CAVENDISH UNIVERSITY ZAMBIA

DISTANCE LEARNING DEPT.

BACHELOR OF BUSINESS ADMINISTRATION (BBA)

STUDY MATERIAL
Module Name: BUSINESS LAW Module Code: BBA 140 Stage: Y1S2

MODULE DESCRIPTOR Module Name: BUSINESS LAW Module Code: BBA140

Aims
To introduce students to the basic principles and practice of modern legal systems. To be able to understand the legal requirements of modern business.

Learning Objectives.
On completion of this module a student should: Understand the social necessity of law. Have a broad understanding of the domestic court system and related infrastructure. Be able to distinguish between civil and criminal case law. Be familiar with relevant legal language and terminology. illustrations, using diagrams and examples.

Content.
1. General Principles of the Domestic Legal System, Sources of Law, Definitions of Criminal Law and Civil Law, Court Structure, The Legal Profession (the roles of Solicitors & Barristers), Precedent. 2. Contract Law: Definition of a contract, Classification, Offer & Acceptance, Consideration, Intention, Capacity, Remedies, Useful Cases, Citations, Contents of a Contract Terms: Express & implied, Appropriate Case Law, Sale of Goods Exclusion Clauses, Misrepresentation, Mistake, Restraint of Trade, Discharge of contract (Breach, Anticipatory, Agreement, Frustration, Illegality). 3. The Tort of Negligence - General Principles, Useful Cases, Duty of care, Defences in Tort. 4. Law of Business Organisations: The Concepts of Limited Company, Partnership and Sole Trading, Unincorporated associations. The Relevance of Legislation in Business Organisation: The relevant Companies and Business Names Acts.

Assessment.
3-hour examination. Candidates must answer 5 out of eight questions. Candidates will be expected to show that they can apply their knowledge of economic theory and principles to the economy of the UK or their own country. Credit will be given for appropriate illustrations, using diagrams and examples.

Reading.
1. Principles of Contract Law by Richard Stone, published by Cavendish Publishing. 2. English Legal System by Elliot & Quinn, published by Longman. 3. Law of Tort by John Cooke published by Longman.

BUSINESS LAW

Essential Reading Testbooks Christie R.H., (1993) The law of Contract in South Africa, Butterworths, Durban Swanepoel JPA (1995) Introduction to Mercantile Law, Eighth Edition, Juta & Co (Ltd)

Purchasing and Sale

1.0 What this Unit is about

In this Unit we now look at a special type of contract. This is a contract which has own essential requirements. This is very common type of contract which we all enter into without much thought. 2.1 What you will Learn When you come to the end of the Unit, you should be able to: * Objective sold; and Freight, Discuss requirements for ownership to pass from seller to buyer; Explain the concept of risk in contract of sale; Discuss the various methods by which delivery may be effected; Explain the duties of the buyer and seller; Describe some special types of sale for example Cost Insurance Define a contract of sale Distinguish between things which can and cannot be bought or

Free on Board and Sale on Approval. 3.2 Essential Elements of a contract of Sale We must remember that a contract of sale is a contract just like any other contract, thus it must meet all the essential elements of a contract which have already been considered in Unit 2; that is, the agreement must be legal, parties must have contractual capacity, terms must not be vague, it must be enforced etc. further, the contract must meet those essentials peculiar to a contract of sale. These are: Agreement must be one of sale. The courts will always look at the transaction and call it what it amounts to despite what the parties decide to call it. For example, contract of sale must be distinguished from gift or free offers or donations. They must also be distinguished from exchange or barter. There must be an agreement on the article which is known as the thing/ or subject matter of the sale. This is important because some things cannot be sold and the sale of others is restricted or subject to regulations. In a contract of sale a price must be paid for the things or the parties must have agreed that the price will be paid in the future. Thus an agreement to sell for free is not a sale. Activity 3A *Objective they cannot be sold. regulations and name the regulations in each case. 3.3 Things which cannot be sold The right to inheritance to a person who is still alive cannot be Also give a list of things which are sold subject to Give a list of things which cannot be sold and reasons why

sold. But a right to Inheritance to deceased person can be sold . Stolen property and property belonging to third parties can be validly bought and sold. The reasons is that in Zambian Law of purchase and sale the contract of sale is kept separate from passing of ownership. The sale of stolen property is valid, but the seller cannot pass ownership. This is because one cannot pass a greater right in the property than one actually has. This is expressed by the concept nemo dat quod non babet. The thief has no right in the property therefore the true owner has a right to recover the goods from who ever may be in possession. This is known as the vindicatio right. Where the thing bought has been recovered by the true owner, the buyer can only recover the purchase price from the seller where he is still available. Note that the buyer should not prematurely surrender the goods, lest he surrenders to another thief. The buyer should afford the seller a reasonable opportunity to come to his protection. If a buyer purchased goods with knowledge that they were stolen or where he ought to have known from the surrounding circumstance that they were stolen then he is an accomplice after the act and has no remedies. Not only tangible things can be sold-those which can be toughed e.g the book, but intangible can be sold e.g goodwill, trade marks and patents. Note only existing goods can be sold. These are goods already in the possession of the seller. Non-existent or future goods capable of coming into existence may be bought and sold. For example, a future harvest or catch of fish. these are goods which need to be counted, weighed or measured to the buyer's specifications. Activity 3B * Objective

rule? 3.4 The Price/Pretium

What are the exceptions to the nemo dat quad non dabet

There must be agreement as to the price. The price is important as it distinguishes a contract of sale and gifts or donations or exchange. There can be a valid agreement to sell at a price to be determined by a third party who agrees. If the third party does not agree, then there is no sale. The price must be current money not in goods. However, where the value of goods is insignificant, the court may still call it a contract of sale. 3.4.1 Passing of Risk and Ownership Risk You should be able to understand the aspect of risk. This has no relation to the aspect of ownership. Risk refers to the issue of who bears the loss due to accidental deteriorate, damage or loss to the thing after the conclusion of the contract but before delivery. This issue of risk does not arise before the contract is concluded. It also does not arise after delivery. It is important to note that the issue of risk also entails benefits accruing to the at the same time. For example, if A buys a cow from B and there is agreement on the cow to be bought and the price, if the cow calves before delivery and payment of the purchase price , the calf belongs to the buyer. The general rule is that risk passes to the buyer as soon as the contract is concluded, or is Perfecta. This rule has nothing to do with the issue of Ownership. There are exceptions to the general rule. These are as follows: have occurred The parties are free to agree to the contract i.e. to vary general rule Where the seller has delayed delivery- he is at loss and would not

had he delivered timeously. Where the seller is negligent in the business sense.

Where the sale is one of unascertained goods. Risk would only pass when the goods have been ascertained i.e. there has been counting, weighing and measuring the goods Before risk passes. For example, if A buys bags of maize from B, and before delivery B's entire stock is destroyed by fire, then risk has not passed to A because the goods have not been ascertained, weighed, counted or measured. Where the contract is subject to a suspensive condition. This is because there is only Contractual relationship before the condition is satisfied. The obligations are suspended. If the contract is void for one reason or another. valid contract does not give rise to any obligations. Activity 3C * Objective Advise X in each case: a) X contracts for the supply of new carpet from Z (Pvt) Ltd which has been specifically ordered for him from a manufacturer. Before delivery, Z's premises are destroyed by fire and the carpet is lost. b) As in (a) except the carpet was manufactured by Z (Pvt) Ltd and had not been selected from the bulk of carpets earmarked for the customers. 3.4.2 Ownership Ownership is a bundle of rights which include among others the right of use of the right of enjoyment, possession or the right to alienate the ite, Ownership is a real right which Because a

can be claimed against the whole world. A person may have a right of ownership without actual possession of the item. Conversely, a person may have possession without ownership. For ownership to pass, certain requirements must be met. These are as follows: means one cannot pass a greater right than he actually has. cannot be passed. The thing must be capable of being owned. If not, then ownership For example, air cannot be owned. The seller must intend to apses ownership while the buyer must intend to receive ownership. given. There is a waived or given up his right to receive cash. Thus, in a credit sale ownership passes to the purchaser. Thus in Hire-Purchase transactions, ownership of goods does not pass to the purchaser until the payment of the last instalment. The seller must have delivered the thing to the buyer. As a general rule, delivery entails the seller putting the goods at the disposition of the buyer. Thus delivery ordinarily takes place at the seller's place of business. We must note that at law, the seller is not obliged to deliver the goods to the buyer's place. Delivery is ordinarily subject to agreement between the parties. There are however, a number of recognised ways of delivery: 3.4.3 Actual delivery This is from hand to hand physical delivery otherwise known as manu de manu delivery The purchase price must have been paid or credit must have be en presumption that sales are for cash unless the seller is taken to have The seller must be owner. The nemo dat quad babet principle. This

3.4.4 Delivery with a short hand Known as Brevi manu delivery. the buyer already possesses the merx he buys because of a previous transaction: for example he had borrowed the computer. When he buys it the seller does not have to redeliver. 3.4.5 Delivery with a long hand Here the goods are bulky to be moved, or the movement of such goods may be for the time being prohibited. The seller merely points at the goods which shall then be taken to belong to the buyer. The is delivery longa manu 3.4.6 Symbolic delivery The seller delivers something other than the goods. What is delivered here must give the buyer exclusive control of the goods e.g. keys to house or bills of lading to goods still at sea. 3.4.7 Attornment Goods are delivered to a third party who acts as agent of the buyer 3.4.8 Constitutum possessorium The seller keeps the goods on behalf of the buyer. the courts do not favour this type of delivery as it may tempt and lead to fraud. 3.4.9 Regsitration Ownership in unmovable property is passed by registration according to the provisions of the Deed Registries Act . Thus the purchaser of a house who has paid cash without having the house registered in his name would not become the owner. Activity 3D *Objective Explain whether ownership has passed in each of

the following a) him to his cattle kraal and points out six beasts which he says are for the payment. However, there is a regulation preventing the movement of animals From one area to another and the father -in-law cannot take the animals. Three of them are struck by lightning and die before they are possessed by father in law. b) has migrated to Malawi and has no intention of coming back to Zambia. The two have agreed that Gilbert buys the bike for $2 000.00 Mike has not paid . c) company registered in Poland an overseas country. Betty has received the bills of lading which he sells to Joe. When the rice arrives by sea, it is found to be musty and unfit for human consuption. 3.5 Duties of the seller We now look at what the seller is legally obliged to do. These duties do not arise out of agreement with the buyer, but out of the law. This means the the duties are implied by the law. The duties are as follows: Duty to deliver the goods. By any method of delivery already considered. Where the seller delays he will be in mora and risk may revert back to him. To keep the goods in safe custody until delivery. If the seller is negligent in the business sense, then he may become liable to the buyer. if the buyer delays taking the goods, then the seller would be liable only for willful acts or gross negligence. Betty has bought rice from Satisfy (Pvt) Ltd a Gilbert borrowed a mountain bike from Mike. Mike Gift is paying lobola to his father-in law. He takes

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Duty to guarantee undisturbed possession of the goods. (vaccua posessio). Remember the seller does not guarantee that he is owner. He only guarantees that no one with a greater title will disturb the buyer. However, the buyer has (loci standi) the right to take his own legal action where his possession is disturbed by those without any title. Duty to guarantee against latent defects. Latent defects are those which are not obvious to the naked eye. The buyer does not have to carry out a cruel examination of the subject matter or to employ an expert to do the examination. the seller does not have to guarantee against patent defects. These are obvious defects such as a table with one of the legs shorter than the rest. The duty would be excluded or not apply there the sale is vetstoots i.e. marx is sold as it stand. this fact has to be brought to the attention of the buyer 3.6 Remedies to the Buyer Where the goods are defective the buyer has some remedies at law. we should remember that these remedies are for latent defects only. These are not obvious to the naked eye. The remedies are as follows. 3.6.1 Action Redhibitoria (Rescission) The defect must be material and not trivial. The test of materiality is an objective one not merely that this particular buyer, due to his whims, considers the defect to be so material. The defect must be latent. In this action the buyer must prove that the defect is of such a mature as to make the merx unfit for the purposes for which it was bought. also that had he known of the defect he would not have bought the item. We must be careful not to allow the buyer who is wise after the event, to be his own judge. Buyer returns the merx and gets his purchse price. This is also the case where the merx perished due to the inherent defect. For example, if animals bought die of an unknown disease

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which existed at the time of the sale, the buyer should take back the horns and get his purchased price. If more than ignite, id bought i.e major item and accessories - a defect in the major item would entitle the buyer to action redhibitoria whereas a defect in the accessory may not. If the items are bought as a unit, then defect in one entitles rescission of the entire unit. Note: This action is different from the one where the buyer claims that the wrong goods have been delivered. This would amount to breach of contract. 3.6.2 Actio Quanti Minoris The buyer retains the merx and claims a reduction in the purchase price. In this case the buyer may still Merx anyway, or he/she may no longer be in a position to return the Merx. The remedy is the diferef\nce between the price paid and the market value of the item in its defective state. This may de deducted from the cost of repairs. Where the merx is defective, the seller does not have a legal right to ask to be allowed to repair it. An exception is where the nature of the contract and goods would allow such repairs, e.g supply of artificial teeth. A supplier may be allowed to adjust them where they protrude. Similarly, a supplier of suits to fit would be allowed to alter them Where the buyer suffers damage to his own materials as a result of the defective merx, this would amount to consequential losses. Ordinarily, the seller is not liable for consequential Damages. the exceptions are: If he warranted that the Merx is free of defects. Then the seller's liability is base on breach of warranty. Acto empto. If seller knew of the existance of the defect and deliberately concealed it

