MULUNGUSHI UNIVERSITY

SCHOOL OF BUSINESS STUDIES

DEPARTMENT OF LAW, LABOUR & HUMAN RESOURCE MANAGEMENT

COURSE TITLE: LAW OF CONTRACT 1

COURSE CODE: BLL 211

ASSIGNMENT 2

Big Boy Malembeka (BBM) works as a real estate agent, which brings him into contact with
many influential people within and outside government. He is approached by Dust-Bin
Njobvu, an accountant in government with a proposal to find for him a buyer for a piece of
land he had been given by the Ministry of Empowerment, as part of his retirement benefit.
This programme was designed by the ministry to assist retirees who were unable to buy land
during their tour of duty. Njobvu is not interested in this land and wants to sell it to acquire
another piece of land elsewhere. This is because of the controversy surrounding the
allocation, as it is a gazetted forest reserve, demarcated for allocation at the critical time of
parliamentary and general elections. The opposition People’s Redemption Party (PRP)
criticises it as a political gimmick that it will reverse when voted into power. That is why
Njobvu wants to sell this piece of land and peacefully settle elsewhere.

BBM advertises the 50 x 100 metres piece of land in the Times of Zambia, indicating that the
sale would be to the highest bidder. The highest bidder is Naomi Mulenga, who pays into
BBM’s account cash of 30,000 Kwacha. Naomi is not given a receipt or letter of sale, and the
entire arrangement is verbal. BBM like to be revealed advises her to keep quiet, as this deal
involved important people in government that would not. No reference is made of Dust-Bin

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Njobvu, the original owner. Naomi clears the land and constructs a three bedroomed house
within six months. She moves into the house as soon as it is complete.

The new government of PRP however does not sympathise with anyone who developed an
area gazetted as a forest reserve. The new government orders occupiers of this land to vacate
it. They refuse arguing that they need to be reimbursed with the money they had spent on the
investments. Government refers them to sellers of the land with whom they had agreements.

Naomi does not know what to do and has approached you to assist her at least to recover her
money that she had invested into the land and building. Phone calls to BBM go unanswered,
and the area is secured by police. Naomi spends days and nights outside in the dark cold
nights. She is not allowed to enter her premises and is referred to as a trespasser by the
security personnel. How would you advise Naomi in this intricate legal matter?

Typed, 5-7 pages, Times New Roman, 12 font, 1.5-2.0 spacing.

Date due: 16th November, 2021.
Submission: Hard copy only.

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In cases like the one under consideration, in practice, the victim is usually unable to avoid the

contract with the rogue before the goods are sold on, so an innocent third party becomes

owner of the goods. The only hope for the victim is to persuade the court that the contract is

void for mistake, since this would mean that the goods have not become the property of the

party who bought from the rogue and could be recovered. The problem for the court is how

best to do justice between two innocent parties – the rogue’s victim (the claimant) and the

person who bought the goods from the rogue in good faith (the defendant). Generally, the

courts are more likely to sympathise with the defendant, unless the claimant is able to prove

that it was entirely reasonable for the claimant to be duped by a virtually fool proof deception

by the rogue. The rationale for this approach is that it is fair that the original seller carries the

risk of the buyer not being creditworthy, by letting the buyer remove the goods.

Contracts to sell or dispose of an interest in land must be made in writing. The written

contract must incorporate all the terms of the contract in one document, or in both contracts

where contracts are exchanged, and must be signed by both of the parties. If these formalities

are not complied with, the contract will be void and therefore of no effect. There is, however,

one exception. A lease of land for a period of three years or less will be valid if made orally,

as long as the lease takes effect immediately.

The Law of Property (Miscellaneous Provisions) Act 1989 requires all contracts for the sale

or disposition of land to be made in writing. It should also be appreciated that some such

agreements, for example hire purchase, must be signed by both parties.

Essentially, contracts that must be made by deed applies to conveyances of land and leases of

property extending over a period of more than three years. A conveyance is the legal process

of the transfer of land. It is distinct from a contract to sell land, which is merely a legal

agreement to transfer the land and not the actual process of transfer, which comes later.

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Agreements made by deed which would not otherwise be enforceable as contracts, because

the required formation element of consideration is absent, will be implemented by the courts.

It has already been pointed out that not all agreements are recognised as contracts in law; but

it must also be borne in mind that, even where agreements do constitute contracts, they may

not be given full effect by the courts. The legal effect of particular agreements may be

distinguished as follows:

Valid contracts

These are agreements which the law recognises as being binding in full. By entering into to

such contractual agreements, the parties establish rights and responsibilities and the court will

enforce these by either insisting on performance of the promised action or awarding damages

to the innocent party.

Void contracts

This is actually a contradiction in terms, for this type of agreement does not constitute a

contract: it has no legal effect. Agreements may be void for a number of reasons, including

mistake, illegality, public policy or the lack of a necessary requirement, such as

consideration. The ownership of property exchanged does not pass under a void contract and

remains with the original owner. The legal owner may recover it from the possession of the

other party or, indeed, any third party, if it has been passed on to such a person. This is so

even where the third party has acquired the property in good faith and has provided

consideration for it.

Voidable contracts

These are agreements which may be avoided, that is, set aside, by one of the parties. If,

however, no steps are taken to avoid the agreement, then a valid contract ensues. Examples of

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contracts which may be voidable are those which have been entered into on the basis of

fraud, misrepresentation or duress. In relation to voidable contracts, the appropriate remedy is

rescission of the original agreement. The effect of rescission is that both parties are returned

to their original, pre-contractual position. Consequently, anyone who has transferred property

to another on the basis of misrepresentation, for example, may recover that property.

