Professional Documents
Culture Documents
Commercial Transactions
Commercial Transactions
There are two registries in the High Court: the Principal Registry (in Lusaka)
with District Registries (in Chipata, Livingstone etc) and the Commercial
Registry. The commercial registry is specifically designed to fast track the
adjudication of commercial disputes. The creation of the commercial list
(established on 3rd April 2000) arose from an amendment to the High Court
Act in 1999 and brought about Order 53 of the High Court Rules. Order 53 was
published under S.I No. 29 of 1999 and O.53, together with the Practice
Direction of 2000, contain the Rules regulating commercial actions. It is
necessary to stress that the other rules in the High Court Act apply to
commercial actions. E.g. it is permissible to obtain judgment in default of
appearance and defence if the defendant fails to appear. All that is required is
that before default judgment is entered, the plaintiff must file into court an
affidavit of service together with an acknowledgement of service as, once
judgment is entered, it cannot be reversed except for very good reason.
The commercial list was created as a fast track court for the sole purpose of
expediting court decisions in commercial disputes. It has its own unique rules
In O.53 and the 2000 Practice Directions. Before a Writ and Statement of
Claim are issued a Counsel must consider whether to file the action in the
Principal Registry or the Commercial Registry. The decision will of course be
based on O.53, rule 5(2). Counsel must consider the issues of fact, the law and
the procedure to be followed before proceeding to file an action in the
Commercial List Registry.
The High Court Rules, as amended in 1997, require that the Writ of summons
be accompanied by a Statement of Claim, and that the Memorandum of
Appearance be accompanied by a Defence. This applies to both the General
List and Commercial List
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Writ of summons & Statement of Claim Writ of summons & Statement of
Claim1
Memorandum of appearance & Defence Memorandum of appearance &
Defence
Note: In Commercial actions the Statement of Claim must state in clear terms
the material facts upon which the plaintiff relies and above all must show a
clear cause of action, failure to which the action may be struck out, set aside
or dismissed summarily - see Practice Direction rule 1. [Note: Dismissal -
cannot have the action restored, a new action has to be commenced. Set
aside - used to set aside a default judgment. The action can then proceed
normally. Struck out - must make an application to restore the action to the
active cause list.]
As in the General list, the defence must specifically “traverse” (i.e. concede or
rebut each allegation of fact, paragraph by paragraph) every allegation of fact
made in the Statement of Claim. A general or bare denial is not allowed. The
defendant who fails to meet these requirements is deemed to have admitted
the allegation(s) not specifically traversed, and, in an appropriate case, the
plaintiff may be entitled to enter Judgment on admission. [See Kawambwa Tea
Co. (1996) Ltd. v Zygo Bonsai Ltd. SCZ Appeal No. 11 of 2003 - the SCZ upheld
a High Court decision as the defence just made bear denials without
explanations]. 14 Days after the filing of the Memorandum of Appearance and
Defence, a Judge shall summon the parties to a Scheduling Conference.
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Each Statement of claim must clearly state the material facts upon which the plaintiff relies. It must
show a clear cause of action, failing which the statement of claim may be struck out, set aside or the
action may be dismissed summarily
2
The Scheduling Conference:
(a) Who should attend? It is important that the lawyers who are personally
seized with the conduct of the case attend the conference, as the
scheduling of events and the directions for the trial ought to be agreed
upon by counsel on both sides and the Judge. Having committed
themselves at the Scheduling Conference, the lawyers will know what
has been agreed upon and will therefore not be expected to advance
any excuses for non-compliance.
(b) What happens at the Scheduling Conference? The aim of the
conference is to chart the course of events in the case. Since all matters
in the Commercial List are judge driven, the judge, in consultation with
the parties gives directions. By agreement the directions will cover:
a. Reply, if any.
b. Defence to counter-claim, if any.
c. Discovery by List as agreed.
d. Inspection.
e. Exchange, and filing, of bundles of pleadings and documents
f. Statements of Witnesses
g. Skeleton arguments and authorities
h. Number of witnesses to be summoned by each party
i. Time required by each party to conduct its case - see PD rule 4
j. Date of the status conference
k. Trail date (although this may be agreed later at the status
conference).
At the scheduling conference, the judge may refer the parties to mediation or
arbitration. The Judge will also consider if the Statement of Claim and Defence
comply with the rules (i.e. clarity, materiality, clear cause of action, specific
traverse of allegations). As stated, the Statement of Claim may be struck pout,
set aside or dismissed or the Defence may be deemed to be an admission and
Judgment entered on admission.
Assuming the last pleading before the scheduling conference is the defence,
then after the defence is the reply, then there is discovery and exchange of
documents and a date is set for filing the “bundles” and for the “Status
Conference”. At the Status Conference the judge and the parities will
ascertain if the parties are ready and have complied with the orders for
directions given at the Scheduling Conference. I.e. held to see if the orders
made at the scheduling conference have been observed, assess if the parties
are ready and set the date of the trial (if not already done so).
Note: Interlocutory applications may be made at any time. When making the
application, the applicant shall, together with his application, file a skeleton
argument of his case stating the facts relied upon; the law and citing any
authorities relied upon with copies of such authorities. The respondent is
required to do the same. All interlocutory applications are made to a Judge in
Chambers having conduct of the case and not the Deputy Registrar. In all
interlocutory applications (e.g. application that the plaintiff provided further
and better particulars), the applicant must file with the application, skeleton
arguments, the law (e.g. summons to restore pursuant to O ….. of the HCR)
and cite any authorities relied upon and, where possible, with copies of such
authorities. The respondent is also required to file the same.
Class note: The high court rules have been amended to the extent that other divisions
for the high court for Zambia there is now a scheduling conference and statuts
conference and also a witness statement are now used in all the divisions.
Witness statement:
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Are used because they make the process faster and cheaper because once witness
statements are filed and the matter goes to trial the witness statement is used as
evidence in chief. When you save time you also save money. Read order 38 (2) and
38 (2) (8A) of the white book.
A witness statement should contain all the relevant facts to the claim, defense and
counter claim. In the sequence of things the witness statement is prepared and filed
long after the bunder of documents.
1. Full name
2. Residential address
3.
4. Occupation
5. Name of employers
6. It must also state that the witness is a party to the proceedings or an employee
or an agent to the proceedings
Adjournments
A judge shall not grant an application for an adjournment except in compelling
and exceptional circumstances. PD rule 5 says “Where a party requests an
adjournment, and the Judge, while granting an adjournment is of the view
that the reasons for the adjournment are not very firm, the Judge may, apart
from awarding costs to the opponent, condemn the party requesting the
adjournment to a hearing fee2 to be paid to the Court. Such fee shall be paid
before the matter proceeds.” I.e. these must be paid before the next hearing
date. If the party condemned to pay the court hearing fees is not the applicant
and he fails to pay the fees before the next return date, the applicant shall be
granted his application. If the party condemned to pay the court hearing fees
is the applicant and he fails to pay the fees before the next return date, his
application will be dismissed.
2
Now K 300,000 - up from K 150,000 in 2005.
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In the event that counsel cannot appear in person, counsel can seek an
adjournment through an agent or by notice of motion accompanied by an
affidavit explaining the reasons for non-appearance. No application for an
adjournment by letter will be accepted.
SUMMONS TO RESTORE
O ….. of the HCR
________________________________________________________________
Finally, if after an action has been filed, 60 days elapse without any progress
being made in the case, the rules state that the action shall be taken to a
judge for dismissal. This makes it necessary for counsel to ensure that
progress is served as quickly as possible. C.f. in the General list where you
have to file an application to dismiss for want of prosecution. Under O 53 rule
13, time determines dismissal in the commercial list.
Practice directions require the applicant to serve process on the other party
and show proof to court of such service by producing as an exhibit a letter of
service enclosing the process that was signed. After service, if no
Memorandum of Appearance accompanied by the Defence is filed and served,
counsel for the plaintiff must file an affidavit of service together with the
acknowledgment of service and the default judgment.
MORTGAGES
A mortgage is a disposition of property as security for a debt. A mortgage can
be created by a demise3 of land, by a transfer of a chattel or by a charge on
any interest in real or personal property for securing money. The security is
redeemed on payment or discharge of the debt.
Characteristics of a mortgage
(a) It is a personal contract for the payment of a debt.
(b) It is a disposition or charge of the mortgagor’s estate or interest as
security for the repayment of the debt.
