INTRODUCTION

Commerce is involved with anything which occupies the time, attention or labour of a man
for fruits. It is therefore the very reason that distinguishes life from death. It embraces all
forms of the purchase and sale of goods and services.

Commercial law is that branch of law that deals with the legal aspects of commerce.
Commerce is not the same as trading; with commerce there is an element of consideration
which is normally referred to as quad proqua (something for something).

Conradie v. Rouseau 1919 AD 306

It was held that consideration is not an essential element to a binding contract in Roman-
Dutch jurisdictions. All that is required is for the agreement to be seriously and deliberately
met with the intention of creating a binding contract. This is the basis of the Roman-Dutch
doctrine of redelyk oorzaak which is a doctrine which entails offer and acceptance.

Commercial law is dynamic. It clearly recognises that law is a servant of man. Historically
the following areas of human discourse have been unanimously agreed on as part and parcel
of commercial law, these are;

 Sale and purchase of goods

 Insurance
 Carriage of goods
 Commercial agents
 Negotiable instruments
 Competition law

Consideration

It’s an English law principle which entails a return or quad proqua for every promise made. It
is necessary for the validity of every English contract. Consideration is an important
ingredient of Zimbabwean commercial law. This is despite the Roman-Dutch background of
our law.

Section 89 of the constitution of Zimbabwe is a relevant port of call in establishing the

sources of Zimbabwean commercial law. It provides that the law to be administered by our
courts shall be the law in force at the Cape of Good Hope on 10 June 1891, as modified by
subsequent legislation having in Zimbabwe the force of law and subject to African customary
law in existence in Zimbabwe by then.

To understand our commercial law it is therefore pertinent to find the following,

1. The African customary law applicable to Zimbabwe by 1891.

2. What was the law in force in the colony of Cape of Good Hope on 10 June 1891.
3. In what respects has the law enforced in the Cape of Good Hope been modified by
subsequent legislation in Zimbabwe?
Historically the law enforced in the colony of the Cape of Good Hope can be traced from the
12 tables which is merely the codified Roman law. However, in the field of commercial law,
English law had a lot of influence at the Cape. A lot of English law principles had become
part of the law at the Cape by the time the Dutch introduced Roman law. In practice, English
legal principles remained dominant after the introduction of Roman law as English legal
principles had been found a preferred legal system by traders.

The development of English law was much influenced by informal rules of practice by
individual traders who came to be known as law merchants. Through the informal rules of
practice which were called the lex mercature the merchants managed to come up with rules
of guidance which were accepted customarily by all traders. The lex eventually became part
of the English law of equity. Under English law it was a requirement that every dispute must
correspond with an underlying summons/writ, however, most commercial disputes did not
have corresponding writs/summons.

The law merchants and others involved in commercial disputes came up with a system which
developed alongside the common law. In terms of this system the Lord Chancellor who was a
representative for the king was given the honour to decide cases on the basis of what he
considered to be just. This concept of justice was what developed to be known as the law of
equity.

The law of equity is a system of doctrines and procedures which developed side by side with
the common law and statute law. It evolved around the court of the Chancellor in its attempt
to remedy some of the weakness of common law. The law of banking, insurance and
company law continue to rely heavily on the influence of the law of equity and it is therefore
a fact that both Roman-Dutch law and English law are relevant as sources of Zimbabwean
commercial law.

This is the general position that section 89 of the constitution of Zimbabwe attempts to
portray. Section 89 of the constitution has however failed to deal with the class nature of
commerce and that law has always been used as an instrument of domination. This was
complicated by the Supreme Court decision of the following case,

Book v. Davidson 1988 (1) ZLR 365

In that matter the Supreme Court held that it can’t ignore the decision of Magna Alloys &
Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 because Zimbabwe is a Roman-Dutch
common law country. Further, held that decisions of a court in another Roman-Dutch
jurisdiction have very persuasive authority.

The problem with the Book decision is that it begets two interpretations

1. More weight should always be given to a Roman-Dutch decision than an English

decision.

2. The choice of Roman-Dutch law and English law is dictated by the justice of the case.
What is worrying is that both interpretations are not supported by Section 89 of the
constitution of Zimbabwe, which simply requires an ascertainment of the law at the Cape on
10 June 1891.

CONTRACT OF SALE
A sale is a contract in which one person, called the seller/vendor, promises to deliver a thing/
merx to another person called the purchaser/vendee, with the purchaser agreeing to pay a
price/pretium.

A contract of sale may be made orally or in writing. Where the parties agree to reduce it to
writing the contract becomes conditional and therefore its actionability arises when it is
reduced to writing.

Mhute v. Chifamba 1999 (2) ZLR 115 (SC)

A contract of sale may be made orally, without it being put in writing. The parties may agree,
however, that the oral contract will not be legally binding until it is drawn up in a written
agreement. Where the parties to an oral agreement mention that the contract should be
reduced to writing, the question is whether the parties intended that the contract would not be
binding until the written agreement had been signed or simply that the contract should be
binding immediately but should subsequently be put in writing to facilitate proof of the terms
of the contract. The onus of proof is on the party who asserts that an oral contract was not
intended to be binding until reduced to writing and signed. In the present case it was clear
that the parties had intended the oral contract to be binding and its reduction to writing was
intended only to aid the proof of the terms of the contract.

NB: The agreement reached constitutes the sale, neither delivery nor payment is important
for a valid sale.

