (i.e. give information) see
below LEE v AMERICAN SWISS WATCH Co. 1915

2) The offeree must have been aware of the existence of the reward, BLOOM v
AMERICAN SWISS WATCH Co. 1915 AD,

3) The offeree must be the intended offeree or be amongst the intended offeree.

BLOOM v AMERICAN SWISS WATCH Co. 1915 AD,

On 19th March 1913, a robbery was perpetrated at the Cape Town premises of the defendant
company and jewelry value at £5000 was forcibly removed. In the press the following day,
there appeared a notice in these terms that a reward of £500 was offered to any person who
could supply information leading to the arrest of the thieves and recovery of the jewelry.
Bloom supplied the required information to the C.I.D. but at the time he did so, he was not
aware of the reward. The Court said he/she could not be given the reward since he could not
accept an offer of which he was unaware. Solomon, JA: “Until the plaintiff knew of the offer,
it seems clear that he could not accept it and, until he accepted it, there could be no contract,
for a contract requires that there should be a “consensus” of two minds, and if the one did not
know what the other was proposing, the two minds never came together …” A person acting
as required by a reward advertisement will receive that reward only if he was aware of the
reward when he so acted.

LEE v AMERICAN SWISS WATCH Co. 1915

Lee gave information after Bloom. The court sought to establish whether Lee was eligible
after Bloom was ruled ineligible. “It is the person who gives information who is entitled to the
reward offered. For disclosures are not information unless they contain something which is
new.” Where only one reward is available only the first person acting as required, provided he
knew of the reward, will receive such reward. Anyone who is not the first will not receive the

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reward even if the party who was first did not receive it. This is so because after Bloom “the
police were in possession of the facts and the offer could not be regarded as still open for
acceptance.”

ACTIVITY

5.5.1.4 ACCEPTANCE

 OBJECTIVES
 Define acceptance.
 Outline the requirements of a valid acceptance.
 Discuss the information and expedition theories
 Identify and discuss the ways in which an offer can be terminated

5.5.1.4.1 DEFINITION OF ACCEPTENCE

This is the consent by the offeree to abide by the terms of the offer made to him/her.

5.5.1.4.2 ESSENTIALS OF A VALID ACCEPTANCE

Acceptance must be: -

1) Made during the life of the offer i.e. before the offer comes to an end or lapses and by the
person to whom it was made.

2) Acceptance must be unqualified and must meet all the essentials of a valid contract.
Jones V Reynolds 1913 AD366. In this case the offeree replied to an offer for lease of a farm saying
“- this serves to accept (your offer), but as I explained to you, conditionally upon your deleting clause
9 having reference to sub-letting. The court held that this statement constituted a conditional
acceptance amounting to a counter offer which cancelled the original offer. Therefore since there was
no longer a valid offer to accept the acceptance was invalid and the alleged contract void.

3) It should be in the manner prescribed by the offeror.

4) Acceptance should be communicated to the offeror before the contract becomes

binding.
Where however the offeror prescribes that acceptance of the contract shall be by post the
golden rule is that the contract becomes binding as soon as the letter of acceptance is posted
by the offeror not when it is received by the offeror.

In this situation it can therefore be validly sated that where acceptance is by post the need for
communication is regarded as dispensed with because there is a binding contract even before
the offeree has received the response. If the letter gets lost or destroyed before reaching the
offeror, the law there is a binding contract.

A case to illustrate acceptance by post is R V Nel 1921 AD 339. This case shows that a
contract comes into existence where the letter is posted. N had a license to sell liquor in the
Transvaal only not in the Cape. X ordered liquor from the Cape and N dispatched the liquor
by post. N was convicted for selling liquor to a person in the Cape without a license to sell
there. It was however held on appeal that the transaction or the contract of sell had taken place

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in Transvaal when N accepted the order by posting the liquor not in the Cape where it was
received. Thus the sale was not in the cape but in Transvaal where N had a license.

Cape Explosives Works Ltd V South African Oil and Fat Industry Ltd 1921 CPD 244.
On 10 July 1916 SA Oil and Fat Industry made a written offer from Transvaal to sell glycerine to the
plaintiff in the Cape. On the 14th the plaintiff posted a letter of acceptance. C. E. W Ltd was now
suing on the contracts in a Cape court. The defendant argued that the Cape court had no jurisdiction
i.e. power to hear the case since the contract had been concluded in Transvaal. The court ruled that the
contract had taken place in the Cape when C. E. W had posted the letter of acceptance thus the Cape
court had jurisdiction to hear the case.
It should however be noted that if the offeror prescribes that postal communication be used as
a mode of acceptance and his postal address is incorrectly spelt by the offeree through the
offeree’s own fault, the acceptance will be postponed until the letter is received and if it is not
received then there would be no valid acceptance hence no contract.

If the error of address is the fault of the offeror through giving incorrect, incomplete
information or failure to notify change of address, then the acceptance will be valid upon
posting even if the letter does not reach the offeror.

5) An offer can be accepted by express words in writing or by conduct.

So where one requests that he needs a delivery of sugar and the seller dispatches without
saying a work, this is valid acceptance as inferred / gathered from his behaviour.

Information theory

The general rule regarding acceptance says that acceptance is only effective until it reaches
the mind of the offeror, hence communication of acceptance should be made using quick
means such as, telephone, telex, facsimile (fax). However the information theory supports the
general rule regarding acceptance

Expedition theory

This is a theory that governs acceptance through the post. Here we distinguish between
contracts entered into by letter and telegram, which are exceptions to the general rule of
acceptance. The rule says that acceptance is valid when the letter of acceptance is posted even
if it does not reach the mind of the offeror. Simply because it is the offeror who has chosen
that means of communication and it is implied that the Post Office now acts as the agent of
the offeror.

5.5.1.5 TERMINATION OF AN OFFER

How does an offer come to an end?

i) By acceptance – ordinarily if an offer is accepted then it comes to an end since it is now

converted into a contract.

ii) By Revocation – The offeror may withdraw his offer at any time before it is accepted by
the offeree he cannot withdrew it after acceptance because there would now be a valid
contract. Withdrawal of an offer is what referred to as revocation. For it to constitute
effective revocation the offeror has to notify the offeree that has revoked the offer. The
withdrawal of an offer may be affected where the offeror grants the offeree an option.
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iii) By a counter offer – As noted elsewhere above an offeree is only supposed to say, “yes”
to the offer for there to be a contract. If he introduces a new condition or term then it is not
acceptance but a counter offer which also has to be accepted by the first offeror. In Hyde
V Wrench 1840. D offered to sell his property to P for £1 000. P wrote that he would
accept £950. D refused this and P then sought to accept the £1000 D had by this time
decided not to sell. P sued D saying there was a contract since D had offered £1 000 and
he had accepted. Held the court, when P refused the offer by suggesting £950 which the
seller also had to accept. The seller had refused this so P would not renew a original offer
which he had already cancelled.

iv) Lapse of time – If an offer stipulates a period within which it should be accepted and
there is no such acceptance within that time then it will lapse. If no time is stated then the
offer will lapse after a reasonable time.

v) Rejection - Rejection should be distinguished from revocation. With rejection the offeree
is the one who rejects or refuses to accept the proposed offer. If the offeree rejects the
other then it comes to an end.

vi) Death – Ordinarily speaking death of either the offeror or the offeree would terminate an
offer.

