About this Business Law Module

The Business Law Module has been produced by National Institute of Public Administration (NIPA).
All modules produced by the Institute are structured in the same way, as outlined below.

How this Business Law Module is structured

The Module overview

The module overview gives you a general introduction to the module. Information contained in the
module overview will help you determine:

 What you can expect from the course.

 How much time you will need to invest to complete the course.

The overview also provides guidance on:

 Study skills.
 Where to get help.
 Assignments and assessments
 Activity icons
 Units.

We strongly recommend that you read the overview carefully before starting your study.

The Module content

The Module is broken down into 10 units. Each unit comprises:
 An introduction to the unit content.
 Unit outcomes.
 New terminology.
 Core content of the unit with a variety of learning activities.
 A unit summary.
 Assignments and/or assessments, as applicable.

For those interested in learning more on this subject, we provide you with a list of additional resources at
the end of this Business Law module; these may be books, articles or web sites.

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Your comments
After completing this Business Law module, we would appreciate it if you would take a few moments to
give us your feedback on any aspect of this course. Your feedback might include comments on:
 Content and structure.
 Reading materials and resources.
 Assignments and Assessments.
 Duration.
 Support (assigned tutors, technical help, etc.)

Your constructive feedback will help us to improve and enhance this course.

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Welcome to Business Law Module
This Business Law Module gives an in-depth knowledge of the Business Law.

Module learning outcomes

Upon completion of this Module, you will be able to:

Time frame
Expected duration of this Module is 6 months
Formal study time required is 4 weeks before the beginning of the semester
Self-study time recommended is 4 hours per week

Study skills As an adult learner your approach to learning will be different to that from your
school days: you will choose what you want to study, you will have professional
and/or personal motivation for doing so and you will most likely be fitting your
study activities around other professional or domestic responsibilities.
Essentially you will be taking control of your learning environment. As a
consequence, you will need to consider performance issues related to time
management, goal setting, stress management, etc. Perhaps you will also need to
reacquaint yourself in areas such as essay planning, coping with exams and using
the web as a learning resource.
Your most significant considerations will be time and space i.e. the time you
dedicate to your learning and the environment in which you engage in that
learning.
We recommend that you take time now—before starting your self-study—to
familiarize yourself with these issues. There are a number of excellent resources
on the web. A few suggested links are:

 http://www.how-to-study.com/
The “How to study” web site is dedicated to study skills resources. You will
find links to study preparation (a list of nine essentials for a good study
place), taking notes, strategies for reading text books, using reference
sources, test anxiety.

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  http://www.ucc.vt.edu/stdysk/stdyhlp.html
This is the web site of the Virginia Tech, Division of Student Affairs. You
will find links to time scheduling (including a “where does time go?” link), a
study skill checklist, basic concentration techniques, control of the study
environment, note taking, how to read essays for analysis, memory skills
(“remembering”).

 http://www.howtostudy.org/resources.php
Another “How to study” web site with useful links to time management,
efficient reading, questioning/listening/observing skills, getting the most out
of doing (“hands-on” learning), memory building, tips for staying motivated,
developing a learning plan.
The above links are our suggestions to start you on your way. At the time of
writing these web links were active. If you want to look for more go to
www.google.com and type “self-study basics”, “self-study tips”, “self-study
skills” or similar.

In case you need help, you can contact NIPA at the following website, phone
number or you can email.
www.nipa.ac.zm

NIPA-Main Campus – Outreach Programs Division

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 Phone Numbers:+260-211-222480
Fax:
e-mail address:opd@nipa.ac.zm

The teaching assistant for routine enquiries can be located from the Outreach
Division from 08:00 to 17:00 or can be contacted on the numbers and email
address indicated above.
Library
There is a library located at the main campus along Dushanbe Road. The library
opens Monday to Friday from 08:00 to 17:00.

Assignments There shall be two assignments given for this module.

The assignments should be sent by post or email them to the Outreach Programs
Division – Nigeria Hall using the addresses provided in the training manual.
Assignments should be submitted to Outreach Programs Division Registry.

Assessments There shall be a minimum of two (02) assessments given to the students
undertaking this subject
These assessments shall be teacher marked assessments.
The assessments shall be determined and given by the course tutors after you have
covered a number of topics
The teacher/tutor shall ensure that the assessments are marked and dispatched to
the student within a period of two weeks.

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 Getting around the Business Law Module
Margin icons
While working through this Business Law module, you will notice the frequent use of margin
icons. These icons serve to “signpost” a particular piece of text, a new task or change in activity;
they have been included to help you to find your way around this module.
A complete icon set is shown below. We suggest that you familiarize yourself with the icons and
their meaning before starting your study.

Activity Assessment Assignment Case study

Discussion Group Help Note it!

activity

Outcomes Reading Reflection Study skills

Summary Terminology Time Tip

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 Learning tips
You may not have studied by distance education before. Here are some guidelines to help you.

How long will it take?

It will probably take you a minimum of 70 hours to work through this study guide. The time
should be spent on studying the module and the readings, doing the activities and self-help
questions and completing the assessment tasks.

Note that units are not of the same length, so make sure you plan and pace your work to give
yourself time to complete all of them.

About the study guide

This study guide gives you a unit-by-unit guide to the module you are studying. Each unit includes
information, activities, self-help questions and readings for you to complete. These are all designed
to help you achieve the learning outcomes that are stated at the beginning of the module.

Activities, self-help questions and assessments

The activities, self-help questions and assessments are part of a planned distance education
programme. They will help you make your learning more active and effective, as you process and
apply what you read. They will help you to engage with ideas and check your own understanding.
It is vital that you take the time to complete them in the order that they occur in the study guide.
Make sure you write full answers to the activities, or take notes of any discussion.

We recommend that you write your answers in your learning journal and keep it with your study
materials as a record of your work. You can refer to it whenever you need to remind yourself of
what you have done.

Unit summary
At the end of each unit there is a list of the main points. Use it to help you review your learning.
Go back if you think you have not covered something properly.

