03 contents of a contract

Financial Training Company

2007

Corporate and Business Law- F4 (Zimbabwe)

Casebook

Constructive delivery and the transfer of moveable

property.

One of the seller�s paramount obligations is to deliver the property sold to the buyer. He is

obliged to deliver the actual property sold i.e. that which matches with the contract description.

The time, method and place of delivery are governed by the contract between the parties.

A distinction is drawn between the delivery of movable and immovable property. In the case of

immovable property (land and buildings) registration constitutes delivery while actual or

constructive delivery are applicable in the case of movable property.

When movables are delivered use may be made of actual or constructive delivery. Actual

delivery or traditio is the delivery of the thing from one hand to the other for example, a book, a

pen, a plate etc.

Where actual delivery is difficult or impossible constructive delivery is used in order to transfer

ownership to the purchaser. Thus constructive delivery has the same legal significance as

actual delivery. Examples of constructive are:

1. Symbolical Delivery

This takes place where the thing itself is not delivered but something else which places the

purchaser in a position where he may exercise control over the thing bought. For example

where the goods bought by the purchaser are in storage and the seller hands him the key

enabling the purchaser to have unimpeded access to the merx (item that has been bought).

Equally where goods are being shipped and delivered (in import and export contracts) symbolic

delivery takes place by the handing over of the bill of lading to the buyer.

2. Traditio Longa Manu (delivery with the long hand)

This form of delivery is used when the goods are very bulky or huge. Delivery takes place by the

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pointing out of the thing sold to the purchaser so that he may exercise control over it. In Xapa v

Ntsoko (1919) in which lobola cattle were pointed

out to the in-laws by their daughter�s husband. The court said that valid delivery had taken place

through the process of pointing the cattle out.

3. Traditio brevi manu (delivery with the short hand)

Delivery takes place by agreement. The purchaser is already in possession through an earlier

arrangement (for example a book that has been loaned) and now that the same item has been

sold to the buyer, it is not necessary for the purchaser to surrender it first to the seller to enable

the latter to hand it over to him. The parties merely agree that the purchaser will retain the item,

but now as owner and not possessor.

4. Constitutum possessorum

This is the opposite of traditio brevi manu. The seller remains in possession of the thing sold

after the sale has been concluded (e.g. a watch or pair of trousers that must be rectified or

redone). The intention of the parties is that ownership passes to the purchaser and that the

seller is now only in possession of the thing as an agent of the buyer.

5. Attornment

This occurs where a third party is holding the item for the seller and the latter instructs the third

party to retain the item (until collection) for and on behalf of the buyer. Attornment involves the

mental concurrence of the three parties at the same time.

Guarantee the purchaser against eviction One of the primary obligations of the seller towards the purchaser is the duty to guarantee him

against eviction. Thus the buyer has to be granted vaccuo possessio or undisturbed

possession. This is known as the tacit warranty against eviction and it forms an inherent part of

the contract of sale. The parties do not have to expressly add this warranty to their contract. It is

an implied term of the contract.

The warranty against eviction ensures that the purchaser will not be disturbed in his possession

of the thing i.e. that he will not be evicted. The seller therefore undertakes that no-one with a

better right shall deny the purchaser possession of the whole or part of the thing sold. This duty

was explained by the court in York and Company v Jones (1961) as

�. . . a duty to guarantee the purchaser against eviction i.e. subsequent dispossession, total or

partial by third

parties claiming a title superior to that which the purchaser has obtained from the seller.�

Where eviction is threatened it is the duty of the seller to come to the assistance of the


purchaser even before he has been evicted by process of law. If the purchaser surrenders the

thing over to a third party without notifying the seller of the impending eviction, the seller

remains liable provided that the purchaser can prove that the third party had an indisputable

right to the thing sold. In the case of Olivier v Van der Bergh (1956) the court noted that the

mere receipt by a purchaser for a demand from a third party claiming the article sold does not

by itself entitle the purchaser to sue his vendor (seller) upon the warranty against eviction.

Where

however in such an action, the purchaser in addition proves both that the third party�s title is

legally unassailable and that he � the purchaser has duly admitted the demand and legally

bound himself to comply with it, the purchaser is entitled to succeed even though he has not yet

actually complied with the demand made upon him by the third party.

Even where the seller does not assist the purchaser, the purchaser is expected to defend his

position with all the means at his disposal and should he be deprived of possession he will have

to prove that the seller�s title was deficient.

(Dickinson Motors v Oberholzer 1952).

When the purchaser has been evicted, the warranty which is an implied term of the contract will

have been violated and he will have at his disposal the remedies which are normally available in

cases of breach of contract.

(General Finance Company (Pvt) Ltd v Robertson (1980).

Should the purchaser be fully evicted, he may resile from the contract and claim repayment of

the purchase price, as well as damages. Alternatively he may enforce the contract and claim

damages.

(Alpha Trust v Van der Watt (1975).

However as an exception to the general rule, in three instances the tacit warranty against

eviction does not protect the purchaser.

(i) where the parties expressly agreed when concluding the contract that the warranty

would not form part of the contract. (provided the seller acts in good faith).

(ii) where the purchaser is aware that a third party is the owner of the thing sold, he

may not hold the seller liable should he be evicted.

