Faculty of Law

Department of Legal Undergraduate Programs

Group Name: Group 3

Programme : LLBS & BLS 1.2
Module Title : Law of Contract
Lecturer : Mr. W. Makhuyana
Due Date : 29 April 2025

ASSIGNMENT QUESTION

Xolani approaches Stanbic Bank for a loan. The bank approves $20000.00, and parties sign a
loan agreement in which Xolani agrees to repay the loan amount with interest over a 6-month
period. The monthly repayment falls due on the 25th of each month. In terms of the agreement,
the bank deducts the amount directly from Xolani’s account on the due date. The last instalment
is due on the 25th of October 2015. A few days before the last instalment, the 24th and the 25th
of October 2015 are declared public holidays. As a result, Xolani is unable to deposit money
into his Bank account. On the 1st of November Xolani receives an email from the Bank advising
him that he is in breach of his contract as he did not settle the last instalment. Xolani replies to
the email 2days later confirming that he didn’t pay but arguing that it was impossible for him
to pay on the 25th of October 2015 as it was a public holiday. Soon after, Xolani gets a call
from a company in South Africa offering him a job. Xolani leaves for South Africa on the 7th
of November 2015. He only returns on the 1st of January 2019. When the Bank learns of his
arrival, it immediately serves him with summons claiming breach of contract and demanding
payment of the last instalment together with penalty interest for the period and costs of suit.
Xolani is not sure whether he should pay the debt. Advise Xolani. (20 marks)

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Group Coordinators:
No. Name Reg. No. Programme
1 Chikwanda M Mdiwa R2422506 LLBS
2 Dube Clyde R2426275 BLS

Writers and Editors

3 Chikukwa Kudakwashe R2422529 LLBS
4 Chikumbu Shalom R2426007 LLBS
5 Dara Trish R2423414 BLS
6 Dzudzo Tawanda R2419683 BLS
7 Maruve Tazvitya R2111853 BLS
8 Chisema Tinotenda R2418067 LLBS

Group Members:
9 Chikonji David T R2422450 LLBS
10 Chifamba Glenda T R048327Y BLS
11 Chikandwa Takudzwa R2422401 LLBS
12 Chikobvore Challene R2422513 LLBS
13 Chikofi Kudakwashe R2422505 LLBS
14 Chikonyora Tinodaishe B R2422442 LLBS
15 Chimbarami Hillario R2422489 LLBS
16 Chinamasa Anopaishe R2422500 LLBS
17 Chingovo Joshua R2422516 LLBS
18 Chinondira Tineyi R197536H LLBS
19 Chinyama Akudzwe R2422576 LLBS
20 Chiwada Izwiraishe R2417801 LLBS
21 Chiwanza Chamunorwa R2419662 BLS
22 Date Gerald R2419604 BLS

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23 Foroma Shalom R2422885 BLS
24 Gahadzikwa Tinevimbo R2423210 BLS
25 George Celesty R2424634 BLS
26 Gomondah Tandiwe R061844P BLS
27 Jumbe Wilberforce R142058L BLS
28 Hamandawana Zowe R2423214 BLS
29 Mlambo Lorraine R236603N LLBS
30 Shanel T Zvoushe R235307U LLBS
31 Masukume Success R238350P LLBS
32 Nzipho Sibusisiwe R235225T LLBS

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INTRODUCTION

This essay examines whether or not Xolani remains legally obligated to pay the final instalment
of a $20,000 loan from Stanbic Bank. Moreso it is going to bring out the legal issues such as
breach of contract, supervening impossibility, prescription, the possible remedies, pros and
cons of the remedies and lastly the legal advice that Xolani as our client is bound to follow.
Nonetheless, upon careful examination of the facts the issue remains that Xolani breached his
contractual obligations with Stanbic Bank and he is liable to payment of the last instalments as
agreed.

LEGAL ISSUES IN XOLANI’S CASE

1. Whether or not there was a contract between Xolani and Stanbic Bank

To start with, we need to ascertain whether or not there was a contract between Stanbic Bank
and Xolani. A contract is a legally enforceable agreement, a promise to undertake a
responsibility or an obligation by two or more parties1. Xolani, approaches Stanbic Bank for a
loan. The Bank approves $20,000.00 and both parties sign a loan agreement in which Xolani
agrees to repay the loan amount with interest over a 6-month period. The monthly
repayments fall due on the 25th of each month, Xolani was to deposit on the repayment along
with the interest accrued on the 25th of each month. This suffices for the existence of a
contract.

