The first respondent (Gostino) was the registered owner of Lot 2 of Lot 20A Waterfalls Induna. On 25 August 2008, he gave a mandate to the second respondent (Promenade Real Estate), a registered estate agent, to dispose of the property. On 26 August 2008, the applicant (Mavuto) made a written offer of $225,000,000 Zimbabwe dollars for the property, which he signed but the first respondent did not. The applicant contended that an oral agreement was concluded between the parties on 26 August 2008 at the estate agent's offices, which was subsequently reduced to writing, but the first respondent refused to sign claiming the purchase price had been eroded by inflation. Payment of the purchase price was allegedly made via RTGS into accounts controlled by the second respondent. The first respondent denied the existence of any agreement and refused to sign either the offer form or the written agreement of sale. The second respondent attempted to refund the money to the applicant four days after the transaction.
The application for specific performance was dismissed with costs.
For a contract to exist, there must be a true agreement and meeting of the minds arrived at after acceptance by one party of the other party's offer. Acceptance must be clear and unequivocal so as to leave no reasonable doubt that an offer has been accepted. To determine whether there was a meeting of the minds, the court must examine the state of mind of the parties as manifested by word or deed, not in the abstract, by examining the documents and conduct of the parties. An estate agent, in the absence of express or implied authority, is not the agent of the seller to receive the purchase price and holds deposits for the purchaser until the contract is completed. A party relying on an oral agreement must establish the material terms of that agreement and demonstrate compliance with those terms. The court will examine the totality of the parties' conduct and documentary evidence to determine whether consensus was reached.
The court observed that the second respondent (estate agent) was not being candid with the court, noting discrepancies in his affidavits and his failure to explain key facts such as why money was deposited into accounts over which he had control given the first respondent's refusal to sign documents, and why he attempted to refund the money merely four days after the alleged transaction was concluded. The court also commented on the implausibility of inflation eroding the value of money within a few hours to the extent that it would render a business transaction unattractive, even in the inflationary environment that existed at the time. The court noted that payment of purchase price to an estate agent is not infrequent in property sales, and referenced the vexed question of whose agent such estate agent is when holding purchase price, which has come before the courts repeatedly.
This case is significant in Zimbabwean contract law (which shares principles with South African law) for establishing principles regarding: (1) the requirements for proving the existence of an oral agreement, particularly in the context of immovable property sales; (2) the importance of establishing a clear meeting of the minds through conduct and documentary evidence; (3) the role and authority of estate agents in concluding agreements and receiving payment; (4) the burden on a party relying on an oral agreement to establish all material terms of that agreement; and (5) the principle that acceptance of payment by an estate agent does not necessarily constitute acceptance by the principal/seller in the absence of express authority.