(iii) where the purchaser lost possession through the unlawful act of a third party (like a

thief) the seller will not be liable because the purchaser bears the risk.

Risk In our law, the purchaser carries the risk from the moment that the contract of sale is perfecta.

The contract of sale is perfecta or concluded when the price is fixed or ascertainable, the thing

sold has been specified and the contract is unconditional.


The risk therefore passes to the purchaser before delivery has taken place. Should the thing be

damaged or destroyed due to circumstances beyond the control of the parties, the purchaser

will bear the risk. In short, the purchaser remains liable to pay the price even if the seller can no

longer deliver the merx (merchandise) in the state originally agreed upon.

In Horne v Hutt (1956), one farmer sold maize mealies which were meant for stock feed to a

neighbouring farmer. The required maize was set aside and appropriated for the exclusive use

and benefit of the purchaser. Before delivery of the mealies could be effected the whole

consignment was stolen and the thieves and the court ruled that risk had already been

transferred to the purchaser. On the other hand in Jacobs v Petersen and Another (1914)

Petersen bought a horse and a cart from Jacobs and undertook to pay the purchase price in

weekly instalments. The contract contained a suspensive condition namely that the seller would

remain the owner of the horse and cart until the last instalment was paid. After payment of the

first instalment, the horse died. The court held that the risk was with the seller and therefore he

could not claim payment of the balance of the price from the purchaser.

There is no doubt that at the time the car was reduced to ashes, the contract was perfecta and

risk had already passed to the purchaser

Ownership Under Roman-Dutch Law, no matter what arrangements the buyer and the seller can make,

ownership of the property does not pass from one to the other by their mere agreement. There

has to be delivery. On the other hand, risk of destruction of or damage to the property normally

passes to the buyer when the sale is perfected. This means that if it is an unconditional sale of

specific goods the risk passes on the conclusion of the contract unless agreed to the contrary,

Horne v Hutt 1915. Thus damage or destruction which occurs after the risk has passed will

relieve the seller from any duty, for example, of delivery but will not relieve the buyer from his

duty of paying the full price.

Increased duties, taxes and other burdens imposed by law are risks, Snyman v Fowlds 1950.

Where a person sells his property subject to a suspensive condition, the sale is not perfected

until the condition is fulfilled. Thus the risk of total loss does not pass until then. However, if the

property is partly damaged or destroyed then the loss falls on the seller if the condition is

subsequently not fulfilled, and on the buyer if it is fulfilled. Where specific property is sold, but

the price cannot be ascertained until it is weighed, measured or counted, the sale is not

perfected and therefore the risk of destruction does not pass until this has been done. This is

because the price the buyer is obliged to pay cannot be ascertained, Page v Blieden and

Kaplan 1916. The weighing and measuring or

counting must have taken place in the presence of a buyer.


If the property sold is unascertained then the sale is not perfect and therefore the risk does not

pass until property conforming to the contract description has been set aside or appropriated to

the contract by the seller. In this case the presence of the buyer is not necessary, Taylor & Co v

Macke Dunn & Co 1879. It was said in Fitwell Clothing v Quorn Hotel 1966 that a breach of

contract by the seller which obliges him to resume possession of the property he has delivered

to the buyer renders the contract imperfect and casts the risk on the seller.

Price in a contract of sale

A sale in Roman-Dutch law has been defined as a contract in which one person promises to

deliver a thing (merx) to another, who on his part promises to pay a certain price (pretium).

According to MacKeurton for a valid contract of sale to come into existencethe following

essential elements must be satisfied, that is, agreement on the thing sold and a price thereon. If

these exist, there is a sale. If the above stated elements do not exist, there is no contract of

sale. Therefore no matter how the parties describe their contract, if the aforementioned

elements are not satisfied, the courts will not enforce the contract in question as a contract of

sale but another contract.

In relation to the aspect of price in a contract of sale the Roman-Dutch law position is that, for it

to qualify as a contract of sale, the price must be either fixed by the parties or ascertainable

from the contract. The price may be ascertainable from the previous course of dealing between

the parties even if not expressly so agreed or from an express reference to market rates and

values.

There must be an intention as to the real price between the parties to the contract of sale. In

some other cases, the courts have ruled that if there is no mention of the price the

circumstances may justify the conclusion that the parties impliedly agreed to be bound by the

seller�s usual price as stated in the case of Calamas v R (1949).

From a number of case law authorities, the price should be ascertainable as further illustrated

by the case of Macey�s Consolidated Ltd v Chesebrough Ponds Pvt Ltd (1967), where a sale at

the ruling price was held enforceable as the prices were readily ascertainable. In a different

case of Baxter v Maxwell (1923), a contract to sell milk at �current wholesale rates� was held

void because the evidence showed that it was impossible to calculate the current wholesale

rates in that trade at the time. The above discussion reaffirmed the position that the court will

always ascertain the real nature of the transaction and there can be no sale without a genuine


intention on the one hand to buy and on the other hand to sell at a genuine price.