There are 3 requirements for a valid sale;

1. Thing/merx
2. Purchase price/pretium
3. Meeting of the minds/consensus ad idem

Consent

Consensus involves the intention and reciprocal agreement to buy and sell. Clear intention for
an exchange of property for a price must be present. Consent has 3 important ingredients,

1. Consent must be rational. (The parties must be able to enter into an agreement, etc.)
2. Consent must be free and not induced by fraud, undue influence or duress.
3. The parties must mutually communicate the intention of contracting to sell. (There
should be a firm offer and acceptance.)
Subject matter of the sale

The merx must be defined and must be ascertainable. The parties must be in agreement as to
the merx. The courts have tended to follow a liberal approach in disputes involving the
identification of the merx.

H v. T 1938 SR 89

Addition of words such as etc in a contract of sale and in the description of the merx, was
held not to invalidate a sale.

(See R v. B 1959 (1) R&N 393, R v. AJ Construction 1964 RLR 456)

NB: One may be guided by trade practices, issue of intention of the parties and if the
additions are immaterial.

The following can be sold,

1. Expectation or hope.

2. A thing not yet in existence. (Which may not be necessarily expectation or hope)

3. Unascertained goods may be sold.

4. Goods to be manufactured.

5. The property of a third party. (A sale involving stolen goods is valid in law, however,
ownership will not pass, and it will only pass with consent of the original owner.)

6. Property subject to litigation may be sold. That property may not be sold to litigating
lawyers.

The following cannot be sold,

1. Things owned by the buyer.

2. Things prohibited by law.

3. Things subject to litigation cannot be sold by a client to his lawyer.

4. A thing that unknown to the parties has seized to exist.

5. Public property.

6. A right of a person still living.

The concept of freedom of contract applies to sale and purchase transactions; one has
freedom to choose what to sell and to whom. The common law freedom of contract and
sanctity of contract is subject to statutory intervention e.g.
 i. Prevention of Discrimination Act [10:12] prohibits discrimination in the sale of
immoveable property on the basis of race, tribe, place of origin, political opinions,
colour or sex.

ii. The Grain Marketing Act [18:14] confers monopoly on the Grain Marketing Board
in the sale and purchase of controlled products including the price thereof.

iii. The Control of Goods Act [14:05] delaminates the control of the distribution,
disposal, purchase and sale of certain controlled goods from time to time.

iv. Much recently SI 159A-2007 (Presidential Powers Temporary Measures

Amendment of National Incomes & Pricing Commission Act and Education
Act Regulations) seeks to further control increases on remuneration, rentals,
service charges, prices and educational fees. Section 17(b) (1) of those regulations
provides that the regulations take precedence over all other laws in Zimbabwe.
The regulations therefore purport to override the constitution (regulations are a
subject of jurisprudential debate because no law can claim to be superior to the
constitution of Zimbabwe in Zimbabwe). It is also interesting to note that the
regulations are a product of a Presidential gazette and not a constitutional
amendment. The trite procedure in the law of Zimbabwe is that the constitution
can only be amended or repealed through the procedure set out in the constitution;
Presidential Gazettes are not such a procedure. It raises questions because it seems
to be ultra vires.

The Pretium

The price must be in current money, it must be fixed, certain and real. There must be
intention as to the real price. In the absence of express or implied agreement as to the price to
be paid there is no sale.

Smith v. Market Right HH 156-90

Held that whereas under Roman-Dutch law there can be no sale at a reasonable price, it may
be necessary to validate a sale where parties are able to come up with a reasonable price.

The position was summarised clearly by the Supreme Court

Chikomo v. Muhweza 1998 (1) 5841

It was held that there can be no valid sale unless the parties have agreed on the purchase
price. If it is not stated clearly then it must be stated implicitly and there must be an agreed
method by which the price can be ascertained provided this can be achieved.

The price must be expressed in money. If it is expressed in some other form e.g. goods or
services, it will not be a contract of sale. If the price is expressed partly in money and in
goods or services then it will only be a contract of sale if the money component is greater.
There is no sale if the price is left to one person or his nominee to fix. The price has to be
agreed by both parties.

Baxter v. Maxwell 1923 SR 113

It was held that a contract to sell milk at current ruling rate was impossible and therefore
void because evidence showed that it was not possible to calculate the current ruling rate in
that trade at that time.

Masses Consolidated Ltd v. C 1957 RLR 253

It was held that a contract to sell future goods at the then ruling rate was valid because it
was possible to calculate the ruling rate.

Common Law

By common law the parties may fix the price as high or low as they wish subject to the
limitation that the price must be real and serious. This is the basis of the old laesio enormis
doctrine which allowed rescission of sale were price was less than half or more than double
the value of the merx (rescission and not seeking cancellation of the sale)

 Rescission – going back to the status quo.

 Cancellation – compensation e.g. damages, etc.

The doctrine was abolished in Zimbabwe with the amendment of the General Laws
Amendment Act [8:07] (Section 8). In practice it is not possible to repeal the doctrine.

Lambs v. Walter

It was held that a shocking disproportion between the price and value might entitle one party
to rescind on the basis of implied fraud.

The Control of Goods Act also purports to limit the common law freedom to fix prices in
sales involving controlled goods as defined in the act.

Once the 3 elements are met, a valid contract of sale comes into being. It does not follow that
ownership has passed at this stage because the rights between the parties are still personal
rights (rights via the contractual relationship) – vacant possession.

Passing of Ownership

For ownership to pass, the following conditions have to be met,

1. There must be intention by the seller to pass ownership and a related intention by the
purchaser to receive ownership upon paying the pretium. (Intention to pass and
receive ownership.)
2. The seller must be owner of the merx. In law one cannot pass on rights that one does
not possess (nemo dat qua non habit). The true owner can always vindicate the goods
from whoever is in possession (rei vindicatio)

R v. K 1936 SR 130

It was held that a purchaser commits theft were without intending to purchase the
merx sells it to a third party.

