CBZ Bank (plaintiff) granted a loan facility of USD 60,000 to Axis Medical Corporation (first defendant) on 8 November 2011, with the loan due to expire on 31 December 2012. The second, third and fourth defendants stood as sureties and a mortgage bond was registered over property owned by the fourth defendant. First defendant instructed plaintiff to effect a telegraphic transfer of USD 9,753 to Paramed International in Dubai as a deposit for converting 4 vehicles to ambulances. Plaintiff delayed in processing the transfer, missing Paramed's 12 December 2011 deadline, only effecting payment on 14 December 2011. Paramed had warned that failure to meet the deadline would result in vehicles being sent to storage at USD 130 per container per day and production delayed until April 2012. However, on 18 December 2011, Paramed's accountant confirmed receipt of payment and advised that production would commence soon but delivery would be delayed by 3-4 weeks. On 23 January 2012, Paramed's general manager informed first defendant that vehicles had been sent to warehouse on 15 December 2011. First defendant accepted liability for storage charges without challenge. The loan remained unpaid and plaintiff sued for USD 59,977.96 capital plus interest and charges. Defendants counterclaimed USD 458,933.32 in damages alleging breach of the loan facility agreement and banker-client contract.
1. Defendants to pay plaintiff jointly and severally the one paying the others to be absolved: (i) capital sum of USD 59,977.96; (ii) interest of USD 26,685.95; (iii) bank charges of USD 202.80; (b) interest on outstanding capital at 28% per annum from 1 September 2013 to date of full payment; (c) Stand number 500 Ruwa Township of Stand No. 2015 Ruwa Township registered in fourth defendant's name declared specially executable to satisfy the judgment; (d) Defendants to pay plaintiff's costs of suit on attorney and client scale. The counterclaim was dismissed.
Where a contracting party has condoned a breach of contract by accepting late performance and confirming that the contract will proceed (albeit with modified timelines), it cannot subsequently enforce the original consequences threatened for that breach. A party who negligently fails to enforce clear contractual rights and defenses, particularly where condonation of breach has been communicated, cannot claim damages from a third party for losses arising from that failure. The consequences of a party's own negligent failure to protect and enforce its contractual rights cannot be visited upon another party, even where that other party may have contributed to the initial breach.
The court observed that the defendants' directors 'slept on the job' by failing to raise the obvious defense of condonation to Paramed's claim for storage charges. The court noted it was 'highly unlikely' that Paramed's accountant would have responded to the first defendant's enquiry about shipment timing without liaising with the general manager or sales department, suggesting the condonation was authorized at the highest level. The court commented that it was 'strange to say the least' for first defendant to acquiesce in Paramed's attempt to go back on its word without seeking an explanation. The court also noted that the parties had agreed to determine various issues at pre-trial conference relating to the Consumer Contracts Act, Contractual Penalties Act, and the contra proferentem rule, but found it unnecessary to address these issues given the determinative nature of the condonation finding.
This case is significant in Zimbabwean contract law for establishing that where a party condones a breach of contract by the other party, it cannot subsequently seek to enforce the consequences of that breach. The judgment emphasizes the duty of parties to protect and enforce their own contractual rights diligently, and that failure to do so cannot be visited upon third parties. The case also illustrates the principle that parties cannot claim damages arising from their own negligent failure to assert valid contractual defenses. It reinforces the importance of consistency in contractual dealings and the legal effect of condonation in commercial transactions.