The question as to what extent Roman-Dutch law recognizes a sale at a reasonable price is still

open and a moot point. There is however authority to the fact that even though the parties did

not agree on a price, but on the circumstances, something had to be paid, the courts had not

struck down those contracts, but have ruled that in the circumstances a reasonable price had to

be paid. This is illustrated by the case of Mechanick v Simon (1920) were it was held that there

is in such a case an implied term to pay a fair and reasonable price. It should be noted that out

of justice and fairness between the parties to a contract of sale the Roman-Dutch law

recognizes a sale at a reasonable price. This same position of recognizing payment of a

reasonable price was also held in the case of Elite Electrical Contractors v Covered Wagon

Restaurant (1972), where it was held that in the circumstances, there was a need to pay a

reasonable price for the work done or service provided.

The position in Zimbabwean law as regards the upholding of a contract based on a reasonable

price where the price is not fixed or the price is not ascertainable was settled in the case of

Chikoma v Mukweza (1998) where it was held that there can be no valid sale unless the parties

have agreed on the price. If it is not stated clearly it must be stated implicitly and there must be

an agreed method by which the agreement can be achieved provided the sale will be valid.

The law is now clear in Zimbabwe, if the price is not fixed or ascertainable no matter what

contract the parties have entered into, it is not a contract of sale. The court will always ascertain

the real nature of the transaction and there can be no sale without a genuine intention on the

one hand to buy and on the other hand to sell at a genuine price. The Chikoma case (supra)

reaffirmed, the general Roman-Dutch law position that a contract of sale is only found if the

price is fixed or ascertained.

It is therefore clear that, Elite Electrical case (supra) is no longer applicable in Zimbabwe. The

issue of �reasonable price� is now settled in the Chikoma case (supra). All in all, the

Zimbabwean position, following the decision in the Chikoma case no longer recognizes a sale

based on a reasonable price. It should be noted that, the common law freedom to fix a price has

for many years been subject to price control legislation, for which the enabling Act is currently

The Control of Goods Act Chapter [14:05]. A sale at a price in excess of the controlled price

is void. Even when the parties have agreed on a price and have intention to be bound, the

courts will always ascertain the price and see to it that it complies with the law.


Reasonable Price

A sale in Roman Dutch law has been defined as a contract in which one person promises to

deliver a thing (merx) to another, who on his part promises to pay a certain price (pretium).

According to MacKeurton for a valid contract of sale to exist, certain essential elements must be

satisfied, that is, agreement on the thing sold and a price thereon. If these exist, there is a sale.

If the above stated elements do not exist, there is no contract of sale. Therefore no matter how

the parties describe their contract, if the aforementioned elements are not satisfied, the courts

will not enforce the contract in question as a contract of sale but as another contract.

If these requirements are not fulfilled, there is no sale. If an enforceable agreement remains, it

will be some other transaction to which the special rules of contract of sale do not apply.

Whether the merx is corporeal (tangible) or incorporeal (intangible), it must be defined with

sufficient certainty. It must be clear that the parties are in agreement on what is to be bought or

sold; this was stated in the case of Munro v Johnson and Fletcher (1916).

An insufficiently precise description of the property to be sold will make the contract

unenforcable for it will be void for vagueness.

However, it should be noted that a general description of the property to be sold may be

sufficient to satisfy the requirement of �merx�. In Clapham v Struckel (1979), the court enforced a

description of the subject matter, which merely stated, �. . . up to two hundred head of breeding

stock.� The court held that this was sufficiently clear to satisfy the general rule that the

description of the property must be sufficiently clear and certain. Further, it is possible to sell

property, which is not yet in existence but expected to come into existence in future. In

Rhodesia Wire Industries (Pvt) Ltd v A & J Constructions (1964), Fieldsend J accepted this type

of contract

of sale into our law of sale.

If it is unknown to the parties that the merx or property was not in existence or had ceased to

exist at the time of the contract, the contract of sale is void for initial impossibility, Scrutton v

Ehrlich (1908). In this case, the parties contracted for a sale of prospecting rights, which had

ceased to exist. The court concluded that the contract was void of initial impossibility.

It should be noted, however, that the above general rule will not apply, and the sale will be

binding, if the non-existence of the property is the fault of the other party or because the seller

had made representations and promised that the merx existed. This position at law was

emphasised in the case of Inhambane Oil and Mineral Development Syndicate Ltd v Mears and


Ford (1906).

In relation to the aspect of price in a contract of sale the Roman Dutch law position is that, for a

contract of sale to come into being, the price must be either fixed by the parties or ascertainable

from the contract. The price may be ascertainable from the previous course of dealing between

the parties even if not expressly agreed or from an express reference to market rates and

values. In some cases, the courts have ruled that if there is no mention of the price the

circumstances may justify the conclusion that the parties impliedly agreed to be bound by the

seller�s usual price as stated in the case of Calamas v R. (1949).

From a number of case law authorities, the price should be ascertainable as further illustrated

by the case of Macey�s Consolidated Ltd v Chesebrough Ponds Pvt Ltd (1967), where a sale at

the ruling price was held enforceable as the prices were readily ascertainable. In a different

case Baxter v Maxwell (1923), a contract to sell milk at �current wholesale rates� was held void

because the evidence showed that it was impossible to calculate the current wholesale rates in

that trade at the time. The above discussion reaffirmed the position that the court will always

ascertain the real nature of the transaction and there can be no sale without a genuine intention

on the one hand to buy and on the other hand to sell at a genuine price. The question as to

what extent Roman Dutch law recognises a sale at a reasonable price is still a moot point.

