The Plaintiff issued summons claiming USD 130,000.00 from the Defendants jointly and severally in terms of a settlement agreement entered into on 8 October 2020. The settlement agreement arose from an urgent chamber application (HC 5689/20) relating to a contractual dispute over the sale and purchase of hunting rights and quotas. By the time of the hearing, the Defendants had already paid a large percentage of the sum claimed. The remaining dispute centered on the interpretation of clause 3:3:2 read with clause 3:4 of the Settlement Agreement, specifically whether the Plaintiff had satisfied the condition precedent for payment of USD 21,875.00. The condition required the Plaintiff to provide proof of payment of three (3) instalments of the annual payment due in 2019 by 21 October 2020. The Plaintiff provided proof on 20 October 2020 showing two payments: USD 21,875.00 on 10 May 2019 for the quarter ending March 2019, and USD 42,000.00 on 2 March 2020 for the quarters ending June and September 2019. The Defendants contended that proof of 4 instalments should have been provided.
The court ordered: (1) The Defendants jointly and severally, one paying the other to be absolved, to pay the Plaintiff USD 21,875.00 or the equivalent in RTGs$ convertible at the inter-market bank rate at the time of payment; (2) The Defendants to pay interest at the prescribed rate from 21 October 2020 to the date of payment in full; (3) The Defendants to pay costs of suit on a legal practitioner and client scale.
Where a settlement agreement contains a condition precedent for payment that requires proof of payment of a specified number of instalments by a certain date, the condition is satisfied when proof of exactly that number of instalments is provided, and the court will not read in additional requirements not expressly stated in the agreement. A compromise agreement extinguishes and replaces the original agreement between the parties. Courts must interpret contracts and uphold the intentions of the parties as expressed in the agreement, provided the agreement meets all the elements of a valid contract. When interpreting conditions precedent, only those conditions expressly stated in the agreement will be enforced.
The court noted that the settlement agreement was a compromise, being a settlement by agreement of disputed obligations. The court also observed that by the time of the hearing, the parties had made tremendous progress in settling the matter, with the Defendants having already paid a large percentage of the sum claimed, leaving only the interpretation of the specific clauses as the live controversy between them.
This case provides guidance on the interpretation of settlement agreements in Zimbabwean law, particularly regarding the enforcement of conditions precedent. It reinforces the principle that courts must interpret contracts according to the actual intentions of the parties as expressed in the written agreement, without reading in additional requirements not explicitly stated. The case also illustrates the binding nature of compromise agreements and their effect in extinguishing and replacing original contractual obligations. It is significant for commercial parties in understanding how precisely worded conditions precedent will be interpreted and enforced.