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there is fraud. If the seller is a manufacturer or dealer who professes to have expert knowledge of the merx he is selling Both Actio Redhibitoria and Actio Quanti Minoris are known as Aedilition Remedies

Activity 3E *Objective remedies 3.7 Obligatyions of the Buyer The buyer also has obligation which arise from the law. He is obliged to do the following duties. For To pay the purchased price. This is the most important of the buyer's example, the buyer must pay the purchased price. accepting gross negligence. Duty to reimburse the seller for necessary expenses. The buyer is obliged to accept delivery. Where the buyer has delayed delivery, then the seller's duty of care is reduced. He will be liable only for Explain situations when the buyer may not be entitles to aedilition

3.8 Some Special Types of Sale 3.8.1 F.O.R. (Free on Rail) It may be free on rail sender's station or buyer's station. In the former, which is more common, the seller's duty is to pack the goods and deliver them to the nearest railway station and load them on trucks destined for the buyer's station. The railways then because the agent of the buyer. However, if it is F.O.R buyer's station, then the obligations of the seller only end when

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the goods are at the buyer's station. This means the railways become the seller's agent. The former is a more expensive ccontract. 3.8.2 F.O.B (Free on Board ) The seller delivers the goods to the harbour and puts them on board a ship. The same rules as in F.O.R apply. 3.8.3. C.I.F. (Cost, Insurance and Freight) The seller must pack the goods, deliver them to the docks, load then on a ship proceeding to the buyer's port. He must pay for them to the port of destination. He must get the requirement documents; i.e contract of carriage, bill of lading, document of title and receipts. The documents must be sent expeditiously to the buyer. They must also include the policy of insurance. As the bill of lading is a document of title, delivery of it to the buyer is symbolic delivery of the goods. Ownership passes to the purchase on delivery of the bill of lading. The risk passes to the purchaser as soon as the goods are on the ship properly insured. 3.8.4 Sale on Approval This is sale which is conditional upon the merx being approved by the buyer. This is a suspensive condition. If the approval is not given, then the obligation does not flow. 3.9 Summary In this Unit you learnt that a contract of sale is a special contract. This contract must have all the essential of a valid contract plus those essential; peculiar to contracts of sale law sale of We looked at why some things are incapable of being sold and also why at

stolen property is valid. however, we noted that the seller of stolen property cannot pass a greater right in the property then he actually had. We looked at what happens if the property is accidentally destroyed or damaged after the

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conclusion of sale but before delivery. This is the concept of risk. We also looked at the legal requirements for ownership to pass to the purchase. We noted that ownership would not pass to the purchaser unless the buyer has intention to receive ownership and seller also intends to pass it. The Unit looked at common law duties of the parties. These duties do not arise out of agreement of the parties but out of the law. 3.10 Explanatory Terms Merx: Subject matter of contract of sale Nemo dat non babet: One cannot pass a greater right than one actually has Vindicatio right: who has no right Spei: Hope Risk: Liability for accidental loss or deterioration of subject matter after conclusion of contract but Before delivery. It also entails the concept of benefit accruing to the subject matter at the same time. Perfecta: Concluded in all respects Free undisturbed possession The right of owner to get back his property from any other

Vaccua possessio:

Latent defect: A defect not obvious to the eye Actio Redhibitoria : Action for rescission Actio Quanti Minoris: Action for reduction of price

Essential Reading Textbooks Swanepoel J.PA (1995) Introduction to Mercantile Law. Butterworths, Durban Christie R.H. (1993) The Law of Contract in South Africa. Butterworths, Durban

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Willie, (1991) Principles of South African Law, eighth Edition, Juta & Co. (Ltd)

Agency Law

4.0 What this Unit is about In this Unit we look at creation of contract through an agent. Ordinarily the contracting people Negotiate directly and conclude their contract. It is also common for people to act through others so as to conclude binding contracts. We look at the three sided transaction- that is the giving of the authority or mandate to the agent, the negotiation between the agent and the third party and the resultant relation between the principal and the third party. 4.1 What you will Learn When you have finished this Unit you should be able to * * * * Define an agent; Explain how an agency situation is created; Describe right and duties of agents and principals Explain how the relationship between agent and principal is terminated.

4.2 The Need for an Agent Many business transaction are carried out through agent. The law may require that such transactions be carried out by that special type of agent. For example, the registration of immovable property may only be done through a special lawyer/legal practitioner. It may also happen that the party has limited contractual capacity and for his contracts to be valid his legal agent must either assist or act on his behalf. Examples would be trustees acting on behalf of the insolvent, the guardian on behalf of a minor, a curator on behalf of a mentally deficient person etc.

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Here we are concerned with a voluntary agent, in a situation whereby the principal can act for himself. This agent is voluntarily chosen by the principal to act on his behalf. The reasons for choosing to act through an agent are many. One may arrange a holiday through a travel agent who will make contracts with hotels, airlines and tour operators. We may appoint agent simply because we do not have time to do the acts ourselves. Or the agent may possess the necessary expertise within that market . we have difficulties ourselves because of the distance involved. Or it may be a practice acceptable in the industry we are dealing in. 4.3 Definition Agency is a contract One person (the principal) employ another (the Agent). To act for the principal and enter into contractual and other relationships. The transactions would be binding between the principal and third party.

Unlike the simple contract between two people, in agency three people are involved and there are two contracts. These are the following The one on whose behalf the acts are done is the Principal The One who is to act is the Agent The other person the agent deals with is a third party

There must be a contract between the agent and the principal giving the agent the power to act on his behalf. This is a contract of Mandate. The second contract is the one which comes out of the negotiations by the agent with the third party but this is binding only between the principal and the third party. Principal

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Contract Mandate Agent Negotiation Third Party

Thus the agent must have contractual capacity so as to enter into the contract with the principal But as far as third parties are concerned and their relationship with the Principal, any person of adequate understanding may act and bind the principal. The agent is a mere instrument of the principal, he falls out of the picture after the conclusion of the contract between the Principal and the Third Party. 4.4 Creation of Agency 4.4.1 By express agreement This must be clear. Whether the authority to act is given orally or in writing. Where express authority is given, the agent is not permitted to exceed the four corners of the mandate. 4.4.2 Implied agreement This is inferred from the circumstances. The test is whether a reasonable man, when assessing the conduct of the parties, would consider that the parties have agreed to act on a basis which can be characterized as an agency. The existence o a special relationship; e.g. employ and employee, partner and co-partner, may assist bin deciding whether there is implied authority. 4.4.3 Ratification Important points with ratification are: principle The agent acted without authority. He represented to the third party that he was acting on behalf of the

The Principal then adopts the transaction so as to cloth it with

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retrospective authority. The Principal must adopt the whole transaction and not only advantageous parts of it One ratification has taken place, the effect is to place the parties in the position they would have been in had the agent originally had authority. 4.4.4 Estoppel/Ostensible Authority Where a person, by words or conduct, represents (or permits it to be represented) that another person professing to bind him has authority to do so, he will not be permitted to deny the agency against a third party who acts on the faith of the representation as to prejudice himself. In this case the principal is bound by what the agent does when there is no express, implied authority and no ratification. In fact, in estoppel the principal would be denying the existence of authority and is prevented or estopped from denying its existence. Note: The representation must come from the principal and not the agent. 4.4.5 Usual Authority This is a result position. Where one is employed in such a position where people employed in such position usually do certain acts, he will bind his principal if he dose a similar act. For example, one employed as a director may bind his company if he does things directors ordinarily do. Even if his power is limited by the articles of association 4.4.6. Negotiorum Gestio/Agent of Necessity These are acts done without authority. The courts do not look favorably to unauthorized interferences in other people's affairs. As a result there are very limited. They act justifiable on behalf of another in cases of emergency. There should be no prohibition. The intention must be to benefit the other party. they are then allowed

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to cover their expenses. The party they act for is not a principal as such but is called the dominus. The situation should be such that it is impossible or impractical to communicate with the dominus. Examples would be feeding uncollected animals or taking care of perishables.

Activity 4A *Objective forbidden B to buy any further supplies of cattle feed on credit without A's consent. Despite these instructions B purchased more cattle feed on credit from J, who had supplied previous orders and had been paid by A. Further, A sees J's delivery van supplying the cattle feed but does nothing. unauthorized Advise A A now refuses to pay on grounds that the purchases were Distinguish between agency by estoppel and ratification A is owner of farm managed by B. A had previously expressly

4.5 Right and Duties Between Agent and Principal to do. If he the principal for any loss arising out of breach of contract. The court have decided that in some cases substantial performance by the agent would be enough to entitle the agent to commission. The Agent must follow the principal's instructions fully except where the instructions are illegal. He must not exceed his authority. The duty to perform the mandate. The agent must do what he is mandated does not then he is not entitled to any commission or he may be liable to

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The agent must exercise reasonable care, skill and diligence in the performance of his mandate. Duty to act in good faith. This is an important duty. The relationship between the principal and agent is a fiduciary one. It is one of utmost good faith. The agent binds himself to act in the interest of the principal. He must act honestly, loyally and singlemindedly in the principal's interest. This duty includes the following: mandate. if he does, then the profit belongs to the principal. For example, an State agent who buys the principal's house and resells it for a profit breaches his duty. The agent should not be bribed. principal. In case principals informed consent The agent should not abuse confidential information He should not allow his interests to conflict with those of the of risk of conflict, the agent must make full disclosure and obtain The agent must not make a secret profit in pursing the principal's

The duty not to delegate authority. The concept of delegatus non potest delegare means that a delegate must not sub-delegate. There are however exceptions to this rule. For example, where it is trade, business usage or Ministerial duties not involving the exercise of the agent's discretion or skill the agent may validly sub-delegate. Duty to account. he must keep proper account of money received or spent on behalf of the principal and must allow the principal access to these books.

4.6 Principal's Duties to the Agent The principal also has common law duties owed to his agent. Some of them are as follows.

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according

The duty to remunerate the agent for services. Commission is paid to agreement. It is only paid after substantial performance at the

value of the service to the principal, time pended by agent, his expertise and the prevailing market rates. So as to determine what commission is to be paid. incurred liabilities indemnification and reimbursement for payments made. These must be necessary expenses and payments The agent should have been acting within the scope of his authority; picture. The only the agent may not disclose the existence of the the third party discovers that the agent was actually acting for another person, he may choose to hold the undisclosed principal to the contract. 4.7 Termination of Agency The agency situation is terminated in several way including the following the agent Activity 4B Death of either party, insanity or insolvency of either party; Supervening illegality e.g the principal is declared an enemy alien; Where appointment is for a specific time , then expiration of the time; Having completed the assignment as tasked. By acts of the parties; Express revocation of authority by the principal or express renunciation by Where the agent has performed his mandate, he falls out of the parties who remain are the principal and the third party. However, The duty to indemnify and reinburse the agent where the agent has or made patents on behalf of the principal, he is entitled to

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*Objective law involved: A. agreement purchased new mag-wheels for the car and also intructed B to repaint it. He has now sold the care and demanded refund for the mag-wheels and New paint-work. B. not make any effort to contact T. He buys stock fees and feeds and waters the horses for three weeks. When one of the horses show3s signs of illness, S hires a Veterinary Surgeon to attend to is. He now claims his expenses from T. C. carried out the work, but has to appoint F to do part of the work as F is more skilled than him in this field. F has presented E with an exorbitant figure as his price. E is refusing to pay. 4.8 Summary In this Unit we conclude that an agent concludes a juristic act on behalf of the principal. The result is that he creates legal this between the principal and third party, We noted the right and obligations which arise from the agent's negotiation accrue to the principal only. We conclude that for the principal to be bound by an act of the agent, authority has to be established in one way or another. The agents previously unauthorised act or he is by law prevented from refusing that the agent was his agent. G is appointed to do certain work by E. He has substantially S is a cattle rancher. T's horses have strayed into his farm. S does X was appointed by Y to find a buyer for Y's car. X without Y's Consider each of the following situations and give the principle of

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We concluded that for the principal to be bound by an act of the agent, authourity has to be established in one way or another. The principal may also be bound because he voluntarily took on the agent's previously unauthorised act or he is by law prevented from refusing that the agent was his agent. We also looked at the special relationship between the agent and the principal. This relationship is of utmost good faith based on trust and loyalty. 1.9 Explanatory Terms Agent : A person who acts on behalf of another person A relationship of trust and loyalty The agreement through which the agent the principals instructions Principal: Ratification: not been given authority to act. Estoppel: Essential Reading Texbook Prevented from denying The one who engages the agent Adoption of an act performed by another who had

Fiduciary relationship: Mandate: agrees to perform

Christie R.H. (1993) The Law of Contract in South Africa. Butterworths, Durban Swanepoel J.PA (1995) Introduction to Mercantile Law. Eighth Edition, Juta & Co (Ltd) Willie, (1991) Principles of South African Law, Eighth Edition, Juta & Co. (Ltd)

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Employment Law 5.0 What this Unit is About In this Unit we look at one of the most important contract in society. An employment contract governs the relations between an employer and employee. we should also note that because of the important of this relations, the State also has an interest ,to protect. As a result the State; through the Labour Relations Act, regulates this relationship between the employer and employee. 5.1 What you will Lean When you come to the end of this Unit you should be able to : * * contractor; Discuss the nature of a contract of employment; Identify the differences between an employee and an independent

* Identify the situations where an employer will be liable for wrongful acts of the employee. This is vicarious liability. * * List duties of the employer and employee; Discuss situation when an employer is entitled to terminated employment.