There is, however, authority to the effect that, when parties have not agreed on a price but

based on the surrounding circumstances, something has to be paid, the contract will not be

struck down. Instead, a ruling will be made that a reasonable price be paid.

This is illustrated in the case of Mechanick v Simon (1920) where it was held that in a situation

similar to the one outlined above, there exists an implied term to pay a fair and reasonable

price. It should be noted that out of justice and fairness between the parties to a contract of

sale, Roman Dutch law recognises a sale at a reasonable price. This same position of

recognising payment of a reasonable price was also held in the case of Elite Electrical

Contractors v Covered Wagon Restaurant (1972), where it was held that in the circumstances, it

was necessary to pay a reasonable price for the work done or service rendered.

The Zimbabwean law position on the upholding of a contract involving a reasonable price where

the price is not fixed or the price is not ascertainable was settled in the case of Chikoma v

Mukweza (1998) where it was held that there can be no valid sale unless the parties have

agreed on the price. If it is not stated clearly it must be stated implicitly and there must be an

agreed method by which the agreement can be achieved provided the sale is a valid one.

The law is now clear in Zimbabwe. If the price is not fixed or ascertainable no matter what

contract the parties have entered into, it is not a contract of sale. The court will always ascertain


the real nature of the transaction and there can be no sale without a genuine intention on the

one hand to buy and on the other hand to sell at a genuine price. The Chikoma case (supra)

reaffirmed the general Roman Dutch law position that a contract of sale is only found if the price

is fixed or ascertained.

It is therefore clear that, the Elite Electrical case (supra) no longer applies to Zimbabwe. The

issue of �reasonable price� is now settled in the Chikoma case (supra).

All in all, the Zimbabwean position, following the decision in the Chikoma case no longer

recognises a sale at a reasonable price. It should be noted that, the common law freedom to fix

a price has for many years been subject to price control legislation, for which the enabling Act is

currently The Control of Goods Act Chapter [14:05]. A sale at a price in excess of the controlled

price is void. Even when the parties have agreed on a price and have intention to be bound, the

courts will always ascertain the price and see to it that it complies with the law.

Restraint of trade agreement

From a historical perspective a restraint of trade agreement was generally regarded as being

contrary to public policy and therefore unenforceable on the basis of unreasonableness.

However as an exception to the broad rule, where the restraint is justifiably and reasonably

necessary for the protection of the business or proprietary interests of the covenantee and with

reasonable qualification as to time, space and distance, it may be enforceable.

Lord Macnaughten stated the rule in the Maxim-Nordenfeld (1894) landmark case as follows:

�all interference with individual liberty of action in trading and all restraints of trade in themselves

if there is nothing more are contrary to public policy and therefore void . . . It is a sufficient

justification and indeed is the only justification if the restriction is reasonable . . .�

In the aforementioned case N sold his business which manufactured guns and ammunition to

the Maxim-Nodenfeld company and he undertook that he would not for 25 years engage either

directly or indirectly.

(i) in the trade of business of manufacturing of guns, gun mounting or carriages,

gunpowder, explosives or ammunition or

(ii) in any business competing or liable to compete in any way with that for the time

being carried on by the company.

The court held that the second part of the restraint was unreasonable being wider than

necessary to protect the business as it was when bought. It was severable from the

first part which was reasonable between the parties.


Where the object of the agreement is merely to forestall or restrict competition and not to

regulate trade per se the agreement would be void on the ground that it is contrary to public

policy and therefore uneasonable. In Morris v Saxelby (1916) S was employed as a tailor�s

assistant by Morris in terms of a contract in which he covenanted that, on termination of his

employment, he would not practice his trade within 10 miles of his employer�s place. The court

held that his was merely a restraint of competition and therefore void.

With a trade regulating agreement such as this one the court made a very pertinent remark in

Esso Petroleum Co Ltd v Harper�s Garage (1968)

�. . . if however, the contract ties the trading activities of either party after its determination it is a

restraint of trade, and the question of unreasonableness arises. So, too if during the contract

one

of the parties is too unliterally fettered, so that the contract loses its character of a contract for

the

regulation and promotion of trade and acquires the predominant character of a contract in

restraint

of trade . . .�

In Spa Food Products Ltd v Sarif (1952), an application was made to compel S to comply with

the terms of a trade regulation agreement, covering the whole of Southern Rhodesia (now

Zimbabwe) and unlimited as to time between water manufacturers. The agreement fixed

minimum prices which could be varied only by an association consisting of six members, three

being the applicants and the other three being other competitors who were not parties to the

agreement and could reduce their prices at will. S had ceased to be a member of the

association.