An option is separate agreement between the offeror and the offeree that the offeror shall
keep his offer open for a certain period of time. Here the offeree maybe taking time to make
his decision. The offeror thus, where he grants an option, cannot withdraw the offer until the
agreed date of the option has lapsed. An option should however be distinguished from a Right
of Pre-emption. A right of pre-emption is a separate agreement between two persons where
one stipulates that should he intend to offer or to sell something, he will offer first to the other
party before offering to other people.

BOYD v NEL 1922

Nel gave Boyd an option to purchase a farm but then allowed prospecting. In the result,
Government declared the farm an alluvial digging. Meanwhile Boyd had arranged to
subdivide the farm into plots for resale. Nel’s action forced him to abandon those plans

ACTIVITY
1) Explain five ways in which an offer can be terminated. 10 marks
2) Does silence mean acceptance. Discuss 10 marks
3)

5.5.2 THE AGREEMENT MUST BE MADE WITHIN THE LIMITS OF THE

PARTY’S CONTRACTUAL CAPACITY

OBJECTIVES
 Define the term contractual capacity.
 Discuss the contractual capacity for- Minors, married women, the insolvent, the insane,
prodigals, corporate bodies and drunk persons

5.5.2.0 INTRODUCTION
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In order for any contract to be a valid contract both parties must have capacity to enter into
such a contract. The general rule is that all people have capacity to enter into a contract.
However certain groups of people may not have full capacity. These groups are discussed
below:

5.5.2.1 DEFINITION OF CONTRACTUAL CAPACITY

Contractual capacity is the ability or power of a person to enter into a contract on his own
standing.
I. MINOR

A contract with a minor is invalid at law. The contract is void ab initio i.e. invalid from the
start. A minor is an unmarried person who is below the age of 18 years in Zimbabwe and
below the age of 21 years in South Africa. He is under the custody and authority of a guardian
whose duty is to look after the minor, to look after his property and assist him in entering into
contracts. As a general rule the contract with a minor can be enforced by the minor against a
major person but a major person cannot enforce it against the minor. So the discretion is on
the minor to be bound or not to be bound by the contract.

However in certain circumstances a minor may be held liable especially in the following
instances.
a) Unjust Enrichment
Where a minor is unjustly enriched, i.e. gets a benefit for nothing in return, contract remains
invalid but he is under an obligation to make restitution (to return) to the other party anything
that is still in his possession at the time of the action. Thus the minor should return any benefit
obtained by him under an invalid contract.

Case: TONNE v FOGGIT 1938 TPD .Foggit a minor child entered into a contract without
the knowledge of his father or natural guardian to take lessons at a college for two weeks in
March and for the whole of April -–fees being payable in advance. He paid only for the March
lessons and attended them but neither paid nor attended the April lessons.
It was held that, he was liable for only the two weeks that he had attended since he had no
fraudulently misrepresented anything. The court focused on the “benefits actually enjoyed”. A
minor is liable to the extent enriched and so Foggit paid only for services received.

b) Tacit Emancipation
This occurs where a minor is allowed to carry on business and enter into contracts without the
assistance of his guardian. This is obviously of practical necessity. Honestly a person who is
below 18 years and is employed, earns a separate salary and lives all by herself should be
tacitly emancipated to be able to contract without the assistance of anyone.

Case: DAMA v BERA 1910 TPD

Bera, 21 years old, and a minor under South African law was employed as a domestic for 4/5
years. She controlled her own income and contributed for board and lodgings to her mother
and stepfather with whom she lived. The stepfather disclaimed responsibility for her. Bera
sued Dama for wages due. Dama raised the defense that Bera, being a minor did not have
locus standi in judicio. The court held that Bera, in her circumstances, had been emancipated

c) Fraudulent Misrepresentation
Here the minor would have fraudulently lied as to his or her age. The major party who would
have contracted with that minor cannot sue on the contract because it is an invalid contract but
can sue for a civil wrong or a delict done to him by the minor. His claim would be to recover
all that he would have lost.

d) Ratification

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If a minor enters into a contract with another person without guardian assistance the guardian
can later ratify such a contract. Ratification means accepting all that has been done without
authority as if it was done with such authority. Ratification may also be expressed or implied.

Case: STUTTAFORD v OBERHOLZER 1921 CPD. Oberholzer a minor bought a motorcycle

on hire- purchase. When he became a major, he continued to ride the motorcycle but failed to pay
instalments. When sued he pleaded minority at the time of the contract as defense. Oberholzer was
bound due to “ratification by deed” as he continued to use the bike in full knowledge of his legal
position.

II. MARRIED WOMEN

In Zimbabwe all marriages since 1929 are presumed to be out of community of property.
When people marry out of community of property it means that although husband and wife
are now living together there is no fusion or mixture of property. The husband still retains
what belongs to him although they are under one roof. Thus according to Zimbabwean law the
wife is free to deal with her share of property without the assistance of her husband. So the
wife in Zimbabwe has full contractual capacity to contract with any other person. It is also
perhaps necessary to emphasise here that once a minor, for example a 17 year old, is married
in Zimbabwe she is tacitly emancipated and becomes a major on marriage. If the marriage is
terminated before she reaches 18 years she does not revert back to minority. So in essence
women married out of community of property in Zimbabwe have full contractual capacity.

If parties marry in community of property it means that there is mixture of the wife and
husband’s property such that no none can distinguish what is his or hers. In Zimbabwe on
divorce the wife takes what rightfully belongs to her and the husband takes his. The property
is distributed equally each taking half share despite the fact that one of the parties may not
have bought anything at all. However where the property in brought together, one person is
put in charge of it whilst the parties are married. Thus the husband is appointed as the
administrator of the joint property. Therefore since he is the administrator of the joint
property. He enjoys what is called marital power. The wife does not have contractual capacity
to deal with the property since she is placed under the power of the husband. Therefore in
entering into contracts effecting the property, the wife lacks capacity and any contract entered
without the assistance or consent of the husband is void ab initio (invalid from the beginning).

The only exceptions where a wife can contract the assistance of the husband are where she is
buying household necessaries and other few exceptional cases. It has however to be pointed
out that is Zimbabwe parties may opt to marry community of property by entering into a
contract called ante – nuptial contract. In South Africa those who don’t want fusion of
property and want to marry out of community of property also have sign an ante nuptial
contract.

In short, women married outside community of property in Zimbabwe have full

contractual capacity and women married in community of property are under the
marital power of their husbands and do not have full contractual capacity especially
when dealing with matrimonial property.

III. INSOLVENT PERSONS

Insolvency occurs where a person’s financial position is such that he cannot pay off his debts
i.e. his liabilities exceeds his assets. The person in trouble may apply to court that he be
declared insolvent. The creditors of that person can also apply. Once one is declared insolvent
his property is taken away from him and placed under a Trustee who realizes it and try to
distribute equitably the remains of the property amongst the creditors. In terms of the
Insolvency Act an insolvent person lacks capacity to enter into contract especially when
dealing with his property. Any contract entered into with an insolvent person without the
assistance of his trustee is void ab initio.

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IV. PRODIGALS
A prodigal is a person who has been declared by the court to be incapable of managing his
affairs as a result of a propensity to squander his assets. A prodigal differs from an insolvent
in that a prodigal may still have the assets and may still have money to pay his debts but he is
just careless in his spending. A prodigal cannot contract with regard to his property and if he
does so that contract in void but besides his property, he can contract. The prodigal has a
curator appointed to assist him in his contracts.

