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UNIVERSITY OF BOTSWANA

DEPARTMENT OF LAW

LAW 251: FOUNDATIONS OF BUSINESS LAW

COURSE OUTLINE

SEMESTER 1 ACADEMIC YEAR 2022 / 2023

CONVENOR/ COORDINATOR:
Mr TH BAHTA
Office 248/212
Ext 4325
Email: bahtat@ub.ac.bw

LECTURING TEAM:

1. Mr. B. Mmipi (Tue,Thurs,Fri 9:00 - 10:00 AM)

2. Mr. W. Wankie (Mon,Wed,Fri 10:00 - 11:00 AM)
3. Mr. T. Bahta (Mon,Wed,Fri 11:00 -12:00 PM)
4. Mr. T. Ndzinge-Makhamisa (Tue, Thur, Fri 13:00 -14:00 PM)

OBJECTIVES AND LEARNING OUTCOMES

The first part of this course provides a brief overview of the Botswana legal system, with special
emphasis on the nature, classification and sources of the law and the structure and hierarchy of
the courts. The second and main part of the course introduces general principles of the law of
contract, with special emphasis on formation, content, breach and termination of contracts. A
contract is the core element of most business transactions. Although common examples of
business contracts have unique characteristics and are governed by special rules, general
principles introduced in this course apply to all contracts. This course thus sets the foundations
for further study of the law relating to specific types of business contracts or arrangements in
other law courses.

At the end of the course students will be expected to have a sufficient grasp of the rules and
general principles to recognize and appreciate incidences relating to formation, content, and
breach of contracts in simple and common business transactions. Through elements of the
Botswana legal system introduced, students will also be able to appreciate how legal rules and
principles affecting simple business transactions are developed, through case law and statutory
interpretation.

METHODOLOGY

The course will be taught mainly through lectures and individual or group assignments or
exercises on specific topics and issues. The blended learning approach will be followed. Some
lecture notes, exercises, case and other reading materials will be posted on Blackboard. But to
ensure that online learning does not substitute for class attendance, there will be a considerable

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time lag between lecturing and the posting of relevant materials on Blackboard. Attendance of
classes and participation in class discussions will also be closely monitored. As not everything
of importance on a particular topic can be taught in class, students will be expected to read
prescribed texts and other recommended books, cases and other materials.

ASSESSMENT

Assessment will be based on continuous assessment and a final examination. Continuous

assessment will be in the form of at least two tests. The ratio of continuous assessment to an
examination will be 2 to 3; that is continuous assessment will contribute 40 per cent towards the
final mark for the course, and the examination 60 per cent.

OTHER COURSE DETAILS

Type: core
Lecture hours: 3 per week
Credits: 3
Prerequisites: None

TEXTS AND REFERENCES

Prescribed Texts:

1. J.T.R. Gibson, South African Mercantile and Company Law, (Latest ed. Juta & Co Cape
Town)
2. Robert Sharrock, Business Transactions Law (latest edn, Juta & Co)

Other References:
1. C.J. Nagel and Others, Commercial Law (2nd edn, Butterworth 2000)
2. C.M. Fombad, Botswana Legal System (2nd edn, Lexis Nexis 2013)

Time table of work

(a) Introduction to Botswana Legal system (3 hours) week 1

▪ Nature and functions of law
▪ Classifications of law in Botswana
▪ Sources of Botswana Law

(b) Structure, Jurisdiction and Composition of Botswana Courts (3 hours) week 2

▪ Higher Courts and the Doctrine of Precedent
▪ The Legislature and Enactment of Statutes

(c) Introduction to contract law (6 weeks) week 3 and 4

▪ Definition and elements of a contract
▪ Formation of a contract

(d) Offer and acceptance in some special arrangements (3 hours) week 5

▪ Formalities

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ASSIGNMENT OR TEST ONE week 6 – week commencing 11 September 2022)

(e) Contractual capacity (3 hours) week 6

▪ Minority
▪ Marriage in community of property
▪ Insanity
▪ Intoxication
▪ Prodigality
▪ Insolvency

(f) Other factors affecting validity or enforceability of a contract (9 hours) Week 7, 9 and
10)
▪ Mistake (week 7)
▪ Misrepresentation (3 hours) week 9
▪ Duress and undue influence (1 hours) week 10)
▪ Illegality (2 hours) week 10