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 Studying at a distance
There are many advantages to studying by distance education – a full set of learning materials as
provided, and you study close to home in your own community. You can also plan some of your
study time to fit in with other commitments like work or family.

However, there are also challenges. Learning at a distance from your learning institution requires
discipline and motivation. Here are some tips for studying at a distance.

1. Plan – Give priority to study sessions with your tutor and make sure you allow enough
travel time to your meeting place. Make a study schedule and try to stick to it. Set specific
days and times each week for study and keep them free of other activities. Make a note of
the dates that your assessment pieces are due and plan for extra study time around those
dates.

2. Manage your time – Set aside a reasonable amount of time each week for your study
programme – but don’t be too ambitious or you won’t be able to keep up the pace. Work in
productive blocks of time and include regular rests.

3. Be organised – Have your study materials organized in one place and keep your notes
clearly labeled and sorted. Work through the topics in your study guide systematically and
seek help for difficulties straight away. Never leave this until later.

4. Find a good place to study – Most people need order and quiet to study effectively, so try
to find a suitable place to do your work – preferably somewhere where you can leave your
study materials ready until next time.

5. Ask for help if you need it – This is the most vital part of studying at a distance. No matter
what the difficulty is, seek help from your tutor or fellow students straight away.

6. Don’t give up – If you miss deadlines for assessments, speak to your tutor – together you
can work out what to do. Talking to other students can also make a difference to your study
progress. Seeking help when you need it is a key way of making sure you complete your
studies – so don’t give up.

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UNIT ONE: SOURCES OF ZAMBIAN LAW

Introduction

The Business Law is a compilation of many commercial and corporate law principles which are applied
in all trades and commercial undertakings. Over some years rules have been enacted to give clients and
customers protection against Business transactions, reputations and breaches and facilitate smooth
business transactions for all.

Therefore, Business Law is about equipping trainees with skills, knowledge and values in Business field
of study and be applied in day to day marketing and merchantile transactions.

Learning Outcomes

After studying the unit, you will be able to:

 Identify the sources of Zambian Business laws

 Classify common law and equity
 Understand judicial precedents
 Customary law
 Legislation

Common Law

As a source of law, the Common law refers to practices that were similar to most parts of England at the
time of the Norman conquest of 1066 AD. It was administered on behalf of the king by officers known
as Commissioners whose main responsibility was to go round the country and settle disputes. In their
settling of disputes they discovered a number of differences in the practices of the people of different
parts of England. However, in spite of these differences they also noticed a number of similarities in the
practices of the people and it is these similarities that were later on to be considered to be the common
law of England. It must be mentioned that as a source of law the common law had a number of
weaknesses e.g;

i) Corruption was common

ii) Cases took long to be completed

iii) Wagering of witnesses

iv) Damages were the only remedy

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Equity

Equity was created to remedy the weaknesses observed under the common law and not for the purpose
of replacing it. As a source of law equity was mainly interested in justice, fairness and equality. It was
administered on behalf of the king by an officer called the Chancellor who was also known as the
“Keeper of the kings conscious”. The Chancellor was appointed from members of the clergy. To help
the courts to administer equity, a number of maxims were developed:

 He who comes to equity must come with clean hands

 He who seeks equity must do equity.

 Equity is equality

 Equity aids the vigilant

 Equity shall not suffer a wrong without a remedy

For centuries the law of equity and those of the common law were administered concurrently by two
different courts, namely; chancery courts for equity and common law courts for the common law. This
changed after the passing of the Judicature Act which merged the two systems, however, in the event of
a dispute between principles of the common law and those of equity, equity should prevail.

Judicial Precedents

The principle of judicial precedents is founded in the doctrine of “stare decisis” which means to stand
by a decision. Under this doctrine the courts will use their previous decision to decide a present case
provided the facts are similar. As a source of law precedents can either be binding or persuasive. A
binding precedent is one which the court is under an obligation to follow e.g. decisions of a higher court
are binding on a lower court. On the other hand a persuasive precedent is one which the courts can either
follow or not e.g. decisions of a lower court are only persuasive to a higher court.

Customary Law

A custom is a practice that has acquired the force of law due to long usage. These practices are not
written and are passed on from one generation to another by word of mouth. For a practice to qualify to
be called a custom, it must satisfy the BLACKSTONE RULES of 1765, namely;

 It must not be repugnant to natural law and any other statutes or Acts of parliament in Zambia.

See: Kaniki v. Jairus (1967) ZR 71

 It must be reasonable in nature.

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 See: RV. Mutengule and Others (1948) NRLR 8

 It must have been followed continuously and if it were right, since the beginning of legal
memory.

 It must have been accepted as a normal way of doing things in that society.

 It must not be in conflict with any written law.

Legislation

These are laws made by Parliament or any other body or persons as may be authorized by
parliament. This may also include Presidential decrees made by virtue of authority conferred on the
Republican President by the constitution of Zambia. Legislation can either be Parliamentary or
delegated. Parliamentary legislation refers to those laws that are specifically made by parliament itself.
A law in parliament starts its life as a bill which has to pass through different stages known as readings
followed by presidential assent before it finally becomes a law. On the other hand delegated legislation
refers to those laws made by bodies or persons that parliament may have authorized to pass certain laws
on its behalf. This is done through an enabling act which is the parent act. Delegated legislation is thus
subordinate or supplementary legislation. Examples of delegated legislation will include; by laws which
are laws made by local authorities in relation to their respective districts, statutory instruments which are
laws made by ministers in relation to their respective ministries.

Delegated Legislation

It is subordinate or supplementary legislation. It is legislation made under the powers conferred by an

Act of parliament, or an enabling statute, which is parent Act. The bulk of delegated legislation is
governmental and it is composed of Statutory Instruments (S.I); Orders, Regulations, Circulars,
Schemes, Bye-laws, Directions and Rules. These are made by ministers.

Such legislation supplements Acts of parliament by prescribing the detailed and technical rules required
for their operation. As a source of law delegated legislation has its own advantages and disadvantages,
e.g.:

Advantages

 Delegated legislation decentralizes decision making.