5.2. Principles of Employment Contract This is just an ordinary contract. One party provides his labour to another in return for payment. The contract may be oral or written. The terms of the contract may be expressly agreed by the parties. Where these are skimpy or even non-existent, the terms would be implied due to the employeremployee relationship e.g the duty to obey lawful orders subject to the provisions of the Labour Relations Act. It is important to establish whether the contract is one of employment proper. The reason is that an agreement for the provisionof services per se is not legally regarded as a contract of employment.

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Here there is an independent contractor rather than an employee. The independent contractor is not under the control of the employer in as far as when he does his work, or how he does it. It is the degree of wears company uniform or has use of the employer's vehicles is not materials. The courts will look at the reality of the situation and decide whether one is an employee or employee or independent contractor. The way one has been integrated in the employer's business may also be an important consideration The relationship between employer and employee is extremely important with respect to the aspect of vicarious liability in the law of delict. 5.3 Vicarious Liability

An employer is liable (vicariously) for the wrongful act of his employee. But not those of an independent contractor. The notion is that liability is attached to one person although he may not be the actual wrongdoer. The rationale is that the employer is in better position to pay. That he is able to contort how the employee performs his work, and it is the employer who benefits from the conduct of the employee. For the employer to be vicariously liable, the wrongful act of the employee should have been committed in the course of his employment. The employee should largely have been doing his duties for the benefit of the employer. He should not have deviated from his duties in terms of time and space. Thus the employer will not be liable where the employee commits the act while he is now on frolic of his own. This is different from doing one's duties wrongly or negligently; e.g. a recovery driver deciding to engage in a race with his friends and thereby knocking down a pedestrian. The driver is still largely doing his duties though in an improper manner. The injured party may sue either the employee or employer or both of the jointly Activity 5A *Objective

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to deliver

Funny was employed by Fix It (Pvt) Ltd as a driver. He was tasked some materials to the company's customers. After delivering the

goods, fanny decided to proceed to Chitungwiza, twenty kilometres off his route. While on his way he negligently drove his vehicle and injured Speed who was crossing the road. Is Fix It (Pvt) Ltd liable? What are the reasons behind the concept of vicarious liability?

5.4. Obligations of the Employer 5.4.1 Payment of Wages

The employer is obliged to pay the employee his remuneration. This is ordinarily as agreed in their contract. In some cases statute gives the lowest amount which an employer of a certain class of person must pay eg. domestic workers. In this case it is illegal to pay, less than the statutory minimum wage. 5.4.2 To provide work

Legally the employer is not obliged to prove the employee with work. However, where work is available, the employer should afford the employee the opportunity to do the work he was employed to do. Thus in a case where an employer prevented his employee for doing work he was employed to do, but still paid him his salary the court held his to be constructive dismissal. Where there is no work at one plant but work is available at another location, the employer has a legitimate right to require the employee to move to another location. This is the geographical mobility of employees. 5.4.3 Sick Leave The employer must provide employee with sick leave. This may be as per agreement. However, continued absence of employee, due to sickness is a ground for dismissal.

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5.4.4 Vacation leave Employees are not legally entitled to vacation leave except those declared by the law as public holidays. 5.5 Duties of Employee 5.5.1 Provide Services The employee must make personal services available to employment. A contract of employment is one of personal services. The employee must therefore render personal services to his employer. As a result, where there is breach of contract by one party, the court are unlikely to insist on specific performance. Damages are more preferred. 5.5.2 Obedience The employee must obey the employer's legitimate lawful order. The order must be lawful. It of course, be legitimate as far as the contract is concerned. The employer may not legitimately demand that the employee should perform work completely different from that which he was employed to do, so as to amount to demotion or unilateral variation of job specification. 5.5.3 Subordination The employee must be subordinate to his employer and the line of authority. Insubordination is a ground for dismissal 5.5.4 Maintain bona fides/confidentiality He must act in good faith in the interest of the employer. He should not appropriate the employer's property nor should he disclose confidential information gained during the course of his employment. Activity 5B *Objective X is employed by Kutambara Electrical (PVT) Ltd as a supervisor in the electrical department.

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The company has currently had difficulties in securing contracts. As a result is is facing financial difficulties. Mr. F, the manager has recently had arguments with X. The company has informed X that due to lack of contracts, X would be demoted to a general worker and his salary would be reduced. X has complained about this move but has continued working for two months. Now X has faun another job. Does he have any remedies? 5.6 Termination of contract of employment 5.6.1 This is ordinarily by notice from either party The period of notice may be as per agreement by the parties. The employment contract may provide for payment of money in place of notice. Where no period of notice is stated in the agreement, common low provides that the notice period should be equivalent to the period when salary is paid e.g Fortnightly salary -then fortnight is notice. Monthly salary-month's notice etc. 5.6.2 Summary termination of contract of employment There are some common law grounds permitting the employer to summarily terminates the contract Wilful disobedience of lawful order. This amounts to breach of employment contract. The act must be deliberate. Drunkenness so as to be unable to perform one's duties or to interfere with the work Of another employees. Continued/Persistent absence from work without reasonable excuse. This is misconduct justifying dismissal Dismissal for incompetence. It is taken that an employee impliedly warrants his competence. This should amount to failure to afford the required skill 5.7 Summary

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In this Unit we noted that the relations between employer and employee is governed by the law of contract and the Labour Relations Act. The contract of employment may be oral or written. That the employer is only liable vicariously for the wrongful acts of one who is an employee and not an independent contractor. We noted that the wrongful act should have been committed while the employee was in the course of his employment for the benefit of the employer the employer has common law duties to the employee, but he is not legally obliged to provide the employee with work. We learmt that there are circumstances when the employer may summarily dismiss the employee but in all other circumstances the dismiss the employee but in all other circumstances the dismissal has to be after adequate notice has been given to either party. 5.8. Explanatory Terms Employer: Employee: services in return One who hires another to provide services to him One who is engaged in a contract for the provision of for payment of wages. Independent contractor : One engaged in contract of services. He is not closely controlled by the employer Vicarious Liability: employee. Employer's liability for the wrongful act of his

The law of Lease

6.0 What this Unit is about In this Unit we look at the letting and hiring of immovable property. owners of property may for a

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variety of reasons not want to use their property themselves. They therefore would grant others the right to use and enjoy that property in return for rent. The relationship between the Landlord who is otherwise known as the Lessor and the tenant (Lessee) if governed by principles of common law. 6.1 What you will lean When you come to the end of this Unit you should be able to: * * * Define the nature of a contract of lease; List the essential elements of a lease; Describe the different types of leases and rights grated to the lessee under type of lease; Distinguish between duties of the lessor and the lessee; Explain how the leasee is terminated.

* *

6.2. Law of Lease. What is Lease? This is base on the law of contract. The contract is a special one in that is concerned with immovable property only. It is a reciprocal agreement between the lessor and the lessee whereby the lessee agrees to give the lessee temporary use and enjoyment of the property in return for the payment of rent. A contract of lease does not confer ownership of the property on the lessee. This distinguishes a contract of lease from a contract of sale. The lessee is only granted a right of use and enjoyment. This means that the lessee should not consume the subject matter of the lease. He should be able, at the end of the period, to restore the subject matter in the same condition in which it was. Fair or reasonable wear and tear is expected. The deterioration should be as a result of normal use. As a result, if by its use, the subject matter would be consument or the lessee would not be in

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a position to restore it to the lessor, then a lease cannot be created over such property. 6.3 Essential Elements All essential elements of a contract have to be satisfied. In addition: enjoyment The lessor must give and the lessee must receive the temporary use and of the property; There must be agreement on the property let; There must be agreement on the rent to be paid.

A lease is a reciprocal contract. it confers rights and imposes obligations on both parties. These rights and obligations are a matter of terms by the parties. Like other contracts, lease must be legal. For example, a lease of a place to be used as a brothel is illegal. Such a lease would be vaid and unenforceable. Thus if the lease is illegal, the court will refuse to en force a claim for rent. 6.4. Formalities Writing is not a legal requirement for a contract of lease. An oral lease is as binding as a written one. The Parties may agree that the lease be in writing. this may be intended as a record of the agreement. Activity 6A * Objective Peter and John are best of friends. Peter is a businessman and John is an accountant. The two have a written agreement that John would stay in one of Peter's houses. In return , John would be responsible for doing all of Peter's business books. This is to last as long as both parties are alive. What is the legal between Peter and John? 6.5 Duration The lessee is only temporary use and enjoyment of the subject matter. Parties may

relationships

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agree on the duration. Basically, there are two types of leases: 6.5.1 Lease in Longum Tempus (Long Lease) This is a lease of period of more that ten years or for the lifetime of the lessee. This lease gives real right to the property. To obtain this right over successors of the lessor, the lease must be in written and registered in the Deeds Registry. Where there is such registration the lessee's right will prevail where the property has been alienated or where the lessor goes insolvent. The registration serves as notice upon the successors and creditors of the lessor. Every successor to the landlord takes the property subject to the lease. The new owner is not entitled to terminate the lease be fore the period fixed expires. He simply steps into the shoes of the old and must honour all the obligation thereunder 6.5.2 Short Lease This runs for a period of less than ten years. This lease in practice does not have to be registered. It may be a periodic lease which runs from month to month. The contract of lease gives the lessee a personal right only. Under the general law, the lessee has no right to remain in occupation against successors in title to0 the property unless the successor has agreed to be bound by the lease. The Lessee has some protection under the rule huur gaat voor koop which means hire goes before sale. This provides some security of tenure for the lessee. To benefit from this protection, the lessee must be in occupation of the property let. Again, if a purchase of leased property known at the time of purchase that the property is subject to a lease then he is bound by the lease even if it is not registered. 6.6 Requirements for Rent Rent is essential element of a lease. An agreement where A simply permits B to occupy property without rent being paid is not a lease. Similarly, if the parties fail to agree on the rent there is no lease.

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Rent must be not in services. But it seems possible that rent can be partly in money and partly in service. Activity 6B * Objective A. the house was leaking and the window panes were broken. She notified Muzungu of the situation but he did not do anything. Now rain-water has damaged her property. B. which continuously The Dog also wander through the leased property upsetting rubbish bins and making the property dirty. 6.7 Implied Duties of the Lessor To deliver to the tenant use and occupation of the property let. Guarantee the tenant undisturbed use and enjoyment. To make necessary repairs to the property. To pay taxes levied on the property To Guarantee against defects in the property. On termination of the lease, to compensate the tenant for improvements. Sarah's new neighbor has brought onto his premises vicious gods bark at night so as to make it difficult for Sarah to find any sleep. What advice would you give Sarah in the following situations. When Sarah moved into the house she is leasing from Musungu,

6.71 Delivery of Use and Occupation Delivery here means the property is put at the disposal of the lessor at the date agreed. In the case of a building, the lessor hands over the keys to the building. Thus the building must be vacant at the time of delivery . The lessee should be able to enjoy the full use of the

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property for the purpose for which it was let. For example the lessee of a shop was entitled to have access to an adjourning years (Owned by the lessor) top offload goods from vehicle at the rear entrance to the shop. (Wireless & General v Arjoy Investment 1971 (4) SA 174). But the lessee was not entitles to park his vehicles in the lessor's yard as this was not a normal or necessary incident of due enjoyment of the shop. If the property is leased for a specific purpose, e.g a butchery, then the lessor must deliver the property in a condition reasonably fir for the purpose for which it is let 6.7.2 Failure to deliver The lease has the ordinary remedies. he may seek an order for specific performance by the landlord. The order for specific performance is only made if the landlord is able to make such delivery. The lease may rasile/withdraw from the contract and sue for damages. 6.7.3 Guarantee the tenant undisturbed use and enjoyment Every landlord undertakes that he will not disturb the tenant in his enjoyment of use of the property leased. He also warrants that no person with a superior title will disturb the lessee's use and enjoyment of the property let. Note: The landlord does not warrant that he is owner of the property. The lease is valid even where the landlord is not owner. Thus the lessor is not entitled to enter premiums let by him without the lessee's consent. Unless such is for a legitimate purpose; for example, to inspect the premises but not to take any fruit Remedies if the lessee's use and enjoyment is disturbed he may: him, or He may accept the deprivation as repudiation of the lease and cancel the Claim immediate reinstatement; i.e to have his use and joyment restored to

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contract, or In addition he may recover damages for any loss he has sustained.

