Calisto Chirenje v (1) Vendfin Investments (Private) Limited (2) H S M Ushewokunze (3) Divine Homes (Private) Limited

The appellant and 23 other applicants purchased serviced residential stands (subdivisions of Stand 399 Highlands Estate of Welmoed Township, Harare) from Divine Homes (Pvt) Ltd in 2001. Before title could pass, the property was sold in execution and transferred to Vendfin Investments (Pvt) Ltd, a nominee of Ushewokunze. This led to litigation between Divine Homes and Ushewokunze, which culminated in a consent court order dated 4 May 2005 incorporating an agreement between them. Clause 4 of the agreement provided that Ushewokunze would offer the 62 purchasers (including the applicants) the stands at $60,000 per square metre, with the offer open for 7 working days. Clause 9 allowed the parties to amend the agreement if reduced to writing and signed. On 21 and 28 June 2005, Divine Homes and Ushewokunze signed an addendum amending the price to $60,000 per square metre or the prevailing market price, whichever was higher. Ushewokunze then offered the property to applicants at $200,000 per square metre (the prevailing market price). The applicants rejected this and applied for a provisional order compelling Ushewokunze to offer the property at the original $60,000 per square metre price and an interim interdict preventing disposal of the property. The High Court (Bhunu J) dismissed the application.

• Whether the applicants had acquired enforceable rights under the contract for the benefit of a third party between Divine Homes and Ushewokunze
• Whether a vinculum juris was created between the applicants and Ushewokunze entitling them to sue on the contract
• Whether the amendment to the agreement was valid and enforceable
• Whether the amendment constituted an illegal variation of a court order
• Whether the applicants established a prima facie case for an interim interdict

The appeal was dismissed with costs.

In a contract for the benefit of a third party, the beneficiary third party's right to sue and obligation to be sued under such contract only accrue upon the offer being communicated to and accepted by the third party in terms of the contract. It is the communication of the offer and the acceptance of the offer that creates the vinculum juris which creates the entitlement to sue. Without communication and acceptance of an offer, a third party beneficiary cannot sue or be sued upon the contract. Where an agreement incorporated into a court order expressly confers on the contracting parties the power to amend the agreement in a prescribed manner, amendments made in compliance with those terms are valid and do not constitute illegal variations of the court order.

The Court noted that Divine Homes, as a party to the agreement, could have sued Ushewokunze to make good the offer before it expired. The Court also observed that had Ushewokunze communicated the offer to the applicants and then sought to withdraw it prior to the expiry date, the applicants might have had a cause of action. The Court stated that the argument that the original agreement could not be altered because it formed part of a court order was "simply untenable" and did not merit detailed consideration given the express language of clause 9 conferring unfettered power to amend.

This case is significant in Zimbabwean contract law for clarifying the principles governing contracts for the benefit of third parties (stipulatio alteri). It establishes that third party beneficiaries cannot enforce rights under such contracts until an offer has been communicated to them and accepted, following the South African precedent in McCullogh v Fernwood Estate Ltd. The case also demonstrates that parties to a consent order incorporating an agreement retain the power to amend that agreement if the agreement itself expressly provides for such amendments, and such amendments do not constitute improper variations of court orders. The judgment reinforces the distinction between the rights of contracting parties and those of third party beneficiaries, and the temporal element in the creation of enforceable rights under stipulatio alteri arrangements.