2. Whether or not there was a breach of contract

A breach of contract occurs when one of the parties fails to honor his or her obligation, in a
contract. It also occurs when there is fault on the part of the person breaching the contract2.
The breach in this case relates to mora ex re.2 This breach occurs when the contract stipulates
the date on which performance was due, in fact Stanbic does not have to do anything for
Xolisani to be in breach of his contract as enunciated in the classical case of Laws V
Rutherfurd3.

1 The Law Of Contract In Zimbabwe, I.Maja (2015)

2 ibid
3 Laws V Rutherfurd. 1924 AAD 173 195 (Innes CJ)

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POSSIBLE REMEMEDIES FOR XOLANI

1. Whether or not there was supervening impossibility of Performance

Supervening impossibility occurs when performance of a contractual obligation is

rendered impossible after conclusion of the contract because of circumstances beyond
human capabilities. The impossibility should not arise from any party’s fault, it should
also be due to vis major or casus fortuitus.4 This principle is long established in both
Roman-Dutch law and modern common law systems. In the case of Peters, Flamman &
Co. v Kokstad Municipality,5 the court held that a contractor was excused from
performing due to the outbreak of World War I, which rendered performance legally
impossible.

On the days before the last instalment, the 24th and 25th October 2015 the powers be,
declared public holidays. The final loan instalment fell on the 25 October 2015, a
declared public holiday. Notably, the 24th of October was also a public holiday, meaning
that banking operations were suspended for a consecutive two-day period. The
agreement was that Stanbic Bank was supposed to deduct the amount directly from
Xolani's account. However, Xolani was incapacitated to deposit the last instalment due to
a temporary disability.

This situation constitutes a "temporary legal impossibility" to which courts have

recognised as sufficient to excuse non-performance. In Unibank Savings & Loans Ltd v
Absa Bank Ltd,6 the court acknowledged that performance impeded by statutory or
administrative barriers could be excused when such barriers were not anticipated by either
party.

Furthermore, Zimbabwe's Interpretation Act [Chapter 1:01],7 specifically Section 14,

provides that when an obligation falls due on a non-business day (including public

4 The Law Of Contract In Zimbabwe, I.Maja(2015)

5 Peters, Flamman & Co v Kokstad Municipality, 1919 AD 427.
6 Unibank Savings & Loans Ltd v Absa Bank Ltd, 2000 (4) SA 191 (W).
7 Interpretation Act [Chapter 1:01], Zimbabwe.

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 holidays), the party may lawfully perform on the next business day. This principle was
upheld in Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd,8 where
the court emphasised the necessity of Interpretating contractual deadlines in light of
practical realities, including statutory holidays and business closures.

However, Xolani should note that the temporary incapacitation was only valid for two
days, the 24th and the 25th of October 2015, these two days may be excluded for non-
performance though the court may hold him accountable for the remaining days up to the
1st of January 2019.

2. Whether or not prescription of the Debt suffice.

Prescription in law refers to a time limit to which either part can claim and or enforce
contractual right or obligation, should a party or creditor fail to claim a right within that
time frame they absolve their rights to litigate against either party. The bank's claim may
be defective in the context that the debt may have prescribed under Zimbabwe's
Prescription Act [Chapter 8:11]9. According to Section 15 of the Act, a contractual debt
prescribes after three years from the date it becomes due, unless interrupted by legal action
or acknowledgement of debt.

However, Xolani acknowledged non-payment in an email on the 3rd of November 2015,

thereby interrupting prescription. The prescription period restarted on 3 November 2015,
giving the bank until 2 November 2018 to institute legal proceedings. The bank only served
summons after 1 January 2019, more than three years later, therefore it is a possible defence
for Xolani not to pay. It is trite law, as enunciated in the ratio decidendi of Santam Ltd v
Ethwar,10 the South African Supreme Court of Appeal held that once the statutory period
has lapsed without interruption, the debt is extinguished, and the debtor is no longer legally
obliged to pay. Similarly, in Moyo v Agricultural Finance Corporation,11 the Zimbabwean
Supreme Court ruled that a mere acknowledgement of a debt is insufficient unless followed
by actual legal proceedings within the prescriptive period.

8 Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd, 1998 (1) SA 811 (SCA).
9 Prescription Act [Chapter 8:11], Zimbabwe.
10 Santam Ltd v Ethwar, 1999 (2) SA 244 (SCA).
11 Moyo v Agricultural Finance Corporation, 1995 (1) ZLR 258 (S).

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 The rationale behind the prescription doctrine is rooted in the need for legal finality,
memory may fade, documents may be destroyed, and witnesses may no longer exist. As
held in Uitenhage Municipality v Molloy12 creditors bear the responsibility of acting within
the statutory timeframe to enforce their rights. Failure to do so results in the permanent
extinction of the claim.

