BUSINESS LAW

3 ESSENTIAL OF SERIOUS INTENTION

This is the essential that graduates an agreement into a binding

transaction. It makes a private undertaking which the agreement in
into a subject matter of law. It does this by creating personal rights and
corresponding obligation which by definition attract the interest and
therefore protection of the law.

Such personal rights are deemed to have been created where parties
enter into an agreement with a serious object to be bound to
performance under the agreement. There are three factors that must
be established to determine whether or not parties have the serious
intention to performance.

1. It is serious undertaking of the obligations with intend to perform

the undertaking obligations.
2. The understanding of obligations must be based on a reasonable
or lawful ground known as “Justa Causa”.
3. Performance of the obligation must be possible both at Law and
in fact.

The three elements are set out by the doctrine of “Redylyke

Ozaark”- which regulates the creation of rights by deliberate and
intentional undertaking and that such undertaking must be both
reasonable and possible. If parties agree on a contract which can not
be governed by the aforementioned doctrine, then such an
undertaking is not based on a reasonable ground and that such parties
could not have intended the undertaking to bind them. The effect is of
making the contract void by the reason that the serious intention is
lacking as an important essential.
[ Conrade Vs Russow]

4. LEGAL CAPACITY TO CONTRACT

In principal every owner of a right has the power and authority to do as

he wishes with his or her right such as either to destroy or keep it.
However, the rules of law do provide modification for this principle
which modifications are intended in some cases to protect the owner of
the right or the public in general by classifying people into two broad
classes namely Mondig Class and Onmondig. The former consists of
the people with full contractual capacity, and as such capable to
choose any contract of their choice.

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 The latter consists of people with limited contractual capacity as such
restrained to enter into any binding transactions without some legal
formalities such as assistance from either a guardian or warden or a
trustee.

There are two groups under On-mondig:

1. It is the natural limited capacity group which consists of Minors,
Women married in community of property, Prodigals, Habitual
Criminals, and Drug Addicts.
2. Capable limited capacity group

“The general rule is that the people on the natural limited capacity
group are protected by law from incurring a liability whilst their right
empowers them to earn a gain or profit remains undiminished. Thus
they may contract to gain not to loose. If a contract entails a gain for
them and if they accept the gain, they must therefore perform
obligation corresponding to the gain received.

In order to avoid conflict with the rules of unjustifiable enrichment the

policy of the law is to protect the natural capacity from the general
public.

As for the capable limited capacity the policy of the law is to protect
the public from the members of the capable group, because, this
group’s incapability, is as a result of their fault or is of their making.

Minors
These belong to the Onmondig group. A minor is an unmarried person
below the age of 18yrs, as such having no contractual capacity to
make a binding contract without the assistance or knowledge of his
guardian.

A contract signed by a minor without the knowledge of his or her

guardian is known as a limping contract, and is void as far as the
minor is concerned and valid and binding as afar as the other
party is concerned. Such a contract places a minor in position to
choose either to ignore the contract or denounce it as never came into
existence or enforce the contract against the other party.

The other party to the contract has no choice as he can not enforce the
contract against the minor by the reason and fact that it is void on the
side of the minor. Therefore enforcement and performance of a limping
contract is within the authority of the minor. If the minor chooses to
enforce the contract he must be ready to render share of his obligation
under the contract in avoidance conflict with the rules pertaining to
unjustifiable enrichment.

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 [ Eldelsters Vs Edelstein]
However, there are exceptions to this general position in which a minor
may be bound by a contract he signed without the knowledge of his
guardian. These are
1. Statutorily exceptions
2. Enrichment
3. Tacit Emancipation
4. Fraudulent Misrepresentation
5. Ratification of the contract.

1. Statutory Exceptions

A minor may sign the following contract without the assistance of his
guardian; this is so because the contract is deemed to be beneficial to
the minor,
1. Opening a POSB account
2. Building Society account
3. Insurance Policies
4. Contracts involving necessaries such as purchase of food and or
clothes involving no credit.

2. Enrichment
If a minor has benefited under a contract which he signed without
assistance or knowledge of his guardian, the minor shall be bound to
reciprocate the benefit received by being bound to effect performance
whose value is equal to the benefit he has been enriched with. He may
not perform on all the terms of the contract but only perform by the
extent of the benefit delivered by the other party. The enrichment of
the minor must have prejudice the position of the other party that is
making it necessary to replenish the prejudice.

[Tanne Vs Forgit]

3. Tacit Emancipation
It is but one form of emancipation. It occurs where a minor holds
himself out to the public in the open that the minor’s welfare and
personal needs are no longer being looked into by his guardian, thus
he now fends for himself out of his own income. As such he is entirely
responsible for his affairs and there is no longer room for the
guardianship. And the guardian on the other hand takes no action to
correct the impression, thus implying that because of the emancipation
given by the minor, any contract entered into by such a minor will be
binding by reason of paraded tacit emancipation.

[Grand Prix Motors Vs Stewart]

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4. Fraudulent Misrepresentation

If a minor lies to the other party as regards his real age and the other
party enters into a contract with him on the belief that he is a major,
the minor shall be bound not on the contract as the as the Contract is
Void by the reason of fraud, but shall be bound by the law of DELICT,
compelling the minor to make good the position of the other party.

5. Ratification of Contracts

On attaining the age of majority the minor has choice to either ratify
the contract signed on his behalf by his guardian during his period of
minority, or contract he himself signed without the knowledge or
assistance of his guardian, thus, taking them as binding as if they were
on the onset. Or he may choose not to ratify them.

The minor may succeed to set-aside such contract if he proves to the

contract that the contract was or is prejudicial to his interest that is he
will be in a better materials position without the arrangement. If the
court is satisfied by the minor’s submissions the contract shall be set
aside by the rules “Restituto in Entergrum” which has the effect of
reversing performance under the contract.