V. INSANE PERSONS
A contract entered into by an insane person is void ab initio. Thus where one can establish
that, he /she was incapable of understanding and appreciating the transaction or that his
contract was influenced by an insane delusion caused by a mental illness, the contract can be
treated as invalid.

VI. DRUNK PERSONS

Where a person enters into contract while so drunk that the does not know what he is doing
and has no idea of the terms; the contract is void but not if the drunk person is merely more
persuadable or more willing to contract.

VII. ARTIFICIAL PERSONS

Artificial persons include companies and associations. In Zimbabwe a company can enter into
any contract as if it were a natural person. It used to be that where a company entered into a
contract exceeding its objects clause in the memorandum of association, that contract was
void ab initio but the position was changed by the Companies Act and any transaction entered
into by an agent of an artificial person is a valid and binding one

5.5.3 THE PARTIES MUST SERIOUSLY INTEND TO CONTRACT I.E. ANIMUS

CONTRAHENDI.

For the contract to be a valid one it should be shown that the parties has serious intention to
contract (Animus Contrahendi). Thus one should expect action to be bound legally therefore
courts will not treatment such as an enforceable contract.

The concepts of serious intention to contract has actually engulfed that the agreement itself
should not be vague. A vague agreement is thus treated as lacking the much needed animus
contrahendi. The courts have described the following as vague agreements.

i. Contracts which depend on a condition that the promisor will be bound if he so wishes.
KANTOR V KANTOR 1962 (3) SA 207. Under a contract K agreed to settle on his
wife (give his wife) “all such furniture, linen plate and domestic effects, together with
any and all renewals of and additions to the same, as he may then or thereafter acquire, at
such times and is such quantities as may be expedient to him”. This promise was held to
be too vague and unenforceable as it gave unlimited discretion to the donor.

ii. Where a contract is impossible to perform when it is entered into, it in void ab initio. The
impossibility, to render a contract void should be absolute impossibility i.e. where
performance is impossible not only to the other party but also to everyone else. Thus
where parties contract to buy a dog which they are not aware that it has been run over by
a car, this contract is invalid from the start because it is no longer possible to deliver the
dog. If the contract is invalid from the start because it is no longer possible to deliver the

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 dog. If the contract becomes impossible after it has come into existence this is called
supervening impossibility and the contract will come to an end as soon as the
impossibility surfaces.

5.5.4 THE AGREEMENT MUST BE LAWFUL.

A contract must be legal for it to be valid. An illegal contract is treated as if there is no
contract at all. There are a number of ways in which a contract can be invalid.

a. Common Law Illegality

This is a contract which is illegal because it is against public policy or is contrary to good
morals i.e. contract contra bonos mores. A contract which is against public policy is for
example where one enters into a contract with an alien enemy or a contract to bribe a public
official. A contract which is against good morals would be for example where one contract to
participate in homosexuality or the contract to encourage divorce. The courts are not prepared
to enforce these contracts.

b. Statutory Illegality
The legislation may make its intention clear by passing a law that any contract of a specified
nature or which does not fulfil certain statutory requirements shall be null and void and of no
force or effect. Thus for example the Hire Purchase Act stipulates that all contracts of hire
purchases should be reduced down to writing. The effect of this is that if such a contract is not
reduced to writing it is invalid as a Hire Purchase. Another example where a statute prohibits
a certain type of contract is the Companies Act chapter24:03 section 177 which says that nay
contract by a company to offer loans to its directors shall be invalid.

i. A Contract in Fraudem Legis

Where one is aware that the contract he intends to enter into is an illegal contract prohibited
especially by a void contract. The argument here is that the contract is disguised so as to fall
outside the scope of the statute when in actual fact it falls inside. Thus if a law prohibits a
minister from owning business and he proceeds to register the business in the name of his
niece when in actual it is his business, this is a contract in fraudem legis.

Rules that regulate the relationships of parties in an illegal contract

A. Ex Turpi Causa non Oritur Actio
When dealing with illegal contracts, the above maxim says that, where one party suffers some
loss in an illegal contract the courts are not prepared or shall not use its machinery to enforce
such a contract. Thus where one contract seek to bribe a driving inspector to process a license
for him and the inspector does not process the license or to be given back what he had paid
over under the illegal contract, the court cannot enforce such contracts because it does not
want to be a participant in an illegal transaction.

Case: IN LION MATCH COMPANY V WESSELS 1946 OPD 376. W sued for the price
of wood he had sold and delivered to L M. It was a requirement that W had to have a license

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first before the sale but he did not have one. It was held that the sale contract was illegal and
unenforceable

B. Pari Delicto Rule

Pari delicto means equally guilty. This rule says that, if parties where in pari delicto, and
where property or money has been transferred under an unlawful agreement, the loss lies
where it falls, which means that the money or property will remain where it is. This means for
example that one party who receives property under an illegal contract will continue to have it
even though he has not paid for it because the other cannot sue him since the contract was
illegal.

However if parties where not in pari delicto or there is unjust enrichment the aggrieved or
innocent party is allowed to recover his/or her property or money he/she transferred under the
illegal contract.

Case: Unjust enrichment DUBE V KHUMALO 1986 (1) ZLR103.

Bulawayo Municipality prohibited a person from owning two houses in the city. The parties
had contracted to buy a house to be registered in the name of the girlfriend. The use of the
girlfriend’s name was to deceive Bulawayo Municipality because the husband had another
house with a wife elsewhere in the city. When the relationship between the husband and the
girlfriend soured (as it will always do), the husband sought to recover his money for the
buying of the house. The court first stated that the rule in pari delicto would mean that the
wife will keep the house and loss would lie where it is. The husband should not seek help of
the courts where he had entered into an illegal contract.

However strict application of this rule would be unfair to the husband and a benefit to the wife
who had also participated in an illegal transaction. So generally the courts are prepared to
relax the rule to do justice between man and man to prevent unjust enrichment. Thus in Dube
V Khumalo (supra) the rule had to be relaxed to allow the husband to recover a portion of the
money.

Another interesting case where the pari delicto was well enunciated is JAYBAY V
CASSIM 1939 AD 537. J the registered owner of a piece of property had sublet the property
to another. The laws did not allow subletting. When the tenant refused to vacate, he then
wanted to sue to evict the tenant. The tenant was not supposed to have occupied the premises
in the first place. Here if in pari delicto was to be applied in strict sense the tenant could not be
evicted but the court relaxed this rule noting that both parties were equally guilt.

5.5.5 THE PARTIES MUST BE OF THE SAME MIND AS TO THE SUBJECT

MATTER (CONSENSUS AD IDEM).

5.5.5.1 MISTAKE

A mistake is a disunite of mind or misapprehension of the mind on aspects of the contract. It

occurs when parties are mistaken about the existence or non-existence or absence of a fact that
is material to their transaction. Mistake exists where parties to a contract think that they have
agreed when in actual fact they have not. A mistake can be a mistake of fact or law.

Mistake of fact relates to a matter of facts on which the agreement is based on, not to the law
applicable to facts. It relates to the terms or conditions of the contract. Affects validity of the
contract if it is an operative or fundamental mistake. A Fundamental or Justus error is one
which causes hardship to a person

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Mistake of law is that one which affect the matter of law. This is when parties are mistaken as
to what the law says. Such a mistake does not invalidate a contract because of the principle of,
ignorantia juris neminem excusat.

