Financial Training Company

2007

Corporate and Business Law- F4 (Zimbabwe)

Casebook

Constructive delivery and the transfer of moveable property.

One of the sellers 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 daughters 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

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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 partys 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 sellers 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.

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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.

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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 sellers 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 Maceys 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

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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.

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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

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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 sellers 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 Maceys 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

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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.

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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 tailors 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 employers 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 Harpers 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 firms main offices were) and the period of the restraint was also reduced from five years to three years.

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

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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 Vs 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

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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 sellers 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 sellers 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

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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 todays 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 courts 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:

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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 Harpers 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 companys 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).

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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).

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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 respondents 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 Durbans 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

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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 500 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 500 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

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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 Vs 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 Bs 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. 128

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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.

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