 It can be made and later amended easily if necessary without taking up parliament time.

 Delegated legislation allows for expedient enactment of law to meet emergence needs.

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  Many bodies make delegated laws outside central government for instance By-laws – council
laws. The rules of supreme court and codes of supreme court and codes of conduct for various
bodies such as LAZ (Law Association of Zambia) or rules for mass media.

 Delegated legislation promotes technical expertise.

 Most delegated legislation, except by-laws is subject to some degree of parliamentary control
such as:

i) Simple requirement that it be law before parliament after being made. This ensures that
members become aware of its existence but affording them no special method or
opportunity of questioning its substance.

ii) It s liable to a annulment by a resolution of National Assembly (N.A) called NEGATIVE

RESOLUTION PRECEDURE.

iii) A provision that it be loud and either shall not take effect until approved by resolution of
Zambian parliament within a specified period.

iv) All delegated legislation is subject to judicial control under the Doctrine of “Ultra Vires”.

v) Delegated legislation is interpreted in the light of the parent Act, so particular words are
presumed to be used in the sense as in that Act.

vi) Delegated legislation serves on parliamentary time and relieves work load of parliament.

Disadvantages

 It is an undemocratic way of law making as such legislation lack scrutiny by parliament

 Lack of accessibility and community awareness

 Members of the public do not receive notice of publication of delegated legislation enacted
neither are they made aware of such legislation

 Promotes overregulation of society

 Delegated legislation may be ultra vires the Parent Act thereby undermining the rule of law and
good governance.

See: Christine Mulundika and 7 others v. The people (1995) Supreme Court of Zambia, Appeal
No. 25

 Delegated legislation dilutes the legal framework owing to their bulky nature.

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 Unit summary

In this unit you have learnt the following:

 The differences between common law and equity.

 Judge made law (case law) and judicial precedent

 Customary law

 Legislation or statutory law

 Delegated legislation

Activity

What are the major categories in the historical development of English

laws?

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UNIT TWO: LEGAL LIABILITY

Introduction

Learning Outcomes

After studying the unit, you will be able to:

 To demonstrate the differences between civil and criminal liability.

 Appreciate liability in contract and tort.

Classification of Law

As a set of rules and principles that are meant to regulate human conduct, law can be classified as being
either civil or criminal.

● Civil Liability

Civil law relates to the law that regulates relations between individual. Examples of civil law may
include tort or contract. Thus, civil liability is a type of liability that arises from wrongs between
individuals. Since the wrong committed in civil law is between individuals and not society as a
whole, it is the responsibility of the aggrieved individual to commence action against the other and
the main remedy is compensation in the form of damages.

When two or more people are liable for causing same damage, the injured person is entitled to
recover full compensation for his losses from any one of them. The wrong doer who is sued may then
ask for contribution from the other wrong doers. The formula of assessing the extent of damages
caused is called quantum merit.

The right to contribution is available in all forms of civil liability, whether tort, breach of contract,
breach of trust or otherwise. The civil court assesses the amount of contribution on the basis of what
would be just and equitable taking into account the parties responsibility for the damage.

● Criminal Liability

Criminal law relates to offenses committed against society as a whole and thus it is the responsibility
of society to prosecute. The main aim of criminal law is to punish the offender. Thus, the prosecution
in criminal proceedings has to prove that the defendants conduct;

(i) Has caused a certain event forbidden by law i.e. the actus reus

(ii) That the defendant’s conduct was accompanied by the prescribed state of mind i.e. mens rea

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The main differences between civil wrongs and criminal wrongs are as follows:

(i) Only the injured may sue while a criminal prosecution it is the responsibility of the state to
prosecute.

(ii) An action in civil law may be discontinued or settled of court by the plaintiff at any time, which
may not necessarily be the case with criminal proceedings.

(iii)In civil proceedings the main aim is to compensate the injured party whilst in criminal law the
aim is to punish.

Unit summary
In this unit you have learnt the following:

 All forms of liabilities, civil and criminal

Activity

What are the core differences between civil and criminal law?

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UNIT THREE: PRINCIPLES OF LAW OF CONTRACT

Introduction

A contract is a legally binding agreement. Agreement arises as a result of offer and acceptance. A
number of requirements must be satisfied for an agreement to be legally binding:

 There must be consideration

 The parties must have an intention to create legal relations

This is required to prevent purely domestic or social agreements from constituting a contract. The parties
must have capacity to contract e.g. a contract is not binding between a minor and a man of capacity, but
the minor will always win in case of conflict of interests between the minor and the adult person if such
contract is for ordinary goods. However, a minor may be held liable for goods called necessaries and
contracts of beneficial service to the welfare of a minor.

The agreement must comply with any formal legal requirements. It may be oral, written, partly oral and
partly written or even implied by conduct. The agreement must be legal and must not be rendered void
either by some common law or statutory rule or by some inherent defect, such as operative mistake.
Certain contracts, though valid, may be liable to be set aside by one of the parties on such grounds as
misrepresentation or the exercise of undue influence called voidable contract.

Learning Outcomes

After studying the unit, you will be able to:

(a) Offer

An offer is an undertaking by the offeror that he will be bound in contract by an offer if there is a
proper acceptance of it. An offer may be specific or to any member of a group of persons; and in
all cases of an offer embracing a promise for an act designed to produce a multilateral contract to
the world at large e.g. CARLILL V. CARBOLIC SMOKE BALL (1893) 1Q.B.256

The defendants were proprietors of a medical preparation called “Carbolic Smoke Ball”. They
put an advertisement in many papers inviting persons at large to use their medicine against
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 influenza; and state that they were offering £100 to any person who contracted influenza after
using the ball three times a day for two weeks. The plaintiff used it for more than 40 days, three
times a day. She successfully sued the company against the defence of offer being:-

i) Vague – no time limit given in advertisements

ii) Suggested that the matter was a ‘puff’

iii) That it was only an attempt to contract the whole world

iv) That the plaintiff did not supply any consideration

v) That there was no communication of acceptance

Read the following cases:

