The plaintiff sued for provisional sentence based on an acknowledgement of debt signed by the first defendant and a deed of suretyship executed by the second defendant. The acknowledgement of debt required payment of US$50,000 on or before 30 November 2018 into the plaintiff's preferred Foreign Currency Account (FCA). The defendants did not pay by the due date. After 22 February 2019, the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and the issue of Real Time Gross Settlement Electronic Dollars) Regulations 2019 (SI 33/2019) were enacted, introducing the RTGS currency as legal tender and deeming all USD assets and liabilities to be converted to RTGS dollars at a 1:1 rate. The defendants tendered payment in RTGS currency instead of USD, arguing the debt had been converted by operation of law.
1. Provisional sentence be and is hereby refused. 2. The case is ordered to stand over for trial.
The binding legal principle established is that where legislation mandates the conversion of obligations denominated in one currency to another currency (as occurred with SI 33/2019 and the Finance Act 2019 converting USD obligations to RTGS dollars at 1:1), such statutory conversion applies to all pre-existing contractual obligations regardless of express contractual terms to the contrary. Any contractual provision that cannot be performed in compliance with such supervening legislation (such as payment into an FCA where the new currency cannot be so deposited) is rendered of no legal effect. Contracts and their terms must be read subject to and in compliance with the express provisions of law which affect their performance.
The court's observation that "any contract or term thereof must be read subject to the express provisions of a law which affects its performance" represents a general statement of principle regarding the relationship between contractual obligations and supervening legislation. While this principle was necessary to the decision, the broader articulation of how contracts must yield to legislative intervention may be considered obiter to the extent it goes beyond the specific facts of currency conversion at issue in this case.
This case is significant in Zimbabwean jurisprudence as it interprets the effect of the 2019 currency reforms on pre-existing contractual obligations denominated in United States dollars. The judgment establishes that statutory currency conversion provisions override specific contractual terms regarding the currency and method of payment. It demonstrates the application of the principle that contracts must be performed in compliance with supervening legislation, even where this frustrates the express terms agreed between parties. The case illustrates how monetary policy changes can fundamentally alter the nature of contractual obligations, particularly in the context of Zimbabwe's transition from multi-currency to RTGS dollar regime.