(g) Terms and contents of a contract (3 hours) week 11

▪ Terminology and classifications
▪ Exclusion and limitation clauses
▪ Treatment of vague and uncertain terms

(h) Breach of contract (6 hours) week 12 and 13)

▪ Mora debitoris
▪ Mora creditoris
▪ Repudiation: positive, constructive and anticipatory
▪ Positive mal-performance
▪ Prevention of performance

TEST TWO - week 10 - week commencing 23 October 2022

(i) Remedies for breach of contract (3 hours) week 14-15

▪ Specific performance
▪ Interdict
▪ Cancellation
▪ Damages

(j) Termination and discharge of contract (3 hours) week 16)

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OUTLINE

1 INTRODUCTION TO THE BOTSWANA LEGAL SYSTEM

1.1 Nature and functions of law

1.2 Classifications of law in Botswana

1.3 Sources of Botswana Law

• The Constitution
• Legislation
• Common Law
• Case Law (stare decisis)
• Customary Law
• Secondary Sources

1.4 Structure, Jurisdiction and Composition of Botswana Courts

1.4.1 Higher or Superior Courts

• Court of Appeal
• High Court

1.4.2 Subordinate or Lower Courts

• Magistrate’s Court
• Customary Courts

1.4.3 Courts with Special Jurisdiction

• The Industrial Court

• The Juvenile Court
• The land Tribunal
• The Court Martial
• The small claims Court

1.5 Higher Courts and the Doctrine of Precedent

The Common law and the doctrine of precedent

Elements of a case

1.6 Reading, interpretation analysis and understanding of a case

Either
Goddard v Anjus Fresh Produce (Pty) Ltd, [1973] Botswana Law
Reports (BLR) 221-229
Or
Molefi v Blue Blends Investments (Pty) Ltd, 2004 (1) BLR 259 (IC)

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1.7 The Legislature and Enactment of Statutes

1.8 Other Notable Actors and Institutions in the Botswana Legal System

• The National Assembly

• House of Chiefs
• The Executive
• Attorney General
• Director of Public Prosecutions
• Judicial Service Commission
• The Legal Profession
2. INTRODUCTION TO CONTRACT LAW

2.1 Definition and elements of a contract

➢ A contract as a legally recognized “agreement’

➢ Justification for legal recognition and enforcement
➢ Subjective and objective aspects of an agreement
South African Railways & Harbours v National Bank of South Africa,
1924 AD 704
I. Pieters & Co.v Salmon, 1911 AD 121
Khama v Debswana Diamond Co. (Pty) Ltd 2000 (1) BLR 31 (HC)
Alemayehou v The Director of Public service Management and Others 2005
(2) BLR 199 (HC)

2.2 Formation of a contract

2.2.1 The concept of an Offer

➢ Definition and elements

Metswe and Another v Thata Save (Pty) Ltd, 2000 (2) BLR 198 (IC)

➢ Animus contrahendi
Conradie v Rossouw, 1919 AD 279
TIM’S Lock and Key (Pty) Ltd v Jones and Another, [1988] BLR 338.
Fashion Enterprises v Image Botswana Ltd, [1994] BLR 288

➢ Solicitation of information, statements of intention, advertisements, etc.

Crawley v R 1909 TS 1105
Efroiken v Simon 1921 CPD 367
Ferguson v Merensky 1903 TS 657

➢ General offers to the public

Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256 (CA).
Bloom v American Swiss Watch Co. 1915 AD 100

➢ Duration and termination of an offer

Dietrichsen v Dietrichsen 1911 TPD 486

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➢ Irrevocable offers and options

Hersch v Nel 1948 (3) SA 686 (A)
Bhamjee v Maposa (No. 2), [1988] BLR 268

2.2.2 The concept of an acceptance

➢ Meaning
➢ Who should accept
➢ Modes of acceptance
Watermeyer v Murray, 1911 AD 61
Nyabienda v Attorney General 2000 (1) BLR 143 (HC)
Nindi v The University of Botswana 2005 (1) BLR 439 (HC)