He is also free from payment of rent for the period he is deprived of use and enjoyment. If the lessee is disturbed by another with a greater titles, he may not seek reinstatement, but he has an action for damages against the landlord unless when taking the lease, he was aware of the defect in the lardlord's title. A lessee who is threatened with disturbance must inform the lessor so that the letter can come to his defence. A lessor does not warrant the lessee against disturbance by third parties without title. As a result, a lessee disturbed by a squatter has no claim against the lessor nor can he claim cancellation of lease. 6.7.4 To make necessary repairs A lessor is obliged to maintain the premises in a condition reasonably fit for the purpose for which it was let. He must repair doors, windows, the roof and other parts of the premises. He must also repair structural defect which substantially interfere with the structural alterations or improvements. If damage is caused by the tenant's negligence the lessor has no duty to repair these. If repairs are urgently necessary, and the landlord cannot affect them while the tenant is in occupation, he may require the tenant to vacate the premises without becoming liable for damages for breach of contract. The purpose must be to effect repairs. The landlord may not under the guise of making repair the tenant to vacate the premises so that he makes a major alteration. Such a 'repair' is not reasonable or necessary. The lessee is not to pay rent during the period he is deprived of beneficial occupation. The landlord takes the risk of the premises depreciating through proper use. It is the duty of the lessee to give notice to the lessor of the existence of a defect and afford him a reasonable

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opportunity to remedy the defect. If the lessor fails to maintain the premises in a proper condition, the lesser may effect the neccessary repairs himself and deduct the cost from the rent. He may only effect repairs after prior demand and notice to the landlord. He must also have given him a reasonable opportunity to effect the repairs. The tenant is restricted to effecting necessary repairs but should not make structural improvement or alterations unless if the on lt way of repairing is replacement; e.g a leaking roof which may need new materials. The tenant can claim damages for loss caused by the existence of defects on the leased premises. The damage should flow from the breach of the lessor's obligation to maintain the premises. But the lessor must have had knowledge of the defect. The burden of roof is on the tenant or if his trade or profession makes him an expert in matters related to buildings. The landlord's liability for damages caused as a result of defect in the lased property may be excluded by agreement. E.g. a lardlord was made liable for damage to the tenant's property caused as a result of rain water coming through the roof where the landlord had notice of the fact that the roof leaked and failed to repair. (Salomon v Dedlow 1912 TPD 971). 6.7.5 Payment of Taxes The lessor is the owner of the property let. In the absence of legislation or agreement to the contrary, the lessor should pay all taxes, rates or charges imposed by the State or municipality or any taking authority on the property. On the other hand, the lessee must pay tax which is imposed upon the produce fruits of the property. Activity 6C

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*Objective the house he is staying in does not reflect his new social and economic status. The house which Simba is staying in belongs to John. Simba would like John to do the following 1. bedroom. 2. 3. is there. 4. asbestos and developed cracks which allowed water in. * whether he is entitled to the request or whether he may carry out the repairs himself and recover from the landlord. 6.8 Duties of the Lessee 6.8.1 Payment of rent This is the most important duty of the tenant. A lessee is under an obligation to pay the lessor rent for the right to use and enjoy the property let. Rent must be paid in time. If there is no agreement on the time, rent is payable on the expiration of a lease or if the lease is periodic, on the expiration of the period i.e end of month or week as the case may be. it must be paid at the agreed place to the person agreed. 6.8.2 Failure to pay rent If the lessee fails to pay rent, the lessor is entitled to claim payment as rent becomes due. In each case advise Simba whether he is entitled to the request or Repair the door because most of the doors are falling of the Repaint the house Erect a durawall around the property and remove the fence which Demolish and reconstruct the front view including extending the Simba has recently been promoted at his company. he believes that

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He may also claim damages suffered. The lessor may cancel the lease. The lessee should vacate the premises otherwise there is unjust enrichment. The ladlord may also request for an order for the lessee's ejectment or eviction. 6.8.3 Lessor's tacit hypothec rent As soon as the rent is in arrears the lessor obtains a tacit hypothec for the amount of rent due to him. This right is to retain possession of certain movable goods of the tenant until the rent is paid. The hypothec attaches to all things brought or carried on to the property- animals, tools, whatever their nature. He may also attach goods belonging to third parties. The onus is on him to prove his ownership in the possessor. Also, by permitting the property to be on hired premises and by failing to notify the lessor of his ownership, an owner leads the lessor to believe that the property is the lessee's. For example, a third party's animal which is allowed to graze indefinitely upon a farm by the lessee, is subject to the lessor's hypothec. However, a vehicle supplied to an employee by his employer to be saved solely in the course of his employment is not subject to lessor's hypothec because there is no permanence contemplated.

The hypothec comes into operation only when the rent is owing . The landlord can only exercise the hypothec if the movables are at leased premises . He cannot use this right if the goods have been removed. The landlord can then apply to court for attachment of these goods. The lessee is entitled to a refund of the rent if he is deprived of the

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use and enjoyment of the property let to him either the lessor's default or through vis major or casus fortuitus. Thids is supervening impossibility which extinguishes the contract is a superior power or force which cannot be resisted or controlled. Casus fortuitus means an exceptional occurrence not reasonable foreseen

6.8.4. Duty to use and care for the property It is the duty of the tenant to take care of the property let and use it for the purpose for which it was let. Thus a place let for use as a dwelling house cannot be used as a workshop; causing damage to the property amounts to improper use. The lessee must use the property let with the degree of care expected of reasonable man in the use of his own property. He should not make structural alteration of the property so as to charge the character of such property. A lessor would be entitled to an interdict restraining a lessee from using premises for puposes for which they were not let, or for using them improperly. 6.8.5 Duty to restore the property Upon termination of the lease, the lessee must restore the property to the lessor. The property must be restored in the same condition in which it was delivered to him-subject to reasonable wear and tear. The fact that the premises are in damaged condition upon termination of a lese does not entitle a lessor to refuse to redelivery of them. Here merely has a claim for damages i.e the reasonable cost of repairs for the property. In addition to his claim for damages to the premises, the lessor may have a claim for loss of rent during the period he is unable to let them because of their damaged

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condition. 6.8.6 Subletting This is where the lessee lets property which is hired. The lessee becomes a sort of lessor and creates another lessee. The lease between the original lessor and lessee remain bound to each other. This means that a sublease does not create a contractual relationship between the sub lessee and the original lessor. The lessor cannot claim rent from the sub lessee. Payment of rent under the original lease remains the responsibilty of the lessee. Activity 6D * Objective the lessor where Explain the legal relationship created between the sub lessee and the leased property has been sub-let. 6.9 Termination 6.91 Expiration of time If time is given the lease terminates upon expiration of time. No notice of termination is needed. 6.92. Notice A periodic lease is terminable by either party giving the other notice of termination. 6.9.3 Mutual Cancellation Mutual agreement to cancel, Or when there is breach which entitles the innocent party to cancel. The other party may make an election to accept cancellation. 6.9.4 Repudiation A party indicates an intention not to be bound by the contract. This repudiation may also be inferred

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from conduct: e.g the lessee vacating the premises and returning the keys. Remember repudiation is form of breach and the innocent party has remedies. 6.9.5 Extinction of Lessor's title A lessee derives his right to occupy and enjoy the property let from the lessor. Thus where the lessor's right in the property terminates, the lease comes to an end except where the lessee is protected by the rule huur gaat voor koop. 6.9.6 Merger One cannot be his own creditor. Where the lessee acquires by sale or inheritance, the property let. this results in termination of the lease. 6.9.7 Destruction of the subject matter This is total destruction without fault of either party. If destruction is due to lessee's fault, the lease is not terminated and the lessee remains liable for rent for the unexpired period of lease. He must also pay the lessor the value of the property destroyed. 6.9.8 Death This does not terminate a lease. The estate of the deceased party is bound except where the contract provides that the lease will terminate on death of either party. 6.10 Summary In this Unit we noted that a contract lease can only be effected on immovable property such as building. We also learnt that the lessee should, at the end of the lease, be in a position to hand back the subject matter of the lease to the lessor. matter. We noted We looked at how the lessee is protected when the leased property is sold. that the lessee should not simply be evicted by new owner of the property. The lessee on only granted the right to use but not to consume the subject

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We concluded that both the lessee and the lessor have rights and duties which arise our of the law and not by agreement of the parties. For example the lessee's right to undisturbed use and enjoyment of the leased property and the lessor's entitlement to payment of rent at the agreed time.

6.11 Explanation Terms Lessor: enjoyment of property . Lessee: of rent. Long lease: adding up to A lease for period often years or more or for a period more then years or for the whole like of the lessee. Short lease: Lease for less than ten years One who makes available to another, the use and

The one who uses another's property in return for payment

Huur gaat voor koop: Hire goes before sell. A maxim which protects a less see where the lease is not registered i.e a short leas. Sub-letting: property. Tacit Hypothec: the lessor Lessee lets another person to use part of the leased

A right a retain possession of lessee's property by until payment of rent arrears.

Assignments and Tutorial Questions In this Unit we shall discuss methods of answering business law questions. We shall look at how business law students are expected to apply the principles of law to answer given questions. 7.1 What you will Lean By the end of this Unit, you should be able to know * What you are expected to know when answering question

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That there are three different types of sugqestions;

* That problem type questions are more complex and require you to be analytical and argumentative; * * instruction That you should identify the legal issue arising from problem questions That you should always answer the questions asked or comply with the given 7.2. Introduction Questions in most law subject are normally in three forms Straight forward essay questions Problem type questions There may also be an option for multiple choice questions

This Unit contains these three forms of questions. There are twenty simplified problem questions, twenty straight forward essay questions and twenty multiple choice type questions. The objective is to discover whether you have understood well the basic concepts in each topic covered. You should then be in a position to explain, analyze or discuss issues give. It is important to remember that in law, one should always support an argument with reference to legal principle, cases or statutes. 7.3. Problem Questions Most of you are familiar with essay and multiple choice questions. Problem questions are exercises where one is given a fictional factual situation. This may cover a number of legal aspects of any topic. The question may then require that you discuss the legal issues arising out of the given facts. or they may requre that you discuss the legal issues arising out of the given facts, or they may require you to

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give advice to a party. You may also be required to discuss remedies available, if any. You should appreciate the substantive law involved and apply the law to the facts so as to come to a conclusion which is the solution to the problem. 7.3.1 How to approach problem questions will help own From the important facts, identify the issues. You must note that there may be more than one legal issue in a problem question. Apply the law to the issue. You have to find the relevant law to each issue apply the law so as to arrive at a conclusion. questions Summarize your va rious conclusions in such a way that you answer the The First step is to analyze the fact. This is isolating important facts which you in identifying the issues. Take the facts as given, do not make your

and

7.4. Multiple Choice 1. The Zambian legislative consists of : A. B. C. House of Assemble and the Executive President House of Assemble, Senate and President The Judiciary, House of Assemble, Senate and the President

2. The term privity of contract means A. B. C. Terms of contract are standard Parties are free to choose their contractual partners A void contract is not enforceable

3. The head of the Judiciary in Zambia is A. B. The President The Chief Justice

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C.

The Attorney-General

4. Consensus ad idem means A. B. C. The parties are at one, there is agreement The parties are at cross-purposes The contract is voidable

5. Merger in the law of contract means A. B. C. The coincidence of capacities so as to extinguish obligations Agreement by novation Acquisition of property which was unoccupied

6. A negotiorum gesto is A. B. C. A lessee who has sub-let property An agent of necessity An agent required by the court

7. An independent contractor is A. it. B. he does it. C. One who is under the control of the employer as to what he does and how One not under control of the employer as to what he does and how he does

One who is vicariously liable for the acts of his worker.

8. A suspensive condition A. event B. C. Terminates the contract Makes a contract voidable at the option of the innocent party. Suspends the operation of the contract until the materialization of the

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9.. Unascertained goods are : A. B. C. Goods which do not exist Goods which need counting, Weghing or measuring Goods incapable of being owned

10. One of the following is not a lessor's duty. A. B. C. To Protect the lessee's possessions from strangers Not to disturb the use and enjoyment of the property To delivery usr and enjoyment of the leased premises.

11. In a sale vetstoots means A. B. C. The merx is sold as it is, with all its defects The seller must guarantee against latent defects The Sale is subject to a condition

12. The nemo dat quod non babet doctrine means A. B. C has it. 13. Duress vitiates the following A. B. C. Intention to enter into the contract Capacity to contract Legality of the contract. One cannot sell stolen property One connnot pass a greater right in the property that he actually has. The owner of stolen property can recover his property from anyone who

14. Which statement is correct A. The supreme Court is bound by its own decision

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B C.