3
Demise - conveyance/transfer of an interest in land.
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Types of Mortgage
Legal mortgage: created by the demise of land or a legal charge 4. It must be
created in writing by a deed. The effect of a legal mortgage by demise is to
vest the legal estate in the term of years created by such demise in the
mortgagee5 who is immediately entitled to possession of the property upon
execution of the deed. The mortgagor’s6 legal estate in the reversion7 of the
term of years is not transferred to the mortgagee until the right of redemption
is destroyed by foreclosure8.
As a general rule, all property, real or personal, may be the subject of a legal
mortgage and can also be charged in equity.
4
Charge - in property law, a charge is a form of security for the payment of a debt or performance of
an obligation, consisting of the right of a creditor to receive payment out of some specific fund or out
of the proceeds of the realisation of specific property. The fund or property is said to be charged with
the debt thus payable out of it.
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Mortgagee - person to whom property is mortgaged, the lender of the mortgage debt.
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Mortgagor - person who mortgages his property as security for the mortgage, the borrower of the
mortgage debt.
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Reversion - where land is granted by the owner for a less estate or interest than he himself has, his
undisposed of interest is terms the reversion as the land will revert to the owner on the
determination of the particular estate.
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Foreclosure - when a mortgagor has failed to pay off the mortgage debt within the proper time the
mortgagee is entitled to bring an action in the Chancery Division by writ or originating summons
asking that a day may be fixed on which the mortgagor is to pay off the debt and that in default of
payment on that day the mortgagor may be foreclosed of his equity of redemption. The court may
make an order for foreclosure nisi for payment of the principal with interest & costs usually within 6
months, failing which an order absolute will be made, land thereupon becoming the property of the
mortgagee.
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Mortgagor’s Equity of Redemption
A mortgagor has the right to redeem the mortgage i.e. pay off the debt and
get back his property. This is the mortgagor’s Equity of Redemption. This right
continues even if the mortgagor fails to pay his debt in accordance with the
provisions for payment/ redemption. This right arises from the transaction
being considered a mere loan of money, secured by a pledge of the estate. For
this reason, any provision in the mortgage deed which tends to prevent
redemption on the payment of the debt or performance of the obligation for
which the security was given is considered to be a “fetter” or “clog” on the
mortgagor’s equity of redemption and is VOID. The mortgagor’s right to
redeem is so inseparable from the mortgagor that it can’t be taken away even
by the express agreement of the parties. [See: Esso Petroleum Co. Ltd. v
Harper’s Garage Ltd. [1967] 1 All ER 699, or [1968] AC, 269]. The mortgagor’s
right of redemption continues until the mortgagor’s title is extinguished or his
interest is destroyed by the sale of the property e.g. pursuant to a court order
to foreclose.
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Mortgagee’s Remedies
When the mortgagor defaults the mortgagee is entitled to pursue the
following remedies concurrently:
(i) Payment of the Principal and Interest: This remedy is in accordance
with the mortgagor’s covenant in the mortgage deed to pay the
principal and interest on or after a certain date.
(ii) Possession: The Mortgagee is also entitled to possession of the
mortgaged property. In the case of land that has a dwelling house
on it, the remedy of possession is subject to the limitation that the
court has the discretion to delay the making or enforcement of a
possession order if it considers that the mortgagor is likely to pay
any money due under the mortgage within a reasonable time. The
effect of physical possession is that if the property is on lease, the
mortgagee receives the rent, thus depriving the mortgagor of this
benefit.
(iii) Foreclosure and Sale of the Mortgaged Property: This remedy is
available to the mortgagee after the date for redemption expires. A
power of sale does not include the right to sell to the mortgagee
himself – see Dapontev v Schubert [1939] 3 All ER 495; S. Musonda
(Receiver for the First Merchant Bank Ltd.) v Hyper Food Products
Ltd. and Others SCZ Judgment No. 16 of 1999. The right to foreclose
on a mortgaged property an only be effected by an order of the
court. The mortgagee will first apply for and obtain a foreclosure
order nisi from the court which gives an opportunity to the
mortgagor to redeem the mortgage within a specified period. In
default of payment by the mortgagor, the foreclosure order nisi will
become absolute thereby destroying the mortgagor’s equity of
redemption. [Note: After the sale, the mortgagor must account to
the mortgagee if there is any surplus over the mortgaged amount. If
there is a deficit, the mortgagor can still pursue the mortgagee for
the balance.]
(iv) Appointment of a Receiver (or Manager): A mortgagee may apply
for the appointment of a receiver or manager by the court where
the mortgagor breaches any of its obligations under the mortgage
or if the security is endangered. A receiver may only be appointed if
the mortgagor is a limited company.
Mortgagor’s Remedies
In the appropriate circumstances the mortgagor is entitled to pursue the
following remedies:
(i) Possession: This remedy arises when the mortgagee refuses to
deliver up possession of the mortgaged property after payment and
discharge of the mortgage.
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(ii) Redemption: This is simply the mortgagor’s right to redeem the
mortgage.
(iii) Surrender or Release: The mortgagor is entitled to this remedy
when a mortgagee refuses to release the security e.g. refuses to
give up the title deeds of the mortgaged property.
ORIGINATING SUMMONS
Pursuant to Or 30, rule 14
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court said “a mortgage or charge by a company, which contains the following
characteristics, is a floating charge:
(1) If it is a charge on a class of assets both present and future,
(2) If that class is one which, in the ordinary course of business of the
company will be changing from time to time;
(3) If it is contemplated by the charge that, until some future step is taken
by or on behalf of the mortgagee, the company may carry on its
business in the ordinary way so far as concerns the particular class of
asset so charged.”
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The operation of a floating charge is usually restrict6ed by a provision in the
debenture that the company shall not create a mortgage or charge on any of
the assets, ranking in priority to, or parri passu9 with, the charge given by the
debenture.
“A crystallised charge will bite on all the assets covered by the charge
since a floating charge does not normally provide for crystallization over
a part only of the assets to which it relates. The effect of the
crystallization is to deprive the company of the authority to deal with the
assets subject to the charge in the normal course of business”.
Guarantees
In certain situations, security for a loan may be provided by a surety under
a contract of guarantee. A guarantee is a contract by which the promissor
i.e. the guarantor or surety, undertakes to be answerable to the promisee
or creditor for the debt or default of another party who is called the
principal debtor or borrower. A guarantee is usually referred to as a
collateral contract and is different from an original contract between the
creditor and the borrower. A guarantor is discharged if the principal
debtor performs the obligation guaranteed, i.e. he pays the debt.
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They are at par, they are the same or equal
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guarantor’s consent or (b) if the principle obligation i.e. the obligation to
pay is itself discharged.
Offeror (Guarantor)10
Guarantor’s Liability
There are two kinds of Guarantors Liability:
2nd: A promise that the principal debtor will perform his obligations to the
creditor.
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unless the borrower defaults, the creditor cannot sue as the guarantor’s
liability a\only arises when the principal debtor is in default and not until
then.
AGENCY
An agent is a person who negotiates and concludes commercial/business
transactions on behalf of another called the principal. E.g. insurance brokers,
estate agents, auctioneers, travel agents. It is an established principle of law
that a person cannot acquire rights or duties under a contract unless he/she is
a party to that contract (privity of contract). However, if a contract is
concluded by an agent on behalf of his principal, the acts of the agent are
treated as if they are the acts of his principal. I.e. the principal steps into the
shoes of his agent and becomes a party to the contract through his agent. In
law, agents are recognized as having the power to affect the legal rights,
liabilities and relationships of the principal. In Cavmont Merchant Bank v
Amaka Agricultural Holdings SCZ Judgment No. 12 of 2001, the SCZ held that
where an agent in making the contract discloses both the interest and the
names of the principal on whose behalf he purports to make a contract, the
agent as a general rule is not liable to the other contracting party.
Apart form having the power to affect the legal rights, liabilities and
relationships of the principal, the agent may also affect the legal position of
his principal in other ways. E.g. he may dispose of the principal’ property in
order to transfer ownership to a third party or he may acquire property on his
principal’s behalf. Sometimes the actions of the agent may make the principal
criminally liable [see Gardener v Ackeroyd [1952] 2 QB 743 or 2 All ER 306].
