What does the law on agency govern?

The relations between the principal and agent as well as the agent and third parties.

What is the definition of an agent?

A person who negotiates and concludes a commercial or business transaction on behalf of another person, called the principal.

What are four common examples of commercial agents?

Travel agents, estate agents, insurance brokers, auctioneers, and lawyers.

What is the principle of privity of contract and how does agency modify it?

Privity dictates that only contract parties acquire rights under it; agency modifies this by treating acts done by an agent on behalf of a principal as if done directly by the principal.

What was held in Cavmont Merchant Bank v Amaka Agricultural Holdings SCZ (2001) regarding agent liability?

Where an agent discloses both the interest and name of the principal when making a contract, the agent is generally not liable on the contract to the third party.

How does the American Restatement of the Law of Agency (2nd Ed) define agency?

The fiduciary relation resulting from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.

How does Bowstead on Agency (15th Ed) define agency?

The fiduciary relationship existing between two persons where one expressly or impliedly consents that the other should act on his behalf, and the other similarly consents so to act.

How does G H L Fridman define agency in The Law of Agency (6th Ed)?

The relationship existing between two persons when one (agent) is considered in law to represent the other (principal) so as to affect the principal's legal position in respect of strangers by making contracts or disposing of property.

How do company directors act as agents for a company?

Because a company is an artificial person, it can only act through human agents; authority is usually vested in the Board of Directors or delegated to Executive Directors under the Articles of Association.

How do partners act as agents in a partnership?

Since a partnership has no separate legal identity, every partner is an agent of the firm and co-partners for the purpose of carrying on partnership business.

How can employees act as agents for an employer?

Employees (such as shop assistants) have authority as agents to make contracts of sale and binding statements about goods to customers on behalf of the employer.

How do professional advisers like lawyers act as agents for clients?

They act on behalf of clients in transactions or litigation and have authority to affect the client's legal position, such as negotiating binding consent judgments.

Why is agency essential in commerce, trade, and industry?

It enables individuals and corporations to overcome constraints of time, geographical reach, lack of specialized skill, or lack of legal capacity by employing representatives.

What four main situations give an agent power to bind the principal?

(a) Prior consent (actual authority); (b) Estoppel or representation (apparent authority); (c) Retrospective consent (ratification); (d) Imposed by law (agency of necessity).

What is the practical distinction between actual authority and apparent authority?

Actual authority governs rights between principal and agent (such as commission eligibility); apparent authority governs the principal-third party relationship relied upon in commerce.

Define express authority and how it may be granted.

Explicit power granted directly by a principal to an agent through spoken instructions, a written contract, or a deed (Power of Attorney).

Define implied authority and cite Garnac Grain Co v HMF Faure and Fairclough.

Authority inferred from consent, conduct, or trade custom; Garnac Grain established that principal-agent consent exists if parties agreed to what amounts in law to agency, even if disclaimed.

What is incidental authority, and how does authority to sell differ from authority to find a purchaser?

Incidental authority permits acts necessary to carry out express tasks; authority to sell includes signing a contract, whereas authority to find a purchaser does not.

What authority does a lawyer have regarding litigation settlements?

A lawyer acting for a client has ostensible authority to negotiate a binding settlement or compromise (Lusaka West Development Co v Turnkey Properties).

What is apparent or ostensible authority?

Authority a person appears to possess based on the principal's words or conduct representing to a third party that the agent has authority.

What happens if an agent's actual authority is limited to K10 million but they contract for K15 million with a third party unaware of the limit?

The principal is bound by the transaction because the agent possessed apparent authority to order goods within the normal scope of their role.

What is the effect when a principal terminates an agency but fails to notify third parties?

The principal remains bound by subsequent contracts made by the agent with third parties who are unaware of the termination (Drew v Nunn).

What was Diplock LJ's distinction between actual and apparent authority in Freeman & Lockyer v Buckhurst Park Properties?

Actual authority is a consensual agreement between principal and agent; apparent authority is created by a representation from the principal to a third party that the agent has authority, to which the agent is a stranger.

Define agency of necessity and its legal scope.