 Harris v. Nickerson (1893) Z.R. 8Q.B.284

 Winn v. Bull (1877), 7 ch.D.29

(b) ACCEPTANCE

An acceptance occurs when the offeree’s words or conduct give rise to the objective inference
that the offeree assents to offeree’s terms. Thus, acceptance refers to a an unconditional positive
response to an offer. This essentially means that for acceptance to be valid it must have no
conditions attached to it. It consequently suffices that the attachment of a condition or change of
a term will amount to a counter offer and not acceptance. Counter offers have the effect of
terminating the initial offer:

HYDE V WRENCH (1890)

Some of the basic rules of acceptance will include:

1. Acceptance must be unequivocal and unconditional

2. Acceptance must be communicated as silence is not acceptance

3. There must be an offer in existence

(c) CAPACITY

Competence to enter a legally binding agreement, the main categories of persons lacking
capacity in full are minors, mentally disordered, the drunk and corporate bodies without legal
personality. A minor is capable of making valid contracts for necessaries and is also bound by
any beneficial contract of service into which he enters which is advantageous to him. Certain
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 contracts of proprietary nature e.g. tenancy agreements, agreements to buy company shares and
partnership agreements are voidable in that a minor may repudiate them either before he comes
of age or within reasonable time thereafter.

If he fails to repudiate, he becomes fully bound. All other contracts made by minor are
unenforceable unless ratified by minor when he comes of age. A contract made by a person who
is mentally disordered or drunk is voidable if the other party knows that his disorder or
drunkenness will prevent him from understanding what he is doing. He can set the contract aside
by rescission.

(d) CONSIDERATION

The courts do not enforce gratuitous promises, thus, it is necessary that the person to whom the
promise was made should have done something in return for the promise. This is what
constitutes consideration and is a vital element in the formation of a contract. Consideration can
be understood, therefore, as the price paid for a promise. The House of Lords in the case of
Dunlop v Selfridge (1915), as:

“An act or forbearance of one party, or the promise thereof, is the price for which the promise
is bought, and the promise thus given for value is enforceable”

The law recognizes two types of consideration;

1. Executed Consideration

This is the type of consideration where one or both parties have performed their promise.

2. Executory Consideration

This is a type of consideration where one or both parties are yet to perform what they
promised.

(e) INTENTION TO CREATE LEGAL RELATIONS

For any contract to exist there must be an intention on the part of the parties to enforce whatever
they have agreed on. This is what is referred to as the intention to create legal relations. The test
that the courts will use to determine whether this intention is present or not is by looking at the
nature of the transaction in question; is it a Domestic or Commercial agreement.

1. Domestic Agreements

These are agreements that may arise from certain relations. In these agreements there is a
presumption that parties did not intend to create legal relations, however, this just like any
other presumption is rebuttable. Examples of such relations are those of;

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 - Husband and wife

- Parents and children

- Relatives and friends

2. Commercial Agreements

These are agreements of a business or commercial nature and these carry a strong
presumption that the parties intend to enter into a legally binding agreement.

(f) LEGALITY

A contract enforceable at law must be one that does not go against the interest of the public, thus,
a contract that promotes the commission of an illegal act will not be recognised by the courts.

PRIVITY OF CONTRACT

As a general rule contractual agreements can only affect those persons who have entered into the
agreement expressed in the terms of the contract. Thus, a third party cannot enforce the provisions of a
contract to which he is not a party unless in situations where a party formally transfers the benefits of a
contract to a third party. This process which is known as an assignment must be in writing.

DISCHARGE OF A CONTRACT

Discharge of a contract refers to a point at which a contract comes to an end. The following are some of
the examples through which a contract may be discharged;

1. Discharge by performance

A contract is generally considered to be discharged the moment both parties have performed
their obligations under the contract

2. Discharge by breach

Breach of a contract occurs when one or both of the parties to the contract fails to perform their
part of the agreement, either fully or partially. However, it is not every breach that may have the
effect of bringing the contract to an end, but it is only where the term breached is one that can be
considered to go to the root of the contract that a discharge may arise.

3. Discharge by lapse of time

In situations in which a contract is entered into for a specified period of time, it will
automatically terminate the moment the stipulated period of time expires.

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 4. Discharge by frustration

This refers to the occurrence of an unforeseen even event which renders the performance of the
contract impossible. Such events may have the effect of terminating the contract and examples of
a frustrating event may include the destruction of the subject matter of the contract through
calamities like fire, floods, earthquake etc. ill health may also operate as a frustrating event.

5. Discharge by mutual agreement

A contract may also terminate through the parties mutually agreeing to discharge each other from
their obligations under the contract.

REMEDIES

Available methods at law for the enforcement, protection, or recovery of rights or for obtaining redress
for their infringement. It includes:-

1. Damages

Damages are a common law remedy which refers to compensation in monetary terms, thus, the
party in breach may be ordered to pay some form of compensation to the innocent party.

2. Specific Performance

This is an equitable remedy requiring a party to a contract to positively perform their contractual
obligations. Specific performance like the other equitable remedies is discretional may only be
ordered where it is clear that damages won’t provide an adequate remedy for the loss suffered.

3. Injunction

Another way in which performance of a contract may be enforced is by the grant of an order
known as an injunction. This is another equitable remedy. An injunction can either be mandatory
or prohibitory. In prohibitory injunctions the courts may order a party to a contract to refrain
from the continued commission of a particular act.

4. Rescission

This is a right available to an injured party to consider the contract as terminated. The innocent
party in equity is entitled to set the contract aside where there is a breach of a condition. The aim
of rescission as a remedy is to try to restore the parties to their original pre-contractual positions.

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 Unit summary
In this unit you have learnt the following:

 Elements of a contract

 Privity of a contract

 Discharge of a contract

 Remedies

Activity

Discuss elements of a contract.