It was held by the court that the restrictions in this agreement were very onerous indeed and the

applicants claiming to bind S forever and throughout the width and breadth of the country to an

agreement, the terms of which might well act to his disadvantage; the fact that a restriction was

too wide in space or time was a good ground for holding that the restraint was unreasonable. In

a relatively recent case, Munyaradzi Mangwana v Brianb Mparadzi and Company Legal

Practitioners (1989) a young lawyer who had recently graduated from the University of

Zimbabwe covenanted not to practice as a lawyer either on his own or in association with others

for five years anywhere in Zimbabwe upon leaving his employer. The High Court said that in its

current format the agreement was too wide in terms of time and space and in order to effect

simple justice between man and man the agreement was modified, to cover only Chinhoyi (the

town where he was based about 120 kilometres away from the capital where the firm�s main

offices were) and the period of the restraint was also reduced from five years to three years.


Types of restraint Contracts in restraint of trade are contracts which impose an unreasonable restriction on a

person�s right to carry on his trade or profession. However, if it merely regulates and promotes

trade by absorbing production or services, the restraint of trade doctrine will not apply to it and

therefore its reasonableness will not be investigated, Shacklock Phillips-Page (Pvt) Ltd v

Johnson 1977 (2) R.L.R 161.

A complete prohibition against trading is called a general restraint while a prohibition limited in

time or place is known as a partial restraint. The present law on restraint of trade seems to be

summarised by the Supreme Court in Commercial and Industrial Holdings (Pvt) Ltd v Leigh-

Smith 1982 (1) ZLR 247 as follows:

(i) all restraints, whether general or partial, are prima facie contrary to public policy and

therefore illegal.

(ii) a restraint will be held valid if it is shown to be reasonable as regards the public interest as

well as the interests of both parties.

(iii) in considering the question of reasonableness the court must be satisfied that the

agreement as a whole is reasonable in the sense that the factors of area covered, period of

time, and the scope of the restraint are all properly balanced against another. The court is likely

to allow a wider area, where, for instance, the time factor is shorter.

(iv) the court must be satisfied that some interest of the promisee requires protection.

There are four types of contracts in restraint of trade: these are as follows:

(i) contracts for the sale of the goodwill of a business containing an agreement by the vendor

not to compete with the purchaser.

(ii) contracts between traders and businessmen by which prices, output, or methods are

regulated.

(iii) contracts in which an employee undertakes not to compete with his employer when he

leaves him, by working on his own or for another employer.

(iv) contracts in which a person agrees to limit his mode of trade by accepting orders from one

person only or by agreeing to make only one type of machine. The reasonableness of the

restraint is determined as at the time when it was entered into, Commercial and Industrial

Holdings (Pvt) Ltd (supra).


Voetstoots provision

A voetstoots provision in a contract is a provision which exonerates the seller from liability in

respect of all defects of which he/she was genuinely ignorant up to the time of sale. In other

words the article or property being sold voetstoots is sold as it stands together with all defects

and deficiencies thereon. Aedilitian remedies are remedies afforded to a party who has suffered

loss emanating from a representation by a seller of an article. The remedies are actio quanti

minoris and actio rhedibitoria (redhibitoria). The interface or the relationship between aedilitian

remedies and a voetstoots contract starts from the concept of latent defects. Aedilitian remedies

are remedies available to the purchaser of a latently defective product.

Aedilitian Remedies

Aedilitian remedies are basically categorised into two sections. Firstly the actio quanti minoris

and secondly actio redhibitoria also known as redhibitoria.

Actio Quanti Minoris

In the case of Hall v Milner 1959, the court held that an innocent representation that qualifies as

a dictum et promissume, i.e. a material statement made by the seller to the buyer during the

negotiations bearing on the quality of the res vendita (thing sold) and going beyond mere praise

and commendation, gives rise to an actio quanti minoris. The actio quanti minoris action is an

action for the reduction of the price because the res vendita would be defective. In

Labuschagne Bros v Spring Farm (Pty) Ltd (1976) the court spelt out that the reduction of the

purchase price is calculated as the difference between the price objectively ascertained to the

best evidence available. This scenario is also clearly seen in the case of Grosvenor Motors

(Border) Ltd v Visser (1971). V had purchased a 1969 model car from G. He found however,

that the car delivered to him and accepted by him was a 1968 model and when sued for the

balance of the purchase price of R200, he pleaded by way of exception quanti minoris that the

value of the car was less than the purchase price and accordingly G was not entitled to the

amount claimed. A magistrates� court found in V�s favour. On appeal it was held that what V had

to prove was that the actual or true value of the car was R200 less than the purchase price.

See also SA Oil & Fat Industries Ltd v Park Rynie Whaling Co Ltd (1916) at pp 400. The court

gave judgment in favour of P since the parties could not be restored to their original positions no

restorative decree could be granted but S was entitled to a relief under the actio quanti minoris.

From the authorities cited above it can be seen that the relief of actio quanti minoris is awarded


in a situation where the defects complained of are of less serious degree or alternatively, the

defect could still be serious in nature but the purchaser deliberately opts to keep the merx at a

reduced purchase price.

Actio Redhibitoria (Redhibition)

If the defects on the res vendita are many and go to the root of the contract, the aggrieved party

is entitled to rescind the contract and claim restitution in integrum. By rescinding, the innocent

party is seeking restoration to the status quo ante. If there has been no performance on either

side nothing further needs to be done, but an innocent party who has already paid money or

delivered goods under the contract will wish to claim their return. The philosophy or legal

rationale underpinning the actio redhibitoria is that the defect is so serious that if the buyer had

known of the defect in advance he would not have bought the article when he did.