An emergency authority created by law to preserve property or interests of another without prior actual consent, arising only under extreme commercial necessity.

What four requirements must be satisfied for an agency of necessity to exist?

(1) Genuine commercial emergency; (2) Practical impossibility of communicating for instructions; (3) Good faith in principal's interest; (4) Reasonable actions under all circumstances.

How do Great Northern Railway v Swaffield and Springer v Great Western Railway compare on agency of necessity?

Swaffield permitted stabling costs for an uncollected horse as valid necessity; Springer denied necessity for selling tomatoes because communication for instructions was practically possible.

Why is agency of necessity rare in modern commercial transactions?

Advanced telecommunications make it extremely rare that an agent cannot practically obtain instructions from the principal during an emergency.

What is the presumption of authority arising from co-habitation?

Co-habitation creates a rebuttable presumption that a spouse or cohabitant has authority to pledge credit for household necessities.

How can a partner or spouse rebut the presumption of authority to pledge credit for necessities?

(1) Showing the cohabitant is adequately supplied with necessities; (2) Providing an adequate allowance; or (3) Expressly forbidding the cohabitant from pledging credit (Debenham v Mellon).

What is ratification in agency law?

The principal's adoption of an unauthorized act done in their name, making the act valid retroactively from the time it was performed.

What are the main requirements for effective ratification by a principal?

(1) Act done in principal's name (Watteau v Fenwick); (2) Principal in existence at time of act; (3) Principal competent at time of act and ratification; (4) Act is lawful; (5) Done within reasonable time.

What is the common-law rule regarding pre-incorporation contracts made by company promoters?

Promoters cannot ratify pre-incorporation contracts after incorporation because the company did not exist when made; promoters are personally liable unless novation occurs (Kelner v Baxter; Newborne v Sensolid).

Can a minor ratify a contract upon reaching majority age?

No; a minor cannot ratify a contract after attaining majority if the contract would not have bound them when they were a minor (Williams v Moor).

What was held in Bolton Partners v Lambert regarding ratification and withdrawal of offers?

Ratification has retroactive effect; an offer accepted by an unauthorized agent and later ratified by the principal binds the third party even if they purported to withdraw before ratification.

Can a principal ratify an illegal act or contract?

No; a principal cannot ratify an illegal act or contract (Bedford Insurance Co v Instituto).

What is an agent's duty to obey instructions?

A contractual agent must obey all lawful, clear instructions of the principal within authority; failure constitutes a breach of contract.

What was held in Ernest Mubanga v Barclays Bank of Zambia regarding express instructions?

The onus is on the principal to prove that express instructions were actually given to the agent; courts will not assume unproven instructions.

What is the rule from Ireland v Livingstone regarding principal instructions?

Instructions given by a principal must be clear and unambiguous; courts are reluctant to impose a duty on an agent to obey unclear instructions.

What standard of care is required of an agent, including gratuitous agents?

Reasonable care under the circumstances; professional agents are judged against competent professional standards, while gratuitous agents also owe reasonable skill and care (Chaudhry v Prabhakar).

What is the fiduciary rule on conflict of interest for agents?

An agent must not enter engagements with conflicting personal interests (such as buying principal's property or selling own property to principal) without full disclosure and principal's consent.

What was established in Phipps v Boardman regarding secret profits?

An agent or fiduciary cannot retain profits made in the course of their duties, regardless of good faith or lack of loss to the principal, unless full disclosure and consent are given.

What is a civil bribe in agency law according to Industries General Mortgage v Lewis?

A secret payment made by a third party to an agent dealing on behalf of a principal, where the third party knows of the agency relationship and conceals the payment from the principal.

What remedies are available to a principal if an agent accepts a bribe?

Dismiss agent without notice; refuse or recover commission; rescind third-party contract or recover bribe; seek criminal prosecution under corrupt practices legislation.

What is an agent's duty to account and handle principal funds?

Keep accurate books of account, keep client funds separate (such as mandatory client accounts for law firms), and deliver all documents and books to principal upon termination.

What is the delegatus non potest delegare rule in agency, and what was held in De Bussche v Alt?