3. There must be a valid contract of sale. In cash sales, the pretium must be paid before
ownership passes. In credit sales delivery and other requirements depending on the
contract would be sufficient to pass ownership. Unless otherwise agreed all sales are
presumed to be for cash in which case the seller has the right to demand payment or to
reclaim the merx within a reasonable time. What is a reasonable time depends on the
circumstances of each case.

However Section 15 of the Insolvency Act presupposes a reasonable period of 10

days.

Parties can agree to delay passing of ownership till a later date for convenience.

NB: Where immoveable property is sold by a non-owner, ownership may eventually

pass on to the purchaser if the purchaser has been in possession of the property for 30
uninterrupted years (Ownership by Prescription)

Where payment of the pretium is by way of a cheque, ownership does not pass until
the cheque is honoured. Where a cheque is honoured acquisition of property is with
retrospective effect.

4. The merx must be delivered.

Passing of Risk

Risk relates to the destruction or damage of the merx as well as profit of the merx. Under
Roman-Dutch law risk generally passes to the purchaser when the contract of sale is
concluded. The purchaser in such cases has to pay the pretium even when the merx is
destroyed. The purchaser cannot plead supervening impossibility.

In modern practice risk passes if the contract is perfecta (when the contract is concluded
or when involving unascertained merx, as soon as property of the contract description has
been appropriated to the contract)

There are exceptions to the risk rule;

1. Risk does not pass were the sale is subject to a supervening condition no matter how
trivial the condition is.
 2. The parties may agree that the risk rule must not apply to them.

Modes of Delivery

Immovable property is delivered by registering the names of the purchaser on the title deeds
of the property in terms of the Deeds and Registry Act. With movable property there is
either actual delivery or symbolic delivery.

Physical delivery is the actual movement of the merx from the seller to the purchaser.

Fictitious delivery occurs where the actual delivery is difficult, impossible or unnecessary. It
means the merx stays where it is at the time of legal delivery and need not move.

Constructive delivery takes the following forms,

a. Symbolic Delivery (clavium traditio) – this involves delivery, not of the merx itself
but of some symbol of the merx which allows the purchaser to take delivery, for
instance handing over the key to the warehouse were merx is stored. (See Land Lease
Finance Pvt Ltd v. C 1976 (4) SA 464).

b. Delivery with the long hand (Traditio longa manu) – It takes place in the form of
pointing out the merx to the purchaser and giving the purchaser the right to remove
the merx at his own convenience. It is normally applied in circumstances were the
merx is bulky or where there are special government regulations.

c. Delivery with a short hand (Traditio brevu manu) – It happens were the purchaser is
already in the physical possession of the merx and then subsequently takes delivery as
the owner.

d. Atonement – Occurs were an agent has possession of the merx but continues to hold
the merx, not for the seller, but for the purchaser.

e. Costitutum Possesanum – The seller remains in possession of the merx as the agent of
the buyer (See ex parte Smith 1896 SR 92)

f. Cession of the right of vindication – will arise when a third party is in possession of
the merx without the consent of the owner, but the owner decides to cede his right of
vindication to this possessor, making him the owner.

NB: Under Roman-Dutch law there is no sale based on a reasonable price. However there
are exceptions.

Duties of the Vendor

1. The duty to take care of the merx. Until delivery the vendor must take proper care of
the merx even if risk has passed to the purchaser. Seller liable for any loss caused by
 his wilful act or negligence. If delivery is late because of the seller’s fault then the
vendor is only responsible for gross negligence. The buyer can claim damages, but if
damage to the merx is extensive he is allowed to cancel the contract. (See Fruner v.
Maitland 1954 (3) SA 840)

2. Duty to deliver the merx. It must be delivered at the stipulated contractual time; if no
time is stipulated then delivery must be done within a reasonable time. The quantity
delivered must not be more or less than what was contracted. Where the seller has
supplied more than the required merx the purchaser can either reject the entire merx in
its totality or accept it on condition that he would be able to sue and recover for
damages occasioned to him (rescission or damages). Where the merx delivered is less
than the agreed quantity, the buyer may reject it in totality or accept the delivered
portion of the merx on payment of a pro rata pretium. If there has been mixed
delivery, the buyer may reject the whole package or may opt to sort them out and be
paid damages for doing so (rescission or damages). If there is no delivery at all and
delivery is material to the contract, the buyer may opt out of the contract with or
without damages; alternatively the buyer may seek specific performance of the
contract. The other option open to the buyer is simply to reclaim the purchase price.

3. The seller has a duty to guarantee against eviction. All contracts of sale have an
implied warranty against eviction. The seller promises that the buyer would not be
disturbed in his possession of the merx. This is what is referred to as vacant
possession. It arises were the merx is destroyed in part or in whole, through the
conduct of third parties. The seller is always presumed to be the bridge in which no
third party is allowed to cross with a view to disturb the purchaser. Where eviction
becomes imminent, the purchaser must instantly advise the seller to enable the seller
to protect the buyer’s rights accordingly. The warranty against eviction would not be
open to the buyer in situations where the buyer himself is responsible for his eviction.

a) In circumstances were the buyer knows that the merx is owned by a third party
and the third party comes to evict him

b) Where the cause arises after the sale

c) Negligence by the buyer to other people and his peace is disturbed by these
people, even eviction

It is a breach of contract for a seller to fail to guarantee against eviction. Buyer is

entitled to ordinary remedies available for breach of contract.

4. Seller has a duty to guarantee against defects. Generally the buyer must be given the
opportunity to inspect the merx and see if it tallies with what was contractually
agreed. If the merx does not tally then the buyer is entitled to reject the same as the
seller would have failed to effect delivery. Defects may be patent or latent. A patent
defect is one that must have been obviously seen by an ordinary purchaser at the time
of the sale. A buyer who, at the time of sale, inspects the merx when it is suffering
 from a patent defect cannot complain when such a merx is subsequently delivered to
him. Where the buyer has not inspected the merx, his remedy is dependent on whether
the merx takes the form of ascertained goods or unascertained goods. If the merx was
ascertained, the purchaser is at liberty to reject it on delivery. If it was unascertained
then the buyer’s remedy is aedilition in nature.