➢ Communication of an acceptance
➢ Communication through the postal system
Cape Explosives Works Ltd v SA oil and Fat Industries Ltd, 1921 CPD
Kergeulen Sealing and Whaling Co. Ltd, CIR 1939 AD 487

➢ Contracts concluded by telephone

Wolmer v Rees, 1935 TPD 319
Tel Peda Investments Bureau (Pty) Ltd v Van zyl 1965 (4) SA 475
➢ Contracts concluded online (electronically)
Electronic Communications and Transactions Act 14 of 2014

2.2.3 Offer and Acceptance in Some Special Arrangements

➢ Tendering
Emerald Star (Pty) Ltd v Attorney General 2000 (1) BLR 8 (HC) and 2000 (2)
BLR 98 (CA)
WBHO Construction (Pty) Ltd v PPADB and Others, 2006 (2) BLR 361
(HC)
Letsatsi Investments (Pty) Ltd v South East District Council and Another, 2009
(1) BLR 449 (HC)

2.3 Formalities

➢ General rule as to the form which contracts may take

Meswele Investments (Pty) Ltd T/a Oasis Motel v Attorney General 1985 BLR
370 (HC)
Metswe and Another v Thata Save (Pty) Ltd, 2000 (2) BLR 198 (IC)

➢ Written form required by law, examples -

S. 4 of the Hire Purchase Act, Cap 46:03
S. 10 of the State Land Act, Cap 32:01

➢ Deeds and notarial execution

S. 17 of the Deeds Registry Act, Cap 32:02
S. 83 of the Deeds Registry Act, Cap 32:02

➢ Interpretation of written agreements

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TGB Drill Contractors (Botswana) Pty Ltd v National Development Bank 1987
BLR 11 (HC)
Mosienyane v Dobo 1989 BLR 473

2.4 Contractual Capacity

2.4.1 Minority

Edelstein v Edelstein, 1952 (3) SA 1 (A)

Stuttaford & Co. v Oberholzer, 1921 CPD 855

2.4.2 Marriage in Community of property

Effects of marriage in community of property

Reloomel v Ramsay, 1926 TPD 271
Abolition of Marital Power Act, 34 of 2004,Cap. 29:07
Married Persons Property Act, 2014

2.4.3 Insanity

Molyneux v Natal Land and Colonization Company Limited [1905] AC 555

Pheasant v Warne 1922 AD 81

2.4.4 Intoxication

Goodman v Pritchard, (1907) 28 NLR 227

2.4.5 Prodigality

Delius v Delius 1960 (1) SA 270

2.4.6 Insolvency

Ss. 21 – 22 of the Insolvency Act, Cap 42:02

3 Other factors affecting validity or enforceability of a contract

3.1 Mistake (Error)

National and Overseas Distributors Corporation (Pty) Ltd v Potato Board, 1958
(2) SA 473 (A)
Allen v Sixteen Stirling Investments) (Pty) Ltd, 1974 (4) SA 164 (D)
George v Fairmead (Pty) Ltd, 1958 (2) SA 465
Standards Chartered Bank Ltd v Estate Construction (Pty) Ltd, [2001] B L R 2033
Klette v Dick Drilling Services, 1994 BLR 432 (HC)
Thobega v Botswana Motor Vehicle Insurance Fund, 1995 BLR 657
Tlokweng Land Board v Matsetse and Another, 2007 (2) BLR 850 (CA)

3.2 Misrepresentation

➢ Definition and elements of:

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Novick & Another v Comair Holdings Ltd, 1979 (2) SA 116, 149-150
BCL Ltd v Trengove No and Another, 2002 BLR 221 (HC)
Loeto v Molaolwa 1994 BLR 355
Motor Sales and Service (Pty) Ltd v Bapedi Transport (Pty) Ltd, 2009 (1) BLR 81
Dibley v Furter, 1951 (4) SA 73
Karabus Motors (1959) Ltd v Van Eck 1962 (1) SA 451 (C)
Mazza v Jones, 1973 (2) SA 740

➢ Remedies and Consequences

Trotman and Another v Edwick 1951 (1) SA 443 (A)
Phame (Pty) Ltd v Paizes 1973 (3) SA 397 (A)
Dibley v Furter 1951 (4) SA 73 (C)