An agent cannot delegate duties to a sub-agent unless authorized by express consent, trade usage, or emergency; De Bussche v Alt established that an authorized sub-agent owes fiduciary duties directly to the principal.

When is an agent entitled to remuneration?

When agreed expressly or impliedly; if unstated, remuneration is assessed on a quantum meruit basis (reasonable sum for work done) (Way v Latilla; Clement Chuuya v JJ Hakwenda).

What is an agent's right to indemnity and set-off?

Indemnity covers reimbursement for expenses and liabilities properly incurred in agency duties; set-off allows deducting due sums from principal monies held (Graphics Africa v Barclays Bank Zambia).

Distinguish between a general lien and a particular lien for an agent.

A general lien permits retaining any principal property until all debts are paid (e.g., bankers, solicitors); a particular lien permits retaining property only for debts related to that specific property or transaction (e.g., accountants).

List six ways an agency relationship can be terminated.

(1) Mutual consent; (2) Unilateral revocation or renunciation; (3) Expiry of time (Dickson v Lilwall); (4) Completion of task (Blackburn v Scholes); (5) Operation of law (illegality/impossibility); (6) Death, insanity, or bankruptcy of either party.

Under what three circumstances is an agency irrevocable?

(a) Authority given by deed or valuable consideration to secure agent's interest (Frith v Frith); (b) Power of Attorney given to secure proprietary interest or obligation; (Agent has incurred personal liability requiring principal indemnity-Chappel v Bray

What is the legal effect of terminating an agency on accrued rights?

Termination is prospective only; accrued claims (such as prior breach damages or unpaid remuneration) remain enforceable by both parties.

