FBC BANK LTD v DUNLETH ENTERPRISES (PVT) LTD & ORS 2014 (2) ZLR 595 (H)

Flynote

Contract — mistake — party signing contract in blank and leaving it to other party to complete — when first party may escape liability

Contract — written agreements — written agreement signed in blank — blank spaces completed by the other party thereto — effect thereof — application of the caveat subscriptor principle — written suretyship agreements — possible defences open to the party who has signed the agreement in blank.

Costs — award of costs on the scale of attorney and client — no justification for claiming collection commission in addition thereto

Headnote

Where a party to an agreement signs it in blank and leaves it to the other party to complete the rest of the document, the former cannot claim that he is not bound by the terms of the agreement. Applying the caveat subscriptor principle, he could escape liability only by raising one of the defences that would have availed him if the blank spaces had been filled in prior to his signature. These are the normal defences which would have been available to any signatory, such as misrepresentation, fraud, illegality, undue influence and mistake. In relation to suretyship agreements, blanks in written contracts can sometimes be dealt with on the basis that they could be filled in from another document, where there is such a document which is incorporated by reference, or a clause containing the blank space which was designed solely for the benefit of one party, who, by leaving the blank, has elected not to take the proffered benefit.

Where payment is recovered in terms of a judgment and in terms of which the judgment creditor has been awarded costs on an attorney and client scale, there can be no legal justification for claiming collection commission in addition to such costs. Collection commission is a charge that is levied by an attorney or agent when payment of a debt has been recovered through his services prior to judgment. In other words, the commission is for collecting the payment other than through a judgment. The rationale is that attorney-client costs compensate the judgment creditor in full for the costs paid to the legal practitioner representing him.

Editor's note: this decision was upheld on appeal. See Muzuva v FBC Bank Ltd S-67-15 (Ziyambi JA, Gowora & Mavangira JJA concurring) (judgment delivered 16 November 2015).