Aedilition remedies

Latent Defects – These are hidden defects. It is not the seller’s duty to guarantee against
latent defects. To protect themselves sellers normally invoke voetstoots clauses which limit
the seller’s liability.

Section 5(1) (d) of the Consumer Contracts Act says that a court may find a consumer
contract to be unfair for the purposes of this act if the consumer contract excludes or limits
the obligations or liabilities of a party to an extent that is not reasonably necessary to protect
his interests.

Elstone v. Dicker 1995 (2) ZLR 375 SC

The respondent bought a house from the late mother of the appellant. Before the sale a crack
in the building was observed by the buyer, but the seller described it as minor and mentioned
no others. Her son, the appellant, had lived in the house for several years and had noticed
several cracks, which he said were progressive. They had been filled in as they appeared, but
not professionally.

When the sale took place, the agreement included a condition that the property was sold as it
stood. It was also recorded that where cracks had appeared they had been temporarily
repaired. After the buyer moved in, however, major cracks started appearing at the end of the
rainy season. All were old cracks which had been previously patched up and plastered over.
Experts were called in to assess the damage and as a result major repair work to the
foundations of the house was carried out. The buyer sued the seller’s estate for the expenses
and succeeded in the High Court.

On appeal:

Held, that to establish the seller’s liability for the defect complained of, the purchaser must
show directly or by inference that the seller actually knew of the defect. It was clear from the
evidence that the seller must have known of the defects at the time of the sale and deliberately
refrained from disclosing them. Even if she had been unaware of the exact cause of the
cracking, she must have appreciated that there was something remiss with the structure.

Held, further, that the duty on the seller of the property, notwithstanding legal consequences
which flow from the fact that the sale was voetstoots (which would otherwise exculpate the
seller from liability in respect of all defects of which she was genuinely ignorant up to the
time of sale), was to disclose to the purchaser the existence of all defects of which the seller
was aware, but which the purchaser did not know of at the time of sale. The duty embraced
the full disclosure of the progressive and recurring nature of the defects, regardless of the
voetstoots provision.

Appeal dismissed.

Goods sold voetstoots are goods sold as they stand by a seller who does not want liability if
the goods prove defective in quality. If however the seller knows the goods are defective and
fraudulently conceals this to the buyer then the sale won’t be considered voetstoots. The
purchaser can cancel the contract and seek damages or a reduction of the purchase price.

Where there is doubt as whether a sale is voetstoots or not there is a presumption against a
sale being voetstoots. There is also a presumption that a defect that manifests itself shortly
after the sale of the merx existed at the time of the sale.

The buyer’s remedies for latent defects are generally non-contractual in nature. This is
because liability arises not because of an implied warranty against latent defects but by
operation of the law from the aedile edicts. It is not necessary to prove that the seller had
knowledge of the defects because the remedy arises ex lege.

Buyers’ remedies in the event of latent defects in the merx are not contractual but delictual.
They are called aedilition remedies. Liability arises not from an implied warranty against
latent defects but by operation of law from the aediles edicts. It is therefore not necessary to
prove that the seller had knowledge of the defects. It is also possible that contractual relief
may be available in circumstances where there are latent or aedilition remedies.

NB: Aedilition damages – seeking rescission. Approach a question in the widest

approach, do not narrate – analyse, read aedilition remedies.

It can happen that in some cases the existence of an aedilition remedy is also a breach of
warranty in which case one must choose the most appropriate remedy.

Aedilition damages may be

1. Actio rhedhebitoria

2. Actio quanti minoris

Actio Rhedhebitoria

It entitles the purchaser rescission or rhedhebition (looking to achieve status quo) when the
merx does not live up to the dictum ad promisum and where restitution is possible. It’s
possible for parties to exclude this remedy. (See R v. C 1973 (1) RLR 225; C v. R 1948 (1)
SA 413; P v. P 1973 (3) SA 397)

The statement can be read in conjunction with Consumer Contracts Act especially with
regard to exemption clauses. Also look at the voetstoots clauses.
Actio Quanti Minoris

This is an action for the reduction of the purchase price. It is normally available for a buyer
entitled to rhedhibit but does not do so for the following reasons;

a. He may not be able to get restitution.

b. The defects in the merx may not be sufficiently serious to justify rhedhebition.

c. Where a buyer who is entitled to rhedhibit does not but insists on the reduction of the
price.

The relief that is available is the reduction of the purchase price, what they call the
aestmatoria.

Original Market price – Price in Defective Form = the price to be paid by the purchaser

Consequential relief is the hybrid of the merx and the prospective profits.

Factors Persuading Contractual Relief

In some cases contractual remedies are a preferred remedy than aedilition remedies in
particular where the following circumstances exist;

1. Where the seller knows of a defect and either misrepresents its absence or fails to
disclose its presence. Breach of contract may be a better relief because it entitles the
purchaser to consequential damages (e.g. if the purchaser wronged was a farmer the
value of cattle and their prospective profits)

2. Where the seller actually manufactures the article himself or makes it his business to
deal in such articles. A breach arising there from entitles the purchaser consequential
damages. This is part and parcel of the Pothiers Rule. (See L v. W 1949 SR 216; J v.
S 1974 (1) RLR 92)

3. Where the existence of a defect in the merx amounts to breach of a tacit term of the
contract, in this case the buyer can opt for contractual damages by way of
consequential relief.

