The respondent (Tian Ze Tobacco) and appellant (Campion Mugweni) entered into a Tobacco Farming Contract in June 2016. The respondent supplied the appellant with farming implements on credit valued at US$127,253.50. The appellant paid only US$7,000.00, leaving a balance of US$120,253.50. On 12 December 2018, the appellant signed an acknowledgement of debt for the outstanding amount. The respondent subsequently sued for payment and applied for summary judgment. The appellant entered appearance to defend, arguing that: (1) repayment of the first instalment was predicated on a third party (Allied Insurance) paying on his behalf, and the third party failed to pay; (2) he failed to pay the second instalment due to poor tobacco crop yield; (3) the third instalment was not yet due; and (4) following Statutory Instrument 33/2019, the claim should have been in Zimbabwe dollars, not United States dollars.
The appeal was dismissed with costs. The summary judgment granted by the High Court in favor of the respondent for US$120,253.50 was upheld.
The binding legal principles established are: (1) In the tobacco industry, where inputs are advanced in foreign currency sourced from offshore funding, the debt is recoverable in that foreign currency to protect the merchant's investment; (2) Foreign loans and foreign obligations denominated in foreign currency are excluded from the currency conversion requirements of Statutory Instrument 33/2019 by virtue of section 44C(2) of the Reserve Bank Act; (3) Exchange Control Circular No. 7 of 2019 confirms and permits tobacco merchants to recover USD-denominated input loans in foreign currency; (4) A debtor who signs an acknowledgement of debt cannot avoid liability by relying on a third party's failure to pay on their behalf where the third party is not part of the agreement; (5) The parole evidence rule prevents a party from modifying or adding to the terms of a written contract through extrinsic evidence.
The court observed that the tobacco industry has always transacted in foreign currency as a custom, and this has received Exchange Control approval because the industry is the country's major foreign currency earner and should be supported in its endeavors. The court also commented that the fact that Exchange Control Circular No. 7 of 2019 was issued after the signing of the acknowledgement of debt was of no moment, as the appellant was already aware that the industry was allowed to and does transact in foreign currency. The court noted that a debtor cannot rely on misfortunes as a farmer (such as poor crop yield) to avoid contractual liability under an acknowledgement of debt.
This case is significant in Zimbabwean commercial law as it confirms that the tobacco industry's foreign currency transactions are protected and excluded from general currency conversion regulations. It reinforces the principle that foreign-funded agricultural input schemes can recover debts in the currency in which they were advanced, protecting offshore investments in Zimbabwe's key export sector. The judgment clarifies the application of Exchange Control Circular No. 7 of 2019 and the exemption in section 44C(2) of the Reserve Bank Act for foreign obligations. It also reaffirms the application of the parole evidence rule to prevent parties from contradicting written acknowledgements of debt with extrinsic evidence.