The law recognizes the following as agents even though they do not bear the
title of agent:
(a) Company Directors and other company officials - being an artificial person,
a company has to act through human agents. Then authority to act as
company agents is vested in the board of directors. This authority may be
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delegated to one or more executive directors by the articles of the
company to allow him to manage the day-to-day operations of the
company.
(b) Partnerships - as a partnership has no separate legal identity from its
members, every partner in a firm is an agent of the firm as well as all other
partners for the purpose of the business of the firm. Thus, a partner who
performs an act for the purpose of carrying out the business of the firm,
binds the firm as well as the other partners.
(c) Employees - may be servants working under a contract of service or an
independent contractor working under a contract for services. An
employee e.g. a shop assistant is the agent of the shop owner for the
purposes of making a contract of sale for the owner. He has the authority
to make statements about goods that are binding on the shop owner, his
employer.
(d) Professionals - acting on behalf of clients may be the agents of those
clients. E.g. a lawyer conducting litigation is his client’s agent and may have
authority to settle the case and that settlement will bind the client. Thus
the lawyer, not the client, normally signs a consent judgment. Similarly, an
accountant’s agreement or statement to ZRA will bind his client in
accordance with agency principles.
As the relationship between the agent and his principal is based on consent,
actual authority is of paramount importance. An agent is only entitled to be
paid if he acts within his actual authority. If he acts outside his authority he
may be liable to his principal. The relationship between the principal and a
third party depends on the agent’s power to bind his principal. However, what
is of concern to the third party is the agent’s apparent authority as this is what
he relies on in the ordinary course of events. The distinction between actual
and apparent authority was explained by Diplock L.J. in Freeman & Lockyer v.
Buckhurst Park Properties [1967] 2 QB 480.
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Types of Authority of An Agent
[A] Express Authority - the agreement between a principal and agent may be
express or implied. Express agreement may be made orally, in writing or by
deed. In general, if an agent is appointed to execute a deed his appointment is
by deed called a power of attorney.
[B] Implied Authority - arises where, although a particular action is not
sanctioned by express agreement between the principal and the agent, the
principal is nevertheless taken to have impliedly consented to the action or
transaction in question. In Garnac Grain Co. v. H.M.F. Faure and Fairclough
[1967] 2 All ER 353 the House of Lords stated at p. 358 “The relationship of
principal and agent can only be established by the consent of the principal and
agent. They will be taken to have consented if they have agreed to what
amounts at law as a relationship even if they do not recognize it themselves
and even if they have professed to disclaim it. An agent who has express
authority to carry out a particular task may also have additional authority to
do certain acts incidental to his authorized task For instance, an agent
authorized to sell the principal’s property has implied incidental authority to
sign a contract of sale.”
[C] Apparent Authority - a person may be bound by the acts of another done
on his behalf without his consent or even in breach of an express prohibition if
his words or conduct create the impression that he has authorized the other
person to act on his behalf. This is described at law as “apparent agency or
authority” or “ostensible agency or authority”. Apparent authority can be
inferred in the following situations:
(a) X is appointed to act as Y’s Managing Director, but Y expressly places a
limitation on X in that he can only enter into a contract with a third party
worth more than K 50m if he first gets the approval of the Board of
directors. X then orders goods worth K 100m from a third party who is
unaware of the limitation of X’s actual authority. Here, X has apparent
authority to buy the goods and Y is bound by the contract.
(b) X is appointed to act as Y’s agent but his agency is terminated. Thereafter X
continues to act and enters into a contract with a third parry who is
unaware of the termination. Y is bound as the principal. [See: Drew v Nunn
[1879] 4 QBD 661].
(c) X is never appointed to act as an agent but Y allows him to act as if he
were or leads a third party to believe that X is Y’s agent. Y will be bound to
a third party in transactions entered into by X on his behalf and within the
scope of his agency.
[D] Agents of Necessity - A person who acts in an emergency e.g. to preserve
the property or interest of another may be treated as an agent of necessity.
His actions will be deemed to have been authorized even if no actual authority
is given. Like apparent authority, an agency of necessity can arise even in the
absence of consent from the principal. Note: an agency of necessity only
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arises in extreme circumstances where there is actual and definite commercial
necessity for the agent’s actions. The following must be satisfied for an agency
of necessity to exist:
(a) There must be an emergency - something unforeseen.
(b) It must be practically impossible to get instructions fro the principal.
(c) The agent must act bona fide in the interest of the principal rather than
to advance his own interests. He must not take advantage of the
principal.
(d) The agent must act reasonably in the circumstances.
An agency is common in a situation of carriage of goods by sea. It is universally
accepted that a caption of a ship may take such action in relation to the ship,
and/or its cargo in an emergency, as he deems appropriate for the purpose of
preservation. He may e.g. sell or pledge the cargo to raise capital to repair the
ship or he may incur expenses on behalf of the owners in order to preserve
the cargo. He may also throw overboard (jettison) part of the cargo in the case
of extreme danger in order to lighten the ship. In respect of perishable goods
or livestock, an agent of necessity may also apply to cases of goods carried by
land. Agency of necessity creates privity of contract between the principal and
the third party e.g. when the agent arranges d\for a third party to store the
goods of the principal. An agent can also rely on the necessity either to
provide him with a defence to a claim from the principal for wrongful
interference with his property or as a basis for claiming expenses that he has
incurred in preserving the principal’s property.
[E] Agency arising out of Co-habitation - It is argued that a wife has authority
to pledge the credit of her husband for necessities (or vice versa). This is
inaccurate for two reasons:
(a) The rule applies also to non-married couples who are cohabiting as
there is a presumption f marriage creates by the cohabitation.
(b) Cohabitation does not give rise to authority but to a rebuttable
presumption that the husband gave his wife such authority. The
husband can deny he gave authority to the wife by rebutting the
presumption by showing:
a. The wife is adequately supplied with necessities.
b. The wife is provided with an adequate allowance
c. The wife has been forbidden to pledge his credit.
However, others argue that social conditions now make it old fashioned to
suggest that actual or apparent authority should not arise between husband
and wife.
[F] Ratification of Agent’s Actions - Notwithstanding the absence of the
agent’s actual or apparent authority, a principal can nevertheless adopt the
agent’s acts done in his name without his authority by ratifying them, unless
the acts ore to his detriment. The requirements for effective ratification are:
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(a) The principal can only ratify acts done in his name i.e. the agent must
have purported to have authority and not to have acted in his own
name. See Watteau v. Fenwick [1893] 1 QB 346; Keighley Maxted and
Co. v. Durant [1901] AC 240.
(b) The principal must have been in existence at the time of the agent’s
actions done on his behalf. This requirement may cause problems for
promoters of companies who enter into contracts before the company
is incorporated and they cannot be ratified after incorporation.
Promoters making pre-incorporation contracts are personally liable
unless there is agreement to the effect that the company, once
incorporated, shall be substituted for the promoters.
(c) The principal can only ratify a contract/transaction if he is competent
to make it at the time of the agent’s actions and at the time of
ratification. E.g. a minor cannot effectively ratify a contract after
attaining majority if the contract would not have bound him when he
was a minor. Similarly a company cannot ratify a contract that is ultra
vires its articles of association.
Effect of Ratification
When a principal ratifies a contract made in his own name, the effect is as if
the agent had been authorized at the time of his actions. Therefore, if the
agent made a contract with a third party on behalf of the principal, a privity of
contract will exist between the third party and the principal. At the same time
the relationship of principal and agent will also exist. When the principal
ratifies the agent’s actions, the agent is not liable for exceeding his authority
and may be entitled to the rights of an agent (e.g. remuneration). Similarly, a
third party cannot have a claim against the agent for breach of warranty of
authority. Ratification may also have retroactive effect on the third party in
that if he makes an offer to the agent that the agent accepts on behalf of the
principal who subsequently ratifies it, the third party is bound, even if he
purports to withdraw his offer before ratification. See: Bolton Partners v
Lambert [1889] 41 Ch D 295. ratification will only be effective if it takes place
within a reasonable time. Ratification will not be effective where third parties
have acquired property rights, which would be adversely affected by
ratification.
Method of Ratification
A principal may expressly or impliedly ratify an agent’s actions. He may
impliedly do so by any act that unequivocally shows his intention to ratify e.g.
if he starts legal proceedings to enforce the contract with a third party which
the agent entered into on his behalf. See: Bedford Insurance Co. Ltd v.
Instituto de Resseguros do Brasil [1985] QB 966; [1984] 3 All ER 766.