For a party to be able to set a contract aside on the basis of mistake he has to establish the
following:
a. The mistake should be one of fact not law.

b. The mistake must concern a material fact. To determine whether a mistake in material the
question is whether a party would have contracted had he known of the mistake. If he
would have contracted then the mistake is not material but if he would not have
contracted then it is material.

c. It must be a reasonable mistake

4.5.5.2 Fundamental mistake/errors include;

a. Error in negotio- error as to the nature of an agreement ,i.e. a mistake affecting the
nature/ kind of an agreement e.g selling intention Vs leasing intention, student application
Vs employment reply.

b. Error in persona- mistake as to the identity of a party to a contract.

c. Error in corpore- mistake affecting the identity of the subject matter (thing) e.g buying
an ox instead of a bull.

d. Error in substantia (material) - error as to the nature of the quality of the subject-matter
of the contract.

e. Error in quantity- error as to the amount of the subject matter.

CLASSIFICATION OF MISTAKES

A. Unilateral Mistake
This occurs only when one of the parties is labouring under some misapprehension i.e.one
party is mistaken and the other is not. The general rule is that a party who is mistaken under
unilateral mistake cannot set the contact aside on the grounds of mistake unless it can be
shown that the mistake is Justus i.e. justifiable and reasonable.

In MABHENA V BULAWAYO POLYTECHNIC COLLEGE H.B 22 – 94.

The applicant was admitted to a cookery course at Bulawayo College. The applicant had 3
Zambian Ordinary Level subjects. The college’s minimum requirements were 5 Ordinary
Level subjects. The applicant was admitted by mistake. The college now intended to expel her
and she sued. The court stated that before a party can opt out of a contract on the grounds of
unilateral mistake it has to be shown that the mistake is reasonable. It was held that the college
would not opt out of the contract because the mistake was neither justified nor reasonable

B. Common or Joint mistake

This exists where both parties are mistaken. There they would be thinking that they have
agreed when in actual fact there is a common mistake on either side courts have usually
allowed both parties to set such a contract aside. The academic argument which is well

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founded is that such a contract should be treated as void because one of the requirements i.e.
consensus ad idem is missing.

This was illustrated in the case of DICKINSON MOTORS (PTY) LTD V OBERHOLZER
1952(1) SA 448(A). Mr. Oberholzer sued the appellant for repayment of the sum of 291
pounds which he alleged to have paid in error. He paid it to obtain a car which both parties
thought had been sold by the appellant to the Respondent’s son on Hire Purchase terms. In
fact it was a different car, which belonged to Alris Motors from whom the Respondent’s son
had bought it on Hire Purchase terms. The Messenger of Court had attached the 2 nd car
thinking that it was the first and it was delivered to the Appellant for repossession. The
Respondent had paid 291 pounds to get the car back. It was held that the respondent could
recover the money he had paid under a common mistake. The general rule is that such a
contract is void and unenforceable

It is important to note that mistake or ignorance of the law is not an excuse, that a mistake of
law does not invalidate a contract was held in NCUBE V NDLOVU 1985 (2) RLR 281. The
appellant seduced a major daughter of the respondent. The appellant then signed an agreement
undertaking to pay the respondent damages for seduction. He wanted to avoid the contract on
the basis that he was mistaken as to the law i.e. he did not know that a father has no right to
sue for damages in respect of seduction damages of a major daughter. The appeal was
dismissed because this was a mistake of law not a fact.

C. Mutual mistake
This occurs when each party is mistaken about the other’s intention so that the parties are at
cross-purposes. In solving this problem the court usually applies the doctrine of quasi mutual
assent. Courts have adopted two approaches namely:

a) If one of the parties understanding what has been agreed is unreasonable in that it conflicts
with the impression he has given to the other party, he will be deemed to have agreed in
accordance with the impression he has given.

b) If each parties understanding/mistake is reasonable then there will be no contract between

the parties.

MARITZ V PRATLEY 1894 11 SC 345.

At an auction sale two lots, a mirror and a mantel piece were separately numbered but
however the mirror was placed on top of the mantel piece. Maritz the auctioneer knocked the
mantelpiece to Pratley and then invited bids for the mirror. Selling a mirror and a mantelpiece
together was quite common. Pratley refused to pay for the mantelpiece arguing that he had
bided for both the mirror and the mantelpiece. When he was sued for the price the court held
that the mistake was justified and reasonable and Pratley could avoid this contract.

RECTIFICATION OF A MISTAKE
The court may rectify or correct a mistaken agreement upon application by one or both parties
in contract. Rectification cannot be effected when;

a) The contract is illegal

b) The contract will prejudice one party or the third party

WRITTEN DOCUMENTS SIGNED BY MISTAKE

The doctrine of CAVIAT SUBSCRIPTOR (meaning basing on the signatory) requires a

person to be alert when signing a contractual document. It states that the signature binds a
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party who signed a document containing contractual terms whether or not he has read and not
understood the terms of the contract

The effect of signing a contractual document is that the party is bound by the contractual
terms because of his or her signature.

The CAVIAT SUBSCRIPTOR RULE is applicable even if;

1) The signatory signed in blank spaces

2) It is obvious that the signatory has not even read and not understood the document
3) The document was recklessly, carelessly or signed by mistake.

GEORGE v FAIRMEAD 1958 SA

A guest at a hotel was given a register to sign. He signed the register without
reading/familiarizing himself with a clause that exempted the hotel from claims arising out of
theft. His clothes were stolen and the hotel refused to compensate him. He said he had made a
mistake through ignorance based on Justus error believing that he was signing a mere register
not a contract. But the court said he was bound by his signature. “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 doing
so, his assent to whatever words appear above his signature. If he chose not to read what that
additional something was, he was, with his open eyes, taking the risk of being bound by it. He
cannot then be heard to say that his ignorance of what was in it was Justus error.” Thus unless
induced by misrepresentation or fraud, one is bound under caveat subscriptor by his own
signature - even if the material was neither read nor pointed out.

BHIKAGEE v SOUTHERN AVIATION PVT LTD, 1949.

Bhikagee sought to escape liability on grounds that he could not read English and that the
terms had not been brought to his attention and had not been explained. “The fact that the
defendant did not read the condition on the ticket and did not know their contents is
immaterial by his signature he elected to take the risk and he is bound.”

The CAVIAT SUBSCRIPTOR RULE is not applicable where;

1) The signatory is illiterate or blind but not a trader
2) A person is misrepresented.
3) A person was induced by a false statement of another to sign a fundamentally different
document the one he intended to, but has to prove that;
a) He signed a different document
b) Was induced by misrepresentation otherwise might not have done so.
c) The mistake was not due to his carelessness, the defense PLEA OF NON EST
FACTUM meaning it was not my deed.
d) The mistake was a reasonable one
e) Entered into a contract at his prejudice.

MANS V UNION MEAT COMPANY (1919)

M signed a memorandum containing a guarantee without reading or understanding it, on the
representation of company’s representative that he was merely acknowledging a receipt of a
cheque. The court held that the memorandum did not bind M because of misrepresentation.

