Paper 2.

2(ZWE)
Corporate and
Business Law
(Zimbabwe)

PART 2

TUESDAY 4 DECEMBER 2001

QUESTION PAPER

Time allowed 3 hours

This paper is divided into two sections

Section A SIX questions ONLY to be answered

Section B TWO questions ONLY to be answered

Section A – SIX questions ONLY to be attempted

1 ‘More than a century after the reception of Roman-Dutch law as the common law of Zimbabwe, customary law
continues to play a significant role in the lives of the majority of the country’s citizens’.
Explain and discuss this statement with particular reference to the place of customary law in the legal system of
Zimbabwe. (10 marks)

2 Compare and contrast a private company and a public company in terms of the Zimbabwean Companies Act,
Chapter 24:03. (10 marks)

3 The relationship between the principal and agent creates obligations for both parties.

Discuss the nature of each party’s obligations to the other and the remedies available to the aggrieved party in the
event of breach of contract. (10 marks)

4 Outline in general terms, the various ways by which the Companies Act, Chapter 24:03 seeks to preserve and
maintain the share capital structure of the company. (10 marks)

5 Describe the methods by which a partnership comes to an end. (10 marks)

6 ‘If whatever a man’s real intention maybe, he conducts himself so that a reasonable man would believe that he was
assenting to the terms proposed by the other party and that other party upon that belief enters into the contract with him,
the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s termsl.l.l.’
Analyse and discuss the approach of the Zimbabwean courts towards contracts that are based on the doctrine of
quasi-mutual assent. (10 marks)

7 ‘A contract induced by undue influence is voidable at the option of the weaker party . . .’
Explain and discuss. (10 marks)

8 ‘Where the merx is sold voetstoots, it has been held that the seller who does not act fraudulently is not responsible for
any hidden defect in the property itself or any defect in the title, or area of the property . . .’
Illustrating your answers with appropriate authorities, explain the rationale that underpins voetstoots sales.
(10 marks)

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Section B – TWO questions ONLY to be attempted

9 Jonasi, a newly qualified estate agent, has left his first employer in Harare who specialises in obtaining sites for the
establishment of petrol stations. Jonasi intends to start a new estate agency in the Chiredzi area about four hundred
kilometres away. Jonasi gave his employer as required by the terms of his contract three months’s notice. However as
he was leaving work on the last day, his employer, Musanyare, said:
‘Well I wish you luck but don’t try and start up an estate agency in this country as the terms of your contract
with me state that you would not practice as an estate agent anywhere in Zimbabwe or in the SADC region for
four years after leaving my employ. You can be sure that I will enforce this to the hilt . . .’
Jonasi seeks your advice as to whether this clause can be enforced against him by Musanyare. He states that he is only
interested in dealing with ranching land and in fact is utterly sick of petrol stations.
Advise Jonasi. (20 marks)

10 Jeremiah Usavi is a member of Kushinga (Pvt) Limited, a company duly registered in terms of the laws of Zimbabwe.
The company manufactures footwear. Since its date of incorporation in 1995, the company has not filed any returns
with the office of the Registrar of Companies. The latest audit statement for the company shows that the liabilities
exceed its assets and it is unable to pay its debts. Moreover the factory which constitutes its principal asset was
destroyed in a recent fire. The factory was not insured.
In spite of the companies’ numerous difficulties, two of the directors of Kushinga (Pvt) Limited Mr and Mrs Pfumai
recently resolved to purchase a state of the art Mercedes Benz for use by the Managing Director, Mr Pfumai who is the
controlling majority shareholder with 60% of the shares. You are approached by Jeremiah Usavi a minority shareholder
with 25% of the shares who strongly disagrees with the decision to purchase the Mercedes Benz. The rest of the shares
(15%) are controlled by Mrs Pfumai, the wife of the Managing Director, who condones her husband’s behaviour.
Required:
Advise Jeremiah on
(a) His legal position in these circumstances.
(b) The probable consequences to the company in respect of the above facts.
(20 marks)

3 [P.T.O.
11 (a) On 31 December 2000, Mambure hired a room at the Chase the Wild Hotel for a fixed amount per month in terms
of a verbal agreement with Svikai, the hotel receptionist. Mambure moved into the hotel on 1 January 2001 and at
Svikai’s request signed the hotel register. At the top of the register he filled in his name, date of arrival, tariff and
nationality. He then signed the register at the bottom of the page. Above his signature was a printed passage which
read,
‘The proprietor shall not be responsible for loss or damage to property brought onto the premises, whether
arising from fire, theft or otherwise by whomsoever caused or arising from negligence or wrongful act of any
person in the employ of the proprietor. Money or valuables may be handed to the proprietor for custody and a
special receipt will be issued accordingly. All visitors, whether or not they occupy rooms are deemed to
contract with the proprietor on this basis.’
A week later certain clothing and personal effects were stolen from Mambure’s room.
Required:
Advise Mambure about his legal position in relation to Chase the Wild Hotel Company. (10 marks)

(b) There is a terrible storm one night and Michael notices that a window in the house of his next-door neighbour,
Lillian has been broken by a branch which has fallen from a tree in the neighbour’s yard. The neighbour is away for
two months and Michael fearing that burglars might enter the house through the window buys a pane of glass and
putty and repairs the window. The account for the glaze and putty is sent to Michael and when Lillian returns from
her holiday overseas, Michael tells her the whole story and asks her to pay the account. Lillian refuses to pay
contending that Michael had no authority to act as he did and that she is certainly not going to pay the account.
Required:
Advise Michael as to whether or not Lillian is liable for the expenses associated with the window repairs.
(10 marks)
(20 marks)

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12 (a) You are consulted by Ngoni Nhidza, a sole shareholder carrying on business as Nhidza Trading Company (Pvt) Ltd
in Tafara Township, a high density surburb situated 15 kilometres from Harare city centre. He informs you that five
days ago, he received a summons claiming payment of the sum of $200 000·00 as damages arising out of an
incident in which two guard dogs at the premises allegedly attacked a customer, Maria Tembo without provocation
resulting in the customer sustaining severe injuries all over her body. You are further informed that the dogs’
vaccination certificates identify the owner of the dogs as Nhidza Trading Company (Pvt) Ltd although the summons
bears his individual name.
Required:
Advise Ngoni Nhidza as to the question of his liability towards Maria Tembo. (10 marks)

(b) The bridal suite at Funtime Hotel (Pvt) Ltd is a detached rondavel. To improve the attractiveness of the suite, the
hotel orders from Evernice Furnitures an enormous circular bed to be specially made for $100 000·00. Before
Evernice Furnitures have started making the bed, the rondavel is struck by lightning and totally destroyed. The hotel
management writes to Evernice Furnitures informing them of the rondavel’s destruction and requesting them not to
make the bed as it would be too big for any other room in the hotel. Evernice Furnitures reply that they are going
ahead with the making of the bed and will demand the contract price of $100 000·00 on delivery.
Required:
Advise the hotel management as to the question of liability towards Evernice Furnitures. (10 marks)
(20 marks)

End of Question Paper