Mark Mbayiwa v (1) Alfas Muvavarigwa Chitakunye (2) Dainah Ndoro

On 18 August 2005, the appellant entered into two separate oral agreements with the respondents: (1) to sell a Massey Fergusson MF 185 tractor to the first respondent for $180 million, and (2) to sell a bowser to the second respondent for $15 million. The total purchase price was $195 million. The parties agreed that a non-refundable deposit of $20 million would be paid on the date of the agreements, with the balance of $175 million to be paid within three (3) banking days by electronic transfer into the appellant's bank account at AGRIBANK Bulawayo. The deposit was paid on 18 August 2005. On 20 August 2005, the first respondent paid $150 million by electronic transfer into the appellant's account. On 22 August 2005 (the last of the three banking days), the first respondent contacted the appellant and advised him of the $150 million payment and stated that the balance of $25 million would be paid later that day. Later that day, the first respondent offered to pay the $25 million in person when collecting the tractor and bowser, but the appellant refused to accept this payment and cancelled the agreements of sale on the basis that the respondents had not paid the balance of the purchase price within the agreed time and manner.

• Whether a tender of payment not in accordance with the contractual terms constitutes valid performance of a contract
• Whether payment of the balance in person rather than by electronic transfer into the appellant's bank account constituted valid tender of performance
• Whether the appellant was obliged to accept payment in a manner different from that agreed upon in the contracts
• Whether the appellant's refusal to accept payment tendered in person constituted prevention of performance entitling the respondents to specific performance
• Whether the time and mode of payment were of the essence of the contracts

The appeal was allowed with costs. The judgment of the court a quo was set aside and replaced with an order dismissing the application with costs.

To constitute valid tender of performance, payment must comply with all the requirements of valid performance as specified in the contract. Where a contract stipulates specific terms as to time, place and mode of payment, a tender will not be valid unless it complies exactly with those terms. A creditor is not obliged to accept payment that is not in accordance with the contractual terms, even if offered within the stipulated time period. Where parties have made the time and mode of payment of the essence of the contract (particularly by reference to banking business hours and electronic transfer methods), substantial compliance is insufficient - exact compliance is required. Failure to make a valid tender of payment in accordance with contractual terms constitutes a breach that may be treated as repudiation of the contract, releasing the other party from the duty to perform.

The Court observed that the parties had dealt with the two separate agreements as if there was a single purchase price for two movables from a single source of payment. The Court also noted, without deciding the point definitively, that in making the time of payment by reference to hours of normal banking business operations, the intention of the parties appeared to be that the method of payment specified (electronic transfer) had to be specifically complied with for there to be valid performance. The Court further observed that an incorrect tender may be withdrawn and does not preclude the promisor from subsequently making a proper tender within the time limited, unless the incorrect tender is construed as a repudiation of the contract.

This case establishes important principles in Zimbabwean (and by extension South African) contract law regarding the strict requirements for valid tender of performance. It confirms that where parties have stipulated specific terms as to the time, place and mode of payment, a debtor must comply exactly with those terms for there to be valid performance. The case is significant for establishing that a creditor is not obliged to accept payment in a manner different from that contractually agreed upon, even if the payment is offered within the stipulated time period. It reinforces the principle that where specific performance is stipulated (performance in forma specifica), substantial compliance is not sufficient - exact compliance with contractual terms is required. This is particularly important in commercial transactions where parties have negotiated specific payment mechanisms such as electronic transfers.