3.3 Duress

Broodryk v Smuts No 1942 TDP 47

Arend & Another v Astra Furnishers 1974 (1) SA 298
Botswana Breweries Pty Ltd v Nelson Woto, 1997 BLR 368 (HC)

3.4 Undue Influence

Preller v Jordan, 1956 (1) SA 483 (A)

Patel v Grobbelaar 1974 (1) SA 532 (A)

3.5 Illegality (Prohibited arrangements or terms)

➢ Statutory illegality, examples of Statutes prohibiting certain aspects of a contract

Land Control Act, Cap 32: 11
Employment Act, Cap 47:01

➢ Common law illegality, as a general consideration:

Sasfin (Pty) Ltd v Buekes, 1989 (1) SA 1

➢ Specific examples of contracts or terms prohibited at common law:

Contracts or terms in restraint of trade

Magna Alloys & Research (SA)Ltd v Ellis, 1984 (4) SA 874 (A)
Martex Trading Pty Ltd T/a Builders Merchants Botswana v Lloyd, 1998 BLR
201 (HC)
Equinox Investments Pty Ltd v Lepopo Pty Ltd, 2002 (1) BLR 149.

Pactum commissoria

Tswaing v Van Schalkwyk, 1979 -80 BLR 149 (HC)

Molome v Quick Cash Ltd, 2001 (2) BLR 93 (HC)

Pactum de non cedendo

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Drambore Ltd v Cyril Hurvitz Co. (BP) and Another, 1993 BLR 245. (CA)

➢ Enforceability of illegal terms or contracts

Olatotse v Makhala, 1986 BLR322 (HC)

Masilonyane v Setlhare, 2007 (3) BLR 62 (HC)
Molefi v Blue Blends Investments (Pty) Ltd, 2004 (1) BLR 259 (IC)

4. Terms and contents of a contract

4.1 Terminology and classifications

➢ Essentialia, naturalia and incidentalia

➢ Warranties and conditions
➢ Suspensive and resolutive conditions

Small v Smith 1954 (3) SA 434

Meswele Investments (Pty) Ltd t/a Oasis motel v Attorney General, [1985] BLR
370
Goddard v Anjus Fresh produce (Pty) Ltd., [1993] B. L. R. 221

4.2 The problem of exclusion and limitation clauses

Central South African Railways v Mclaren, 1903 TS 727

George v Fairmead (Pty) Ltd, 1958 (2) SA 483
Botswana Vaccine Institute Pty Ltd v DHL International Botswana Ltd, 2009 (1) BLR 437
(HC)
Bostrich Products International Pty Ltd v Monkge, 2010 (1) BLR 7 (HC)
Monkge v Bostrich Products International (Pty) Ltd 2010 (3) BLR 458 (CA)

4.3 Treatment of vague or uncertain terms

Levenstein v Levenstein 1955 (1) SA 615

Time Projects Botswana (Pty) Ltd v Hi- Tech Investments (Pty) Ltd, 2001 (1) BLR 329

5 Breach of Contract

5.1 Mora Debitoris

Goldstein and Wolf v Maison Blanc (Pty) Ltd, 1948 (4) SA 446
Nel v Cloete, 1972 (2) SA 150 (A)
ABE’s Canteen (Pty Ltd v Chouhan and Others. [1993] BLR 382
Standard Chartered Bank of Botswana v Setlhake, [2001] BLR 286

5.2 Mora creditoris

Ranch International Pipelines (Transvaal) (Pty) v LMG Construction, 1980 (1) SA 645

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5.3 Repudiation; Positive, Constructive and Anticipatory

Molebatsi v Molebatsi, 1989 BLR 1 (HC)

Kubu Investments Pty Ltd v Capital Growth Pty Ltd, 2001 (1) BLR 231 (CA)
Botswana Housing corporation v Lempadi, 1998 BLR 131
Tuckers Land and Development Corporation (Pty) Ltd v Hovis, 1984 (3) SA 861

5.4 Positive malperformance

Sweet v Ragerguhara, 1978 (1) SA 131

Motor Sales and Service (Pty) Ltd v Bapedi Transport (Pty) Ltd, 2009 (1) BLR 81 (CA)