[Lancashire Steel FC Vs Justice Majabvi 2007]

[Wood Vs Davies]

MARRIAGE IN COMMUNITY OF PROPERTY

There are two possible marriages in Zimbabwe.

1. Marriage in community of Property
2. Marriage outside community of Property

These two have different effects on the right of spouses. Marriage

outside community of property does not affect the contractual capacity
of the spouses as each spouse is deemed for the management of his
estate although they are in marriage. Thus each spouse owns what
belongs to him or her, meaning that there is no joint between them.

Marriage in community of property does affect the contractual capacity

of the female spouse in the marriage.
1. The female losses her contractual capacity by surrendering to
the male [husband].

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 2. Under this marriage a joint estate is created, thus the two
surrenders their property rights to the joint estate of the
marriage.
3. The husband becomes the head of the joint estate, thereby being
the only person with the contractual capacity to contract on
behalf of the estate.
4. The husband acquires marital authority over wife there by
making the wife close to a minor.

So a contract signed by a women married in community of property is

void by the reason of limited contractual capacity. However, a
marriage in community of property must be preceded by the signing
and registration of Ante-Nuptial Contract

There are few exceptions where a woman married in community of

property can be allowed to enter into a contract without the assistance
of her husband:
1. Where the contract involves household goods.
2. If the woman is a public trader or dealer she may only enter into
contracts that have to deal with her trade or dealership.
3. Any banking accounts provided she may not sign for an
overdraft.
4. Insurances.
5. Employment.
6. if the woman signs a contract without the consent of her
husband and she is enriched under the contract she shall be
bound by such a contract due to the enrichment which now has
the effect of binding the joint estate.

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LEGALITY AND MORALITY

An illegal contract is a contract in conflict with the rules of law be they

statutory or of common law. Included in illegal contract are
transactions which are contrary to the public policy or immoral
transactions, or transactions made to defect the carriage of justice or
simply transactions that can not be enforced by reason of particular
handicap they suffer from.

An illegal contract is void at law and in addition illegal by reason of

illegality which is deemed to be the threat to the public order. As such
a transaction of such nature can not be made to enjoy the protection of
the law. There are three possible instants of illegality which may arise
in a contract.
1. Illegality that is known to one party to the contract and unknown to
the other party. “meaning that he who knows the illegality is guilty
of illegality while the other party is innocent of illegality”

If the innocent party is disadvantaged or injured in such a contract he

shall be entitled to redress his injury under remedies available in
fraudulent transactions.

2. The illegality may be partial, thus a certain portion of the terms of

contract is illegal while the certain portion is legal. In which instants
the doctrine of “Severants of Terms” may be applied if befitting.
Thus the illegal term shall be served from the contract with object of
enforcing the legal terms. Only if the legal terms are completely
independent of the illegal one ie the enforcement of the legal terms
does not in anyway depend on the illegal terms.

If the illegal terms include terms relating to the purpose and or nature
of the contract, the contract shall be deemed to be illegal in certainty,
thus providing no scope for the doctrine of Severants of Terms.

3. The illegality may rise in the contract in its entity and known to all
parties to the contract meaning that all the parties are aware of the
illegality and such illegality runs into the root of the contract. Such a
contract is deemed to be illegal in totality. Therefore it invites the
application of two important doctrines, Doctrine of “Exturpi Causa”
and the Doctrine of “Pari Delicto” .

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The thrust of the doctrines two is contained in the caption that the
“loss lies where it falls, thus if a person is harmed by disadvantaged in
an illegal transaction of his own choice, the rule of law shall not be
made available to him for the redress of injury. Since the injury is
stained in a transaction or process injurious to the law, the rule of law
will not assist a person who is in intend to disturb public order.

The doctrine of Exturpi Causa applied in an illegal transaction where

there had been no performance at all or in which the performance by
the parties has been equal. It is applied rigidly without allowing room
for exception. Meaning that, the courts shall always refuse to intervene
in any illegal transaction of the above description.
[ Jajbhay Vs Cassim]

[ Petterson Vs Jajbhay

Pari Delicto
It is applied in a transaction which has been either wholly or partially
performed by one of the parties to the transaction without being
reciprocated by the other party. Thus the loss lies where it falls, there
by making the position of the defendant stronger than that of the
plaintiff, since the effect of the doctrine is to deny redress of the
injured party in an illegal transaction. If applied rigidly like Exturpi
Causa, Pari Delicto an exception in circumstances which justice
demand such exceptions to be made. The courts shall treat an illegal
contract as an exception if there is evidence that the illegality if not
brought to a stop by the courts shall continue to operate, thus
becoming a continued disturbance to the public order.

In such circumstances the court shall intervene in an illegal transaction

not to redress the injured party but to bring illegality to an end, so as
to terminate persistent disturbance of peace and order.

VOIDABLE CONTRCATS

A void contract is a contract which lacks one essentials of contract, and

as such an agreement is not capable of becoming a contract. By void
we mean nonexistent. As such no contractual obligations or rights may
flow from a void contract.

A voidable contract is qualitatively different from a void contract. A

voidable contract is enforceable at law through out its existence until
its justifiable repudiation by an order of court. A voidable contract is a
contract whose formation confirms to all the necessary essentials of
contract, hence valid. Except that there would have been some flaw or

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error that let the agreement. It there is this flow or error it must be
proved by the court to justify the repudiation of the contract.

However, remedy available to the injured part in a void contract shall

depend on the nature and extend of the flaw responsible for the
voidableness of the contract. In principle the order of Restitution is the
most common one unless fraud is proved. There are three such flaws
or errors that may justify repudiation of the contract:
1. Misrepresentation
2. Duress
3. Undue Influence