SPECIAL SALES

The Consumer Contract Act was passed in 1996. The question that remains is whether the
act has become a mischief itself. The act does not define what a consumer right is. The
constitution of Zimbabwe does not define a consumer right. In fact consumer rights are not
mentioned as part of the fundamental rights contained in part 3 of the constitution. It is
however generally agreed from the common law that the following form part and parcel of
what are called consumer rights i.e. the right to basic needs, the right to shelter, the right to be
heard (audi alterum partem), the right to a remedy, the right to choice, the right to consumer
education, the right to safety. Section 2 of the act defines a consumer contract as a contract
for the sale or supply of goods or services or both in which the supplier is dealing in the
course of business and the purchaser or user is not. It specifically excludes a contract of
employment and a contract for the sale, letting or hire of immovable property. The act is
vague in relation to the aspect of not dealing in the course of business.

Radar Holdings Ltd & Anor v. Eagle 1998 (1) ZLR 479

It was a condition of an insurance policy that, in the event of a claim, the insured must notify
the insurance company as soon as possible of the event giving rise to the claim. The insured,
who had suffered loss in a fire, had notified the insurance company about the fire some eight
days after the fire. The insurance company refused to indemnify the insured because it had
breached the condition requiring him to notify the insurance company as soon as possible.
The insured argued that this condition had been complied with, alternatively that this
condition in the contract was unenforceable under the Consumer Contracts Act [Chapter
8:03].

As regards the condition requiring that the insurance company be notified as soon as
possible:

Held, that the purpose of having the clause requiring quick notification of the insurer is to
protect the interests of the insurer against fraud by allowing it to make enquiries into the
cause of the loss, as soon after the event giving rise to the loss as possible. Speed in reporting
was of essence in the policy and it is a condition that must be strictly complied with by the
insured. The insured must comply with this condition by notifying the insurer as soon as
reasonably practicable in all the circumstances of the case. In the present case the insured
had failed to comply with this condition.

As regards the argument that this condition was unenforceable under the Consumer
Contracts Act:

Held, that although insurance contracts fall within the ambit of the Consumer Contracts Act,
the insured had failed to show that the notification condition was not reasonably necessary
for the protection of the insurer’s interests. In terms of the Act, a condition is not unfair
simply because it imposes an onerous obligation on one of the parties. In deciding whether a
condition is unfair, the court must have regard to the interests of both parties. Thus even if it
could be said that the condition imposed an onerous obligation upon the insured, having
regard to the interests of both parties, the condition was not unfair.

It is clear from the judgement of the court that the principles of equity are also an important
consideration in consumer contracts. Section 5 of the act eliminates circumstances upon
which a consumer contract will be judged to be unfair. It spells out numerous circumstances
which inevitably gives the court wide powers in deciding whether or not a clause in a
consumer contract is unfair.
A hire purchase agreement is a consumer contract. Generally speaking a hire purchase
agreement is a sale subject to a suspensive condition that ownership will only pass upon
payment of the last instalment. It is also a common practice for financial institutions to buy
the seller’s rights and then enter into a contract with the purchaser. This is what is known as
cession of rights.

Duly & Company Ltd v. Shonge 1985 (2) ZLR 350

The respondent concluded a hire-purchase agreement with a finance company in terms of

which the finance company sold respondent a vehicle supplied by the appellant. Before the
agreement was concluded, appellant’s salesman had told the respondent that the vehicle was
“in good working condition” and that he knew this because of “the report that came from the
workshop”. The vehicle subsequently broke down and respondent had it repaired by the
appellant but refused to pay appellant’s charges on the ground that the salesman’s assertions
amounted to a warranty.

Held that the salesman’s assertions went beyond mere praise and commendation; they were
statements of fact material to the purpose for which respondent wanted the vehicle and
induced respondent to enter into the hire-purchase agreement. They therefore constituted a
warrant entitling the respondent to the Aedilition remedies.

Held, further, that it did not matter that the warranty was given by the appellant, the supplier
of the vehicle, and induced the respondent to enter into a hire-purchase agreement with a
third party; respondent could sue appellant for breach of the warranty even though the terms
of the hire-purchase agreement precluded any such action against the finance company.

Held, further, that before would-be purchasers conclude hire-purchase agreements, they
should enter into collateral agreements with the suppliers of the goods warranting the quality
or suitability of the goods supplied.

Hire Purchase

This is a credit sale in which parties agree that the pretium is to be paid in instalments and
that despite delivery, the ownership of the merx will not pass to the purchaser until the last
instalment has been paid.

The Act is therefore a consumer protection law which appreciates the following weaknesses
associated with common law,

1. Agreements under common law normally started from a premise of equality between
the seller and the buyer. This is of course a wrong position as by their nature the
provider of services and goods, is financially powerful and cannot be compared with
the receiver of goods and services.

2. The common law failed to realise that most consumers enter into standard form
contracts out of desperation. This position was worsened by the caveat subscriptor
doctrine which made parties to a signed document bound by the terms thereto.
3. The common law doctrine of freedom of contract worked to the consumer’s
disadvantage. This doctrine states that two parties to a contract are free to choose one
another and are free to lay down their own terms and conditions. This was abused by
the sellers and the common law had no remedies to offer to the receiver of services.

4. Practically buyers were presented with standard form contracts which they were asked
to sign as confirmation of acceptance of the agreement. These were calculated to
benefit the service provider at the expense of the consumer. Buyers were hardly
afforded an opportunity to read and understand the terms and conditions. In most
cases sellers employed marketing personnel skilled enough to persuade buyers to
accept standard form contracts on the face of it and without appreciating the extent of
their liability. This was particularly evident with the cropping up of big corporations
which enjoyed monopoly in the supply of goods and services.

