The Sunday Mail
THE contract of sale is one of the common agreements entered into in the world of commerce. In fact, contracts of sale are entered into on a daily basis.
A contract of sale may be made orally. The parties may agree, however, that the oral contract will not be legally binding until it is drawn up in a written form.
Where parties to an oral agreement mention that the contract should be written down, the question is whether the parties intended that the contract would not be binding until the written agreement had been signed, or simply that the contract should be binding immediately, but should subsequently be put in writing to facilitate proof of its terms.
The onus of proof is on the party who asserts that an oral contract was not intended to be binding until reduced to writing and signed. Reduction to writing is intended to aid proof of the terms of the contract.
The role of the court in dealing with contracts of sale, whether written or verbal, has been settled in terms of the law. It is an accepted principle of our law that courts are not at liberty to create contracts on behalf of parties, neither can they purport to extend or create obligations, whether mandatory or prohibitory, from contracts that come before them.
The role of the court is to interpret the contracts and uphold the intentions of the parties when they entered into their agreements. The requirement is that the agreements should meet all the elements of a valid contract.
This principle was set out clearly in the case of Kundai Magodora & Ors v Care International Zimbabwe SC 24/14 by PATEL JA when he stated the following: “In principle, it is not open to the courts to rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted, even if they are shown to be onerous or oppressive. This is so as a matter of public policy. See Wells v South African Alumenite Company 1927 AD 69 at 73; Christie: “The Law of Contract in South Africa” (3rd ed.) at pp. 14-15. Nor is it generally permissible to read into the contract some implied or tacit term that is in direct conflict with its express terms. See South African Mutual Aid Society v Cape Town Chamber of Commerce 1962 (1) SA 598 (A) at 615D; First National Bank of SA Ltd v Transvaal Rugby Union & Another 1997 (3) SA 851 (W) at 864E-H.”
See also Simbi (Steelmakers) Pvt Ltd v Shamu & Ors SC 71/15.
What is a contract of sale?
There are various definitions for a contract of sale. The late Professor Richard Hunter Christie defines a contract of sale as “. . . the exchange of property for a price . . . the exchange of a merx for a pretium”.
The definition brings out a fundamental issue relating to the essential elements of a contract of sale.
In Kovi v Ashanti Goldfields Zimbabwe Ltd & Another, the court held that there are three essential requirements of a contract of sale. These are: agreement (consensus ad idem); a thing sold (merx); and a price (pretium).
Neither delivery nor payment is necessary to the creation of the contract, for they both fall within the category of its performance.
Three things essentially emerge for an agreement to be deemed a contract of sale, namely:
- a) Agreement or meeting of the minds (consensus) of the contracting parties to enter into an agreement of sale;
- b) Agreement on the thing sold; and
- c) Agreement on the purchase price to be paid for the thing sold.
(See also Ashanti Goldfields Zimbabwe Limited v Jafati Mdala SC 60/17 where the Supreme Court distinguished that case from Kovi v Ashanti Goldfields Zimbabwe Ltd & Another)
A contract of sale comes into existence or becomes perfecta once the seller and the purchaser agree on the above three essentials of the agreement.
There are instances when the parties impose conditions to the contract. In such instances, the contract of sale comes into existence when the parties agree on the three essential elements, but becomes operational when the conditions have been fulfilled.
The payment of the purchase price and delivery are not essential elements of an agreement of sale (Dr I. Maja). These are the duties they have under the contract of sale. We shall look at these duties in future articles.
LEGAL DISCLAIMER: The material contained in this article is set out in good faith for general guidance in the spirit of raising legal awareness on topical interests that affect most people on a daily basis. They are not meant to create an attorney-client relationship or constitute solicitation. No liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the article. Laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements.
Arthur Marara is a corporate law attorney practising law in Harare. He is also a notary public and conveyancer. He is passionate about employment law, commercial law, family law and promoting legal awareness and access to justice. He writes in his personal capacity. You can follow him on social media (Facebook Attorney Arthur Marara), or WhatsApp him on +263780055152 or email [email protected]