INTERPRETATION OF WRITTEN DOCUMENTS

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Interpretation is a process of determining the meanings of the words and other intentions that
the parties used in forging their agreement when the language used is not clear (ambiguous).
Mostly this is done to validate a contract where a dispute arose as to the nature of the
agreement when parties are not in ad idem and cannot resolve the dispute.

The rules of interpretation include;

a. Standard of general usage OR the Golden rule

This involves giving meanings that would be attached to the agreement by a reasonable person
who was aware of all operative uses and acquainted with the circumstances at play prior to
and during the making of the agreement. Ordinary meanings are attached to words. Ordinary
words are given their ordinary common grammatical meanings unless this would result in
absurdity of the contract when words are given their technical meanings.

b. Standard of limited usage

This involves attaching word meanings given to a language in a particular trade instead of the
general usage. Technical meanings are used.

c. The Contra proferentum rule

This is when the court would adopt the meaning favourable to the one who is not the author of
the contract. This involves interpreting against the one who inserted and wrote the contract.

d. The Parole evidence rule

It states that oral testimony (evidence) should not be used to alter, add to or vary the terms of
a written contract. Therefore, if the contract has been reduced to writing, the court would not
allow any external oral evidence to prove what terms are but circumstances surrounding the
transaction should be taken into account.

5.5.6 THE AGREEMENT MUST NOT BE VAGUE

As a general rule a contract is void if it contains vague terms. Contracts void for vagueness are
placed in four categories:

1. The contract is not enforceable because the promise is dependent on a condition which in
fact reserves unlimited option to the promisor.

2. Where the vague or uncertain language justifies the implication that the parties were never
ad idem.

3. Where there is no contract concluded between the i.e. inchoate contracts where important
details are lacking.

4. In cases where the unspecified details of the contract are questions of fact capable of
determination by evidence.

In LEVENSTEIN V LEVENSTEIN 1955(3) SA 615

where in an answer to the plaintiff’s claim for an ejectment order the defendant pleaded that,
“In or about April 1946 a verbal agreement was concluded that between plaintiff and
defendant in terms of which the plaintiff undertook, in consideration of/for the understanding
by the defendant hereinafter mentioned to give; and transfer to the defendant the said number
977 and the said business. The defendant in turn understood to maintain the plaintiff to the
best of his ability during the remainder of her life, and further undertook to maintain and
educate, “… till such a time as she was capable of maintaining herself.” The plaintiff accepted
to this plea on the grounds that the agreement was void for vagueness and was unenforceable.

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The word business was ambiguous and the words to maintain the plaintiff to the best of his
ability were uncertain to be capable of precise definition.

In KANTOR V KANTOR 1962(3) SA 202

Before the plaintiff and the defendant got married and they entered into an Ante nuptial
contract. The husband made an undertaking to buy his wife all such furniture, linen and
domestic effects as may then or thereafter acquire at such time or such quantity … Upon
marriage the husband failed to fulfil this and the wife brought a legal action against him.
Court held that the husband was not bound to do anything because there was unlimited
discretion.

The approach of the courts is to give effect to the validity of the contract and they are reluctant
to annul a contract on the basis that it is void for vagueness. This is in tandem with the
Shibboleth doctrine which says that courts are not there to make contracts for the parties but
simply to interpret and enforce what parties would have agreed. This is in line with the
doctrines of freedom of contract and privy of contract. CHIKOMO V. MUHWEZA 1998 (1) ZLR
452 (SC))

This approach of the courts is in line with the doctrine of utres magis valcat quam pereat (It
is better to give effect to an agreement rather than to let it perish).

5.5.7 PERFORMANCE MUST BE POSSIBLE

For a contract to be valid at law it should be possible to be performed at the time of
contracting. Where it is impossible to perform the contract will be treated as void because of
initial possibility. A contract can only be void because of initial impossibility if the
impossibility is absolute i.e. it should be impossible for everyone not for a single individual.

In the case of WILSON V SMITH AND ANOTHER 1956 (1) SA 393.

W sold part of a larger area of land in Johannesburg. Both parties thought it was possible to
subdivide this land and give the buyer his own portion. However because of municipal laws at
that time this was not possible. Wilson applied that the sale be declared null and void. It was
held that this contract was impossible to perform because of the law therefore it was void ab
initio. Initial impossibility would generally apply but if a party seeking to avoid the contact
knew or foresaw that it would be impossible then he cannot avoid the contract.

5.5.8 NECESSARY PRESCRIBED FORMALITIES MUST BE FOLLOWED

Some contracts need to comply with formalities e.g. a mortgage bond has to be reduced into
writing and registered with the Deeds Registries Office for it to be binding to the parties.
Generally contracts can either be express or oral.

5.6 VOIDABLE CONTRACTS

A voidable contract is one which is rather otherwise valid per se because it has all the
essential elements of a valid contract, but the only outstanding issue is that the consent of the
other party would have been obtained improperly due to duress, misrepresentation or undue
influence. The aggrieved party has a choice whether to stick to it or seek that it be set aside.

The following are reasons or flaws which would allow one of the parties to set the contract
aside;

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 1) Misrepresentation
2) Duress
3) Undue influence

5.6.1 MISREPRESENTATION
Havenga et al (2004), defined misrepresentation as an untrue statement or representation
concerning an existing fact or state of affairs which is made by one party to the contract with
the aim, and result of inducing the other party into concluding the contract. The
misrepresentation may relate to the qualities or characteristics of the subject of the contract.

An innocent party who has been included to enter into a contract can set the contract aside or
claim damages whilst he stands by it. But for one to be able to set a contract aside on the basis
of a misrepresentation he has to prove the following:

a) The misrepresentation must have been made with intention to induce the other party to
enter into a contract. It should not be a mere puff or simplex commendation which is a
statement made before contracting which the maker does not intend you to take it
seriously and which statement has no legal consequences. Thus where a seller depicts the
subject matter of the sale with glowing colours, it is not a misrepresentation. An example
would be where the seller says “My car can really fly”. Here the maker of the statement
does not have intention to be sued if the car does not fly.
Another question is if someone keeps silent about a contract to be entered into, can he be
sued for having misrepresented? The answer is that silence will only amount to a
misrepresentation only where there is a duty to speak.

b) The other party should actually have been induced to contract relying on the
misrepresentation. Thus where one enters into a contract for other reasons not because of
the misrepresentation then he cannot set the contract aside on the basis of
misrepresentation

c) The statement must be false in fact. A mere statement of opinion, although it might be
false, may not be a misrepresentation. Thus in LAMB V WALTERS 1926 AD 35 an
opinion by the seller that the price was fair and reasonable was held not to be a
misrepresentation although – it was false as the price was too high. On the same note a
misrepresentation as to the position of the law does not amount to a misrepresentation.
Thus where one induces someone to enter into a contract by lying what the law says, the
other party cannot set the contract aside. The logic is that no one can be lied to about the
position of the law because everyone is presumed to know the law and also that ignorantia
juris neminem non excusat- ignorance of law is not a defence.

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d) The misrepresentation must be material. A material misrepresentation is one which is
likely to induce another one into contracting.

MISREPRESENTATION can be found in the following three types;

1) Fraudulent or Intentional misrepresentation.

It occurs if a false statement of a material fact is made with the intention of inducing a

contract and if that statement is made either in the awareness that it is false or recklessly

without regard to the truth or falseness of the statement. Havenga et al (2004).