The supreme Court is not bound by its own decisions Is only a Court of appeal

15. A misrepresentation makes a contract A. B. C Void Voidable Illegal

16. Which statement is correct about a Primary Court A. B. C. It is president over by a judge It can hear both both civil and criminal cases It can only apply customary law

17. An agent is merely to facilitate conduct between the principal and the third party. He must himself. A. B. C. Have contractual capacity Does not need have contractual capacity Be solvent

18. The golden rule of interpretation means A. B C If a words is ambiguous, it is interpreted against its maker Words are given their ordinary everyday meaning Contracts are interpreted so as to give them efficiency

19. Delivery longa manu means : A. B. C. the buyer The buyer already has the goods, the seller does not have to re-deliver The seller delivers to the buyer's agent The seller merely point at the goods thus putting them at the disposal of

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20. Actio redhibitoria entails A. B. C. Cancellation of the contract and putting the parties to status quo Reduction of the purchased price Giving damages for consequential losses

Essential Reading Testbooks Christie R.H., (1993) The law of Contract in South Africa, Butterworths, Durban Swanepoel JPA (1995) Introduction to Mercantile Law, Eighth Edition, Juta & Co (Ltd)

Purchasing and Sale

3.0 What this Unit is about

In this Unit we now look at a special type of contract. This is a contract which has own essential requirements. This is very common type of contract which we all enter into without much thought. 3.1 What you will Learn

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Whenyou come to the end of the Unit, you should be abkle to: * Objective sold; Freight, Free on Board and Sale on Approval. 3.2 Essential Elemenets of a contract of Sale We must remember that a contract of sale is a contract just like any other contract, thus it must meet all the essential elements of a contract which have already been condered in Unit 2; that is, the agreement must be legal, parties must have contractual capacity, terms must not be vague, it must be enforced etc. further, the contract must meet those essntmials peculiar to a contract of sale. These are: Agreement must be one of sale. The courts will awalys look at the transation and call it what it amounts to despite what the parties decide to calle it. For example, contract of sale must be distinguished from gift or free offers or donations. They must also be distingushed from excharge or barter. There must be an agreement on the article which is known as the thing/merx or subject matter of the sale. This is important because some things cannot be sold and the sale of others is restricted or subject to requlations. In a contract of sale a price must be paid for the things or the parties must Discuss requirements for ownership to pass from seller to buyer; Explain the concept of risk in contract of sale; Discuss the various methods by which delivery may be effected; Explain the duties of the buyer and seller; Describe some special types of sale for exmple Cost Insurance and Define a contract of sale Distinguish between things which can and cannot be bought or

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have agreed that the price will be paid in the future. Thus an agreement to sell for free is not a sale. Activity 3A *Objective they cannot be sold. requlations and name the requlations in each case. 3.3 Things which cannot be sold sold. But a right to The right to inheritance to a person who is still alive cacnnot be inheritance to deceased person can be sold . Stolen property and property belonging to third parties can be validly bought and sold. The reasons is that in Zambian Law of purchase and sale the contract of sale is kept seperate from passing of ownership. The sale of stolen property is valid, but the seller cannot pass ownership. This is because one cannot pass a greater right in the property than one actually has. This is expressed by the concept nemo dat quod non babet. The thief has no right in the property therefore the true owner has a right to recover the goods from whoeever may be in possession. This is known sa the vindicatio right. Where the thing bought has been recovered by the true owner, the buyer can only recover the purchase price from the seller where he is still avalable. Note that the buyer should not prematurely surrender the goods, lest he surrenders to another thief. The buyer should afford the seller a reasonable opportunity to come to his protection. If a buyer purchased goods with knowledge that they were stolen or where he ought Also give a list of things which are sold subject to Give a list of things which cannot be sold and reasons why

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to have known from the surrounding circumstance that they were stolen then he is an accomplice after the act and has no remedies. Not only tangible things can be sold-those which can be toughed e.g the book, but intangible can be sold e.g goodwill, trade marks and patents. Note only existing goods can be sold. These are goods already in the posession of the seller. Non-existent or future goods capable of coming into existence may be bought and sold. For example, afuture harvest or carch of fish. these are goods which need to be counted, weighed or measured to the buyer's specifications. Activity 3B * Objective rule? 3.4 The Price/Pretium What are the exceptions to the nemo dat quad non dabet

There must be agreement as to the price. The price is important as it distinguishes a contract of sale and gifts or donations or exchange. There can be a valid agreement to sell at a price to be dfetermined by a third party who agrees. If the third party does not agree, then there is no sale. The price must be current money not in goods. However, where the value of goods is insignificant, the court may stll call it a contract of sale. 3.4.1 Passing of Risk and Ownership Risk You should be able to understand the aspect of risk. This has no relation to the aspect of ownership. Risk refers to the issue of who bears the loss due to accidential deretioration, damage or loss to theMerx/thing after the conclusion of the contract but before delivery. This issue of risk does not arise before the contract is concluded. It also

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does noy arise after delivery. It is important to note that the issueof risk also entails benefits accruing to the merx at the same time. For example, if A buys a cow from B and there is agreement on the cow to be bought and the price, if the cow calves before delivery and payment of the purchase price , the calf belongs to the buyer. The general rule is that risk passes to the buyer as soon as the contract is concluded, or is Perfecta. This rule has nothing to do with the issue of ownership. There are exceptions to the general rule. These are as follows: The parties are free to agree to the contract i.e. to vary general rule

Where the seller has delayed delivery- he is in mora if the loss would not have occurred had he delivered timeoussly. when the goods measuring the goods before risk passes. For example, if A buys bags of maize from B, and before delivery B's entire stock is destroyed by fire, then risk has not passed to A because the goods have not been ascertained, weighed, counted or measured. Where the contract is subject to a suspensive condition. This is because there is only contractual relationship before the conditio is satisfied. The obligations are suspended. If the contract is void for one reason or another. contract does not give rise to anyt obligations. Activity 3C * Objective Becuase a vaid Where the seller is negligent in the business sense. where the sale is one of unascertained goods. Risk would only pass have been ascertained i.e there has been counting, weighing and

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Advise X in each case: a) X contracts for the supply of new carpet from Z (Pvt)

Ltd which has been specifically ordered for him from a manufacturer. Before delivery, Z's premises are destroyed by fire and the carpet is lost. b) As in (a) except the carpet was manufactured by Z (Pvt) Ltd and had not been selected from the bulk of carpets earmarked for the customers. 3.4.2 Ownership Ownership is a bundle of rights which include among others the riht of use of the Merx, the right of enjoyment, possession or the right to alienate the ite,. Ownership is a real right which can be claimed against the whole world. A person may have a right of ownership without actual possession of thr item. Conversely,a person may have possession without owership. For ownership to pass, certain requirements must be met. These are as follows: means one nannot pass a greater right than he actually has. cannot be passsed. The thing must be capable of being owned. If not , then ownership For example, air cannot be owned. The seller must intend to apss ownership while the buyer must intend to receive ownership. given. There is a waived or given up his right to receive cash. Thus, in a credit sale ownership passes to the purchaser. Thus in Hire-Purchase transactions, ownership of goods does not pass to the purchaser The purcahse proice must have been paid or credit must have be en presumption that sales are for cash unless the seller is taken to have The seller must be owner. The nemo dat quad babet principle. This

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until the payment of the last instalment. The seller must have delivered the thing to thr buyer. As a general rule, delivery entails the seller putting the goods at the disposition of the buyer. Thus delivery ordinarily takes place at the seller's place of business. We must note that at law, the seller is not obliged to deliver the goods to the buyer's place. Delivery is ordinarily subject to agreement between the parties. There are however, anumber of recognised ways of delivery: 3.4.3 Actual delivery This is from hand to mhand physical delivery otherwis known as manu de manu delivery 3.4.4 Delivery with a short hand Known as Brevi manu delivery. the buyer already possesses the merx he buys because of a previous transaction: for example he had borrowed the computer. When he buys it the seller does not have re redeliver. 3.4.5 Delivery with a long hand Here the goods are bulky to be moved, or the movement of such goods may be for the time being prohibited. The seller merely points at the goods which shall then be taken to belong to the buyer. The is delivery longa manu 3.4.6 Symbolic delivery The seller delivers something other than the goods. What is delivered here must give the buyer exclusive control of the goods e.g keys to house or bills of lading to goods still at sea. 3.4.7 Attornment Goods are delivered to a third party who acts as agent of the buyer

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3.4.8 Constitutum possessorium The seller keeps the goods on behalf of the buyer. the courts do not favour this type of delivery as it may tempt and lead to fraud. 3.4.9 Regsitration Ownership in ummovable property is passed by registration according to the provisions of the Deed Registries Act . Thus the purchaser of a house who has paid cash without having the house registered in his name would not become the owner. Activity 3D *Objective the following a) him to his ca ttle kraal and points out six beasts which he says are for the payment. However, there is a requlation preventing the movement of animals from one area to another and the father -in-law cannot take the animals. Three of them are struck by lightning and die before they are possessed by father in law. b) has migrated to Malawi and has no intention of coming back to Zambia. The two have agreed that Gilbert buys the bike for $2 000.00 Mike has not paid . c) company registered in Zoland an overseas country. Betty has received the bills of lading which he sells to Joe. When the rice arrives Betty has brough rice from Satisfy (Pvt) Ltd a Gilbert borrowed a mountain bike from Mike. Mike Gift is paying lobola to his father-in law. He takes Explain whether ownership has passed in each of

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by sea, it is found to be musty and unfit for human consuption. 3.5 Duties of the seller We now look at what the seller is legally obliged to do. These duties do not arise out of agreement with the buyer, but out of the law. This means the the duties are implied by the law. The duties are as follows: Duty to deliver the goods. By any me thod of delivery already considered. Where the seller delays he will be in mora and risk may revert back to him. To kepp the goods in safe custody until delivery. If the seller is negligent in the business sense, then he may become liable to the buyer. if the buyer delays taking the goods, then the seller would be liable only for wilful acts or gross negligence. Duty to guarantee undisturbed possesseion of the goods. (vaccua posessio). Remember the seller does not quarantee that he is owner. He only guarantees that no one with a greater title will disturb the buyer. Howwever, the buyer has (loci standi) the right to take his own legal action where his possession is disturbed by those without any title. Duty to guarantee against latent defects. Latent defects are those which are not obvious to the naked eye. The buyer does not have to carry out a cruel examination of the subject matter or to employ an expert to do the examination. the seller does not have to guarantee against patent defects. These are obvious defects such as a table with one of the legs shorter than the rest. The duty would be excluded or not apply there the sale is wetstoots i.e marx is sold as it stand. this fact has to be brouygh to the attention of the buyer 3.6 Remedies to the Buyer Where the goods are defectjive the buyer has some remedies at law. we should remember that these

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remedies are for latent defects only. These are not obvious to the naked eye. The remedies are as follows. 3.6.1 Actio Redhibitoria (Rescission) The defect must be material and not trivial. The test of materiality is an objective one not merely that this particular buyer, due to his whims, considers the defect to be so material. The defect must be latent. In this action the buyer must prove that the defect is of such a mature as to make the merx unfit for the purposes for which it was bought. also that had he known of the defect he would not have bought the item. We must be careful not to allow the buyer who is wise after the event, to be his own judge. Buyer returns the merx and gets his purchse price. This is also the case where the merx perished due to the inherent defect. For example, if animals bought die of an unknown disease which existed at the time of the sale, the buyer should take back the horns and get his purchased price. If more than ine ite, id bought i.e major item and accessories - a defect in the major item would entitle the buyer to actio redhibitoria whereas a defect in the accessory may not. If the items are bought as a unit, then defect in one entitles rescission of the entire unit. Note: This action is different from the one where the buyer claims that the wrong goods have been delivered. This would amount to breach of contract. 3.6.2 Actio Quanti Minoris The buyer retains the merx and claims a reduction in the purchase price. In this case the buyer may still Merx anyway, or he/she may no longer be in a position to return the Merx. The remedy is the diferef\nce between the price paid and the market value of the item in its defective state. This may de deducted from the cost of repairs. Where the mer is defective, the seller does not have a legal right to ask to be allowed to repair it. An exception is where the nature of the contract and goods would

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allow such repairs, e.g supply of artificial teeth. A supplier may be allowed to adjust them where they protrude. Similarly, a supplier of suits to fit would be allowed to alter them Where the buyer suffers damage to his own materials as a result of the defective merx, this would amount to consequential losses. Ordinarily, the seller is not liable for consequential damagies. the exceptions are: If he warranted that the Merx is free of defects. Then the seller's liability is base on breach of warranty. Acto empto. If seller knew of the existance of the defect and deliberately concealed it there is fraud. If the seller is a manufacturer or dealer who professes to have expert knowledge of the merx he is selling Both Actio Redhibitoria and Actio Quanti Minoris are known as Aedilition Remedies

Activity 3E *Objective remedies 3.7 Obligatyions of the Buyer The buyer also has obligation which arise from the law. He is obliged to do the following duties. For To pay the purchased price. This is the most important of the buyer's example, the buyer must pay the purchased price. The buyer is obliged to accept delivery. Where the buyer has delayed Explain situations when the buyer may not be entitles to aedilition

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accepting delivery, then the seller's duty of care is reduced. He will be liable only for gross negligence. Duty to reimburse the seller for necessary expenses.