Duties of An Agent
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Whether there is a contract between the principal or not, the law imposes a
number of duties on an agent.
(a) Duty to Obey Instructions - An agent is under a general duty to obey
his principal’s instructions. He is contractually obliged to perform the
duties he has undertaken to do under the contract and if he breaches
or fails to perform these obligations, he is liable for breach of contract.
A contractual agent is under a duty to obey the instructions of his
principal given in during the course of agency, but is not obliged to
obey instructions which require him to act illegally. Moreover, the duty
of a professional agent to obey instructions may also be limited by the
rules of professional conduct. The agent’s duty of obedience also
means he must not exceed his authority and this applies to both
contractual and gratuitous agencies.
(b) Duty to Exercise Reasonable Care: An agent owes his principal the duty
of reasonable care in executing his authority. The standard of care
required is what is reasonable in the circumstances and this will
depend o the facts of each case. If an agent holds himself out to be a
member of a profession, he will be expected to show the standard of
skill and care expected of a reasonably competent member of that
profession [Note a SC will be expected to show and have higher
competence than a newly qualified legal practitioner]. Also it is an
established principle of law that even a gratuitous agent owes a duty of
reasonable skill and care to the principal. E.g. Chaudhry v. Probhakar
[1988] 3 All ER 718; [1989] 1 WLR 29, CA. – the principal, who had
recently passed her driving test, wanted to buy a car and being
inexperienced asked the agent, a friend, to find a suitable car and
specified that it should not have been involved in an accident. The
agent, who was not a mechanic, and acted gratuitously, found and
recommended a one year old VW Golf car being sold by a firm of panel
beaters and paint sprayers. The principal bought the car but later
discovered that it had been badly damaged in an accident. She sued
and the agent sought to rely on old cases as to the standard of care of
gratuitous agents. He Court of Appeal held that the standard of care of
any agent is such as is reasonable in all the circumstances. In deciding
what care is reasonable, the court will take into account the fact if the
agent was paid or not, the degree of skill possessed or claimed by the
agent, and the degree of reliance placed on the agent by the principal.
On the facts of this case, the agent had failed to exercise reasonable
skill and was held to be liable.
(c) Agent’s Fiduciary Duties: An agent has extensive powers to affect the
principal’s legal position and the principal must place trust in the agent.
Thus the law regards the relationship between the agent and his
principal as being one of a fiduciary nature and therefore imposes
certain obligations on the agent so that the principal can be protected
19
against abuse of a agent’s powers to bind him to a third party. These
duties can be equated to those of trustees and directors of a company.
Fiduciary duties are:
a. Duty to avoid Conflict of Interest - a rule of universal application
is that a person who has fiduciary duties to perform shall not be
allowed to enter into engagements in which he has/can have
conflicting personal interests or interests which may conflict
with the interests of his principal. Arid\sing from this rule, an
agent instructed by his principal to but property but sells his
own property to the principal will be in breach of his fiduciary
duty. See: Lucifero v Castel [1887] 3 Times LR 371 - an agent
appointed to buy a yacht bought it himself and then resold it to
the principal for a profit. Agent had to pay the profit to the
principal. Similarly, an agent instructed to sell the principal’s
property and buys it himself will also be in breach of his fiduciary
duty as in both situations there is the obvious potential for
conflict of interest as the seller’s interest is to get the highest
possible price while that of the buyer is to pay as little as
possible. Whether the agent acted fairly and paid a fair price is
immaterial and is in breach of his fiduciary duty unless there is
full disclosure to he principal of all the relevant facts and the
principal consents to the transaction. The duty to avoid conflict
of interest may continue even after the end of the agency if a
confidential relationship is created by the agency continues or if
it gives the agent a special position of dominance over the
principal and the transaction is connected with that relationship.
See: McMaster v Byrne [1952] 1 All ER 1362. Also the decision in
McPherson v Watt [1873] 3 AC 254 demonstrates that an agent
will still be in breach of duty even if he deals with the principal
through a third party. Here the agent was instructed to sell
property but arranged for his brother to buy it for him. When
the principal discovered, he refused to complete and the court
refused to order specific performance because of the agent’s
breach of duty. Where an agent deals with his principal in
breach of this duty, the principal may rescind the contract. Many
professional associations have enshrined rules against conflict of
interest in their codes of conduct e.g. lawyers, accountants.
b. Duty not to make a secret profit - an agent is under a duty not
to make a secret profit out of the transactions that he enters
into on behalf of his principal. It is irrelevant that the agent
acted in good faith or that the principal suffered no loss or that
the agent made a profit that the principal could not have made
or that the principal actually benefited from the agent’s actions.
The liability arises from the mere fact the profit was made. See:
20
Phipps v Boardman [1964] 1 WLR 993. Note: this duty also
applies to unpaid or gratuitous agents. An agent who makes a
profit will be in breach of the duty unless all of the
circumstances are disclosed to the principal and the principal
consents to the agent retaining the profit. Where the duty is
breached by the agent he may be required by the principal to
account for the secret profit.
c. Duty not to take a bribe - a bribe is a form of secret profit.
Where an agent deals with a third party on the principal’s
behalf, a bribe is any payment made by the third party to the
agent, the third party knowing that the agent is the agent off the
principal and the payment is kept secret from the principal. See:
Industries and General Mortgage Co. Ltd. v Lewis [1949] 2 All ER
573. When an agent makes a secret profit, the principal has
recourse to the following remedies:
i. To dismiss the agent without notice.
ii. Refuse to pay any commission due to the agent or
recover commission paid to the agent prior to the
discovery of the bribe.
iii. The principal may rescind the contract with the third
party.
iv. The principal may claim the money i.e. the bribe from
either the third party or the agent.
Termination of Agency
The relationship between principal and agent depends on consent. If
withdrawn, the agency will automatically end, as well as the agent’s actual
authority to bind the principal. An agency relationship may be terminated in
the following ways:
21
(a) By mutual consent between the agent and the principal.
(b) By either party unilaterally withdrawing consent.
(c) An agent may have been appointed for a fixed period of time or for a
specific task or set of tasks. Once the time elapses or the task(s) is/are
completed the agency will terminate.
(d) By operation of law e.g. if the performance of the agency relationship
becomes illegal (e.g. one party becomes the citizen of an alien enemy)
or impossible (where it will be ended by the agency contract being
frustrated). Death of either party will also terminate the agency and
any contract made between them. If an agent becomes insane, the
relationship is automatically terminated. The bankruptcy of either the
agent or the principal will also end the agency.
If an agent continues to act after his authority has been terminated, he may
incur personal liability for breach of implied warranty of authority. Sometimes
an agent may suffer a potential risk when his authority is terminated
automatically without his knowledge. See: Yonge v Toynbee [1910] 1 KB 215
where solicitors were acting in a litigation for a client who, unknown to them,
became mentally incapacitated so that the agency was considered to be
terminated. However, they continued to litigate for the client and were held
liable for their breach of warrant of authority and were ordered to pay the
costs of the other litigant.
As for persons suffering from mental disorder, the law is that a POA executed
by a person incapable through mental incapacity of understanding what is to
be effected by executing the deed is invalid. A purported grant is also invalid
and anything done on its strength is void. For this reason it is immaterial that
neither the attorney nor the third party was aware of the donor’s mental
capacity.
Duties of an Attorney
These are similar to those of a trustee and include:
(a) To act in accordance with the terms of his authority
(b) To act in the name of the donor.
(c) Not to exceed his authority.
(d) To act with due care and skill.
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(e) Not to delegate his office. [Anderson Security Systems v Albert Risky
Masuka SCZ Appeal No. 3 of 2002]
(f) Not to put himself in a position where his duties as an attorney conflict
with his own personal interest or the interest of third parties.
(g) Not to take advantage of his position to obtain a benefit for himself.
(h) Not to accept any secret commission (bribe)
(i) To keep his donor’s money/property separate from his own.
(j) To account to the donor.
A POA is strictly interpreted by the courts as giving only that authority which it
expressly confers or such authority as is necessarily implied e.g. to get State’s
Consent if asked to sell land. See Bryant Powis and Bryant Ltd. v La Bank Du
Peuple [1893] AC 170, esp p. 177] An ordinary POA is also construed so as to
include all incidental powers needed for its effective execution. Where it
contains a list of specific acts followed by general words, the general words
are construed as being the same kind as the specific acts [Ejusdem Generis
Rule]. If a donor wishes to exclude this rule he should expressly state so in the
POA. Where operative words are clear, such words will prevail over any
recitals but if they are ambiguous they may be controlled by the recitals. See:
Damby v Coults and Co. [1885] 29 ChD 500.
