Albert Machengete Mashoko v Mobil Oil Zimbabwe (Private) Limited

The applicant leased a service station from the respondent (Mobil Oil Zimbabwe) under an agreement requiring him to procure and sell only the respondent's fuel and lubricants. On 13 February 2004, the applicant's three employees, acting without his knowledge or authority, sourced 10,000 litres of diesel from a company called Lard Oil. The delivery occurred around midnight. The employees paid a $7 million deposit using money stolen from the applicant's daily takings and subsequently falsified records to cover up the theft. They were later arrested and charged. Brian Mudungwe, an employee of the respondent, witnessed the delivery at 1:30 a.m. The respondent terminated the lease agreement, holding the applicant vicariously liable for his employees' actions. The applicant protested that his employees were acting outside the scope of their authority for their own benefit, and brought this application to challenge the termination. The respondent opposed and filed a counter-application for eviction.

• Whether the doctrine of vicarious liability applies in contract law to terminate a valid contract based on employees' breach
• Whether an employer can be held liable for employees' unauthorized actions that constitute breach of contract
• Whether the principles of agency or vicarious liability govern contractual breaches committed by employees
• Whether the applicant's employees acted within the scope of their authority or as agents of the applicant

1. The purported cancellation of the lease agreement between applicant and respondent is declared null and void. 2. The counter-application by the respondent is dismissed. 3. The respondent pays the applicant's costs.

The doctrine of vicarious liability, being peculiarly born and bred of the law of delict based on culpa and social policy, has no equal application in the law of contract. Where an employee's conduct is alleged to constitute breach of contract by the employer, liability is founded on principles of agency, not vicarious liability. For an employer to be liable for an employee's breach of contract, it must be shown that the employee had express or implied mandate to act, or that on some other recognized basis of agency, the employee's acts were the acts of the employer. An employer will not be held liable for employees' unauthorized actions that fall outside the scope of their authority and the employer's contractual obligations, even if those actions involve the subject matter of the contract.

The court observed that in landlord and tenant law, a tenant is generally liable for destruction or damage to leased premises caused by members of his household and those residing with his consent. However, this duty arises not from vicarious liability but from the tenant's duty of care to return the property in the condition received and from contractual obligations to return the property in good condition. The court also noted that the doctrine of vicarious liability was born out of social policy to make the employer, as the ultimate beneficiary of the employee's activities, liable for losses occasioned by the employee, and to protect injured parties where employees lack means to provide redress.

This case is significant in Zimbabwean (and potentially South African) jurisprudence as it establishes the important distinction between vicarious liability in delict and agency principles in contract law. It clarifies that the doctrine of vicarious liability, which is grounded in social policy and culpa in delictual law, does not automatically apply to contractual relationships. The case establishes that for an employer to be held liable for an employee's breach of contract, the principles of agency must apply - the employee must have been acting within the scope of their authority or mandate. This protects contracting parties from being held liable for unauthorized, clandestine actions of employees that fall outside the scope of their employment and the principal's contractual obligations.