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Commercial

Commercial Transactions

Question	Answer
What does the law on agency govern?	The relations between the principal and agent as well as the agent and third parties.
What is the definition of an agent?	A person who negotiates and concludes a commercial or business transaction on behalf of another person, called the principal.
What are four common examples of commercial agents?	Travel agents, estate agents, insurance brokers, auctioneers, and lawyers.
What is the principle of privity of contract and how does agency modify it?	Privity dictates that only contract parties acquire rights under it; agency modifies this by treating acts done by an agent on behalf of a principal as if done directly by the principal.
What was held in Cavmont Merchant Bank v Amaka Agricultural Holdings SCZ (2001) regarding agent liability?	Where an agent discloses both the interest and name of the principal when making a contract, the agent is generally not liable on the contract to the third party.
How does the American Restatement of the Law of Agency (2nd Ed) define agency?	The fiduciary relation resulting from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.
How does Bowstead on Agency (15th Ed) define agency?	The fiduciary relationship existing between two persons where one expressly or impliedly consents that the other should act on his behalf, and the other similarly consents so to act.
How does G H L Fridman define agency in The Law of Agency (6th Ed)?	The relationship existing between two persons when one (agent) is considered in law to represent the other (principal) so as to affect the principal's legal position in respect of strangers by making contracts or disposing of property.
How do company directors act as agents for a company?	Because a company is an artificial person, it can only act through human agents; authority is usually vested in the Board of Directors or delegated to Executive Directors under the Articles of Association.
How do partners act as agents in a partnership?	Since a partnership has no separate legal identity, every partner is an agent of the firm and co-partners for the purpose of carrying on partnership business.
How can employees act as agents for an employer?	Employees (such as shop assistants) have authority as agents to make contracts of sale and binding statements about goods to customers on behalf of the employer.
How do professional advisers like lawyers act as agents for clients?	They act on behalf of clients in transactions or litigation and have authority to affect the client's legal position, such as negotiating binding consent judgments.
Why is agency essential in commerce, trade, and industry?	It enables individuals and corporations to overcome constraints of time, geographical reach, lack of specialized skill, or lack of legal capacity by employing representatives.
What four main situations give an agent power to bind the principal?	(a) Prior consent (actual authority); (b) Estoppel or representation (apparent authority); (c) Retrospective consent (ratification); (d) Imposed by law (agency of necessity).
What is the practical distinction between actual authority and apparent authority?	Actual authority governs rights between principal and agent (such as commission eligibility); apparent authority governs the principal-third party relationship relied upon in commerce.
Define express authority and how it may be granted.	Explicit power granted directly by a principal to an agent through spoken instructions, a written contract, or a deed (Power of Attorney).
Define implied authority and cite Garnac Grain Co v HMF Faure and Fairclough.	Authority inferred from consent, conduct, or trade custom; Garnac Grain established that principal-agent consent exists if parties agreed to what amounts in law to agency, even if disclaimed.
What is incidental authority, and how does authority to sell differ from authority to find a purchaser?	Incidental authority permits acts necessary to carry out express tasks; authority to sell includes signing a contract, whereas authority to find a purchaser does not.
What authority does a lawyer have regarding litigation settlements?	A lawyer acting for a client has ostensible authority to negotiate a binding settlement or compromise (Lusaka West Development Co v Turnkey Properties).
What is apparent or ostensible authority?	Authority a person appears to possess based on the principal's words or conduct representing to a third party that the agent has authority.
What happens if an agent's actual authority is limited to K10 million but they contract for K15 million with a third party unaware of the limit?	The principal is bound by the transaction because the agent possessed apparent authority to order goods within the normal scope of their role.
What is the effect when a principal terminates an agency but fails to notify third parties?	The principal remains bound by subsequent contracts made by the agent with third parties who are unaware of the termination (Drew v Nunn).
What was Diplock LJ's distinction between actual and apparent authority in Freeman & Lockyer v Buckhurst Park Properties?	Actual authority is a consensual agreement between principal and agent; apparent authority is created by a representation from the principal to a third party that the agent has authority, to which the agent is a stranger.
Define agency of necessity and its legal scope.	An emergency authority created by law to preserve property or interests of another without prior actual consent, arising only under extreme commercial necessity.
What four requirements must be satisfied for an agency of necessity to exist?	(1) Genuine commercial emergency; (2) Practical impossibility of communicating for instructions; (3) Good faith in principal's interest; (4) Reasonable actions under all circumstances.