In case of fraudulent misrepresentation, the innocent or aggrieved party may claim damages

irrespective of his or her choice of upholding or rescinding the contract. The basis for

damages is the delictual conduct of the guilty party and this means that the deceived party

must be placed in the position he or she would have been in if the misrepresentation had not

been made. A claim for damages for fraudulent misrepresentation is therefore a claim in delict

and not contract

Fraudulent misrepresentation can be viewed In the case of RANGER V WYKERD 1977 (2)

SA 976 (A), Ranger bought a house with a swimming pool from Wykerd. Upon inspection of the

premises, the Plaintiff noticed a crack in the pool which the Defendant assured him that it was

minor. However, upon occupation of the premises, Ranger discovered that the crack was major

and he lost R22 000 in repairing it. He then brought an action against the Defendant on the basis

of fraudulent misrepresentation. The court held that the Defendant had lied to the Plaintiff and

that the plaintiff had the right both to uphold the contract and claim for damages or set aside the

contract. The court further held that since fraud was a delict (a wrong committed against an

individual), the Plaintiff was entitled to claim for delictual damages. (MacColl 1990 )

2) Negligent misrepresentation.

Havenga et al (2004) defined this kind of misrepresentation as a false statement of a material

fact which is made negligently and with the aim of inducing a contract. Negligence will be

assumed if a person makes a statement he or she believes to be true, without taking the steps a

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reasonable person would have taken in the circumstances to satisfy himself or herself that the

statement was true.

Here, too, the misrepresentor is at fault and therefore the innocent party will base his or her

claim for damages on delictual principles. The party who has been misled may claim damages

irrespective of whether a decision to upholding or to rescind the contract is taken.

This kind of misrepresentation can be viewed In the case of BAYER SOUTH AFRICA PVT

LTD V FROST. The 2 parties agreed that Bayer would spray Frost’s vineyard which had

onions intermingled with wheat using a helicopter. Bayer assured Frost that the wheat and

onions would not be destroyed in the spraying process.

However, these were destroyed when the vineyard was eventually sprayed. It was discovered

that the company had never sprayed vineyards which had onions and wheat intermingled

using a helicopter before. Neither had the company taken any steps to discover whether or not

this was possible. The court found them negligent and further held that negligence was a

delict which attracted delictual damages. (MacColl 1990)

With negligent misrepresentation, the representor does not bother to verify the false facts he

or she takes advantage of that in order to induce consent of the other party.

3) Innocent misrepresentation

It occurs when a person utters a false statement believing it to be true. In other words,
Innocent misrepresentation occurs when the representor had reasonable grounds for believing
that his or her false statement was true. The usual remedy is rescission of contract. This is
when a contract is set aside and the parties are restored to the status quo ante (the position they
were before entering into the contract).

However with innocent misrepresentation the representor had assurance of the truth of false
statement, it’s unfortunate that events might have changed without his or her knowledge. The
representor had no intention to deceive.

In conclusion we have noted that what is common to all the types of misrepresentation is the
existence of false representation and that the representation must be reasonable to induce the
other party’s consent. Except that, the innocent party can only claim for damages under
fraudulent misrepresentation and negligent misrepresentation, whilst not under innocent

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misrepresentation, the induced party may either raise misrepresentation as a defense in a
lawsuit filed by the promise to enforce the contract or rescind the contract entered into.

5.6.2 DURESS
Havenga et al (2004) defined duress as an unlawful threat of harm or injury, made by a party
to the contract or someone acting on his or her behalf that causes the other party to conclude a
contract. Bampton and Drury (1999) also asserted that, in duress, force or threats of force are
used to induce a person to enter into a contract.

If a person is induced to conclude a contract by duress, such a person concludes the contract
rather than undergo the threatened action. The threatened person’s will is directed at the
particular agreement, consensus is reached and a contract in fact arises. However since, the
consent is obtained improperly, the contract is voidable. The threatened party has the choice
of either upholding or rescinding the contract. Damages may be claimed from the guilty party,
calculated according to the former’s negative interest, that is, he or she must be placed in the
position they would have been in had duress not occurred.( Havenga et al, 2004)

Havenga et al (2004) further disclosed that certain requirements must be satisfied before a
contract will be voidable based on duress, that is,

1) There must be actual physical violence or a reasonable fear or damage directed at the life
or freedom of the threatened person or his immediate family or property.
2) The threat must be of an imminent or inevitable evil
3) The threat of harm or violence must be unlawful. It is seemingly unlawful if a contracting
party uses it to obtain a more beneficial performance than one he or she would reasonably
be entitled to.
4) The duress must be exercised by one contracting party against the other contracting party.
5) The threat must cause the aggrieved party to conclude the contract. Therefore, it must be
the threatened person’s fear of the impending harm that convinces him or her to conclude
the contract or to conclude it on particular terms

The case of BROODRYK VS SMUTS 1942 TPD 47, reveals threat to the person. In this
case, the Plaintiff was forced to join the army by threats of death both on his person and his
family. The court had to set aside the contract on the basis of duress. The court held that a
party pleading duress should prove the following:

- That there was a threat of imminent danger either to the person or family or property of
the other party.
- The other party was induced into entering the contract which he would not have entered
into had it not been for the threats.
- That he was prejudiced. (MacColl ,1990)

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Another case of BLACKBURN v MITCHELL (1897) SC, reveals threat to property .A
ship was in danger of sinking in bad weather. A tug came to the rescue and its captain
demanded £2 000 from the captain of the ship in peril. When the latter said it was too much,
the captain of the rescuing tug threatened to leave them to drown, whereupon the beleaguered
captain agreed. The court said the contract was void for duress. The captain of the stricken
ship had signed under protest. “I will sign this bill, but you will never get paid.” The sailors
were however entitled to fair and reasonable recompense assessed at £1 000 instead of the
original £2 000 demanded.
In the case of “duress of goods” [as here] as opposed to duress of person, the court will
require that in addition to the five points listed in Broodryk, there must have been a
categorical protest at the time of the contract.

5.6.3 UNDUE INFLUENCE

If a party can show that he entered into a contract because of undue influence he can be
allowed to rescind or opt out of the contract. Unlike duress, undue influence is not direct but
indirect pressure. Thus it usually exists where one person occupies a position of influence in
another person’s life e.g. the relationship between a son in law and his father in law or doctor
and a patient. These influential people can weaken the power of resistance especially where
they ask to contract with you. They weaken the power of resistance of the other party. The
person who occupies an influential position however should have used his position in an
unacceptable manner to persuade the other to agree to a prejudicial transaction.

Requirements of Undue Influence

a) That the other party exercised influence over the other.
b) That the influence weakened the latter’s power of resistance.
c) That the other party exercised the influence in an unscrupulous manner to induce him to
consent.
PRELLER AND OTHERS V JORDAN 1956 (1) SA 483 AD
J claimed back his 4 farms which he had donated to his doctor. He alleged that the contract
took place when he was so old and mentally weak and exhausted. P influenced him to transfer
his farms to him (P) for P to administer them for the benefit of J’s wife. It was held on appeal
that in various cases in judicial dicta or in decisions, it has been recognized that such improper
influence may be a ground for cancelling the contract.

Whilst undue influence is likely to exist where there are special relationship it can also exist
where there is no such relationship as can be illustrated by the case of

PATEL Vs GROBBELAAR, 1974.

