PHIRI v NAWASHA 2011 (2) ZLR 464 (H)

Flynote

Agency — agent — liability — when person contracting with agent can sue C agent instead of principal — agent making himself jointly responsible — party entitled to claim against agent personally — non-joinder of principal not fatal

Headnote

The applicant bought a house from a deceased estate. The respondent, acting on behalf of the executor of the estate, concluded the agreement of sale. The sale agreement provided, inter alia, that "the agent [identified as the respondent] hereby undertakes and guarantees that the seller will perform as per the agreement and in the event of any material breach he will be jointly responsible with the seller for paying damages to the purchaser". The applicant paid the agreed purchase price but the respondent did not deliver. In a subsequent agreement, the respondent undertook to deliver to the applicant an alternative house within 14 days of signing of the memorandum. He did not comply with this undertaking, nor did he return the purchase price. When the applicant claimed for specific performance, the respondent argued that the non-joinder of the principal was fatal to the application.

Held, that the general rule is that a person contracting with an agent can only sue the principal on that contract, but in some cases he can sue the agent. If, for example, he contracts with the agent as a principal, makes him his debtor and gives credit to him and not to his principal, then he can sue the agent personally on such contract. The usual test would be to enquire to whom the contracting party looked. In the agreement of sale, the respondent held himself out as a guarantor and surety and being "jointly responsible with the seller in paying damages to the purchaser" in case of a material breach of the contract. He thus made himself a co-principal debtor. The only consequence (albeit an important one) that

A flows from a surety also undertaking liability as a co-principal debtor is that, vis-—-vis the creditor, he thereby tacitly renounces the ordinary benefits available to a surety, such as those of excussion and division, and he becomes liable jointly and severally with the principal debtor. By the respondent holding himself out as a guarantor and surety, by retaining the purchase price in his company's trust account for some 13 months, and by undertaking to secure for the purchaser an alternative property, the applicant looked to the respondent not only as a co-principal debtor but, through novation, as the sole debtor who could be sued in either instance alone without joining the principal or original principal as the case may be. In any event, by agreeing to be a co-principal debtor, the respondent tacitly renounced the benefit of excussion and it was idle for him now to claim it.