However, according to the Prescription Act, the same act section 6(1)(b), it states that, and
I quote “the person in favour of whom the prescription is running is outside Zimbabwe
or is married to the person against whom the prescription is running or is a member of the
governing body of a juristic person against whom the prescription is running”13. Xolani
was outside the country and the bank could not have served him with summons.

3. Equity and Good Faith in Contractual Relations

Modern contract law increasingly emphasises the role of fairness and good faith in the
enforcement of contracts. The Bank's rigid insistence on immediate payment, despite
known public holidays, may have been unreasonable. Although Xolani’s behavior after the
3rd of November 2015 leaves a lot to be desired. The bank may have a reasonable claim
against Xolani after the 3rd of November 2015.

LEGAL ADVICE

In the case of Xolani and Stanbic Bank, the circumstances surrounding the missed payment on
the loan raise important legal and ethical considerations. There are several facts around
Xolani’s case that make him liable enough to pay his debt and the bank has got strong claims
such that Xolani cannot resist payment. Xolani must pay the last installment of his loan despite
the public holidays that occurred on the due date. The rationale for this position is based on the
principles of contractual obligations, the nature of the loan agreement, and the implications of
Xolani's actions.

To start with, when Xolani entered into the loan agreement with Stanbic Bank, he accepted the
terms that required him to make monthly repayments on the 25th of each month. Contracts are

12 Uitenhage Municipality v Molloy, 1998 (2) SA 735 (SCA).

13 Prescription Act 8 of 11

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legally binding agreements, and parties are expected to adhere to their terms unless there are
valid legal defenses for non-performance (McKendrick, 2019).14 Repudiation is a legal term
under breach of contract which is an anticipatory breach. Repudiation occurs when one
party to the contract acts, by words or by conduct in such a way that clearly and unequivocally
indicates that he or she is not going to honour his or her obligations under the contract. Xolani
in this case despite by inhibited to deposit on the 25th and the 25th of October 2015, he could
have deposited from the 26th which was a Monday up to Friday the 30th of October 2015.

Moreso, prior to the 25th of October 2015, which was a Sunday, Xolani could have deposited
these funds into his account for an automatic deduction to be effected by the bank. The loan
agreement included a provision for automatic deduction of payments from Xolani's account.
Xolani was alive to the fact that the bank would withdraw the payment directly on the due date.
It was his responsibility to ensure that his account had the necessary funds available for this
deduction. As such, the bank's action in declaring him in breach of contract is justified. The
law generally holds that parties are responsible for ensuring they can meet their obligations,
regardless of external circumstances (Cohen, 2015).

Although Xolani communicated with the bank regarding his inability to pay, the timing of this
communication is critical. He only responded to the bank's notification of breach two days after
receiving the email. This delay suggests a lack of urgency in addressing the issue, which further
undermines his position. In contractual relationships, timely communication is essential, and
failure to act promptly can be interpreted as negligence (Parker, 2020).15

The defiance is brazenly extant in that he proceeded to accept a job offer in South Africa,
knowing very well that he was still obligated to settle his debt. This raises a very serious
question about his character and moral campus. This may compel the courts to be punitive.

Xolani should pay the outstanding amount, he risks facing legal consequences, including
penalty interest and additional costs associated with the bank's legal actions. The bank is
entitled to seek recovery of the debt, and Xolani's failure to pay could lead to further financial
repercussions, including damage to his credit rating. However, Xolani can avoid cost of suit by
settling with the bank outside court, which is a just and reasonable given the facts of this matter.

14 McKendrick, E. (2019). Contract Law. London: Palgrave Macmillan.

15 Parker, C. (2020). Equity and Fairness in Contract Law. New York: Oxford University Press.

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BIBLIOGRAPHY

1. Cohen, A; Contract Law: A Practical Guide (2015) London: Routledge.

2. Interpretation Act [Chapter 1:01], Zimbabwe.
3. Maja.I; The Law of Contract In Zimbabwe (2015) Maja Foundations, Harare Zimbabwe
4. McKendrick, E. (2019). Contract Law. London: Palgrave Macmillan.
5. Moyo v Agricultural Finance Corporation, 1995 (1) ZLR 258 (S).
6. Parker, C; Equity and Fairness in Contract Law (2020). New York: Oxford University
Press.
7. Peters, Flamman & Co v Kokstad Municipality, 1919 AD 427.
8. Prescription Act [Chapter 8:11], Zimbabwe.
9. Santam Ltd v Ethwar, 1999 (2) SA 244 (SCA).
10. Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd, 1998 (1) SA 811
(SCA).
11. Uitenhage Municipality v Molloy, 1998 (2) SA 735 (SCA).
12. Unibank Savings & Loans Ltd v Absa Bank Ltd, 2000 (4) SA 191 (W