Grobbelar sought cancellation of a mortgage bond registered against his property in favour of
Patel thinking he owed Patel a loan for R40 000. Grobbelar had been persuaded by Patel to
believe that Patel had supernatural powers. In fact Grobbelar owed Patel no money. The court

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ruled in Grobbelar’s favour and they listed essential requirements for undue influence as
follows:

[1] One party exercises influence over another.

[2] That influence weakened his powers of resistance and made his will pliable.

[3] The influence was exercised in an unscrupulous manner in order to obtain his consent.

[4] The agreement is to his detriment

[5] Under normal free will he would not have consented.

Under undue influence one party achieves dominance over another and uses that dominance
improperly to persuade the other into a prejudicial contract which he would not otherwise
make. The resultant contract may be set aside.

5.7.0 TERMS AND CONDITIONDS

TERMS
A Term in a contract is a provision which imposes, on a contracting party, one or more
contractual obligations to act in a specific manner or refrain from performing a specific act, or
which qualifies the contractual obligations. It thus defines the contractual obligations to which
the parties bind themselves and which they can enforce against each other, or it stipulates the
time when or the circumstances in which the obligations either become enforceable or are
terminated. (Havenga et al, 2004)

TYPES OF TERMS IN A CONTRACT

a) Essential terms
These are terms which are key to the operation of the contract, hence they are material,
failure to observe one or more of these terms will amount to breach of contract.

b) Non-Essential terms
These terms are not central to the agreement and failure to observe by either party does not
amount to breach of contract

c) Express Terms
These are terms in a contract which the parties discussed and agreed upon to be part of
their contract. These express terms that are either oral or written down by parties.

d) Implied Terms
Without the need for any discussion or an agreement, the type of contract which the
parties enter into may determine the terms. The terms may also be inferred from the
conduct of the parties. These terms are to be regarded as part of the contract without even
referring to the people who are contracting.

TYPES OF IMPLIED TERMS

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 i. Tacit Terms / Terms Implied from the Facts
Christie, explains a tacit term as an unexpressed provision of the contract which derives
from the common intention of the parties as interfered by the court from the express terms of
the contract and the surrounding circumstances. The conduct of the parties thus may mean
that certain terms are part of their contract. The question would thus be looking at what was
actually said and the conduct of the parties what are the possible terms of that contract? This
is the significance of the doctrine in SMITH V HUGHES LR 6 QB 597 in which the judge
said, “if whatever a man’s intention maybe, he so conducts himself that a reasonable man
would believe that he was ascending to the terms proposed by the other party, and the other
party upon that belief enters into a contract with him, the man thus conducting himself is
equally bound to the contract.” The law seems not to concern itself with what is in the mind
of the person but what that person actually externally manifested.

ii. Terms Implied by the Law

The law may impose certain terms into your contract without referring to the parties’
agreement. For example, it is a term implied by common law that all contracts of sale should
have the price and the goods to be sold terms which are implied by law and were best
explained in the case of McAlpine and Son (Pty) Ltd V Provincial Administration 1974
(3) SA 506 in which the judge said:

“In legal parlance the expression “implied term” is an ambiguous one in that it is often used
without discrimination to denote two, possibly three distinct concepts. In the first place it is
used to describe and unexpressed provision of the contract which the law imports therein,
generally as a matter of course without reference to the actual intention of the parties. The
intention of the parties is not totally ignored. Such a term is not normally implied if it is in
conflict with the express provisions of the contract. On the other hand it does not originate
form contracted consensus: it is imposed by the law from without. Indeed terms are often
implied by the law in cases where it is by no means clear that the parties would have agreed
to incorporate them in that contract. Ready examples of such terms implied by law are to be
found in the law of sale e.g. the seller’s implied guarantee or warranty against defects, in the
law of lease the similar enjoyment and of defects. Such implied terms may derive from
common law, trade usage, custom or form statute. In the sense it simply represents a legal
duty imposed by law unless expressly excluded in the case of certain contacts”

iii. Terms Implied by Trade Usage

Those dealing in specialized commercial fields e.g. accountants or lawyers may develop
terms, which although not written or discussed are regarded as already part of their contract
for a term to be implied by trade usage it has to meet the requirements of trade usage noted
above.

IMPOSED TERMS
These are terms that emanate from one party to the contract on a take it or leave it basis, hence
the word imposed. Imposed terms are normally found on Ticket Receipts and Notices. The
issue here is that there is no document which is signed and a contract contains an exemption
clause, or a party is given a ticket written. “Chengetai nhumbi dzikarasika hatiripe” “Keep
your goods if lost no refund” Situations also exist where a notice, says, “Goods are left at
owner’s risk”.

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What should be the position of the law here?
The GENERAL RULE regarding imposed terms says, that if the party receiving these terms
was aware of the terms then he/she is bound and the terms will form part of the contract.
In order to establish whether the receiving party was aware, the approach of the courts in
situation where one is given a ticket is to ask the following questions:

1) Did the person who received the ticket know that there was some printing or writing on it;
If No;

2) Did he know that the printing or writing contained a provision exempting liability? If the
answer to these questions is in the affirmative then he is bound by the ticket. If one of the
questions, mostly the second is in the negative then we go to the 3rd question.

3) Did the person giving the ticket do what was reasonably sufficient to give the other notice
of the conditions? If yes the provision is part of the contract and the receiver should not
complain, if not then the receiver is not bound and should be compensated

DYER V MELROSE STEAM LAUNDRY 1912 TPD 164.

A laundry list stated that the articles which were to be washed were washed stipulating that
the laundry company would not be liable if articles were lost. Dyer never read this and when
her goods were lost she sued. The court ruled that the company had not done what was
reasonably necessary to ensure that Dyer saw the conditions therefore the company was liable
for the lost articles.

Similar principles would apply when reliance is placed on a term of contract which is posted
in a prominent position such as notices that “Cars are garaged at owner’s risk”

ESSA V DIVARIS 1947 (1) SA 753.

D who conducted a garage and service station had verbally contracted with E to store a lorry
at E’s risk at D’s garage. There was a notice which said, “All cars are driven and garaged at
owner’s risk”. This notice was placed at a prominent place with broad letters. E seemed to
know of the notice and did not bother to ask further. The lorry was damaged by fire and he
sued for the lorry. The court ruled that the notice if placed on a prominent position and written
in bold and clear words would allow D to exempt himself from liability of any damage. The
important point to note is that it should be in a prominent position such that it would be
difficult to allege that one did not see it. The court would then state that “you ought to have
seen it” not that “you actually saw it”.

5.8 CONDITIONS
In English law the word conditions is used to refer to terms of a contract. Thus one would ask,
“What are the conditions of the contract” referring to the terms of the contract. However this
is not the meaning in Roman-Dutch Law. In our usage, a condition is a future certain or
uncertain event and a conditional contract is one whose operation depends on the occurrence
or non-occurrence of a future event.
Types of Conditions

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a) Suspensive Condition
This is a condition which suspends the operation of a conduct until the condition has been
fulfilled. Thus where one says “I will give you my car if you go to town on a “stay away”
Wednesday and some back without any injuries.
A contract which is subject to a Suspensive condition is a valid contract. From the moment it
has been entered into no party can rescind or cancel it unless there is misrepresentation and
such other factors. If the condition is fulfilled the contract becomes immediately enforceable
retrospectively to the time of making the contracting unless the contract provides otherwise

b) Resolutive Condition
This is the opposite of Suspensive condition. By resolutive condition the contract is effective
and operational now but we are saying it will come to an end if the condition is fulfilled. If the
condition is fulfilled then the contract ends. Thus if one says “If you drink beer I will take
away my daughter from you” It means there is a contract to have the daughter which is
operating but it will end if the condition is fulfilled i.e. “if you drink beer”

c) Casua condition
This is a condition whereby the contract depend upon the outcome of the third party. For
example ‘I will buy your Vegetables if Caps United wins the match this Sunday’.