5.5 Prevention of Performance

Benjamin v Meyers, 1946 CPD 655

Tingwane v Botswana Unified Revenue Services, 2009 (2) BLR 1 (IC)

5.6 Impossibility of Performance

Peters, Flaman & Co v Kokstad Municipality, 1919 AD 427

6 Remedies for Breach of Contract

6.1 Specific Performance

Haynes v Kingwilliamstown Municipality, 1951 (2) SA 371

Benson V. SA Mutual Life Assurance Society, 1986 (1) SA 776
Gabaake v Gaborone Town Council, 1972 (1) B. L. R. 35
Potgieter v Van Dyk and Another 2004 (2) BLR 213 (HC)

➢ (exceptio non adimpleti contractus)

6.2 Interdict

Roberts Construction v Verhoef, 1952 (2) SA 300

Quarries of Botswana Pty Ltd v Gamalete Development Trust and Others 2010 (2) BLR
595 (HC), and 2011 (2) BLR 479 (CA)

6.3 Cancellation (Rescission)

➢ Cancellation for mora

Microutsicos v Swart 1949 (3) SA 715
Morewane v Charotee Borehole Syndicate and Others 2005 (2) BLR 388 (HC)
Kasale v Rapoo and Others 2009 (1) BLR 268 (HC)

➢ Cancellation for defective performance

Aviotech (Pty) Ltd v Lesedi Motors (Pty) Ltd, [2004] 2 BLR 190
Greenways (Pty) Ltd v Engen Marketing Botswana (Pty) Ltd [2005] 2 BLR 270
(CA)

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Austin Jack Transport Pty Ltd v Worldwide Commodities Pty Ltd 2010 (1) BLR
679 HC

➢ Cancellation clauses (lex commissoria)

Custom Credit Corporation v Shembe, 1972 (3) SA 462
Van der Colf v Sebusi and Another 1989 BLR 289

6.4 Damages

➢ Meaning, rationale and computation

Hadley v Baxendale (1854) 156 ER 145
Victoria Falls and Transvaal power Co. Ltd v Consolidated Langlaagte Mines Ltd,
1915 AD 1
Lavery & Co. Ltd. V Jungheinrich, 1931 AD 156
Holmdene Brickworks (Pty) Ltd v Roberts Construction Co. Ltd 1977 (3) SA 670
Mosikare v B.M. Construction (Pty.) Ltd [1992 BLR 100 (HC)
Nnyepi v Sijo Construction (Pty) Ltd 2007 (2) BLR 192 (HC)
Van Der Colf v. Sebusi 1989 BLR 281 (HC)

➢ Mitigation of loss
Essack v Bamagwato Concessions Ltd 1983 BLR 307 (HC)

➢ Liquidated damages and penalty clauses

Phakalane Property Developers (Pty) Ltd v Lighthouse Enterprises (Pty) Ltd
2008 (1) BLR 1 (HC)
Phakalane Estates Pty Ltd v Oscar Chombah and Others 2010 (1) BLR 603 (HC)

7 Termination and Discharge of Contracts

7.1 By performance (Fulfilment)

7.2 By agreement (waiver, novation and compromise)

Spot Security Services (Pty) Ltd v Francistown City Council 1998 BLR 480 (HC)
Mbaakanyi v Botswana Meat Commission, 1999 (1) BLR 287 (HC)
Meswele Investments (Pty) Ltd t/a Oasis motel v Attorney General 1985 BLR 370 (HC)
Chinappen and Others v Kindaswany and Others 2005 BLR 58 (HC)

7.3 By operation of law: prescription; set off; merger; death; and insolvency

8. Substitution of Parties and contractual obligations

➢ Privity of contract?
TL Investments Pty Ltd v Molefe 1985 BLR 222
National Development Bank v TGB Drill Contractors (Botswana) Pty Ltd 1987
BLR 515 (HC)
➢ Cession, delegation and assignment?
Drambore Ltd v Cyril Hurvitz Export Co. (BP) and Another 1993 BLR 245 (CA)
Mahomed v Georgoulas, 2000 (2) BLR 245 (HC)

➢ Plurality of parties
Costain Construction (Botswana)(Pty) Ltd v Essack, 1983 BLR 120 (HC)

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