Remuneration
An attorney, like an agent, is only entitled to be remunerated for his services if
the terms of his appointment expressly or impliedly provide for it. If the terms
are not express he may apply for remuneration on a quantum meruit basis, if
the understanding was that he would be remunerated. Even if POA does not
expressly provide for remuneration, the attorney is still entitled to be
indemnified by the donor in respect of costs/expenses incurred by him in the
course of carrying out his functions. To avoid doubt it is advisable to include a
clause in the POA expressly stating whether the attorney shall be
remunerated or not.
Attorney’s Protection
If an attorney purports to act under a POA that has been revoked he is liable
for any loss incurred by the donor and any third party. However, if the
attorney did not know of the revocation of his power he will not incur any
liability either to the donor or to a third party but to escape liability the
act/transaction must be one that would have been authorised but for the
revocation.
Types of POA
First
(a) General POA - gives an attorney full or general powers to act in many
transactions on behalf of the donor i.e. the attorney is given wide
powers over many issues.
(b) Specific POA - gives an attorney authority to perform a specific act e.g.
sell the donor’s property, and he cannot do anything else.
Second:
(a) Ordinary POA - automatically revoked by the intervening mental
incapacity of the donor
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(b) Enduring POA - continues to subsist - given normally to secure either a
proprietary interest of the attorney or the performance of an obligation
owed to the attorney by the donor.
HIRE PURCHASE
Hire Purchase is a form of consumer credit. In Zambia, the Hire Purchase Act,
Cap. 399 of the Laws of Zambia, governs hire purchase agreements. Section 2 -
defines Hire Purchase as follows:
S.5 (2) spells out the consequences if the requirements in s.5 (1) are not
compiled with as follows:
5.(2) If an agreement does not comply with the provisions of subsection (1)
(a) The goods which are the subject of the agreement shall be deemed
to have been sold to the purchaser
(i) without any reservation as to the ownership of the goods or,
as the case may be, without any stipulation as to the seller's
right to the return of the goods; and
(ii) on credit at a price, payable in the same manner as that
stipulated in the agreement, which is twenty-five per centum
less than the purchase price; and
(c) The seller shall not be entitled to enforce any contract of suretyship,
indemnity or guarantee relating to the agreement except, in the case of
an agreement which has been the subject of a cession or assignment,
against a surety or guarantor who was the original seller under the
agreement:
Provided that if, in any action arising out of the agreement, the court is
satisfied that the purchaser would not, but for the provisions of this
subsection, have been prejudiced by the fact that the agreement does not
comply with the provisions of subsection (1), the court may, subject to
such conditions that it thinks just and equitable to impose, order the
parties to carry out the terms of the agreement as if the agreement had
complied with the provisions of subsection (1).
Further section 7 states that the HP agreement must also contain the
following information:
(3) If an agreement does not comply with the provisions of subsection (1) or,
on or after the 8th March, 1960, with the provisions of subsection (2)-
(a) The goods which are the subject of the agreement shall be deemed to have
been sold to the purchaser-
(i) without any reservation as to the ownership of the goods or, as the
case may be, without any stipulation as to the seller's right to the
return of the goods; and
(ii) on credit at a price, payable in the same manner as that stipulated
in the agreement, which is twenty-five per centum less than the
purchase price; and
(b) The seller shall not be entitled to enforce any contract of suretyship,
indemnity or guarantee relating to the agreement except, in the case of an
agreement which has been the subject of a cession or assignment, against a
surety or guarantor who was the original seller under the agreement:
Provided that if, in any action arising out of the agreement, the court is
satisfied that the purchaser would not, but for the provisions of this
subsection, have been prejudiced by the fact that the agreement does not
comply with the provisions of subsection (1), the court may, subject to such
conditions that it thinks just and equitable to impose, order the parties to
28
carry out the terms of the agreement as if the agreement had complied with
the provisions of subsection (1)
Side note: Order XXX – lists the prayers in the High Court.
The hirer has the duty to inform the owner of the whereabouts of the goods
on receiving a written request to do so (until the last instalment the owner is
the owner!)
The hirer has the obligation to pay rent or instalments agreed upon in relation
to the purchase price of the goods.
The hirer is usually given the right to exercise the option to buy the goods by
paying a lump sum at any time during the currency of the HP agreement. (to
save interest, insurance costs etc.)
The hirer must not use the goods for any purpose other than that for which
they were hired and must return the goods to the owner on termination of
the agreement if he fails to complete the purchase.
Termination of a HP Agreement
Can be effected by:
(a) Performance: where the hirer pays all the instalments necessary to
exercise his option to purchase.
(b) Determination of the agreement by either party
(c) Breach by either party amounting to a repudiation of the agreement
(d) Rescission of the agreement for fraud, misrepresentation or mistake.
Partnerships
Section 2 of Partnership Act of 1890 defines a partnership as a “relation which
subsists between persons carrying on a business in common with a view of
profit”. A relation between members of a company is excluded from this
definition. S1(3) – persons who enter into partnership with each other are
collectively called a firm.
11
K 245,000 but registering a business name is only K 80,000.
31
Three Essential Elements of a Partnership
(a) It must be a business
(b) The business must be carried on in common between two or more
partners
(c) Persons carrying on the business must do so for profit and unless the
profit is shared, the partnership relationship cannot exist. Re: Fisher
and Sons [1912] 2 KB 491
Formation of a Partnership
Persons wishing to form a partnership must have the necessary capacity. A
limited company may be a partner so long as it is not ultra vires its articles. A
minor may be a partner but he may repudiate the partnership agreement
while still a minor or within a reasonable after attaining his majority. However,
a minor is not liable for partnership debts incurred during his minority.
Illegal Partnerships
Illegal if formed for a purpose that is contrary to public policy or where the it
cannot be carried on without breaking the law. Where a partnership is found
to be illegal the court will not recognise any rights of the partners inter se i.e.
between the partners themselves. A partnership is automatically dissolved on
the happening of any event that makes it unlawful for the business of the firm
to be carried on.
Duties of Partners
Sections 28 and 30 of the 1890 Act impose the following duties on partners.
(a) Duty to render true account and full information : Partners must give a
true account and provide full information of all things affecting the firm
to any other partner or his legal representative. Law v. Law [1905] 1
ChD 140.
(b) Accountability for private profits: Every partner must account to the
firm for any benefit derived by him without the consent of the other
partners from any transaction concerning the partnership or from any
use by him of partnership property, name, or business connection. E.g.
where a partner uses his position to get a private agreement with the
firm’s customers in relation to goods dealt in by the firm and beneficial
only to himself. He must share the profits he makes with the other
partners because he is abusing his position as a partner for his own
ends and to the detriment of the business. Parthirana v Parthirana
[1967] AC 233.
(c) Accountability for profits from competing businesses: A partner who
carries on a business of the same nature as, and competing with that
of, the firm without the consent of the other partners must be
accountable for, and pay to the firm, all profits made by him in that
business. Trimble v Goldberg [1906] AC 494
Agricultural Credits
These are governed by the Agricultural Credits Act Cap 224. The Preamble
states:
"farmer" means any person who, as owner or tenant of land uses such land
for cultivation, whether for profit or subsistence;
Section 3(1) states: “An agricultural charge may be fixed or floating, or both”.
Section 3(3) states: “A farmer, may, individually or in association, create in
favour of any person a charge on any farming stock, additional asset or other
agricultural asset security for-
(a) inputs or other items required for cultivation;
(b) sums advanced or to be advanced to the farmer; or
(c) sums paid or to be paid on the farmer's behalf under any guarantee;
and such security may also cover interest, commission and charges
thereon”
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Effect of a Fixed Charge
By s.4(1) a fixed charge confers the following rights on the holder of the
charge.
4.(1) A fixed charge shall confer on the holder the following rights:
(a) a right, upon the happening of any event specified in the charge as
being an event authorising the seizure of property subject to the
charge to take possession of any property so subject; and
(b) where possession of any property has been taken, a right, after an
interval of fourteen days or such shorter period as may be specified
by the charge, to sell the property.