5.9 BREACH OF CONTRACT

Breach of contract is failure by one of the parties to a contract to observe one or more of the
essential terms of the contract. Breach of contract does not mean that the contract will end but
it will continue to exist in its breached state.

There are a number of ways in which a party may breach a contract.

a) Repudiation
When one of the parties acts in a way as to lead a reasonable person in the position of the
other party to believe that he does not want to fulfil his part of the contract altogether or not to
respect a material term, he is taken to have repudiated the contract. Repudiation can take place
before the actual date on which performance is to be made and this is called anticipatory
breach. An example of repudiation in advance or anticipatory breach is where one contract to
buy a car and the other party sells and delivers the same car to someone else. It is obvious that
when the date of delivery to the first buyer comes by, he will not be able to deliver it because
it is no longer there.

When a party shows that he does not intend to be bound by the contract the other party may
cancel the contract.

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b) Mora Debitoris
This is where the debtor who is the other party to the contract fails to perform his obligations
on a fixed date of performance and if no date is fixed, with reasonable time of receiving
demand from the creditor for performance. The debtor is usually said to be in mora. Failure to
pay money on due debt is a typical example of mora debitoris.

c) Mora Creditoris
Where the other party to the contract refuses to accept performance when it is tendered by the
other party the creditor is said to be in mora. An example would be where the seller refuses to
accept payment tendered by the buyer in a contract of sale.

d) Positive Malperformance
This is where the other party performs but the performance is not adequate enough to comply
with the contract. It thus amounts to defective performance and is breach of contract.

e) Rendering performance impossible

This is where the party in breach has caused the performance by the other party impossible
either due to frustration or other means.

5.10 REMEDIES FOR BREACH OF CONTRACT

Remedies for breach of contract is the relief that one would seek where the other party has
breached a contract.

a) Specific Performance
As a general rule the aggrieved party has a right to seek specific performance. This is an order
from the court compelling the other party to do what he was supposed/promised to do under
the contract. The injured party should therefore be prepared to carry out his own part. The
court however has the power / discretion whether to award the order of specific performance
or not. Thus if you are seeking specific performance, you should always include an alternative
of damages. The court would usually not order specific performance in the following
situations;
1) Where it is almost impossible for the other party to render specific performance.
2) Where damages are enough to compensate the injured party.
3) Where it would be difficult for the court to enforce its order.
4) Where it would cause great hardships to a third party.
5) Where the contract is of personal nature. Where the contract involves personal services
to be rendered the courts are reluctant to award specific performance because of the
possibility that disputes will always arise. E.g. in an employer relationship specific

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 performance is tantamount to compelling people to continue working together when their
relationships has already been strained.

b) Cancellation
Where a party breaches a material or a certain term which the parties agreed should not be
breached, the other party has an option of cancelling the contract.

Cancellation and Restitution

After cancelling the parties should be prepared to restitute i.e. to bring whatever benefits they
received under the contract. Thus cancellation may not be appropriate where it is not possible
to restitute. In addition to cancellation a party may seek damages

c) Damages
When one claims damages for breach of contract, he intends to be placed in the position he
should have been had the contract been properly performed in so far as that can be achieved
by payment of money and without undue hardship to the other party. Damages for breach of
contract therefore essentially differ with those for a civil wrong or delict. For a delict the party
is to be returned to the original position as if he had not been injured at all whereas for breach
of contract, the damages are to place the other party at a prospective position.
Damages can only be awarded for breach of contract where the injured party can establish the
following requirements;

 The loss must result from the breach itself. If the loss was not caused by the breach
contract then one cannot claim damages for breach of contract.

 The loss must be actual loss or a monetary gain which is lost. No damages, under law of
contract, are awarded for sentimental loss or injured feelings.

 The injured party must do all in his power to mitigate the loss. This is called mitigation of
damages. The injured party cannot sit back and relax and allow the damages to increase
day by day and do nothing about it. He must take reasonable to minimize loss

d) Interdict

An interdict is an order in which a person is ordered to refrain from doing a particular act.
This is the most appropriate where; a party to a contract has good reason to fear breach by the
other i.e. to prevent threatened breach. This remedy is not limited to law of contract only.

e) Declaration of Rights

The High Court has power to declare rights. If parties to a contract are not able to ascertain
who has the right under a contract they can seek the H.C to clarify the position for them
without penalizing any one of them.
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5.11.0 DISCHARGE OR TERMINATION OF CONTRACT

A contract can be terminated in any of the following ways:

1) Performance – if both parties perform their obligations, a contract will be

terminated.

2) Agreement – both parties can agree to terminate the contract and the court
will effect this.

3) Novation – this is when the contracting parties replace an old contract with a
new one. It comes in the form of cession and delegation.
I. Cession entails the transfer of rights from one person to another
whilst;
II. Delegation entails the transfer of obligations from one person to
another.

4) Set-off – usually occurs when both parties are mutually obligated to one
another and the obligations cancel one another. For example, if A owes B
$100 and B has a radio worth the same amount, the debt can be set off.
However, this is subject to the agreement of the parties.

5) Merger (Confusio) – usually occurs when 2 companies are joined together

to form 1 company. The contracts that existed between the said companies
will automatically be terminated. Merger may also happen when the landlord
sells property under a lease agreement to the tenant. In this case, the tenant
replaces the landlord and the lease agreement will be terminated.

6) Prescription – The Prescription Act provides that ordinary debts cannot be

claimed after 3 years and debts owed to the state and mortgage bonds will
not be claimed after 30 years.

7) Death – can only terminate a contract if the contract is of a personal nature.

For example marriage. For all other contracts, an executor will be appointed
to administer the deceased’s estate. He will be responsible for upholding the
deceased’s contracts.

8) Insolvency – can terminate a contract if the contract is of a personal nature.

For all other contracts, a trustee or liquidator will be appointed to fulfill the
obligations of the insolvent person

9) Supervening impossibility – this occurs when performance of contractual

obligations is made impossible because of circumstances beyond human

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 capabilities. These circumstances are called casus fortuitus or vis major or
acts of God.

In the case of KRELL V HENRY, the Plaintiff hired a hotel suite to watch the coronation of
King Henry V11. However, on the morning of the coronation ceremony, the king fell sick and
the ceremony was postponed indefinitely (or sine die). The Plaintiff then refused to pay the
money for the hotel suite and an action was brought against him, to recover these amounts. He
sought to defend himself on the basis of supervening impossibility. The court held that the
sickness was an act of God which entitled the Plaintiff to terminate the contract.

Similarly, in the case of CRADWELL V TAYLOR, the Defendant hired a hall for the
purpose of holding a performance. 3 days before the date of performance, the hall in question
was destroyed by fire. The Defendant refused to pay the booking fees arguing that the
destruction of the hall by fire was a supervening impossibility which frustrated the contract.
The court upheld this argument and terminated the contract.

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