How do Great Northern Railway v Swaffield and Springer v Great Western Railway compare on agency of necessity?	Swaffield permitted stabling costs for an uncollected horse as valid necessity; Springer denied necessity for selling tomatoes because communication for instructions was practically possible.
Why is agency of necessity rare in modern commercial transactions?	Advanced telecommunications make it extremely rare that an agent cannot practically obtain instructions from the principal during an emergency.
What is the presumption of authority arising from co-habitation?	Co-habitation creates a rebuttable presumption that a spouse or cohabitant has authority to pledge credit for household necessities.
How can a partner or spouse rebut the presumption of authority to pledge credit for necessities?	(1) Showing the cohabitant is adequately supplied with necessities; (2) Providing an adequate allowance; or (3) Expressly forbidding the cohabitant from pledging credit (Debenham v Mellon).
What is ratification in agency law?	The principal's adoption of an unauthorized act done in their name, making the act valid retroactively from the time it was performed.
What are the main requirements for effective ratification by a principal?	(1) Act done in principal's name (Watteau v Fenwick); (2) Principal in existence at time of act; (3) Principal competent at time of act and ratification; (4) Act is lawful; (5) Done within reasonable time.
What is the common-law rule regarding pre-incorporation contracts made by company promoters?	Promoters cannot ratify pre-incorporation contracts after incorporation because the company did not exist when made; promoters are personally liable unless novation occurs (Kelner v Baxter; Newborne v Sensolid).
Can a minor ratify a contract upon reaching majority age?	No; a minor cannot ratify a contract after attaining majority if the contract would not have bound them when they were a minor (Williams v Moor).
What was held in Bolton Partners v Lambert regarding ratification and withdrawal of offers?	Ratification has retroactive effect; an offer accepted by an unauthorized agent and later ratified by the principal binds the third party even if they purported to withdraw before ratification.
Can a principal ratify an illegal act or contract?	No; a principal cannot ratify an illegal act or contract (Bedford Insurance Co v Instituto).
What is an agent's duty to obey instructions?	A contractual agent must obey all lawful, clear instructions of the principal within authority; failure constitutes a breach of contract.
What was held in Ernest Mubanga v Barclays Bank of Zambia regarding express instructions?	The onus is on the principal to prove that express instructions were actually given to the agent; courts will not assume unproven instructions.
What is the rule from Ireland v Livingstone regarding principal instructions?	Instructions given by a principal must be clear and unambiguous; courts are reluctant to impose a duty on an agent to obey unclear instructions.
What standard of care is required of an agent, including gratuitous agents?	Reasonable care under the circumstances; professional agents are judged against competent professional standards, while gratuitous agents also owe reasonable skill and care (Chaudhry v Prabhakar).
What is the fiduciary rule on conflict of interest for agents?	An agent must not enter engagements with conflicting personal interests (such as buying principal's property or selling own property to principal) without full disclosure and principal's consent.
What was established in Phipps v Boardman regarding secret profits?	An agent or fiduciary cannot retain profits made in the course of their duties, regardless of good faith or lack of loss to the principal, unless full disclosure and consent are given.
What is a civil bribe in agency law according to Industries General Mortgage v Lewis?	A secret payment made by a third party to an agent dealing on behalf of a principal, where the third party knows of the agency relationship and conceals the payment from the principal.
What remedies are available to a principal if an agent accepts a bribe?	Dismiss agent without notice; refuse or recover commission; rescind third-party contract or recover bribe; seek criminal prosecution under corrupt practices legislation.
What is an agent's duty to account and handle principal funds?	Keep accurate books of account, keep client funds separate (such as mandatory client accounts for law firms), and deliver all documents and books to principal upon termination.
What is the delegatus non potest delegare rule in agency, and what was held in De Bussche v Alt?	An agent cannot delegate duties to a sub-agent unless authorized by express consent, trade usage, or emergency; De Bussche v Alt established that an authorized sub-agent owes fiduciary duties directly to the principal.
When is an agent entitled to remuneration?	When agreed expressly or impliedly; if unstated, remuneration is assessed on a quantum meruit basis (reasonable sum for work done) (Way v Latilla; Clement Chuuya v JJ Hakwenda).
What is an agent's right to indemnity and set-off?	Indemnity covers reimbursement for expenses and liabilities properly incurred in agency duties; set-off allows deducting due sums from principal monies held (Graphics Africa v Barclays Bank Zambia).
Distinguish between a general lien and a particular lien for an agent.	A general lien permits retaining any principal property until all debts are paid (e.g., bankers, solicitors); a particular lien permits retaining property only for debts related to that specific property or transaction (e.g., accountants).
List six ways an agency relationship can be terminated.	(1) Mutual consent; (2) Unilateral revocation or renunciation; (3) Expiry of time (Dickson v Lilwall); (4) Completion of task (Blackburn v Scholes); (5) Operation of law (illegality/impossibility); (6) Death, insanity, or bankruptcy of either party.
Under what three circumstances is an agency irrevocable?	(a) Authority given by deed or valuable consideration to secure agent's interest (Frith v Frith); (b) Power of Attorney given to secure proprietary interest or obligation; (Agent has incurred personal liability requiring principal indemnity-Chappel v Bray