5. The courts’ attitude also left the consumers exposed. Traditionally courts have
emphasised that our law does not recognise the right of a court to either release a
contracting party from performing his obligations in terms of an agreement entered
into between the parties, or alter the terms of such an agreement. In the court’s eyes
doing so was tantamount to making law. This was based on the doctrine of sanctity of
contracts.

Tubb (Pvt) Ltd v. Mwamuka 1996 (2) ZLR 27

By telephone the respondent entered into a contract with the appellant garage. The
garage agreed to collect the respondent’s vehicle and carry out repairs to it. He later
visited the garage to find out what progress had been made in repairing his vehicle.
Eventually he decided to retrieve his vehicle. He found that a lot of engine parts were
missing from the vehicle. The overwhelming probability was that a former director of
the garage had stolen these parts.

The respondent sought to recover the value of the missing parts in an action against
the garage. The garage raised the defence that the contract was subject to an
exemption that exempted it from liability for any loss or damage however caused. This
exemption was contained in notices at the garage. The garage stated that the notices
had not been drawn specifically to the respondent’s attention but that the respondent
must have seen the notices and must have contracted on that basis. The trial judge
gave judgment for the respondent and the garage appealed against that decision.

Held, that at common law the right of a party to sue for loss or damage to property
may be excluded by the express terms of the contract. But any claim to such
exemption must be examined in accordance with these well-established principles:

• The words of the exclusionary clause must be read as part of the contract as a
whole and they must be sufficiently clear and comprehensive to require the court to
give effect to them.
 • Any ambiguity as to the meaning and scope of the exemption must be resolved
against the party who inserted it and the latter must prove that the words used clearly
and aptly embraced the contingency that has arisen.

• If there is not express reference to negligence in the exemption, the court must
consider whether the words are wide enough, in their ordinary meaning, to cover
negligence on the part of the defendant or his servants and, if they are, whether the
claim for damages may be based on some ground other than negligence.

• Where the existence of an exemption excluding liability for negligence is not in

dispute, the burden of establishing any other possible ground for liability, such as
gross negligence or dolus, rests upon the claimant.

• The exemption must be brought to the attention of the other party or must be
within the knowledge of the other party. Where an “owner’s risk” notice is displayed
so conspicuously that a normal person could hardly have failed to see it, an inference
will be drawn that it was seen by the other party.

• The exemption will not avail unless it was known at the time that the contract
was entered into; it is not binding if the party against whom it was to be applied only
became aware of the exemption after he had already entered into the contract.

• A court may presume notice of the exemption from previous dealings between
the parties.

• A party cannot exempt himself from liability for the wilful misconduct or
criminal or dishonest activity of himself, his servants or his agents or perhaps even
from the loss of or damage to the subject matter of the contract resulting from gross
negligence on his part or the part of his servants or agents.

Held, further, that the respondent was not aware of the exemption notice at the time
he contracted by telephone with the garage and it was immaterial therefore that he
might have become aware of the exemption notice later.

Held, further, that in any event the exemption clause did not apply as the loss was
probably caused by the stealing of the parts by a former director of the garage, and a
person cannot exempt himself from liability for loss caused by the dolus of his
servants.

Held, therefore, that the appeal must be dismissed.

Hire-Purchase Act [14:09]

The purpose of the act is to check the balancing interest between the seller and the purchaser.
The HP Act is a product of government realisation that the so-called standard form contracts
normally contained unfair conditions which inevitably prejudiced the buyers. It was also out
of realisation that the buyer normally requires a hire purchase transaction during times of
necessity and therefore may simply enter into a transaction for the sake of a benefit without
looking at the inherent liabilities or risks.

NB: Protection of buyers is in the exam

The requirements derived from the Hire Purchases Act are as follows,

- Agreement to be in writing and signed by both

- Amount to be paid by purchaser – purchase price

- Amount for each instalment

- Description of the goods sold

- Provisions as to the reservation and passing of ownership or the seller’s right to the
return of the goods

The Act was therefore passed as law in order to protect buyers against their own imprudence
or folly.

The Act

- is not applicable where the state is the seller

- Provides that every hire purchase agreement must be reduced to writing and must
contain a statement of the cash price (Section 5(1)). Cash price stated for evidentiary
purposes and also for protecting the rights of the consumer to avoid abuse (Induplum
rule (Interest must not exceed capital amount))

- provides for the warrant against eviction (Section 12)

- provides that the buyer must be informed of all essential details of the contract
(Section 9)

- Provides that the buyer may terminate the agreement upon giving due notice and
returning the merx to the seller (Section 18)

- Provides for the purchaser’s right to be reinstated after return of the goods to the seller
and continuing as if everything was normal (Section 15)

- Provides for extra-ordinary situations

- Provides that no waiver by a purchaser of any right under the Act shall be of any force
or effect. This also applies where the purchaser purports to waive his right to
protection simply to get a service (Section 22)
 - Provides that the purchaser has the right to terminate the agreement upon giving due
notice. The purchaser is however obligated to return the merx to the seller (Section
18)

The Act also protects the sellers as it recognises that the purchaser has a big advantage in
accessing the merx before payment has been made in full. Ordinarily some purchasers are
untrustworthy by nature or natural thieves.

- Section 11 of the Act provides that the purchaser may not remove the goods from
Zimbabwe without the seller’s consent (this is for the issue of enforcement, in the
event of breach the seller will be able to use the Zimbabwean judicial system). This is
to avoid a brutum fulmen (Court order which cannot be enforced and only useful for
academic purposes)

- There is also provision of the manner in which the seller gets his moneys in the event
of purchaser’s insolvency.

- Ownership will only pass upon payment of all sums payable in terms of the agreement
(Section 17)

There is criminal liability placed on the seller for failure to send a copy of the agreement to
the purchaser (Section 6) and on the seller’s failure to provide informative statement of
account (Section 9).