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UNIT FOUR: LAW OF TORT

Introduction

Principles of liability

Tortuous liability arises from a duty primarily fixed by law. The duty is towards persons generally and
its breach is redressible by an action for unliquidated damages.

Learning Outcomes

After studying the unit, you will be able to:

 Demonstrate negligence
 Appreciate the application of the Doctrine of Vicarious liability
 Identify remedies and defences

Liability Theory

That all harm should be actionable in the absence of just cause or excuse; that the damage suffered
should be brought under a known or recognized head of liability, that at present there is no general
liability in tort but has specific areas for wrongful acts applied to old cases to new cases e.g. courts have
refused to create new torts even where an individual has suffered great loss or hardship and could have a
civil remedy in damages. The state has taken an upper hand in cases of perjury and in the invasions of
privacy by electronic surreptitious surveillance.

Damage and Liability

Two concepts:

Damnum which means damage suffered and Injuria which is an injury having legal consequences.
Sometimes damage and injury go together e.g. a driver drives negligently a car and injures a person, he
suffers damnum – the hurt and injuria – right of action to be compensated.

However, there are cases of:-

1 Damnum sine injuria – damage suffered without violation of legal right.

2 Injuria sine damno – violation of legal right without damage

The mere fact that a person has suffered damage not entitled him to maintain an action in tort. The
action will only succeed if the harm suffered has been caused by an act which is a violation of a right
which the law vests in the plaintiff of injured by party. Under the concept of Damnum sine injuria a

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person may suffer harm and have no claim even though the harm was suffered as a result of a known
tort.

Read case of:

Electrochrome Ltd v. Welsh Plastics Ltd (1968) 1 ALLER. 324

Even if a defendant acts with intention of injuring his neighbor, it does not give rise to a cause of action
unless a legal right of the plaintiff is infringed. Only vested rights may bring an action and recover
damages when violated. The law of tort is more concerned with effects of injurious conduct than
motives which inspired it. However, certain circumstances malice may be important such as in a failed
case of malicious prosecution. Also some action e.g. in action of defamation defenses of qualified
privilege may be pleaded and certain acts if acted upon or exercise inreasonably, may become a
nuisance.

(a) Defamation

Defamation is the tort of publishing a statement which tends to lower a person’s reputation in the
eyes of right thinking members of society. Defamation may either be classified as libel or
slander. It will be libel if made in some lasting form e.g. in writing or in the form of a cartoon or
statute. On the other hand, slander is when the statement is in a transient form .e.g. by words
spoken.

(b) Negligence

The tort of negligence has been defined by Baron Alderson in Blyth V. Birmingham
Waterworks Co. as follows: “Negligence is the omission to do something which a reasonable
man, guided upon those considerations which ordinarily regulate the conduct of human affairs,
would do, or doing something which a prudent or reasonable man would not do.”

Three things have to be proved in order to establish that a person has been guilty of the tort of
negligence:

(i) A duty of to take care must have existed towards the plaintiff.

(ii) The defendant must have broken this duty by not behaving in the way in which a
reasonable person would have.

(iii) The plaintiff must have suffered some damage.

Vicarious Liability

Legal liability imposed on one person for torts or crimes committed by another; usually an employee or
agent and sometimes an independent contractor. The person made vicarious liable is not personally at
faulty. An employer is vicariously liable for torts committed by his employees when he has authorized

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or ratified them or; when the tort was committed in the course of the employees’ work. The purpose of
the Doctrine is to ensure that an employer pays the costs of damage caused by his business operations.
His vicarious liability, however, is in addition to the liability of the employee who remains personally
liable for his torts.

The person injured by the tort may sue either or both of them, but will generally prefer to sue the
employer. Likewise an employer may be guilty of supplying goods under a false trade description when
it is his employee who actually delivered them. the registered owner of a vehicle is expressly made
liable by statute for fixed penalty and excess parking charges even if the faulty for the offence was not
his.

If the offence is a regulatory offence of strict liability, the courts often impose vicarious liability if the
offence is defined in the statute in a way that makes this possible. For an offence which requires men, an
employer will only be vicariously liable if the offences relates to licensing laws.

Defences

1. Volenti non fit injuria

This latin maxim means that where a person has consented to the commission of a tort may not
subsequently sue for it. Thus, if one engages in a boxing contest he cannot sue the opponent for
the tort of battery if punched on the nose.

2. Inevitable Accident

The defendant may avoid liability for torts if he can show that the plaintiff’s injury or damage to
the plaintiff’s interest has been caused by some circumstances which was totally outside the
defendant’s control. One example of an inevitable accident is a so-called Act of God, which may
refer to some natural phenomenon such as an earthquake or some unusually heavy rainfall which
could not have been anticipated or guarded against.

3. Statutory Permission

It is a defence in an action based on any tort to show that the tortuous act has been sanctioned by
an Act of Parliament or by some Ministerial order.

4. Contributory Negligence

This is a defense were the defendant agrees that he has been negligent, but contends that the
plaintiff has also been negligent. The rationale behind this is that while a person has to take care
not to injure his neighbor, the other party must also take care not to get injured.

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 5. Necessity

As a defense necessity may relate to an act of the defender which may relate to the prevention of
a greater loss from occurring. For example, in the tort of trespass, one may claim necessity for
unlawfully entering on someone else’s property with the aim of putting out a fire or rescuing a
drowning child.

Unit summary
In this unit you have learnt the following:

 The basic principles of Tortious liability

 Negligence in all its forms

 Vicarious responsibility

 The remedies and defences

Activity

Discuss the nature of vicarious liability in tort and contrast to general

liability.

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UNIT FIVE: AGENCY

Introduction

The Law of Agency provides a long established exception to the doctrine of Privity of Contracts, which
is a Common Law Principle which provides that only parties to a contract can acquire rights and duties
under that particular contract. Thus, agency can be said to be founded in the Common Law position that
he who can act for himself may act through an another, which can be summed up in the latin maxim: qui
factit per alium facit per se. The exceptions to this rule are where personal performance is required or
where the parties involved expressly or by implication prohibit delegation.