What is the legal effect of terminating an agency on accrued rights?	Termination is prospective only; accrued claims (such as prior breach damages or unpaid remuneration) remain enforceable by both parties.
What statutory authority governs partnerships in Zambia?	The English Partnership Act 1890.
What is the statutory definition of a partnership under Section 1(1) of the Partnership Act 1890?	The relation which subsists between persons carrying on a business in common with a view of profit.
Does Section 1(2) of the Partnership Act 1890 classify relationships between company members as partnerships?	No, Section 1(2) expressly excludes relationships between members of a company registered under company legislation.
What is the collective legal term for persons who enter into a partnership under Section 1(3)?	A firm.
What is the underlying legal nature of the relationship between partners?	The relationship between partners is contractual.
What was established in Khan v Meer regarding active trading and joint ventures in forming a partnership?	A joint venture is sufficient to establish a partnership; active trade is not strictly required.
How do partnerships and limited companies compare regarding formation costs and business name registration?	Partnerships are easier and cheaper to form (registering under the Registration of Business Names Act 2011), whereas limited companies incur higher incorporation and annual return filing expenses.
How do partnership accounts compare with company accounts regarding public disclosure?	Partnership accounts are private and cannot be disclosed, whereas company accounts are public (particularly for listed public companies).
How does debt liability differ between partners in a firm and shareholders in a limited company?	Partners are personally liable for the debts of the firm, whereas shareholders have no personal liability for company debts once their shares are fully paid up.
Who owns the property in a partnership versus a limited company?	Partnership property is owned by all partners in common, whereas company property belongs solely to the company due to its separate corporate personality.
What is the rule regarding the transfer of shares or interest in a partnership compared to a limited company?	In a partnership, a partner cannot transfer their share to make another person a partner without the consent of all partners (unless agreed otherwise); in a company, shares are freely transferable.
How is capital increased or reduced in a partnership compared to a limited company?	Partnership capital can easily be increased or renewed by agreement, whereas altering company capital requires strict compliance with the Companies Act (e.g., passing a special resolution).
How does agency status differ between a partner and a company shareholder?	A partner acts as an agent capable of making contracts for the firm, whereas a shareholder is generally not an agent for the company.
What is the default effect of a partner's death or bankruptcy compared to a shareholder's death or bankruptcy under Section 33(1)?	Death or bankruptcy dissolves a partnership unless agreed otherwise, whereas a limited company continues to exist despite a shareholder's death or bankruptcy.
What three essential elements are required to establish a partnership?	(1) There must be a business; (2) The business must be carried on in common between two or more persons; (3) Carrying on the business must be with a profit motive (sharing net profits).
Does sharing gross returns indicate the existence of a partnership?	No; sharing gross returns does not indicate a partnership, as partners share net profits.
What distinction was drawn in Fisher v Sons (1912) regarding co-owners and partners?	The distinction between co-owners and partners is the profit motive.
Can a salaried partner be held liable for partnership debts under M Young Legal Associates Ltd v Zahid Solicitors (2006)?	Yes, salaried partners can also be liable for partnership debts.
Can a limited company become a partner in a partnership firm?	Yes, provided becoming a partner is not ultra vires its articles of association.
What is the rule regarding a minor's capacity and liability in a partnership?	A minor may be a partner, but can repudiate the agreement while a minor or within a reasonable time after attaining majority; minors are not liable for partnership debts incurred during minority.
When is a partnership declared illegal at law?	When formed for a business contrary to public policy or executed through a breach of the law (e.g., operating brothels or illegal activities).
What is the effect of the Legal Practitioners Act on a partnership between an advocate and an unqualified person?	An unqualified person is forbidden from practicing as an advocate, making a partnership between an advocate and an unqualified person illegal.
What is the judicial effect when a partnership is declared illegal?	Courts will not recognize or enforce any rights of the parties inter se.
What happens to a partnership if an event occurs making its business unlawful to carry on?	The partnership automatically dissolves upon any event making it unlawful for the business to be carried on.
What are the 12 essential clauses in a partnership agreement?	1.firm name 2.business nature 3.location 4.duration 5.capital contributions 6.profit/loss sharing 7.partner duties 8.liabilities 9.bank accounts 10dispute resolution. 11. division of profits
What must the firm name comply with under Clause 7 of a partnership agreement?	The Registration of Business Names Act, avoiding public confusion, and regulatory standards (e.g., Law Association of Zambia rules prohibiting names implying a global firm).
What standard determines the validity of a restrictive covenant / non-compete clause for a retiring partner under Whitehill v Bradford (1952)?	Restraints must be reasonable; a 10-mile radius and 21-year restriction was construed as validly binding for a general medical practice.