There is criminal liability on the purchaser for failure to provide seller with address, etc
(Section 10) and on the purchaser removing goods from Zimbabwe without the seller’s
consent (Section 11).

THE LAW OF AGENCY

An agent is a person who normally represents another. Commercial agency is involved with
the performance of a service by an agent on behalf of a principal. The relationship is
therefore triangular in nature. The relationship between principal and agent is contractual
which results in a contract between the principal and third party. No contractual relationship
between agent and third party. An agent is not the same as an independent contractor. An
independent contractor does not receive instructions from the principal simply for the benefit
of the principal; on the contrary an independent contractor creates a binding relationship with
the third party, although at the end of it the object is to benefit the principal.

Principal and Agent Relationship

The general rules of contract apply, this means that capacity is important, for juristic persons
one is guided by the four corners of the constitution of that entity. In respect of registered
companies one must see the objects of the company as stated in the memorandum and articles
of association. It is the relationship between the agent and principal which defines the duties
and obligations of the parties. Authority can be express or implied

1. Express authority arises where the mandate is clearly spelt out in the document of
authority. The document of authority is normally a power of attorney. Express
authority can be special or general. Special authority is when the agent is appointed to
perform a specialized service. It is therefore a defined constituency. A general power
of attorney gives authority to an agent to act generally, there is no defined
constituency.

NB: At the end of the day whether one is a special or a general agent is irrelevant as
specialization is general in itself as much as one becomes a specialist in
generalization.

2. Authority may be implied. It exists where there is no express authority. It is authority

by conduct in circumstances were the dictates of common sense lead to no other
conclusion than the existence of authority. It takes many forms,

a. It can be authority implied by law were a person is deemed by law to represent

another. The law provides that certain persons who are considered incapable of
handling their own affairs should be represented in such affairs e.g. a guardian on
behalf of a minor, a husband in a marriage in community of property.

b. It can be authority implied by facts. Where the conduct of the parties must be such
that according to the rules of common sense it admits of no interpretation other
than the facts point to authority by implication.

3. Authority by estoppel. This is also known as ostensible authority, some call it

apparent authority. Ostensible authority arises where there is no authority (no
authority by implication or expression but there is authority). It exists were a third
party holds the principal liable on contracts entered into by the third party and the
ostensible agent of the principal if the conduct of the principal is such that it amounts
to a representation that the ostensible agent had authority from the principal and that
the party has been induced to contract with the ostensible agent on the strength of
such conduct. The principal is then estopped from denying that the ostensible agent
had no authority. There are four requirements for one to plead ostensible authority

i. There must be a representation by the principal.

ii. The representation must be of such a nature as could reasonably have been
expected to mislead.

iii. That the third party acted on the faith of the representation.

iv. That the third party was prejudiced for doing so.

Gwafa v. Small Enterprises Development Corporation & Anor 1999 (2) ZLR 261
(SC)
 The first respondent put a number of vehicles up for sale by auction. The appellant
bid for one of them and the auctioneer confirmed that he had won the tender.
However, when the appellant tendered payment, the first respondent refused to hand
over the vehicle. The conditions of sale did not specify that the first respondent’s
approval was essential before the sale became binding on it and the auctioneer did
not tell the appellant that this was the case. The appellant sought an order compelling
the first respondent to hand over the vehicle, arguing that the first respondent was
bound by the agreement concluded with the auctioneers because the auctioneers had
ostensible authority to conclude the sale.

Held, that if a principal employs an agent in a certain capacity, and it is generally

recognised that an agent employed in that capacity has authority to do certain acts,
then any of those acts performed by the agent will bind the principal because they are
within the scope of his “apparent” authority. An auctioneer has ostensible authority
to conclude a sale agreement in respect of the property being sold by public auction
for other persons, because it is generally recognised that an auctioneer has authority
to conclude sales of properties which he sells by public auction. The agreement
reached by the appellant with the auctioneer bound the first respondent.

Agency only raises two questions,

1. Does the agent have authority?

2. If so, does the agent have authority to enter in the express transaction?

Power of attorney is a document that states the extent of a person’s authority.

Negotiarum Gestio

This is a person who undertakes the business of another without the authority of his principal
and in the absence of his principal. He is not employed by the principal; he undertakes a
service without a mandate. He has got a right of action to recover the necessary and useful
expenses suffered by him in running the business for his principal. Unlike an ordinary agent,
a negotiarum gestio is only entitled to payment where he is able to show that his service was
utiliter coeptum i.e. his service was necessary and useful in the circumstances. It is therefore
akin to agency by necessity. (Almost or is similar to stipulatio alteri)

A negotiarum gestio has no authority either implied or express to represent the principal and
therefore cannot create obligations between the principal and a third party. The principal is,
however, not precluded from seeking performance from third parties as long as he ratifies the
acts of the negotiarum gestio. The net effect of ratification would be to legitimise or to give a
semblance of legitimacy to the acts performed by the negotiarum gestio.
Undisclosed Principal

An undisclosed principal is not the same as an unnamed principal. The unnamed principal is
one where the agent discloses that he is acting for a principal but does not disclose who the
principal is. A principal is said to be undisclosed were a third party enters into a contract with
an agent with the belief that the agent is working on his own account. The law allows an
undisclosed principal to come forward and seek specific performance from the third party.
(See Nyamweda v. George SC 88-00)

Duties of the Agent

1. Performance of mandate – An agent is bound to do what he has been instructed to do.

An agent who goes off-topic on his instructions would have committed a fundamental
breach of contract which may disqualify him from remuneration or cause him to incur
damages.