Restitution or tender does not have to be an integral part of the act of rescission, rather it is a

consequence that must

necessarily follow from it. See Extel Industries (Pty) Ltd v Crown Mills (Pty) Ltd (1999). If

restitution or tender follows in due course the contract is terminated with effect from the act of

rescission. In the case of Elston NO v Dicker (1995), 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 (voetstoots) and 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 and on appeal the Supreme Court upheld the High

Court decision. It further 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

further stated that it is 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. The Supreme Court

emphasised that the duty of the seller of the property notwithstanding legal consequences

which flow from the fact that the sale was voetstoots, was to disclose to the purchaser the

existence of all defects of which the seller was aware of. As such the duty embraced the full

disclosure of the progressive and recurring nature of the defects of which the seller was aware


of, regardless of the voetstoots provision. In Harper v Webster (1956) Clayden F J said �. . .

cases in regard to action for rescission of a contract on the grounds of fraudulent

misrepresentation, establish then

that there is a general principle that the person seeking relief must tender to restore what he

has obtained under the

contract . . .�

All in all it should always be borne in mind that the aedilitian remedies (action redhibitoria or

action quanti minoris) are

available if the res vendita suffered from a latent defect at the time of the sale. Also, aedilitian

remedies are available if the seller made a dictum et promissume to the buyer, upon the faith of

which the buyer entered into the contract or agreed to the price in question, and it turned out to

be unfounded.

Further cases of restraint Contracts in restraint of trade are one of the most important categories of void contracts at

common law. Broadly, agreements in restraint of trade are agreements in which one or both

parties limit the freedom to work or carry on their profession or business in some way, such as

by agreeing not to compete with each other in certain places or activities. Commonly such

agreements may be attacked because they conflict with public interest and because they are

unfair in unduly restricting personal freedom.

In today�s business it sometimes seems to be in the public interest and sometimes the question

of fairness between the parties, which is the most important factor in agreements involving

restraints of trade. Contracts in restraint of trade are one aspect of a very large and complex

problem with important economic and social implications. Essentially, the question is to what

extent the law should interfere with the freedom of citizens to do business in such a way as to

limit or restrain competition in the market and thus to harm the public interest as a whole.

Broadly speaking, the traditional attitude of the courts was to leave businessmen to use their

own methods of conducting business even if this was likely to lead to the creation of

monopolies, or unfair competition, or the enforcement of restrictive practices of various kinds.

Surely, as a general rule it is not the court�s business to improve on the contract the parties

have made, even if they have made an unreasonable or prejudicial contract, they must live with

it. As an exception to this general rule, the courts will not enforce a contract in an unreasonable

restraint of trade. In the case of Rhodesia Milling Company (Pvt) Ltd v Super Bakery (Pvt) Ltd

(1973) Goldin J said:


�most contracts result in a restraint of trade but that by itself does not justify the application of

the doctrine of restraint of trade so as to entitle the court to relieve a party from contractual

obligations freely assumed.�

The learned judge held that a contract is in restraint of trade if it sterilises or stifles production of

services, but if it merely regulates and promotes trade by encouraging production of services

the restraint of trade doctrine cannot apply to it. Its reasonableness will not be investigated. This

test was laid down by the English House of Lords in Esso Petroleum Co Ltd v Harper�s Garage

Stowport Ltd (1967). The approach was confirmed as part of Zimbabwean law in the case of

Shacklock Phillips-Page (Pvt) Ltd v Johnson (1978).

As indicated earlier, covenants in restraint of trade are prima facie contrary to public policy and

for them to be justified they must protect a legitimate interest. In deciding whether a restraint of

trade is reasonable, the courts have long taken the view that regard must be had to the

�interests� which the restraint is designed to protect. When the contract has been classified as in

restraint of trade it will nevertheless be upheld if the restraint is reasonable in the interests of the

public and of the parties. The onus is on the

promisor/affected person to prove that the restraint is not binding on him because enforcement

of it would be contrary to public policy. This was decided in Book v Davison (1988) and was

confirmed in Mangwana v Muparadzi (1989) settling the question of onus.

In the case of Book v Davison (1988) the Zimbabwean Supreme Court held that the question is

whether enforcement of restraint would be contrary to public policy. To answer this question the

court must have regard to the circumstances prevailing at the time it is asked to enforce the

restraint.

Although unreasonable restraint may be unenforceable, they can be saved by severing what is

too wide and enforcing as reasonable what remains, provided the two parts are separately

identified in the contract. This was demonstrated in Gabriel v Fox and Carney

(Pvt) Ltd (1977) in which the parties had made a laudable attempt to confine a restraint on an

ex-employee to a reasonable area by making it apply �within the area of Rhodesia (now

Zimbabwe) in which the company is carrying on its business�. The attempt failed because

although the company�s business was concentrated in Salisbury (now Harare) it had put

through transactions in a number of other parts of the country. It would have been unreasonable

to restrain the ex-employee from operating in all these places, but they could not be severed

because that would have been the act of the court and not the parties. To cure this problem

Zimbabwean courts have adopted the doctrine of restriction, permitting them to restrict an

unreasonable restraint to what is reasonable even if the division is not made in the contract

itself. Mangwana v Muparadzi (1989) and Direct Response Marketing (Pvt) Ltd v Shephered

(1993).