“A fixed charge shall impose on the farmer, trader or related business, the
following obligations:
(a) an obligation whenever the farmer, trader or related business sells any of
the property, or receives any money in respect of any asset, comprised in the
charge, forthwith to pay to the holder the amount of the proceeds of the sale
or the money so received, except to such extent as the charge otherwise
provides or the holder otherwise allows, and any sum so paid shall be applied,
except so far as otherwise agreed by the holder, in or towards the discharge
of moneys and liabilities secured by the charge:
Provided that if the holder is a related business, the farmer or trader shall not
sell, except as provided under this section, the commodity for which he
received loans or advances of inputs or other items required for cultivation
but shall deliver to the holder the agricultural commodity in the amount
agreed in the charge;
I.e. moneys received from the sale of any property comprised in a charge or
from insurance on that property should, unless agreed otherwise, be paid
over to the holder and set against the liability of the farmer to the holder.
Notwithstanding the above, under s. 4(4) an insurer may pay directly to the
holder. Thus:
“S.4(4) Where any money is due to a farmer, trader or related business, as the
case may be, under any policy of insurance on any of the property comprised
in a fixed charge, the insurer may, notwithstanding anything contained in the
insurance policy, pay such money to the holder of the charge to the extent of
the said charge, and any such payment shall be a valid discharge of the liability
of the insurer to the farmer, trader or related business, as the case may be, to
the extent of the amount so paid, and the provisions of paragraph (b) of
subsection (2) shall apply to the amount so paid as if it had been paid to the
holder by the farmer, trader or related business, as the case may be.”
Note a farmer etc. can sell the property that is subject to the charge if he
applies the proceeds to the charge. Thus:
Note by s.4(6) the holder has the right to recover the proceeds from a third
party if the third party knew that the proceeds were paid to him in breach of
the farmer’s obligations to the third party. Thus:
“S. 4(6) Where the proceeds of a sale made under subsection (2), are paid to
any person other than a person contemplated by or under that subsection,
the holder shall have a right to recover the proceeds from such person if the
holder proves that such person knew that the proceeds were paid to him in
breach of the farmer's, related business's or trader's obligations.”
Provided that-
(a) the charge shall become a fixed charge on the property upon:
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a. a receiving order in bankruptcy being made against the farmer, trader
or related business;
b. the death of the farmer or trader;
c. the dissolution of partnership in the case where the property charged
is partnership property; or
d. notice in writing to that effect being given by the holder on the
happening of any event which, by virtue of the charge, confers upon
the holder the right to give such notice; and
(b) the farmer, trader or related business, while the agricultural charge
remains a floating charge, shall be subject to the like obligation as in the
case of a fixed charge to pay over to the holder the amount received by
him by way of proceeds of sale, in respect of other agricultural assets or
additional assets under policies of insurance, or by way of compensation:
Provided that it shall not be necessary for farmer, trader or related business
to comply with such obligations if and so far as the amount so received is
expended in the purchase of farming stock which, on purchase, becomes
subject to the charge.”
12
If more than one
39
Any person who gets such notice shall pay the proceeds of the sale to the
holder of the charge regard being made to the amount stated in the notice.
[This stops the farmer/ trader from pocketing the proceeds.] This will reduce
the liability of the farmer/trader under the credit but any surplus from the
proceeds will be paid over to the farmer/ trader. A person who contravenes
this statutory requirement is guilty of an offence and is liable on conviction to
the full value of the charge as specified in the notice.
(5) Any person who contravenes subsection (4) shall be guilty of an offence
and shall be liable, on conviction, to the full value of the agricultural charge as
specified in the notice.
(6) Any moneys paid out in accordance with subsection (4) shall reduce the
liability of the farmer, trader or related business under the agricultural
charges created by the farmer, trader or related business, in order of their
priority, and the amount of each agricultural charge shall be reduced by the
amount so paid.
(7) Any payment made in accordance with subsection (4) shall discharge the
buyer or person effecting the sale on behalf of the farmer, trader, or related
business, as the case may be, from any claim, howsoever arising, in respect of
the proceeds of the sale.
(8) Any farmer, trader or related business who fails to give written notice in
accordance with this section shall be guilty of an offence and shall be liable, on
conviction, to a fine not exceeding ten per cent of the outstanding loan.
Provided that the Registrar may, in proof that omission to register within such
time as aforesaid was accidental or due to inadvertence, extend the time for
registration on such terms as he thinks fit.
(4) Any person may, on payment of the prescribed fee, require to be furnished
with a copy of any entry in the register or memorandum certified to be a true
copy by the Registrar.
While s. 9 states
S9.(1) Except as otherwise provided under this Act, a person shall not print for
publication or publish any list of agricultural charges or of the name of any
farmer, trader of related business who have created agricultural charges.
(2) A person who contravenes the provisions of sub-section (1) shall be guilty
of an offence and shall be liable on conviction to a fine not exceeding 1,000
penalty units.
(3) A prosecution for an offence under this section shall not be commenced
without the consent of the Director of Public Prosecutions.
41
shall be guilty of an offence and shall be liable, on conviction, to a fine not
exceeding 1,000 penalty units or to imprisonment for a period not exceeding 3
years, or to both.
(2) Where any related business, with intent to defraud, misrepresents its
rights and obligations under this Act or in any way deprives a farmer of his
rights under this Act, the directors and managers of the business committing
such violation shall be guilty of an offence and shall be liable, on conviction, to
a fine not exceeding 1,000 penalty units or to imprisonment for a period not
exceeding 3 years, or to both, unless they show that the offence was
committed without their knowledge or consent.
(2) Any trader or related business advancing any inputs or other items
required for cultivation shall furnish the farmer, at the time each input or item
is advanced, a written statement showing the value and cost to the farmer of
the input or item, the interest rate, and any charges, fees or penalties, as
provided under this section.
(4) Notwithstanding any other law, any person who advances inputs or other
items required for cultivation to a farmer and fails to fully disclose to the
farmer the cost of the input or item, the interest to be paid by the farmer, and
any changes, fees or penalties, as required under this s. shall be ineligible to
register a charge created by the farmer on the basis of an agreement or
contract, and such charge shall be void.
Failing to make full disclosure of cost of inputs or other items and interest,
etc.
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S12. Any person who advances inputs or other items required for cultivation
to a farmer and fails to fully disclose to the farmer the cost of any input or
item, the interest to be paid by the farmer, and any charges, fees or penalties,
as required under section eleven, shall be guilty of an offence and shall be
liable, on conviction, to a fine not exceeding 1,000 penalty units.
Arbitration
13. The Arbitration Act shall apply to the settlement of any dispute arising as a
result of the interpretation or application of the provisions of this Act.
Injunctive Remedies
Injunctions are interim protective orders that a litigant can get in a court
action. This type of relief is not granted as a matter of right but at the
discretion of the court, depending on the facts and circumstances of the
particular case. For an injunction to be granted, there must be a cause of
action i.e. an applicant must file a Writ of Summons and a Statement of Claim,
or an Originating Summons accompanied with an affidavit in support, where
the applicant will itemise the reliefs he is seeking from the court. These reliefs
may include an order for an injunction. If so, an applicant must also file an ex
parte summons for an interim injunction and an affidavit in support. He
should also prepare in advance an order of interim injunction to be signed by
the Court at the ex parte hearing to serve on the other party who is not
present at this hearing. He must also file a Certificate of Urgency and also
prepare an inter parte summons for an injunction where the date of the inter
parte hearing will be indorsed by the marshal. In summary the documents you
need to file are:
Writ and Statement of Claim (as well as skeletal arguments and list of
authorities)
And if one relief sought is an interim injunction, in addition you need to file:
(a) Ex parte summons
(b) Affidavit in Support
(c) Ex parte Order for Injunction
(d) Certificate of Urgency
(e) Inter Parte Summons (no affidavit needed - you will rely of ex parte
affidavit)
The ex parte order must have an undertaking by the applicant to pay damages
to the defendant if it is later found that the Order was obtained on frivolous
or vexatious grounds and the defendant has suffered loss or injury in the
process.
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Types of Interim13 Remedies
A litigant may apply at any time, & court may grant, the following interim
remedies:
(a) Interim Injunctions
(b) Interim Declarations e.g. that some property should be kept in a
particular manner pending finalisation of the dispute.
(c) Order for:
a. Detention, custody preservation of property
b. Inspection of property subject to a dispute
c. Sale of property that is perishable or which for any other reason
needs to be sold quickly.
