Elastos Chinyakata v Malian Azimana Failahmed t/a Crystal Cabs and Malian Azimana Failahmed

On 2 May 2011, the applicant Elastos Chinyakata entered into a 'rent to buy' agreement with the respondent Malian Azimania Failahmed trading as Crystal Cabs for a Toyota Spacio (Registration ADB 3702). Under the agreement, applicant would work for respondent and remit a minimum of $50.00 daily (Monday to Saturday) or $300.00 weekly, with the car becoming his after 8 months upon reaching a target of US$13,000.00 in remittances. The applicant had an accident with the vehicle on 1 December 2011 and was allocated another vehicle (ACE 8271). On 31 May 2012, he had another accident and the vehicle was declared a write off. Insurance paid the respondent $4,600.00. On 16 August 2012, the second vehicle was confiscated from the applicant. The applicant then brought this application seeking to void the contract on grounds that Crystal Cabs was not a registered entity and that the contract was impossible to perform, claiming repayment of all monies paid (US$7,500.00) or alternatively recognition as an employee or partner.

• Whether a contract is void when entered into with an unincorporated entity trading under a trade name
• Whether impossibility of performance can be invoked to void a contract when such impossibility is self-created
• Whether economic conditions can render a contract impossible to perform
• The legal status of contracts with entities using trade names but not registered as companies

The application was dismissed. No order as to costs.

A contract entered into with an individual trading under a trade name is not void merely because the trade name is not registered as a company, where the individual party is clearly identifiable and ascertainable from the agreement itself. The doctrine of impossibility of performance will not excuse a party from contractual obligations where the impossibility is self-created or due to the party's own fault. Economic conditions or failure to meet contractual targets do not constitute impossibility of performance where such conditions were known at the time of contracting.

The court observed that the primary advantage of incorporation is that an entity can be sued in its own name as separate and distinct from its members, but entering into contracts is not an exclusive corporate power - unregistered entities can also contract using trade names. The court also noted that applicants had access to income on Sundays when there was no obligation to remit money to the respondent, suggesting the financial arrangement may not have been as onerous as claimed. The court emphasized that in applications for declaratory orders, the court should examine the factual grounds upon which the application is based rather than merely the order sought, citing Geddes Ltd v Tawonezvi 2002 (1) ZLR 479 (S).

This case clarifies important principles in Zimbabwean contract law regarding: (1) the validity of contracts with unincorporated entities using trade names; (2) the doctrine of impossibility of performance, particularly that self-created impossibility does not excuse contractual obligations; and (3) the application of Rule 8C of the High Court Rules 1971 permitting entities using trade names to be sued. It reinforces the principle that courts will look to the substance of contractual relationships rather than technical defects in formalities, and that parties cannot escape contractual obligations through their own fault or changed economic circumstances that were foreseeable at the time of contracting.