In assessing the reasonableness of the restraint, the position of the contracting parties should

be taken into account. In the case of Bopgrafoc Pvt Ltd v Wilson (1974), Davies J said

�whilst the onus is always on the stipulator to show that a restraint clause is reasonable inter

partes and goes no further than is reasonably necessary to protect the interests of the parties,

this onus is easier to discharge where the parties contracted on an equal footing (as is normally

the case between vendor and a vendee) than it is where the parties bargain from an unequal

footing (as is often the case in contracts of employment) ��

It has been argued that a restraint may be unreasonable because it prohibits an unnecessarily

wide range of activities. A trading or price fixing agreement must obviously be considered in

relation to the interests of the public. The restraint may not be enforceable if it creates a

pernicious monopoly. In Spa Foods Products v Sarif (1951) it was illustrated that the restraint

may even be unreasonable in relation to the parties� interests as well. However in Commercial

and Industrial Holdings v Leigh Smith (1982) it was accepted that a restraint against competition

per se is not objectionable if it is reasonably necessary for the protection of goodwill.

All in all it is now quite clear that for a restraint of trade agreement to be deemed reasonable by

our courts and therefore enforceable, the time and area covered by the agreement are critical

considerations. For example, Mangwana v Muparadzi (1989), a young lawyer who had

covenanted not to work as a lawyer for five years either on his own or in association with others,

anywhere in Zimbabwe, upon leaving his employer had the restraint agreement modified by the

court to operate for three years in Chinhoyi town (about 120 kilometres from Harare), where he

had been based.

Exemption clauses

The aspect of exemption clauses interfaces with the caveat subscripto doctrine. It is common or

trite knowledge that a person who signs a contractual document thereby signifies his assent to

the contents of the document, and if these subsequently turn out not to be to his liking, he has

no one to blame but himself. However, this rule has sometimes been expressed as a rebuttable

presumption that a person who puts his signature to a document knows what the document

contains. See Glen Comerah (Pty) Ltd v Colbin (Pty) Ltd (1979). The caveat subscripto rule in

this instance complements the parole evidence rule. This rule serves a vitally important purpose

ensuring that where the parties have decided that a contract should be recorded in writing, their

decision will be respected and the resulting documents will be accepted as the sole evidence of

the terms of the contract. See Johnston v Leal (1980).


The courts normally limit abuse of exemption clauses by setting limits to the exemption clauses

through a narrow and conservative approach in interpreting exemption clauses. In the case of

Tubb Ltd v Mwamuka (1996), the respondent entered into a contract with the appellant garage.

The garage agreed to collect the respondent�s vehicle and carry out repairs. He later visited the

garage to find out what progress had been

made in repairing his vehicle. Eventually, he decided to retrieve his vehicle but found that a lot

of engine parts were missing from the vehicle. 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 clause that exempted it from liability for any loss or

damage however caused. The High Court ruled that the exemption clause could not exempt the

garage from liability. The garage appealed and the Supreme Court ruled that 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.

It was further held that any ambiguity as to the meaning and scope of the exemption must be

interpreted against the party who inserted the clause and the latter must prove that the words

used clearly and aptly embraced the contingency that arises. It was also emphasised by the

appeal court that a party cannot exempt itself from liability for the willful misconduct, criminal or

dishonest activity of himself, his servants or his agents or perhaps even from the loss of or

damage to the subject of the contract resulting from gross negligence on his part or the part of

its servants or agents.

See also Cotton Marketing Board of Zimbabwe v National Railways of Zimbabwe (1988) where

the appellant successfully claimed damages from the respondent for the value of 95 bales of

cotton belonging to the appellant, which were destroyed by fire while being transported by the

respondent under a contract of carriage entered into between the parties despite an exemption

clause asserted by the respondents.

The above authorities support the view that Pollony may elect to sue either in contract or delict.

If he sues in contract the result is that the onus of proving that there is no exemption clauses is

on him, see Stocks and Stocks (Pty) Ltd v TJ Daly and Sons (Pty) Ltd (1979). If he sues in delict

the onus of proving the clause will be on the supplier, see Durban�s Water Wonderland (Pty) Ltd

v Botha (1999), Cotton Marketing Board of Zimbabwe v NRZ (supra).

Mistakes in contracts Error or mistake is one of the greatest defects that can occur in a contract for agreements which


can only be formed by the consent of the parties and there can be no consent where the parties

are in error in relation to the object of their agreement.

Mistake can be described as a misunderstanding or misapprehension by one or both of the

parties regarding facts, events or circumstances in the contract. The consequence of mistake

(error) is that the parties do not reach consensus (agreement) and therefore there is no contract

between them.

In our law a contract is void for mistake if the parties are not ad idem (of the same mind) as to

the terms of their agreement provided:

(1) The mistake is one of fact

(2) It concerns an essential fact

(3) It is a reasonable mistake

(4) The party is not estopped from doing so.