Generally there are no formalities to be complied with when forming an agency relationship. However,
in as far as capacity of the parties are concerned, there is no general requirement that an agent must have
full contractual capacity when he acts on behalf of the Principal. This is because the contract is that of
the Principal and not the agent. The Principal must however, have contractual capacity at the time of the
contract in question.

Learning Outcomes

A careful study of this Unit should help you to:

Appreciate the Common Law Principle of: Qui Facit Per Alium Facit Per Se.

Definition of Agent

An agent can be said to be a person who negotiates and concludes a commercial or business transaction
with third party on behalf of another called the principal e.g. insurance brokers, estates agents,
auctioneers, travel agents. The agent can change the legal position of the principal in the sense that in
the event that an agent concludes a business transaction on behalf of the principal the later can come in
and step into the shoes of the former even if he may not have been privy to the initial negotiations and
conclusion of the transaction. Thus, if there are any benefits to be enjoyed, the principal will enjoy

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them. Equally if there are any liabilities to be incurred he may be held responsible. The Law recognizes
the following as being agents even though they do not bear the title of an agent:

a) Company Directors

b) Partnerships

c) Employees and

d) Professionals (Lawyers)

Classification of Agents

The classification of agents may depend on the extent of their power or according to the type of business
they are engaged in. They can also be classified according to the extent of their authority, namely:

i) General Agents:

This type of agent is appointed to perform a task in a general area, thus he has the authority to
enter into a contract on behalf of the principal which are normally within the scope of the trade,
business or profession in which the agent is employed, e.g. an agent appointed to manage a
property would have implied authority to enter into a tenancy agreements and cleaning contracts
on behalf of the principal.

ii) Universal Agents:

These have unlimited authority to enter into any contract for which the principal has contractual
capacity e.g. where Mr Bwalya has several properties in Lusaka which he is managing. In the
event that he goes to settle abroad, he may appoint Mr Chola as his agent to manage the
properties. In this case Mr Chola may have the authority to do almost anything with the property
which had Mr Bwalya been around would have done e.g. putting them on rent.

iii) A Special Agent:

This type of agent is engaged to undertake or perform a particular task or function only e.g. an
agent appointed to find a purchase for a principal’s property.

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Creation of an Agency relationship

As already mentioned above, there are no formalities required for the formation of an agency
relationship, however, this relationship may arise in a number of ways:

a) Agency by Express Appointment

An agency relationship may arise by express agreement between the principal and the agent.
In other words this is the direct appointing of the agent by the principal and this may be
done either orally or it can be written. This appointment will define the mandate and
authority of the agent.

b) Agent by Implication

This is an indirect creation of an agency relationship and it generally arises from the conduct
of the parties towards one another. Thus, even when parties do not express appoint each,
but if their behaviour suggests otherwise then it becomes possible to infer a possible
principal – agent relationship.

c) Necessity

This is an agency by operating of the Law and it deals with cases where the law does
recognize the fact that in certain situations emergencies arise which may necessitate a person
to act promptly in order to protect the interests of another by doing acts which that other
person may have done if he were himself present. In other words, this is a relationship which
will arise when the agent does an unauthorised act due to a situation which he finds himself
in as a way of preventing a greater loss on the part of the principal. There are, however, a
number of requirements that must be satisfied for one to qualify to be called an agent of
necessity:

i) There must be a genuine Commercial Emergency

In this case for one to quality to be called an agent of necessity, there is need to prove the
existence of emergency of a commercial nature. For example, in Great Northern
Railway V Swarfield (1874) LR 9, the defendant sent a horse from one destination to
another using a plaintiff’s railway. There was however, no direction as to the horse being
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 delivered to any particular place. The horse arrived but there was no one there to receive,
thus the plaintiff had no choice but to put the horse in the care of a stable. Eventually the
defendant came to collect it but was told that he could only collect it upon payment of the
cost of maintaining the horse at the stable. The court held that the plaintiff should
recover the amount spent on maintaining the horse at the stable cause they acted out of
necessity.

ii) It must have been impossible or impracticable to get instructions from the Principal

The obvious logical action for an agent who faces an unaccepted emergency is to obtain
further instructions from the principal, thus, for one to qualify to be called an agent of
necessity, it ought to be shown that the person who acted on behalf of another could not
obtain that other’s instructions before acting because it was impracticable or
commercially impossible to obtain such instructions. In Springer V Great Western
Railway (1921) 1 KB 257, the plaintiff instructed the defendant railway company to
transport tomatoes by ship and then by train to London. Owing to bad weather the ship
delayed for three days and but when it finally arrived, the railway employees were on
strike and so off loading was delayed for a further two days. Worried that the tomatoes
would go bad, the railway company sold the tomatoes off locally without communicating
as they should have done with the plaintiff.

The plaintiff then brought an action for damages and the court held that there was no
agency of necessity in this case since communication was not impossible.

iii) The act must be done with the principal’s best interest in mind:

The law does not encourage people to employ themselves all in the name of necessity
and thereby impose liabilities on other people behind their backs. It is a requirement;
therefore that the agent must have acted bone fide in the principal’s interest rather than
the agent’s own interests and must have acted reasonably in the circumstances. In Sachs
V Miklos (1948) 2 KB 23, The defendant accepted to store the plaintiff’s furniture for no
charge to the plaintiff. Subsequently the plaintiff changed address without informing the

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 defendant. In due course, the defendant’s premises were destroyed by bombing and the
defendant then wished to use the room in which the plaintiff’s furniture was stored. The
defendant attempted to communicate with the plaintiff but to no avail and he then sold
the furniture to create room for himself and when the plaintiff finally re-appeared, he
sued the defendant for damages for conversion. The court held that the defendant was
liable for he had not acted in the best interest of the plaintiff but for his own convenience.

d) Agency by Ratification

This occurs when the agent does an act on behalf of his principal without the principal’s prior
authority and the principal subsequently adopts the act done. The act of ratifying has
retrospective effect and it can be done either expressly or by implication. For ratification to
take place, the following principals must be met:

 A non-existent principal cannot ratify an agent’s act purportedly done on his behalf,
thus the principal must be in existence at the time the act was done. In Kelner V
Baxter (1866) LR 2 CP 174, were promoters of a company were personally liable
for the contracts entered into prior to the incorporation of the company.