3.8 Some Special Types of Sale 3.8.1 F.O.R. (Free on Rail) It may be free on rail sender's station or buyer's station. In the former, which is more common, the seller's duty is to pack the goods and deliver them to the nearest railway station and load them on trucks destined for the buyer's station. The railways then because the agent of the buyer. However, if it is F.O.R buyer's station, then the obligations of the seller only end when the goods are at the buyer's station. This means the railways become the seller's agent. The former is a more expensive ccontract. 3.8.2 F.O.B (Free on Board ) The seller delivers the goods to the harbour and puts them on board a ship. The same rules as in F.O.R apply. 3.8.3. C.I.F. (Cost, Insurance and Freight) The seller must pack the goods, deliver them to the docks, load then on a ship proceeding to the buyer's port. He must pay for them to the port of destination. He must get the requirement documents; i.e contract of carriage, bill of lading, document of title and receipts. The documents must be sent ecpeditiously to the buyer. They must also include the policy of insurance. As the bill of land ing is a document of title, delivery of it to the buyer is symbolic delivery of the goods. Ownership passes to the purchase on delivery of the bill of lading. The risk passes to the purchaser as soon as the goods are on the ship properly insured. 3.8.4 Sale on Approval

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This is sale which is conditional upon the merx being approved by the buyer. This is a suspensive condition. If the aprroval is not given, then the obligation do not flow. 3.9 Summary In this Unit you learnt that a contract of sale is a special contract. This contract must have all the essential of a valid contract plus those essentia; peculier to contracts of sale law sale of We looked at why some things are incapable of being sold and also why at

stolen property is valid. however, we noted that the seller of stolen property cannot pass a greater right in the property then he actually had. We looked at what happens if the property is accidentally destroyed or damaged after the conclusion of sale but before delivery. This is the concept of risk. We also looked at the legal requirements for ownership to pass to the purchase. We noted that ownership would not pass to the purchaser unless the buyer has intention to receive ownership and seller also intends to pass it. The Unit looked at common law duties of the parties. These duties do not arise out of agreement of the parties but out of the law. 3.10 Explanatory Terms Merx: Subject matter of contract of sale Nemo dat non babet: One cannot pass a greater right than one actually has Vindicatio right: who has no right Spei: Hope Risk: Liability for accidental loss or deterioration of subject matter after conclusion of contract but before delivery. It also entails the concept of benefit accruing to the subject matter at the same time. The right of owner to get back his property from an other

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Perfecta:

Concluded in all respects Free undisturbed possession

Vaccua possessio:

Latent defect: A defect not obvious to the eye Actio Redhibitoria : Action for rescission Actio Quanti Minoris: Action for reduction of price

Essential Reading Textbooks Swanepoel J.PA (1995) Introduction to Mercantile Law. Butterworths, Durban Christie R.H. (1993) The Law of Contract in South Africa. Butterworths, Durban Willie, (1991) Principles of South African Law, eighth Edition, Juta & Co. (Ltd)

Agency Law

4.0 What this Unit is about In this Unit we look at creation of contract through an agent. Oridinarily the contracting people negotiate directly and conclude their contract. It is also common for people to act through others so as to conclude binding contracts. We look at the three sided transaction- that is the giving of the authority or mandate to the agent, the negotiation between the agent and the third party and the resultant relation between the principlal and the third party. 4.1 What you will Learn When you have finished this Unit you should be able to * * Define an agent; Explain how an agency situation is created;

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* *

Describe right and duties of agents and principals Explain how the relationship between agent and principal is terminated.

4.2 The Need for an Agent Many business transaction are carried out through agent. The law may require that such transactions be carried out by that special type of agent. For example, the registration of immovable property may only be done through a special lawyer/legal practitioner. It may also happen that the party has limited contractual capacity and for his contracts to be valid his legal agent must either assist or act on his behalf. Examples would be trustees acting on behalf of the insolvent, the guardian on behalf of a minor, a curator on behalf of a mentally deficient person etc. Here we are concerned with a voluntary agent, in a situation whereby the principal can act for himself. This agent is voluntarily chosen by the principal to act on his behalf. The reasons for choosing to act through an agent are many. One may arrange a holiday through a travel agent who will make contracts with hotels, airlines and tour operators. We may appoint agent simply because we do not have time to do the acts ourselves. Or the agent may possess the necessary expertise within that market . we have difficulties ourselves because of the distance involved. Or it may be a practice acceptable in the industry we are dealing in. 4.3 Definition Agency is a contract One person (the principal) employ another (the Agent). To act for the principal and enter into contractual and other relationships. The transactions would be binding bwteen the principal and third party.

Unlike the simple contract between two people, in agency three people are

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involved and there are two contracts. These are the following The oneon whose behalf the acts are done is the Principal The One who is to act is the Agent The other person the agent deals with is a third party

There must be a contract between the agent and the principalgiving the agent the power to act on his behalf. This is a contract of Mandate. The second contract is the one which comes out of the negotiations by the agent with the third party but this is binding only between the principal and the third party. Principal Contract Mandate Agent Negotiation Third Party

Thus the agent must have contractual capacity so as to enter into the contract with the principal But as far as third parties are concerned and their relationship with the Principal, any person of adequate understanding may act and bind the principal. The agent is a mere instrument of the principal, he falls out of the picture after the conclusion of the contract between the Principal and the Third Party. 4.4 Creation of Agency 4.4.1 By express agreement This must be clear. Whether the authority to act is givenorally or in writting. Where express authority is given, the agent is not permitted to exceed the four corners of the mandate. 4.4.2 Implied agreement

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This is inferred from the circumstances. The test is whether a reasonable man, when assessing the conduct of the parties, would consider that the parties have agreed to act on a basis which can be characterised as an agency. The existence o a special relationship; e.g employ and employee, partner and co-partner, may assist bin deciding whether there is implied authority. 4.4.3 Ratification Important points with ratification are: principle The agent acted without authority. He represented to the third party that he was acting on behalf of the

The Principal then adopts the transaction so as to cloth it with retrospective authority. The Principal must adopt the whole transaction and not only advantageous parts of it One retifaction has taken place, the effect is to place the parties in the position they would have been in had the agent originally had authority. 4.4.4 Estoppel/Ostensible Authority Where a person, by words or conduct, represents (or permits it to be represented) that another person professing to bind him has authority to do so, he will not be permitted to deny the agency against a third party who acts on the faith of the representation as to prejudice himself. In this case the principal is bound by what the agent does when there is no express, implied authority and no ratification. In fact, in estoppel the principal would be denying the existence of authority and is prevented or estopped from denying its existence. Note: The representation must come from the principal and not the agent. 4.4.5 Usual Authority

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This is a result position. Where one is employed in such a position where people employed in such position ususally do certain acts, he will bind his principal if he dose a similar act. For example, one employed as a director may bind his company if he does things directors ordionarily do. Even if his power is limited by the articles of association 4.4.6. Negotiorum Gestio/Agent of Necessity These are acts done without authority. The courts do not look favourably to unauthorised interferences in other people's affairs. As a result there are very limited. They act justifiable on behalf of another in cases of emergency. There should be no prohibition. The intention must be to benefit the other party. they are then aloowed to cover their expenses. The party they act for is not a principal as such but is called the dominus. The situation should be such that it is impossible or impractical to communicate with the dominus. Examples would be feeding uncollected animals or taking care of preishables.

Activity 4A *Objective forbidden B to buy any further supplies of cattle feed on credit without A's consent. Despite these instructions B purchased more cattle feed on credit from J, who had supplied previous orders and had been paid by A. Further, A sees J's delivery van supplying the cattle feed but does nothing. unauthorised A now refuses to pay on grounds that the purchases wre Distinguish between agency by estoppel and ratification A is owner of farm managed by B. A had previously expressly

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Advise A

4.5 Right and Duties Btween Agent and Principal to do. If he the principal for any loss arising out of breach of contract. The court have decided that in some cases substantial performance by the agent would be enough to entitle the agent to commision. The Agent must follow the principal's instructions fully except where the intructions are illegal. He must not exceed his authority. The agent must exercise reasonable care, skill and diligence in the performance of his mandate. Duty to act in good faith. This is an important duty. The relationship between the principal and agent is a fiduciary one. It is one of utmost good faith. The agent binds himself to act in the interest of the principal. He must act honestly, loyally and singlemindedly in the principal's interest. This duty includes the following: mandate. if he does, then the profit belongs to the principal. For example, an State agent who buys the principal's house and resells it for a profit breaches his duty. The agent should not be bribed. principal. In case principals informed consent He should not allow his interests to conflict with those of the of risk of conflict, the agent must make full disclosure and obtain The agent must not make a secret profit in pursing the principal's The duty to perform the mandate. The agent must do what he is mandated does not then he is not entitled to any commission or he may be liable to

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The agent should not abuse confidential information

The duty not to delegate authority. The concept of delegatus non potest delegare means that a delegate must not sub-delegate. There are however exceptions to this rule. For example, where it is trade, business usage or Ministerial duties not involving the exercise of the agent's discretion or skill the agent may validly sub-delegate. Duty to account. he must keep proper account of money received or spent on behalf of the principal and must allow the principal access to these books.

4.6 Principal's Duties to the Agent The principal also has common law duties owed to his agent. Some of them are as follows. according to agreement. It is only paid after substantial performance at the value of the service to the principal, time pended by agent, his expertise and the prevailing market rates. So as to determine what commission is to be paid. The duty to indemnify and reinburcse the agent where the agent has incurred liabilities or made patments on behalf of the parincipal, he is entitled to indemnification and reimbursement for payments made. These must be necessary expenses and payments The agent should have been acting within the scope of his authority; picture. The only the agent may not disclose the existence of the the third party discovers that the agent was actually acting for another person, he may choose to hold the undisclosed principal to the contract. Where the agent has performed his mandate, he falls out of the parties who remain are the principal and the third party. However, The duty to remunerate the agent for services. Commission is paid

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4.7 Termination of Agency The agency situation is terminated in several way including the following the agent Activity 4B *Objective law involved: A. agreement purchased new mag-wheels for the car and also intructed B to repaint it. He has now sold the care and demandsa refund for the mag-wheels and new paint-work. B. not make any effort to contact T. He buys stock fees and feeds and waters the horses for three weeks. When one of the horses show3s signs of illness, S hires a Veterinary Surgeon to attend to is. He now claims his expenses from T. C. carried out the work, but has to appoint F to do part of the work as F is more skilled than G is appointed to do certain work by E. He has substantially S is a cattle rancher. T's horses have strayed into his farm. S does X was appointed by Y to find a buyer for Y's car. X without Y's Consider each of the following situations and give the principle of Death of either party, insanity or insolvency of either party; Supervening illegality e.g the principal is declared an enemy alien; Where appointment is for a specific time , then expiration of the time; Having completed the assignment as tasked. By acts of the parties; Express revocation of authority by the principal or express renunciation by

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him in this field. F has presented E with an exorbitant figure as his price. E is refusing to pay. 4.8 Summary In this Unit we conclude that an agent concludes a juristic act on behalf of the principal. The result is that he creates legal this between the principala nd third party, We noted the right and obligations which arise from the agent's negotiation accrue to the principal only. We conclude that for the principal to be bound by an act of the agent, authority hasto be established in one way or another. The agents previously unauthorised act or he is by law prevented from refusing that the agent was his agent. We concluded that for the principal to be bound by an act of the agent, authourity has to be established in one way or another. The principal may also be bound because he voluntarily took on the agent's previously unauthorised act or he is by law prevented from refusing that the agent was his agent. We also looked at the special relationship between the agent and the principal. This relationship is of utmost good faith based on trust and loyalty. 1.9 Explanatory Terms Agent : A person who acts on behalf of another person A relationship of trust and loyalty The agreement through which the agent the principals instructions Principal: Ratification: not been given The one who engages the agent Adoption of an act performed by another who had

Fiduciary relationship: Mandate: agrees to perform

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authority to act. Estoppel: Essential Reading Texbook Prevented from denying

Christie R.H. (1993) The Law of Contract in South Africa. Butterworths, Durban Swanepoel J.PA (1995) Introduction to Mercantile Law. Eighth Edition, Juta & Co (Ltd) Willie, (1991) Principles of South African Law, Eighth Edition, Juta & Co. (Ltd)

Employment Law 5.0 What this Unit is About In this Unit we look at one of the most important contract in society. An emplyment contract governs the relations between an employer and employee. we should also note that because of the important of this relations, the State also has an interest ,to protect. As a result the State; through the Labour Relations Act, requlates this relationship between the employer and emplyee. 5.1 What you will Lean When you come to the end of this Unit you should be able to : * * contractor; Discuss the naure of a contract of employment; Identify the differences between an emplyee and an independent

* Identify the situations where an employer will be liable for wrongful acts of the employee. This is vicarious liability. * List duties of the employer and employee;

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Discuss situation when an employer is entitled to terminated employment.