Each of the four requirements is discussed in greater detail below:

(1) The Mistake is one of Fact

The mistake must be as to a fact, not as to the law which is applicable to the facts on which the

agreement is based. The applicable maxim of the law is ignorantia juris neminem non excusat

lex (ignorance of the law excuses no one).

Wessels JA in Sampson v Union and Rhodesia Wholesale (Pvt) Ltd (1929) said

�The general proposition of law is that if you think the meaning of a clause is such and such, you

cannot get rid of your liability when you discover that the true legal meaning is different from

what

you thought, for you cannot be heard to say that you did not know the law�

In Benning v Union Government (1914), B paid £5·00 customs duty on a certain floor surfacing

machine imported by him, believing the machine was of the class �domestic machine� on which

duty was payable. B subsequently claimed the £5·00 back as the machine was exempt from

duty. The court held that B could not recover as the payment was made in mistake of law.

On the other hand in Maritz v Pratley (1894) items were displayed for auction, each bearing a

number for identification. Prospective purchasers were requested to inspect the goods which

were to be put up for auction. A mirror was displayed on a marble table and Pratley made a bid

on the table thinking that the mirror formed part of the table. He refused to pay separately for

the mirror and was sued by the auctioneer for the purchase price. The court ruled that there had

been a mistake (error) regarding a fact material to the contract and consequently no consensus

had been reached. The contract was therefore void.

(2) The Mistake must be Essential

The mistake must be as to a material or an essential fact, that is, if the party mistaken had

known what the real state of affairs was he would never have made the contract. Examples of


mistakes concerning a material fact are given below:

(a) Mistake as to the Nature of the Agreement

Dobb v Verran (1923) EDL 177. D had been conveyed at his request 300 miles in V�s private

motor-car, nothing having been said about payment. When later D sued V for £30 for medical

fees, V admitted owing the amount but

counterclaimed for £15 for the transport of D. The magistrate found there was a tacit contract to

pay for transport. It

was held, on appeal, that there was no contract. Graham JP said

�Even if Verran had been under the honest impression that he was to be paid for his

services, if Dr Dobbs honestly believed he was travelling as a guest, no charge could be

made against him for the parties were never ad idem, the one party understanding one

thing and the other, on reasonable grounds, understanding another . . .�

(b) Mistake as to the Identity of a Party

Beyers v McKenzie (1880). One Holmes fraudulently represented himself to B as being

commissioned to buy horses on behalf of the Cape Government. He purported to buy nine of

B�s horses for the Government and having obtained

possession of them sold and delivered two of them to M, an innocent third party. B sued M for

the return of the horses.

It was held that there was no contract because B meant to contract with the Cape Government

and not with H.

(c) Mistake as to the Identity of the Subject-Matter Maritz v Pratley (supra).

A mistake which is merely incidental to the contract in that it relates only to the reasoning or

motivation of one of the

parties does not render a contract void.

In Orban v Stead (1978), King AJ observed that:

�an error in motive cannot result in the cancellation of an agreement. If this were not so,

the sanctity of a contract would be imperilled by the motivation of the parties to the

contract.�

(3) It must be a Reasonable Mistake

Even if the mistake is material the courts will not come to the assistance of the mistaken party

unless his mistake is

reasonable or justifiable (justus error). This means that the mistake must not be due to the

negligence of the party who relies on mistake (error) in order to avoid liability. If the �reasonable

person� (the normal careful person) under similar circumstances would have misunderstood the

same fact, the mistake (error) is regarded as being reasonable and sufficient to nullify

consensus.

In Merrington v Davidson (1905), at a sale of certain lots of ground, D bought lots nos. 1�28


Block CC. A plan was available on which the various blocks and lots were marked. D contended

that he had intended to buy lots in Block C and not in Block CC and that his mistake rendered

the contract void.

The court held that the contract still stood because the mistake by the buyer was not a justus

error as D ought to have inquired what lots he was buying.

Equally in the case of George v Fairmead (1958) a guest at a hotel signed the register without

acquainting himself with a clause which indemnified the hotel from claims arising from theft.

George maintained that his action was a case of mistake (error) but the court decided that it

was not a reasonable mistake and therefore had no effect on the contract. The other legal basis

upon which the contract was binding was the caveat subscripto rule (let he who signs beware).

Finally, the party setting up the mistake must not be estopped from doing so. Where one person

by his words or conduct represents to another that a certain state of things exists and induces

him to act on that belief to his prejudice, the former is prevented from denying as against the

latter the existence of that state of things. The estopped person cannot succeed if he sets up

the defence that he entered into the contract while labouring under a material mistake.

Material disclosure In the law of contract, silence does not in general amount to misrepresentation. But there is one

class of contract in which disclosure of material facts must be made. Agreements falling within

this class are known as contracts uberrimae fidei (�of the utmost good faith�). Failure to disclose

material facts, whether they are asked for or not, renders the contract voidable at the option of

the party prejudiced, that is, the party to whom disclosure ought to have been made.

03 contents of a contract

Documents

financial training company

cotton marketing board

traditio brevi manu

current wholesale rates

actio quanti minoris

caveat subscripto rule

prima facie contrary

chesebrough ponds pvt