(d) Order authorising a person to enter land/a building in possession of
another party to the proceedings.
(e) Order (also called a “freezing injunction”) for the purpose of restraining
a party from dealing with assets located within or out of jurisdiction -
achieved by an Order called a Mareva Injunction.
(f) Order (Search Order) requiring the defendant to admit the plaintiff into
premises for the purpose of preserving evidence - Anton Piller Order.
(g) Order directing a party to provide information about the location of
some relevant property or assets that are subject or may be subject to
an application for a freezing injunction.
The applicant must give a full and frank disclosure of all material facts in the
dispute, as he who comes to Equity must come with clean hands. For this
reason the applicant must make proper enquiries before making his
application. All relevant and material facts must be disclosed so as to enable
the court to exercise its discretion properly. The consequences of not
disclosing such facts are that the ex parte Order obtained may be set aside
without regard to the merits of the application. The plaintiff should give
particulars of his claim(s) against the defendant stating the grounds for his
claim(s) and, if a monetary claim, the amount involved.
13
I.e. Reliefs or remedies sought before the final determination of the main action.
44
There is also a distinction between injunctions granted by a final order and
that granted by an interlocutory order. Injunctions granted by judicial decision
after the plaintiff has established the existence of his rights in law and the fact
that the defendant has infringed such a right or is about to do so after the trial
is described as a perpetual injunction. Others are interlocutory injunctions. An
order of injunction before judgment is called an interlocutory order.
Generally, an interlocutory injunction will follow as soon as possible on the
issuance of the Writ.
In American Cyanamid Co. v Ethicon Co. Ltd. [1977] AC 396, p. 406 the Court
said, “the objective of interlocutory injunctions are to protect the plaintiff
against injury by violation of his rights for which he could not be adequately
compensated in damages recoverable in the action if the uncertainty were
resolved in his favour at the trail but the plaintiff’s need for such protection
must be weighed against the corresponding need of the defendant to be
protected against injury from his having been prevented from exercising his
own rights for which he could not be adequately compensated must be
weighed against the corresponding need of the defendant to be protected
against injury from his having been prevented from exercising his own rights
for which he could not be adequately compensated the plaintiff’s undertaking
in damages if the uncertainty were resolved in the defendant’s favour at the
trial. The court must weigh one need against another and then determine
where the balance of convenience lies.”
In Shell and BP (Z) Ltd. V Conidaris [1973] ZR, the SCZ said “The court will not
generally grant an interlocutory injunction unless the right to relief is clear and
the injunction is necessary to protect the plaintiff from irreparable injury.
Mere inconvenience is not enough. Irreparable injury is injury that is
substantial and can never be atoned in damages.”
Preston v Luck [1884] 2 ChD 497, p. 506 “Of course to entitle the plaintiff to
interlocutory injunction, though the court is not called upon to decide finally
on the rights of the parties, it is necessary that the court be satisfied that
45
there is a serious question to be tried at the hearing and that on the facts
before it, there is a probability that the plaintiffs are entitled to relief.”
Turnkey Properties v Lusaka West Dev Co Ltd & Others [1984] ZR 85 - SCZ
held:
(a) An interlocutory injunction is appropriate for the preservation or
restoration of a particular situation pending trail.
(b) It is improper for a court hearing an interlocutory application to make
comments which may have the effect of pre-empting decision on the
issues which are to be decided on the merits at the trail.
(c) An interlocutory injunction should not be regarded as a device by
which an applicant can attain or create new conditions favourable only
to himself. In applying for an interlocutory injunction the possibility of
damages being an adequate remedy should always be considered.
Mediation
This is a process of negotiation facilitated by or through the intervention of a
neutral third party called a mediator. He helps the parties to communicate
their position on the issues relating to the dispute and in exploring possible
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solutions to reach a settlement. Unlike an arbitrator or a judge, a mediator
does not decide or adjudicate the dispute between the parties. He is merely a
facilitator who helps them reach a consensus by listening to them and
suggesting a compromise. Mediation is a voluntary and non-binding process
and parties themselves must be willing to come to some sort of settlement.
The process of mediation is non-adversarial, where parties are encouraged to
look at the broader aspects for their interests instead of focusing on the
narrow aspects of their rights and obligations. The process is not restricted by
legal principles or rules of procedure that are used in litigation. I.e. the parties
are not required to prove their cases on a balance of probabilities, by using
legal rules and principles of evidence or by calling witnesses and exhibits. For
this reasons a mediator is usually more skilled oriented than legal knowledge
oriented. A good mediator must have excellent negotiation and problem
solving skills.
Advantages of Mediation
(a) Since mediation is not constrained by legality and procedural rules, it is
easy for the parties to tailor a flexible format to suit their own specific
requirements. Thus, medication can be quite informal and speedy to
the extent that a simple or less complex dispute can be settled in a few
days as opposed to litigation or arbitration that may take months or
years.
(b) As it is speedy, the costs incurred by the parties are considerably lower.
[Unfortunately mediation processes collapse, as some lawyers are not
interested in a quick settlement].
(c) In mediation, the focus is not necessarily what is legally correct but
rather what the parties’ joint interests are. Thus a party may forgo
certain of its rights in order to arrive at a quick settlement.
(d) Most importantly, parties often have greater commitment to the
solution or decision reached since they fully participated in generating
that decision. This means that the decision reached is more likely to be
enduring and respected.
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Disadvantages of Mediation
(a) As mediation requires the consent of the parties, it is bound to fail if
there is no goodwill or willingness or good faith on their part to the
process.
(b) Mediation cannot succeed if one party is bent on causing delay by
insisting on litigation or one party uses the process simply to delay
litigation.
(c) Similarly, mediation is not appropriate and will not succeed if the
parties are desirous of setting a precedent.
Mediation Procedure
The mediator usually starts with a joint session that is attended by the parties
and their representatives. At the joint session, issues in dispute are
highlighted by the mediator and ground rules (e.g. confidentiality and
maintaining civility) are set out. After this the mediator has individual sessions
with each of the parties in turn. These private sessions (sometimes called
“caucuses”) help the parties in being more forthcoming with their ideas and
suggestions than they may be in the presence of the other party. If an
agreement is reached, it is recorded in a written form and signed by the
parties. It then becomes a consent judgment that can be enforced like any
other judgment in of the court. [Can a party apply to set aside a consent
judgment? No, as it is not a court judgment. A party can only challenge a
consent judgment by commencing a fresh action in court to overturn it on the
basis of it being entered as a result of fraud, mistake etc.]
Arbitration
The process where a dispute is put to one or more mutual party(ies) chosen
by the disputing parties for a final, binding and enforceable decision.
Characteristics of Arbitration
(a) Parties submit disputes to a mutual arbitrator or arbitrators for a
decision on the merits (i.e. each party will give evidence and be cross-
examined etc.)
(b) Each part will have the opportunity to present evidence to the
arbitration tribunal in writing and through witnesses.
(c) Proceedings are more informal that court proceedings and strict
adherence to evidential and procedural rules is not usually required
(but Evidence Act does apply).
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settle the dispute by arbitration not litigation. Mediation is non-
binding.
(b) An arbitrator decides the dispute while a mediator helps the parties
themselves to decide the dispute. Arbitrator performs a quasi-judicial
function.
(c) There are formal legal procedures in arbitration (e.g. call witnesses,
cross-examination etc.) but there are no such procedures in mediation
and it is not limited by legal doctrines.
(d) An arbitration award is legally enforceable while mediation is only
enforceable with the consent of the parties.
(e) Arbitration focuses on the rights of the parties. Mediation focuses on
the interests of the parties.
(f) The arbitration process is knowledge-based (i.e. arbitrator must have
knowledge of the law) while medication is skill based (i.e. mediator
needs to possess negotiating skills).
(g) In arbitration, a winner takes all - a win/lose situation. In mediation,
both sides will benefit - it is a win/win situation.
(h) Arbitration can be tedious and costly. In theory, mediation can be
speedy ands cost effective.
Note: some of these are only theoretical advantages and in practice they may
not be realized e.g. an arbitrator is paid fees (often quite high) whereas a
judge is paid by the State and not by fees.