5.2. Principles of Employment Contract This is just an ordinary contract. One party provides his labour to another in return for payment. The contract may be oral or witten. The terms of the contract may be expressely agreed by the parties. Where these are skimpy or even non-existent, the terms would be implied due to the employeremployee relationship e.g the duty to obey lawful orders subject to the provisions of the Labour Relations Act. It is important to establish whther the contract is one of employment proper. The reason is that an agreement for the provisionof services per se is not legally regarded as a contract of employement. Here there is an independent contractor rather than an employee. The independent contractor is not under the control of the employer in as far as when he does his work, or how he does it. It is the degree of wears company uniform or has use of the employer's vehicles is not materials. The courts will look at the reality of the situation and decide whether one is an employee or employee or independent contractor. The way one has been integrated in the employer's business may also be an important consideration The relationship between employer and employee is extremely important with respect to the aspect of vicarious liability in the law of delict. 5.3 Vicarious Liability

An employer is liable (vicariously) for the wrongful act of his employee. But not those of an independent contractor. The notion is that liability is attached to one person although he may not be the actual wrongdoer. The rationale is that the employer is in better position to pay. That he is able to controk how the employee performs his work, and it is the employer who benefits from the conduct of the employee.

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For the employer to be vicariously liable, the wrongful act of the employee should have been committed in the caurse of his employment. The employee should largely have been doing his duties for the benefit of the employer. He should not have deviated from his duties in terms of time and space. Thus the employer will not be liable where the employee commits the act while he is now on frolic of his own. This is different from doing one's duties wrongly or negligently; e.g. a recovery driver deciding to engage in a race with his friends and thereby knocking down a pedestrian. The driver is still largely doing his duties though in an improper manner. The injured party may sue either the employee or employer or both of the jointly Activity 5A *Objective to deliver some materials to the company's customers. After delivering the goods, fanny decided to proceed to Chitungwiza, twenty kilomaters off his route. While on his way he negligently drove his vehicle and injured Speed who was crossing the road. Is Fix It (Pvt) Ltd liable? What are the reasons behind the concept of vicarious liability? Funny was employed by Fix It (Pvt)Ltd as a driver. He was tasked

5.4. Obligations of the Employer 5.4.1 Payment of Wages

The employer is obliged to pay the employee his remun eration. This is ordinarily as agreed in their contract. In some cases statute gives the lowest amount which an employer of a certain class of person must pay eg. domestic workers. In this case it is illegal to pay, less than the statutory minimum wage. 5.4.2 To provide work

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Legally the employer is not obliged to prove the employee with work. However, where work is available, the employer should afford the employee the opportunity to do the work he was employed to do. Thus in a case where an employer prevented his employee feom doing work he was employed to do, but still paid him his salary the court held his to be constructive dismissal. Where there is no work at one plant but work is available at nother location, the employer has a legitimate right to require the employee to move to another location. This is the geographical mobility of employees. 5.4.3 Sick Leave The employer must provide employee with sick leave. This may be as per agreement. However, continued absence of employee, due to sickness is a ground for dismissal. 5.4.4 Vacation leave Employees are not legally entitled to vacation lreave except those declared by the law as public holidays. 5.5 Duties of Employee 5.5.1 Provide Services The employee must make personal services available to employment. A contract of employment is one of personal services. The employee must therefore render personal services to his employer. As a result, where there is breach of contract by one party, the court are unlikely to insist on specific performance. Damages are more preferred. 5.5.2 Obedience The employee must obey the employer's legistimate lawful order. The order must be lawful. It of course, be legitimate as far as the contract is concerned. The employer may not legitimately damand that the employee should perform work completely different from that which he was employed to do, so as to amount to demotion or unilateral variation of job specification.

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5.5.3 Subordination The employee must be subordinate to his employer and the line of authority. Insubordination is a ground for dismissal 5.5.4 Maintain bona fides/confidentiality He must act in good faith in the interest of the employer. He should not appropriate the employer's property nor should he disclose confidential information gained during the course of his employment. Activity 5B *Objective X is employed by Kutambara Electrical (PVT) Ltd as a supervisor in the electrical department. The company has currently had difficulties in securing contracts. As a result is is facing financial difficulties. Mr. F, the manager has recently had arguments with X. The company has informed X that due to lack of contracts, X would be demoted to a general worker and his salary would be reduced. X has complained about this move but has continued working for two months. Now X has founf another job. Does he have any remedies? 5.6 Termination of contract of employment 5.6.1 This is ordinarily by notice from either party The period of notice may be as per agreement by the parties. The employment contract may provide for payment of money in place of notice. Where no period of notice is stated in the agreement, common low provides that the notice period should be equivalent to the period when salary is paid e.g Fortnightly salary -then fortnight is notice. Monthly salary-month's notice etc. 5.6.2 Summary termination of contract of employment There are some common law grounds permitting the employer to summarily terminates the contract

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Wilful disobedience of lawful order. This amounts to breach of employment contract. The act mustbe deliberate. Drunknness so as to be unable to perfotrm one's duties ot to interfere with the work of nother employees. Continued/Persistent absence from work without reasonable excuse. This is misconduct justifying dismissal Dismissal for incompetence. It is taken that an enployee impliedly warrants his competence. This should amount to failure to afford the required skill 5.7 Summary In this Unit we noted that the relations between employer and employee is governed by the law of contract and the Labour Relations Act. The contract of employment may be oral or written. That the employer is only liable vicariously for the wrongful acts of one who is an employeee and not an independant contractor. We noted that the wrongful act should have been committed while the employee was in the course of his employment for the benefit of the employer the employer has common law duties to the employee, but he is not legally obliged to provide the complyee with work. We learmt that there are circumstances whenthe employer may summarily dismiaa the employee but in all other circumstances the dismiss the employee but in all other circumstances the dismissal has to be after adequate notice has been given to either party. 5.8. Explanatory Terms Employer: Employee: One who hires another to provide services to him One who is angaged in a contract for the provision of

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services in return for payment of wages. Independent contravtor : One engaged in contract of services. He is not closely controlled by the employer Vicarious Liability: employee. Employer's liability for the wrongful act of his

The law of Lease

6.0 What this Unit is about In this Unit we look at the letting and hiring of immovable property. owners of property may for a variety of reasonsnot want to use their property themselves. They therefore would grant others the right to use and enjoy that property in return for rent. The relationship between the Landlord who is otherwise known as the Lessor and the tenant (Lessee) if governed by principles of common law. 6.1 What you will lean When you come to the end of this Unit you should be able to: * * * Define the nature of a contract of lease; List the essential elements of a lease; Describe the different types of leases and rights grated to the lessee under type of lease; Distinguish between duties of the lessor and the lessee; Explain how the kease is terminated.

* *

6.2. Law of Lease. What is Lease? This is base on the law of contract. The contract is a special one in that is is concerned with

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immovable propeerty only. It is a reciprocal agreement between the lessor and the lessee whereby the lessoe agrees to give the lessee temporary use and enjoyment of the propety in return for the peyment of rent. A contract of lease does not confer ownership of the property on the lessee. This distinguishes a contract of lease from a contract of sale. The lessee is only granted a right of use and enjoyment. This means that the lessee should not consume the subject matter of the lease. He should be able, at the end of the period, to restore the subject matter in the same condition in which it was. Fair or reasonable wear and tear is expected. The deterioration should be as a result of normal use. As a result, if by its use, the subject matter would be consument or the lessee would not be in a position to restore it to the lessor, then a lease cannot be created over such property. 6.3 Essential Elements All essential elements od\f a contract have to be satified. In addition: enjoyment The lessoe must give and the lessee must receive the temporary use and of the property; There must be agreement on the property let; There must be agreement on the rent to be paid.

A lease is a reciprocal contract. it confers rights and imposes obligations on both parties. These rightd and obligations are a matter of terms by the parties. Like other contracts, lease must be legal. For example, a lease of a place to be used as a brothel is illegal. Such a lease would be vaid and unenforceable. Thus if the lease is illegal, the court willrefuse to en force a claim for rent. 6.4. Formalities

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Writing is not a legal requirement for a contract of lease. An oral lease is as binding as a written one. The Parties may agree that the lease be in writting. this may be intended as a record of the agreement. Activity 6A * Objective Peter and John are best of friends. Peter is a businessman and John is an accountant. The two have a written agreement that John would stay in one of Peter's houses. In return , John would be respon sible for doing all of Peter's business books. This is to last as long as both parties are alive. What is the legal between Peter and John? 6.5 Duration The lessee is only temporary use and enjoyment of the subject matter. Parties may agree on the duration. Basically, there are two types of leases: 6.5.1 Lease in Longum Tempus (Long Lease) This is a lease of period of more that ten years or for the lifetime of the lessee. This lease gives real right to the property. To obtain this right over successors of the lessor, the lease must be in writen and registered in the Deeds Registry. Where there is such registration the lessee's right will prevail where the property has been alienated or where the lessor goes insolvent. The registration serves as notice upon the successors and creditors of thr lessor. Every successor to the landlord takes the proerty subject to the lease. The new owner is not entitled to terminate the lease be fore the priod fixed expires. He simply steps into the shoes of the old and must honour all the obligation thereunder 6.5.2 Short Lease This runs for a period of less than ten years. This lease in practice does not have to be registered. It may be a periodic lease which runs from month to month. The contract of lease gives the lessee

relationship

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a personal right only. Under the general law, the lessee has no right to remain in occupation against successors in title to0 the property unless the successor has agreed to be bound by the lease. The Lessee has some protection under the rule huur gaat voor koop which means hire goes before sale. This propvides some security of tenure for the lessee. To benefit from this protection, the lessee must be in occupation of thr property let. Again, if a purchase of leased property knowns at the time of purchase that the property is subject to a lease then he is bound by the lease even if it is not registered. 6.6 Requirements for Rent Rent is essential element of a lease. An agreement where A simply permits B to occupy property without rent being paid is not a lease. Similarly, if the parties fail to agree on the rent there is no lease. Rent must be not in services. But it seems posible that rent can be partly in money and partly in service. Activity 6B * Objective A. the house was leaking and the window panes were broken. She notified Muzungu of the situation but he did not do anything. Now rain-water has damaged her property. B. which continuously The Dog also wander through the leased property upsetting rubbish bins and making the property dirty. 6.7 Implied Duties of the Lessor To deliver to the tenant use and occupation of thr property let. Sarah's new neighour has brough onto his premises vicious gods bark at night so as to make it difficult for Sarah to find any sleep. What advice would you give ti Sarah in the foillowing situations. When Sarah moved into the house she is leasing from Musungu,

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Guarantee the tenant undisturbed use and enjoyment. To make necessary repairs to the property. To pay taxes levied on the property To Guarantee against defectds in thatr property. On termination of the lease, to compensate the tenat for improvements.

6.71 Delivcery of Use and Occupation Delivery here means the property is put at the disposal of the lessor at the date agreed. In the case of a building, the lessor hands over the keys to the building. Thus the building must be vacant at the timeof delivery . The lessee should be able to enjoy the full use of the property for the purpose for which it was let. For example the lessee of a shop was entitled to have access to an adjourning yars (Owned by the lessor) top offload goods from vehicle at the rear entrance to the shop. (Wireless & General v Arjoy Investment 1971 (4) SA 174). But the lessee was not entitles to park his vehicles in the lessor's yard as this was n ot a normal or necessary incident of due enjoyment of the shop. If the property is leased for a specific purpose, e.g a butchery, then the lessor must deliver the property in a condition reasonably fir for the purpose for which it is let 6.7.2 Failure to deliver The lease has the ordinary remedies. he may seek an order for specific performance by the landlord. The order for specific performance is only made if the landlord is able to make such delivery. The lease may rasile/withdraw from the contract and sue for damages. 6.7.3 Guarantee the tenant undisturbed use and enjoyment

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Every landlord undertakes that he will not disturb the tenant in his enjoyment of use of the property leased. He also warrants that no person with a superior title will disturb the lessee's use and enjoyment of the properrty let. Note: The landlord does not warrant that he is owner of the property. The lease is valid eeven where the landlord is not owner. Thus the lessor is not entitled to enter premiums let by him without the lessee's consent. Unless such is for a legiitimate purpose; for example, to inspect the premises but not to take any fruit Remedies if the lessee's use and enjoyment is disturrbed he may: to him, or contract, or Claim immediate reinstatement; i.e to have his use and joyyment restored

He may accept the deprivation as repudiation of the lease and cancel the

In addition he may recover damages for any loss he has sustained.