2. The duty to exercise care and diligence – An agent must prosecute mandate with
diligence and always act in good faith. As with every delict, the degree of skill and
care that the agent must show will depend on the circumstances of each matter. Look
at reasonableness – diligent paterfamilias. It has been held that a legal practitioner
holds himself to clients as possessing adequate skills, knowledge and learning for the
purpose of carrying out all lawyering business. (See Honey & Blackenburg v. Lou
1965 RLR 685)

3. The duty to pass information – An agent is bound to give his principal the information
that a reasonable person in the agent’s shoes would be expected to give.

4. Duty to advise – This duty becomes relevant were the principal employs a skilled
agent who possesses expert knowledge. Such an agent is duty bound to advise the
principal of the likely results of the course of action proposed by the principal.

5. Agent must remain faithful – Must not make a secret profit.

6. Agent must not put himself in a position of conflict.

7. Agent must not misuse confidential information. (See Fox & Carney v. D 1974 (1)
SA 124)

A successful agent must receive the following from the principal

i. Remuneration – The principal must pay the agreed package if any, if not expressly
stated the law will imply a reasonable package, consumerate with the agent’s
status.
 ii. The principal is duty bound to reimburse and compensate the agent for expenses and
liabilities incurred by the agent in the course and scope of the performance of the
mandate.

iii. The principal must also account to a successful agent especially in circumstances
where the agent is paid by way of commission.

THE LAW OF NEGOTIABLE INSTRUMENTS AND OTHER

COMMERCIAL PAPERS

NEGOTIABLE INSTRUMENTS

Provided that a written instrument complies with the prescribed formalities, the legal rights
which are written on the instrument may be transferred from person to person either by mere
delivery or by the transferor signing his name on the back of the instrument (endorsement),
followed by delivery.

A person who takes transfer of the instrument in good faith and for value then receives those
rights free from any defences which might have been available against previous holders (free
from equities). If the instrument does not comply with the prescribed formalities it will not be
entirely valueless, as the transferee may be able to rely on it under the ordinary law of
contract, either as a written contract or as written evidence of a contract, against the person
who has delivered it to him; but the advantage of transferability free from equities will be lost
(won’t be free from defence)

The Zimbabwe Bills of Exchange Act [14:02] is squarely based on the English Bills of
Exchange Act 1882. The law can best be ascertained by interpreting the wording of the act
itself. But in cases not covered by the act, reference must be made to previous law which was
known in Holland as the Wissselrecht. (See Theodore v. Deacons 1958 (3) SA 307)

When referring to the act, provisions of the key section 95 must not be forgotten.

PROMISORY NOTES (Section 89-95)

89 Definition of promissory note

(1) A promissory note is an unconditional promise in writing made by one person to
another, signed by the maker, engaging to pay on demand or at a fixed or
determinable future time a sum certain in money to, or to the order of, a specified
person, or to bearer.

a. Promise must be unconditional. An unqualified promise, coupled with an indication

of the fund out of which it is proposed to pay, or a statement of the transaction which
 gave rise to the note is unconditional. A promise to pay out of a particular fund is not
unconditional because it would not be capable of fulfilment if the fund were
exhausted.
(2) An instrument in the form of a note payable to maker’s order is not a note within the
meaning of this section unless and until it is endorsed by the maker.
(3) A note is not invalid by reason only that it contains also a pledge of collateral security
with authority to sell or dispose thereof.

90 Delivery necessary
A note is inchoate and incomplete until delivery thereof to the payee or bearer.

91 Joint and several notes

(1) A note may be made by two or more makers, and they may be liable thereon jointly, or
jointly and severally, according to its tenor.
(2) Where a note runs ―I promise to pay‖ and is signed by two or more persons, it is deemed
to be their joint and several note, and any note signed by two or more persons is deemed to be
their joint and several note in the absence of a contrary intention appearing on the face of it.
92 Note payable on demand
(1) When a note payable on demand has been endorsed, it must be presented for payment
within a reasonable time of the endorsement. If it is not so presented the endorser is
discharged.
(2) In determining what a reasonable time is, regard shall be had to the nature of the
instrument, the usage of trade and the facts of the particular case.
(3) Where a note payable on demand is negotiated, it is not deemed to be overdue, for the
purpose of affecting the holder with defects of title of which he had no notice, by reason that
it appears that a reasonable time for presenting it for payment has elapsed since its issue.
93 Presentment of note for payment
(1) Where a note is in the body of it made payable at a particular place, it must be presented
for payment at that place in order to render the maker liable, unless the particular place
mentioned is the place of business of the payee and the note remains in his hands. In any
other case presentment for payment is not necessary in order to render the maker liable.
(2) Presentment for payment is necessary in order to render the endorser of a note liable.
(3) Where a note is in the body of it made payable at a particular place, presentment at that
place is necessary in order to render an endorser liable; but when a place of payment is
indicated by way of memorandum only, presentment at that place is sufficient to render the
endorser liable, but a presentment to the maker elsewhere, if sufficient in other respects, shall
also suffice.
94 Liability of maker
The maker of a note by making it—
(a) engages that he will pay it according to its tenor;
(b) is precluded from denying to a holder in due course the existence of the payee, and his
then capacity to endorse.
95 Application of Part II to notes
(1) Subject to this Part and except as by this section provided, the provisions of this Act
relating to bills apply with the necessary modifications to notes.
(2) In applying these provisions the maker of a note shall be deemed to correspond with the
acceptor of a bill, and the first endorser of a note shall be deemed to correspond with the
drawer of an accepted bill payable to drawer’s order.
(3) The following provisions as to bills do not apply to notes, namely, the provisions relating
to—
(a) presentment for acceptance;
(b) acceptance;
(c) acceptance supra protest;
(d) bills in a set.