In the event that the parties fail to agree on the procedure of appointing the
arbitration tribunal s.12(3) states that the appointment shall be as follows:
(a) In an arbitration with three arbitrators, each party appoints one and
these two appoint the third. If (a) a party fails to appoint its arbitrator
within 30 days of receipt of a request to do so from the other party or
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(b) if the two arbitrators fail to agree on the third within 30 days of
their appointment, then the appointment shall be made upon request
of a party by an arbitral institution e.g. ZCDR. This decision is not
subject to appeal - see s.12(5)
(b) In an arbitration with a sole arbitrator, if the parties are unable to
agree, the arbitrator is appointed, upon request of a party, by an
arbitral institution.
14
One or more of the parties is not Zambian
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a. If he applies a procedure in the arbitration which is not in
accordance with notions of due arbitral process of equality of
treatment of parties.
b. If he fails to observe the rules of natural justice.
15
United Nations Commission on International Trade Law.
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(b) To withdraw from office if the other party also agrees to the challenge.
I.e. ask the other party and if he agrees with the challenge step down,
but again this does not mean arbitrator accepts the validity of the
grounds of the challenge.
(c) The arbitrator can constitute himself into a tribunal for the purpose of
deciding on the challenge. When he does so, he should hear both sides
on the issues. If, after hearing the parties, the arbitrator decides the
challenge is successful, he must withdraw. If he decides otherwise, he
may continue with the arbitration. If the challenging party is dissatisfied
with the arbitrator’s decision, he must within 30 days from the date of
receiving the decision, apply to court for a determination on the
challenge. The court will not be hearing the matter in an appellate
capacity but making a decision on the merits of the challenge itself. I.e.
the court will hear the grounds advanced and decide. The court’s
decision is final and not subject to appeal.
Preliminary Meeting
After the arbitrator has accepted his appointment the next sage is to convene
a preliminary meeting attended by the parties and their lawyers. The
preliminary meeting is like a scheduling conference in the Commercial Registry
as it is here that the arbitrator and the parties agree on the future conduct of
the arbitration after which an order for directions is issued by the arbitrator.
Jurisdiction of An Arbitrator
In addition to challenging an arbitrator for lack of impartiality or
independence, a party can also challenge an arbitrator for lack of
jurisdiction16. In general, and arbitrator’s jurisdiction is derived from the
consent of the parties. An arbitrator has no jurisdiction in the following
circumstances:
(a) Where an agreement between the parties does not contain an
arbitration clause unless they enter into an ad hoc agreement to
arbitrate.
(b) If the arbitration agreement is invalid under the law which the parties
have subjected it to - see s.6(2).
(c) If the arbitrator has not been validly appointed e.g. he dose not meet
the prescribed qualifications.
(d) If the issue in dispute is one that was not contemplated by the parties
e.g. if the arbitration clause relates to a contractual dispute, a tortious
dispute between the parties would not be within the scope of the
arbitration clause.
In these circumstances an arbitrator has no jurisdiction.
16
Jurisdiction - authority; Power - ability to act derived from your authority or jurisdiction.
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of natural justice?). This is commonly referred to a Kompetenz-
Kompetenz. It arises only if his jurisdiction is challenged. Art. 16(1) of the
Model Law (1st schedule of the Act) states that an arbitral tribunal may rule
on its own jurisdiction including any objection with respect to the
existence or validity of the arbitration agreement.
The advantage of this doctrine is that it avoids delays and difficulties when
a question is raised as to:-
(a) Whether there is a valid arbitration agreement
(b) Whether the tribunal is properly constituted.
(c) Whether matters have been submitted to arbitration in accordance
with the arbitration agreement.
According to Art 16(2) a plea that the arbitration tribunal does not have
jurisdiction shall be raised not later than the submission of the defence i.e.
before the defence is served. Art 16(3) states that the arbitral tribunal may
rule on its own jurisdiction either as a preliminary question or in an award. A
party dissatisfied with the tribunal’s ruling may request a court to decide the
matter and the court’s decision shall not be subject to appeal.
The Award
Note: there are no dissenting awards in arbitration c.f. you can have
dissenting judgments in litigation. Section 16(1) of the Act states that the
award shall be in writing and shall be signed by the arbitrator(s). In arbitral
proceedings with more than one arbitrator, the signature of the majority of
the members shall suffice provided that the reason for any omitted signature
is stated. S. 16(2) states that the award must state the reasons upon which it
is based unless the parties agree otherwise. The award must also state the
date and place of the arbitration at which it shall be deemed to have been
made. After the award is made, a copy signed by the arbitrator(s) is delivered
to the parties [In practice, the arbitrator has a lien over the award for his
fees.] On request by any party, (within 30 days?) an award may be corrected
or interpreted by the arbitrator. The arbitrator can also correct the errors at
his own instance or initiative. See Art 33. The interpretation forms part of the
award.
Types of Award
An award may be:
Interim: this award is a determination of an issue during the course of arbitral
proceedings e.g. (a) an interim injunction; (b) an order for the deposit of the
fees, costs and expenses of the arbitration, (c) and interim measure for
protection in respect of the subject matter of the dispute. (See s. 14 of the
Act).
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Partial: like an interim award, a partial award is a determination of an issue
during the course of the arbitral proceedings which may result in the parties
saving time and money. E.g. (a) determination of the arbitral tribunal’s
jurisdiction; (b) determination of part of the claim that can easily be disposed
of during the hearing.
Final: this is an award that completes the mandate of the arbitral tribunal.
Once it is delivered, the tribunal becomes “functus officio” i.e. it ceases to
have any further jurisdiction over the dispute and the relationship existing
between the arbitral tribunal and the parties during the currency of the
arbitration comes to an end. There is however, one exception, i.e. when the
arbitral tribunal is requested by the parties (or one of them) to correct clerical
errors in the award OR interpret the award OR make an additional award.
When a court sets an award aside, the court will normally send it back for
arbitration before a different tribunal. [Normally, as in litigation, costs of
arbitration “follow the event” i.e. costs normally go to the successful party.
Costs may be taxed.
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Recognition and Enforcement of an Award
A court shall recognize an arbitral award as binding regardless of the country
in which it was made see s.18. The party in whose favour the award is made
must file it in court for it to be recognized and enforced. Recognition alone is
sufficient if the loosing party willingly pays the amount awarded to the
successful party. If he is unwilling, the successful party must enforce the
award. Recognition and enforcement of an arbitral agreement may be refused
upon the grounds set out in s.19, which are identical to those above in s. 17
above which a party may use to set aside an award.
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Revision: Exam
5 Q, Q1 compulsory 40%, 2 other Qs 30% each, 3 hours, Most Q are in parts.
Apportion time appropriately; spend more time on Q worth e.g. 10 marks c.f.
those with 5 marks. Answer easier Q first. Use good English and spelling. Show
that a logical legal mind is at work.
Problem Q - a set of facts are given, some may be irrelevant. Quickly
summarize the material facts and identify the legal principles involved always
citing the authority (statute or case law) for these principles. Relate these
principles to the material facts and draw the conclusion(s) required by the
question. When citing cases you may say “In a decided case….” so long as you
know the material facts of the case, understand the legal principle(s) laid
down by it and the case is relevant to your arguments and is appropriately
applied to it.
Differences in Procedure
In both the commercial list and the general list the plaintiff files a Writ and
Statement of Claim; the Defendant files a Memorandum of Appearance and
Defence. Thereafter, in the commercial list the judge calls a scheduling
conference where he gives orders for directions to the parties and as the
advocates are present it is not expected that there should be any slippage. In
the general list, the parties apply to the judge for orders for direction and
there is no scheduling conference. At the scheduling conference the time is
given for:
(a) The plaintiff to deliver a reply
(b) Discovery and inspection
(c) Filing of Bundles of Pleadings and Documents
(d) Filing and exchange of witness statements (should be within 21 days of
trial)
(e) Filing and exchange of skeleton arguments ands lists of authorities
(should be within 21 days of trial).
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(f) The date for the Status conference
At trial
There is no examination in chief and the plaintiff’s counsel starts by asking the
witness “Did you sign a witness statement?” Thereafter the witness is cross-
examined on his witness statement by counsel for the other side and then re-
examined by his counsel on issues arising from the cross-examination. Once
the witnesses for the plaintiff have testified, the defendant calls his witnesses
and the procedure is similar e.g. no examination in chief per se but witness is
cross examined and re examined.
60 Days
If 60 days lapse from the date the action was commenced and nothing
happens, the judge will dismiss the action and the plaintiff must start again de
novo if he wants to proceed again.
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