He is also free from payment of rent for the period he is deprived of use and enjoyment. If the lessee is distugrbed by another with a greater titles, he may not seek reinstatement, but he has an action for damages against the landlord unless when taking the lease, he was aware of the defect in the lardlord's title. A lessee who is threatened with distrubance must inform the lessor so that the letter can come to his defence. A lessor does not warrant the lessee against disturbance by third parties without title. As a result, a lessee disturbed by a squatter has no claim against the lessor nor can he claim cancelation of lease. 6.7.4 To make necessary repairs A lessor is obliged to maintain the premises in a condition reasonably fit for the purpose for which it

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was let. He must repair doors, windows, the roof and other parts of the premises. He must alsi repair structural defect which substantially interfere with the structural alterations or improvements. If damage is caused by the tenant's negligen ce the lessor has no duty to repair these. If repairs are urgently necessary, and the landlord cannot affect them while the tenant is in occupation, he may require the tenant to va cate the premises without becoming liable for demages for breach of contract. The purpose must be to effect repairs. The landlord may not under the guise of making repaire the tenant to vacate the premises so that he makes a major alteration. Such a 'repair' is not reasonable or necessary. The lessee is not to pay rent during the period he is deprived of beneficial occupation. The landlord takes the risk of the premises depreciating through proper use. It is the duty of the lessee to give notice to the lessor of the existence of a defect and afford him a reasonable opportunity to remedy the defect. If the lessor fails to maintain the premises in a proper condition, the lesser may effect the neccessary repairs hims elf and deduct the cost from the rent. He may only effect repairs after prior demand and notice to the landlord. He must also have given him a reasonable opportunity to effect the repairs. The tenant is restricted to effecting necessary repairs but should not make structural improvement or alterations unless if the onlt way of repairing is replacement; e.g a leaking roof which may need new materials. The tenant can claim damages for loss caused by the existence of defects on the leased premises. The damage should flow from the breach of the lessor's obligation to maintain the premises. But the lessor must have had knowledge of the defect. The burden of roof is on the tenant or if his trade or profession makes him an experty in matter5s related to buildings. The landlord's liabil;ity for damages caused as a result of defect in the lased property may be excluded by agreement.

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E.g. a lardlord was made liable for damage to the tenant's property caused as a result of rain water coming through the roof where the landlord had notice of the fact that the roof leaked and failed to repair. (Salomon v Dedlow 1912 TPD 971). 6.7.5 Payment of Taxes The lessor is the owner of the property let. In the absence of legislation or agreement to the contrary, the lessor should pay all taxes, rates or charges imposed by the State or municipality or any taking authority on the property. On the other hand, the lessee must pay tax which is imposed upon the produce fruits of the property. Activity 6C *Objective the house he is staying in does not reflect his new social and economic statuus. The house which Simba is staying in belongs to John. Simba would like John to do the following 1. bedroom. 2. 3. is there. 4. asbestors and developed cracks which allowed water in. * whether he is entitled to the request or whether he may carry out the repairs himself and recover from the landlord. In each case advise Simba whether he is entitled to the request or Repair the doord becuase most of the doors are falling of the Repaint the house Erect a durawall around the property and remove the fence which Demolish and reconstruct the front view including extending the Simba has recently been promoted at his company. he believes that

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6.8

Duties of the Lessee 6.8.1 Payment of rent This is the most important duty of the tenant. A lessee is under an

obligation to pay the lessor rent for the right to use and enjoy the property let. Rent must be paid in time. If there is no agreement on the time, rent is payable on the expiration of a lease or if the lease is periodic, on the expiration of thr period i.e end of month or week as the case may be. it must be paid at the agreed place to the person agreed. 6.8.2 Failure to pay rent If the lessee fails to pay rent, the lessor is entitled to claim payment as rent becomes due. He may also claim damages suffered. The lessor may cancel the lease. The lessee s hould vacate the premises otherwise there is unjust enridhment. The ladlord may also request for an order for the lessee's ejectment or eviction. 6.8.3 Lessor's tacit hypothec rent As soon as the rent is in arrears the lessor abtains a tacit hypothec for the amount of rent due to him. This right is to retain possession of certain movable goods of the tenant unil the rent is paid. The hypothec attaches to all things brough or carried on to the property- animals, tools, whatever their nature. He may also attach goods belonging to third parties. The onus is on him to prove his ownership in the possessor. Also, by permitting the property to be on hired premises and by failing to notify the lessor of his ownership, an owner leads the lessor to believe that the property is the lessee's.

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For example, a third party's animal which is alloawed to graze indefinitely upon a farm by the lessee, is subject to the lessor's hypothec. However, a vehicle supplied to an employee by his employer to be usved solely in the course of his employement is not subject to lessor's hypothec because there is no permanence contemplated.

The hypothec comes into operation only when the rent is owing . The landlord can only exercise the hypothec if the movables are at leased premises . He cannot use this right if the goods have been removed. The landlord can then apply to court for attachement of these goods. The lessee is entitled to a refund of the rent if he is deprived of the use and enjoyment of the property let to him either the lessor's dafult or through vis major or casus fortuitus. Thids is supervening impossibility which extinguishes the contract is a superior power or force which cannot be resisted or controled. Casus fortuitus means an exceptional occurrence not reasonable foreseen

6.8.4. Duty to use and care for the property It is the duty of the tenant to take care of the property let and use it for the purpose for which it ios let. Thus a place let for use as a dwelling house cannot be used as a workshop; causing damage to the property amounts to improper use. The lessee must use the property let with the dregree of care expe cted of reasonable man in the use of his own property. He should not make structural alteration of the property so as to charge the characterr of shuch property. A lessor would be entitled to an interdict restraining a lessee from

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usng premises for puposes for which they were not let, or for using them improperly. 6.8.5 Duty to restore the property Upom termination of the lease, the lessee must restore the property to the lessor. The property must be restored in the same condition in which it was deliveref to him-subject to reasonable wear and tear. The fact that the premises are in damaged condition upon termination of a lese does not entitle a lessor to refuse to redelivery of them. Here merely has a claim for demages i.e the reasonable cost of repairs for the property. In addition to his claim for damages tonthe premises, the lessor may have a claim for loss of rent during the period he is unable to let them because of their damaged condition. 6.8.6 Subletting This is where the lessee lets property which is hired. The lessee becomes a sort of lessor and creates another lessee. The lease between the original lessoe and lessee remain bound to each other. This means that a sublease does not create a contractual relationship between the sublessee and the original lessor. The lessor cannot claim rent from the sublessee. Payment of rent under the original lease remains the responsibilty of the lessee. Activity 6D * Objective the lessor where Explain the legal relationship created between the sublessee and the leased propperty has been sub-let. 6.9 Termination

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6.91 Expiration of time If time is given the lease terminates unpon expiration of time. No notice of termination is needed. 6.92. Notice A periodic lease is terminable by either party giving the other notice of termination. 6.9.3 Mutual Cancellation Mutual agreement to cancel, Or when there is breach which entitles the innocent party to cancel. The other party may make an election to accept cancellation. 6.9.4 Repudiation A party indicates an intention not to be bound by the contract. This repudiation may also be inferred from conduct: e.g the lessee vacating the premises and returing the keys. Remember nreoudiation is form of breach and the innocent party has remedies. 6.9.5 Extinction of Lessor's title A lessee derives his right to accupy and enjoy the property let from thr lessor. Thus where the lessor's right in the property terminates, the lease comes to an end except where the lessee is protected by the rule huur gaat voor koop. 6.9.6 Merger One cannot be his own creditor. Where the lessee acquires by sale or inheritance, the property let. this results in termination of the lease. 6.9.7 Destruction of the subject matter This is total destruction without fault of either party. If destruction is due to lessee's fault, the lease is not terminated and the lessee remains liable for rent for the unexpired period of lease. He must also pay the lessor the value of the property destroyed.

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6.9.8 Death This does not terminate a lease. The estate of the decesed party is bound except where the contract provides that the lease will terminate on death of either party. 6.10 Summary In this Unit we noted that a contract lease can only be effected on immovable property such as building. We also learnt that the lessee should, at the end of the lease, be in a position to hand back the subject matter of the lease to the lessor. matter. We noted We looked at how the lessee is protected when the leased property is sold. that the lessee should not simply be evicted by new owner of the property. We concluded that both the lessee and the lessor have rights and duties which arise our of the law and not by agreement of the parties. For example the lessee's right to undisturbed use and enjoyment of the leased property and the lessor's entitlement to payment of rent at the agreed time. The lessee on only granted the right to use but not to consume the subject

6.11 Explanation Terms Lessor: enjoyment of property . Lessee: of rent. Long lease: adding up to A lease for period often years or more or for a period more then years or for the whole like of the lessee. Short lease: Lease for less than ten years One who makes available to another, the use and

The one who uses another's property in return for payment

Huur gaat voor koop: Hire goes before sell. A maxim which protects a less see where the lease

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is not registered i.e a short leas. Sub-letting: property. Tacit Hypothec: the lessor Lessee lets another person to use part of thr leased

A right a retain possession of lessee's property by until payment of rent arrears.

Assignments and Tutorial Questions In this Unit we shall discuss methods of answering business law questions. We shall look at how business law students are expected to apply the principles of law to answer given questions. 7.1 What you will Lean By the end of this Unit, you should ber able to know * * What you are expected to know when answering question That there are three different types of qestions;

* That problem type questions are more complex and require you to be analytical and argumentative; * * instruction That you should identify the legal issue arising from problem questions That you should always answer the questions asked or comply with the given 7.2. Introduction Questions in most law subject are normally in three forms Straight forward essay questions Problem type questions There may also be an option for multiple choice questions

This Unit contains these three forms of questions. There are twenty simplified problem questions, twenty straight forward essay questions and twenty multiple choice type

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questions. The objective is to discover whether you have understood well the basic concepts in each topic covered. You should then be in a position to explain, analyse or discuss issues give. It is important to remember that in law, one should always support an arqument with referenceto legal principle, cases or statutes. 7.3. Problem Questions Most of you are familier with essay and multiple choice questions. Problem questions are exercises where one is given a fictional factual situation. This may cover a number of legal aspects of any topic. The question may then require that you discuss the legal issues arising out of the given facts. or they may requre that you discuss the legal issues arising out of the given facts, or they may require you to give advice to a party. You may also be required to discuss remedies available, if any. You should appreciate the substantive law involved and apply the law to the facts so as to come to a conclusion which is the solution to the problem. 7.3.1 How to approach problem questions The Firsdt step is to analyse the fact. This is isolating important facts which will help you in identifying the issues. Take the facts as given, do not make your own From the important facts, identify the issues. You must note that there may be more than one legal issue in a problem question. Apply the law to the issue. You have to find the relevant law to each issue apply the law so as to arrive at a conclustion. questions Summarise your va rious conclusions in such a way that you answer the

and

7.4. Multiple Choice 1. The Zambian legislative consists of :

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A. B. C.

House of Assemble and the Executive President House of Assemble, Senate and President The Judiciary, House of Assemble, Senate and the President

2. The term privity of contract means A. B. C. Terms of contract are standard Parties are free to choose their contractual partners A void contract is not enforceable

3. The head of the Judiciary in Zambia is A. B. C. The President The Chief Justice The Attorny-General

4. Consensus ad idem means A. B. C. The parties are at one, there is agreement The parties are at cross-purposes The contract is voidable

5. Merger in the law of contract means A. B. C. The coincidence of capacities so as to extinguish obligations Agreement by novation Acquisition of property which was unoccupied

6. A negotiorum gesto is A. B. C. A lessee who has sub-let property An agent of necessity An agent required by the court

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7. An independent contractor is A. it. B. he does it. C. One who is under the control of the employer as to what he does and how One not under control of the employer as to waht he does and how he does

One who is vicariously liable for the acts of his worker.

8. A suspensive condition A. event B. C. Terminates the contract Makes a contract voidable at the option of the innocent party. Suspends the operation of the contract until the materialisation of the

9.. Unascertained goods are : A. B. C. Goods which do not exist Goods which need counting, Weghing or measuring Goods incapable of being owned

10. One of the following is not a lessor's duty. A. B. C. To Protect the lessee's possessions from strangers Not to disturb the use and enjoyment of the property To delivery usr and enjoyment of the leased premises.

11. In a sale wetstoots means A. B. C. The merx is sold as it mis, with all its defects The seller must guarantee against latent defects The Sale is subject to a condition

12. The nemo dat quod non babet doctrine means

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A. B. C has it.

One cannot sell stolen property One connnot pass a greater right in the property that he actually has. The owner of stolen property can recover his property from anyone who

13. Duress vitiates the following A. B. C. Intention to enter into the contract Capacity to contract Legality of the contract.

14. Which statement is correct A. B C. The supreme Court is bound by its own decision The supreme Court is not bound by its own decisions Is only a Cout of appeal

15. A misrepresentation makes a contract A. B. C Void Voidable Illegal

16. Which statement is correct about a Primary Court A. B. C. It is president over by a judge It can hear both both civil and criminal cases It can only apply customary law

17. An agent is merely to facilitate conduct between the principal and the third party. He must himself. A. B. Have contractual capacity Does not need have contractual capacity

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C.

Be solvent

18. The golden rule of interpretation means A. B C If a words is ambiguous, it is interpreted against its maker Words are given their ordinary everyday meaning Contracts are interpreted so as to give them efficiency

19. Delivery longa manu means : A. B. C. the buyer The buyer already has the goods, the seller does not have to re-deliver The seller delivers to the buyer's agent The seller merely point at the goods thus putting them at the disposal of

20. Actio redhibitoria entails A. B. C. Cancellation of the contract and putting the parties to status quo Reduction of the purchased price Giving damages for consequential losses

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