 The Principal must have had capacity at the time of the act:

As already alluded to earlier; that which one can do, he can do through another, thus
it is a requirement that for a principal to ratify an agent’s unauthorised act, he (the
principal) must have had the capacity to have done it himself at the time of the act.
It is in this vain that a minor cannot upon attaining majority ratify acts that were
done whilst he was still a minor.

 The act must be ratifiable:

The act performed by the agent which the principal seeks to ratify must be ratifable.
An act which is illegal or contrary to public policy, for example cannot be ratified e.g.
aversion of paying tax.

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  Agency by estoppels:

This is an equitable principle where a person holding out another as having authority
to represent him will be stopped (prevented) or precluded from denying the agents
authority to deal with the goods in the manner that the agent so deals.

 Agency by Cohabitation:

A wife cohabiting with her husband is regarded as having authority to pledge her
husband’s credit for necessaries. However, the correct position seems to suggest that
such cohabitation does not give such authority but merely gives rise to a rebuttable
presumption that the husband has given his wife authority to pledge his credit. It
should, however, be mentioned that this presumption is rebuttable by the husband
showing that his wife is adequately supplied with necessaries or that the goods
supplied are not necessaries and that the husband had expressly forbidden it
(Debenham V Mellon (1880) 6 AC 24.)

 Agency under Statutory Provisions:

Provisions of certain Acts of Parliament provide for the existence of an agency

relationship between parties by virtue of certain arrangement between them. This can
be seen in Section 5 of the Partnership Act 1890 which provides that partners are for
purposes of doing business agents of one another.

Authority of an Agent

One of the essential features of any agency relationship is his power to affect the legal position of the
principal in relation to a third party. His actions may have the effect of binding the principal such that if
there are any benefits or liabilities to be incurred they will generally fall on the principal. However, for
this to occur the agent must have authority from the principal and this authority may be created
differently.

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 a) Express Authority

This type of authority arises from the direct giving of authority by the principal to the agent and
this 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

This can be said to be the indirect giving of authority by the principal to the agent and it arises
from the conduct of the parties towards one another.

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
authorised the other person to act on his behalf. This is described as “apparent authority”.

d) Usual Authority

This is a type of authority which an agent is expected to have in his normal area of operation.
Thus, this is not a type of authority which the principal gives to the agent but may arise from
practices or customs in his area of operation e.g. a lawyer will have the usual authority to sign
certain documents on behalf of his client.

e) Actual Authority

This is sometimes referred to a “real authority” and it arises from some form of consensual
agreement between the principal and the agent.

Disclosed and Undisclosed Agency

The general rule is that where an agent makes a contract on behalf of his principal, the contract is
essentially between the principal and the third party and prima facie at common law its only the
principal who can sue or be sued on the contract.

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 i) Disclosed Agency

This refers to a situation where the agent discloses or reveals to a third party that he is acting as
an agent. The effect of this disclosure is that a direct contractual relationship is created between
the principal and the third party and either party can sue the other on the contract. Thus where
the principal is disclosed the general position is that he and not the agent is liable on the contract
and may be sued. On the other hand, it was observed in Keighley Maxted V Durant that it is
only a disclosed principal who can ratify an agent’s unauthorised contract.

ii) Undisclosed Agency

Undisclosed agency refers to an agents contracts with a third party without disclosing that he is
acting as an agent. Thus, in principle such a contract is generally between the agent and the third
party and not the principal and only them can enforce it against each other. However, in the light
that an agent acted within his actual authority, then the principal can intervene and enforce the
contract against the third party. Upon the existence of the principal being discovered by the third
party, the third party may also choose whom to sue between the principal and the agent, but he
cannot sue both. This is known as the right of election.

Duties of an agent

The nature of the relationship between principal and agent entails certain rights and duties between the
parties:

i) Duty to Obey Instructions

An agent is under a general duty to obey his principal’s lawful and reasonable instructions. He is
contractually obliged to perform the duties he has undertaken to do under the contract and if he
breaches or fails in these obligations, he is liable for breach of contract.

ii) Duty to exercise reasonable care

An agent owes his principal the duty of reasonable care in executing his authority. The standard
care is what is reasonable in the circumstances and this will depend on the facts of each case.
Thus, 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 competent member of that profession.
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 iii) Duty to Avoid Conflict of Interest

Under this an agent has a duty to avoid engagements in which he has or can have conflicting
personal interests or interests which may conflict with the interests of his principal. In Luciferd
V Castel (1887) 2, Times LR 371, an agent appointed to buy a yatch bought it himself and then
re-sold it to the principal for a profit. The agent in this case was ordered to pay the profit to his
principal.

Similarly an agent instructed to sell the principal’s property and buys it himself will also be in
breach of his duty as in both situations there is the obvious conflict of interest.

iv) 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 the principal. It is irrelevant that the agent acted in good faith or that the principal
suffered no loss.

v) Duty not take a bribe:

A bribe is a form of secret profit, a bribe is any payment made by the third party to the agent, the
third party knowing that the agent is of the principal and that the payment is kept from the
principal.

vi) Duty to Account

In the same way that an agent may not make a secret profit from the use of his principal’s
property, an agent is also under a duty to keep his own property separate from that of his
principal. Furthermore, the agent must also keep full and accurate books of accounts for all
transactions entered into on behalf of the principal. Where the agency is terminated, the agent
must deliver up to the principal any books, accounts and any other documents given to him.

Rights of an agent

Although the Law imposes on the agent a number of duties it confers relatively few rights on the agent.
Generally the agent’s rights depend on the contract, if any, between the agent and the principal. Apart
from such contractual rights, the Common Law recognizes three general rights:
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 i) Payment of a Commission:

As a general rule, a commercial agent as opposed to a gratuitous agent is entitled to receive

a commission for the work done. How much will be paid may depend on the agency
contract implied from common practices in an area of operation or even statutes. Where a
right of payment is implied, the agent will be entitled to a reasonable sum for his services
assessed on a quantum meruit basis.

