The two appellants were sole directors and shareholders of International Public Relations (Private) Limited (IPR). In 1993, they established a separate company, NEB Promotions (Private) Limited (NEB), to profit from selling Jurassic Park memorabilia under a merchandising license. NEB was essentially a shell company dependent on IPR's resources. On 20 October 1993, the appellants met with Screenspeed directors to arrange for Screenspeed to produce items for sale under the license. The appellants signed personal suretyships for NEB's obligations to Screenspeed. However, when Credit and Finance Corporation declined to factor debts for NEB due to lack of credit history, they agreed to factor debts for IPR instead, which had prior dealings with them. Subsequently, all invoices were issued to IPR, not NEB. Both IPR and NEB later went into liquidation, with nearly one million dollars owed. Screenspeed claimed the outstanding debt of $658,417.44 from the appellants as sureties.
The appeal was allowed with costs. The order of the court a quo was amended to read: 'The plaintiff's claims are dismissed with costs.'
A party cannot approbate and reprobate - that is, it cannot take inconsistent positions by claiming one entity as the principal debtor in liquidation proceedings and subsequently claiming a different entity was the true contracting party. Where a creditor has sworn affidavits in liquidation proceedings identifying a specific company as the debtor and stating that no other person besides that company is liable (other than as surety), the creditor is bound by those declarations against interest and cannot subsequently claim that a different company was the principal debtor in order to enforce a suretyship agreement. Such declarations against interest, made under oath, carry decisive weight in resolving ambiguities about the identity of the contracting party.
The court observed that in determining the identity of a contracting party where there is ambiguity, the court should: (1) first determine on the probabilities what was actually agreed; (2) fit that agreement into a legal framework; and (3) confirm or modify the interpretation by reference to the subsequent conduct of the parties, as parties sometimes use language inappropriate to what they actually mean. The court noted that an agent may contract in its own name and normally will not be liable where the other party knows he is only an agent. The court also noted that the documentation being in IPR's name was neutral in determining the principal's identity, given the factoring arrangement required invoices to be addressed to IPR. The court acknowledged that, but for Screenspeed's proof of claim in IPR's liquidation, it would have agreed with the trial judge that the contract was with NEB.
This case is significant in Zimbabwean contract law for establishing important principles regarding the identification of parties to a contract, the doctrine of approbation and reprobation, and the evidentiary weight of declarations against interest. It demonstrates that parties cannot take inconsistent positions in legal proceedings - particularly where they have made sworn statements identifying a particular party as the debtor, they cannot subsequently claim a different party was the true debtor. The case also illustrates how subsequent conduct of parties can be used to interpret contractual relationships, but that formal declarations under oath carry particular weight in resolving ambiguities about the identity of contracting parties.