However, goods which have been exchanged under a voidable contract can be sold to an

innocent third party. If such a transfer occurs before the first innocent party has rescinded the

original contract, then the later innocent party receives good title to the property. This means

that the property is now theirs and the innocent party to the first transaction can only seek a

remedy such as damages against the other, non-innocent party to that contract.

Unenforceable contracts

These are agreements which, although legal, cannot be sued upon for some reason. One

example would be where the time limit for enforcing the contract has lapsed. The title to any

goods exchanged under such a contract is treated as having been validly passed and cannot,

therefore, be reclaimed.

The sale of the 50 x 100 metres piece of land which is purported to belong to Dust-Bin

Njobvu is not a valid contract. This agreement did not meet the requirement as stipulated by

the Law of Property (Miscellaneous Provisions) Act 1989. Going by the law of contract, this

agreement can be classified as void contract. In other words, the title to transfer the piece of

land from Dust-Bin Njobvu to Naomi Mulenga did not pass as the former did not have title to

the piece of land.

To start with the sale of the land in question did not comply with the contractual requirement

for the sale of land. It is mandatory for the contract of the sale of land to be in written. If this

requirement is not met, there is not contract for the sale of land. However, Naomi Mulenga

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can sue and seek recourse on the loss she has suffered as a result of the land she purchased

through the Big Boy Malembeka (BBM) a real estate agent.

In order for the court to arrive at a decision to either or not award Naomi Mulenga some

damages for the loss she has suffered. The court will determine whether or not Naomi

Mulenga performed her contractual obligations judicially. The court would also want to

establish whether or not Naomi Mulenga did what a rational person is expected to do to

prevent the loss she has suffered.

From the facts given in the case above, Naomi Mulenga fulfilled her contractual obligations

accordingly. She asked for the details of the person selling so that in the event there will be

need to discuss with that person one on one, unfortunately, Big Boy Malembeka (BBM) the

real estate agent decline to give those details but instead advises her to keep quiet, as this deal

involved important people in government that would not, and ultimately does not make

mention of Dust-Bin Njobvu, the original owner of the piece of land in question.

Naomi Mulenga can sue and succeed based on the following case:

Nottingham Patent Brick and Tile Co v Butler (1886) (Court of Appeal)

The defendant’s solicitor, who was selling land on behalf of the defendant, was asked

whether there were any restrictive covenants attached to the land. (The buyer would generally

not want restrictive covenants. If there were any, they would be included in documents which

the solicitor should have read.) The solicitor replied that he was not aware of any restrictive

covenants. This was true, but the reason why the solicitor was not aware of any was that he

had not read the documents which he should have read. The claimant agreed to buy the land

but pulled out of the contract when he discovered that there were restrictive covenants.

Held The solicitor’s statement, although literally true, was a misrepresentation. Therefore,

the claimant was entitled to withdraw from the contract

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The above shows that solicitor who in this case can be taken to be Big Boy Malembeka

(BBM) the real estate agent, who gave untrue information about the true identify of the

person selling the piece of land. This was a misrepresentation. Therefore, the Naomi Mulenga

entitled to be paid in full the purchase price for the piece of land. In the judgement handed

down in the above cited case, the bases of withdraw of the contract was a misrepresentation

made by the solicitor.

If a contract is found to be void for operative mistake the court will require any money or

property which has changed hands to be returned: as no contract exists in law, title does not

pass. From the facts of the case, there was an operative mistake where the contract of sale of

land was not was not written. This mistake rendered the contract void. And as such, Naomi

Mulenga is entitled to receive the full payments of the money she paid. Big Boy Malembeka

(BBM) the real estate agent will be compelled by the court to refund Naomi Mulenga her

K30,000 the payment she made for the purchase of the piece of land. The following case can

be used to support Naomi Mulenga’s case:

Car and Universal Finance Co v Caldwell [1965] (Court of Appeal)

A rogue bought a car with a bad cheque. The rogue sold the car to a third party who bought it

in good faith. Before this second sale the original seller found out about the rogue’s

misrepresentation. He could not find the rogue to tell him that he was avoiding the contract,

so he told the police and the AA.

Held Telling the police and the AA was enough to avoid the contract because it was an action

which showed a definite intention to avoid the contract. The original seller therefore got the

car back from the third party. If the original seller had not told the police and the AA until

after the rogue had resold the car, s. 23 of the Sale of Goods Act 1979 would have applied

and he would never have got the car back.

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In some instances, the court may be prepared to order a decree of rectification to amend a

written contract which contains a unilateral mistake relating to its terms. It will only be

granted if there is clear evidence that, as it stands, it does not represent the intention of the

parties and that injustice would result from enforcement of the written document in its

existing form. However, in Naomi Mulenga’s case the remedy of rectification is not possible

as the seller of the piece of land did not have title to it. The piece of land in question belonged

to the state as it is a gazetted forest reserve. The land was not allocated to Dust-Bin Njobvu in

good faith.

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References

A. Adams. 2008. Law for Business Students. 5th Edition. Pearson Education Limited. UK

E. MacIntyre. 2005. Business Law. 2nd Edition. Pearson Education Limited. England.

E. MacIntyre. 2007. Essentials of Business Law. 3rd Edition. Pearson Education Limited.

England.