In as far as the right to remuneration is concerned; an agent will only be entitled to

remuneration if that has been agreed with the principal. Thus as a general rule, an agent is
only entitled to a commission and not remuneration unless expressly agreed with the
principal.

In Way V Latilla (1937) 3 ALLER, 759, the court amongst other things held that since
there was a contract of employment between the parties, which clearly indicated that the
work was not to be done gratuitously and the appellant was therefore entitled to a
reasonable remuneration on the implied contract to pay him a quantum meruit.

ii) Right to Indemnity:

All agents are entitled to be reimbursed and indemnified against expenses incurred in the
course of performing the duties. However, the agent is only entitled to be indemnified
against reasonable and necessary expenditure incurred whilst working for the principal.

iii) The Right to a lien:

This right is commonly used to protect an agents’ right to a Commission or remuneration

or indemnity. An agent may be entitled to a lien over the principal’s property which is in
his possession. A lien is a right to retain the principal’s property as security until some
debt is paid.

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 Liens can be classified into two:

a) General Lien:

Under a general lien, an agent is entitled to hold on to any property belonging to the
principal even if the property is not in any way connected to the transaction in question.
The Law is generally reluctant to recognize rights to a general lien and hence, most
agents are only entitled to a particular lien.

b) Particular Lien:

A particular lien only entitles the agent to hold on to the principal’s property until the
debt relating to that property is discharged. An agent will lose his right to a lien if his
conduct indicates an intention to waive.

Termination of a partnership agreement

The relationship of principal and agent may be terminated by an act of the party to it or by the operation
of the law. The following are some of the ways in which the relationship may be brought to an end:

a) Notice: A notice of revocation given by the principal to the agent effectively terminates the
relationship. In the same vein, a notice of renunciation may be given by the agent to the
principal terminating the relationship. Where no period of notice is stipulated, either party may
terminate by giving reasonable notice.

b) Completion of the Assignment: Where the agency is created for a specific transaction, it will
be terminate when the transaction has been completed.

c) Mutual agreements: The principal and the agent may by mutual agreement terminate the
relationship which they created by mutual consent in the first place.

d) Lapse of time: Where the agency is for a fixed period of time, it will come to an end at the
expiration of time but if no period is stipulated, the agency can still come to an end within a
reasonable period of time.

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 e) Frustration: This refers to the occurrence of an unforeseen event which renders the
performance of the agency relationship impossible. An example of this is the destruction of the
subject matter, death, ill health or even change in the Law.

Unit summary
In this unit you have learnt the following:

 Concepts of Agency

 Duties, liabilities, rights and authority of Agency

 Termination of Agency

Activity

What are the duties of an Agent?

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UNIT SIX CONTRACT FOR THE SALE OF GOODS

Introduction

Sale of goods contracts are a branch of the general law of contracts and thus the necessary elements
required for the formation of an ordinary contract are applicable. Sale of goods contracts are considered
to be amongst the oldest commercial transactions in human civilization history. These contracts were
initially governed by customs until the passing of the Sale of Goods Act of 1893 which attempted to
codify the common law principles of contract law.

Section 2 of the Sale of Goods Act (SOGA 1893), defines a contract for the sale of goods as;

“A contact in which the seller transfers or agrees to transfer the property in goods to the buyer
for a money consideration called the price”

Learning Outcomes

Implied Terms

These are terms which are automatically brought into the contract for the sale of goods even in the
absence of an express agreement between the seller and the buyer. Under the provisions of sections 12 to
15 of the SOGA, there are certain terms that are implied in a contract for the sale of goods.

(a) Section 12- Seller has the right to sell

In a contract of sale there is an implied condition on the part of the seller that in the case of a sale
he has a right to sell the goods and that in the case of an agreement to sell he will have a right to
sell the goods at the time when property is to pass. There is also an implied warrant that the
buyer shall have and enjoy quit possession of the goods and that the goods shall be free from any
charge or encumbrance in favor of any third party, not declared or disclosed to the buyer either
before or at the time when the contract is made.

National Institute of Public Administration – Outreach Programmes Division 38

 ROWLAND V DIVALL (1923)

(b) Section 13- Sale by Description

Where there is a contract for the sale of goods by description, there is an implied condition that
the goods shall correspond with the description and that if the sale be by sample, as well as by
description, it is not sufficient that the bulk of the goods correspond with the sample if the goods
do not also correspond with the description.

(c) Section 14-Merchantibility

Where goods are bought for a particular purpose which is known to the seller, the description of
those goods must conform to the use for which the goods are bought.

(d) Section 15-Sale by sample

Where there is a contract of sale by sample there is an implied condition that the bulk of the
goods shall correspond with the sample in quality and that the buyer shall have a reasonable
opportunity of comparing the bulk with the sample. Further, there is an implied condition that the
goods shall be free from any defects which would not be apparent on reasonable examination of
the sample.

DRUMMOND V VAN INGEN (1887)

Remedies for breach of a sale of goods contract

The remedies available to the buyer in an event of a breach are as follows:

(a) Right to reject goods

This right to reject the goods is based on a theory that if the seller is not ready or willing to
perform exactly that which the buyer has requested, the buy has the right to reject the goods. For
example; were the seller delivers the wrong quantity or the goods are defective.

(b) Damages

In the event that the seller fails to deliver the goods, the seller can under section 51 of the SOGA
1893 claim damages. Damages are compensation in monetary terms.

(c) Lien

This is an equitable remedy that enables one party to hold on to property in his possession
belonging to another party as a way of protecting his right to a payment. Thus under section 41

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 of the SOGA 1893, the unpaid seller of goods who is in possession of them is entitled to retain
possession of them until payment of the price in goods is fulfilled.

Unit summary
In this unit you have learnt the following:

Activity

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