How does a partner execute a voluntary exit or retirement from a partnership?	Through a written notice of retirement mechanism as provided in the agreement or under statutory provisions.
What is the default rule on capital, profits, and losses under Section 24(1) of the Partnership Act?	All partners are entitled to share equally in capital and profits, and must contribute equally towards losses, subject to contrary agreement.
What is the firm's duty regarding partner indemnity under Section 24(2) of the Partnership Act?	The firm must indemnify partners for ordinary, proper payments and liabilities incurred in the firm's business (excluding mere voluntary acts).
What is the default rule and interest rate on partner advances or loans exceeding agreed capital under Section 24(3)?	Partner advances earn 5% per annum interest from the date of payment; indebted partners do not automatically pay interest on debts without agreement.
Are partners entitled to interest on their contributed capital before profit determination under Section 24(4)?	No, there is no entitlement to interest on contributed capital before profits are ascertained.
What are the legal consequences if a partner fails to participate in management under Section 24(5)?	Equal management right exists; persistent failure to work can ground dissolution and compensation orders for industrious partners.
Are partners entitled to remuneration for acting in the ordinary partnership business under Section 24(6)?	No, except via compensation during winding up or extra workload caused by co-partner death or unsound mind.
What consent is required to introduce a new partner under Section 24(7) of the Partnership Act?	Unanimous consent of all existing partners (unless the partnership deed expressly permits nomination, as in Byrne v Reid).
What vote is required for ordinary partnership differences versus changing the nature of the business under Section 24(8)?	Ordinary differences are decided by a majority vote, but changing the fundamental nature of the business requires unanimous consent.
What rights do partners have regarding partnership books under Section 24(9)?	Books must be kept at the principal place of business with an absolute right of inspection personally or via agents (e.g., valuer access in Bevan v Webb).
Can a majority of partners expel a partner under Section 25 of the Partnership Act?	No; a majority cannot expel any partner unless an express expulsion power is conferred by agreement, which must be exercised in good faith following natural justice (Green v Howell; Re A Solicitor's Arbitration).
How is a partnership of undefined duration terminated under Section 26(1) of the Partnership Act?	At any time by any partner giving written notice of intention to dissolve to all other partners (partnership at will).
What is the legal status if a fixed-term partnership continues after expiry without a new agreement under Section 27(1)?	It continues as a partnership at will under prior rights and duties so far as consistent (Nelson v Mossend Iron Co).
What is a partner's statutory duty under Section 28 of the Partnership Act?	To render true accounts and full information of all things affecting the partnership to any partner or their legal representatives (Law v Law).
What is a partner's duty regarding private profits under Section 29(1) of the Partnership Act?	Must account to the firm for any benefit derived without consent from any transaction concerning the partnership, its property, name, or business connections.
What principle was established in Pathirana v Pathirana (1967) regarding accountability for private profits?	A contract taken in one partner's name only after cancelling the partnership's exclusive supply contract must be treated as partnership property because it arose out of the firm's generated goodwill.
What is a partner's duty regarding profits from a competing business under Section 30 of the Partnership Act?	Must account for and pay over all profits made from carrying on any competing business of the same nature without co-partners' consent.
Why was the partner in Trimble v Goldberg (1906) not required to account for profits from a land purchase?	Because the purchase was outside the exact scope of the partnership business.
What is hire purchase?	Hire purchase is a form of consumer credit.
In Zambia Hire Purchase Agreements are governed by which Act?	the Hire Purchase Act, Chapter 399 of the Laws of Zambia.
How is Hire Purchase Agreement defined in Section 3?	Any contract whereby goods are sold subject to the condition that notwithstanding delivery of the goods the ownership in such goods shall not pass except in terms of the contract and the purchase price is to be paid in two or more instalments;
What right does the hirer have under a contract which provides for the hiring of goods?	To purchase such goods after two or more instalments have been paid in respect thereof;
What other right does the hirer have after two or more instalments have been paid?	After 2+ instalments, to continue or renew the hiring at a nominal rent, or continue/renew possession of the goods without further payment or for a nominal amount, payable periodically or otherwise.
Does the agreement have to be terminable by either party?	Whether or not the agreement may at any time be terminated by either party or one of the parties;
What other contract is included in the definition?	Any other contract which has, or contracts which together have, the same import as either or both the contracts defined in paragraph (a) or (b) of this definition, whatever form such contract or contracts may take.
What does this definition encompass?	This definition encompasses both hire purchase at common law and instalment sale.
What terms does the Act use to refer to the owner and hirer?	The Act uses the terms seller and buyer to refer to the owner and hirer.
What term does the Act use as opposed to rental or merely instalment payment?	The Act also uses the term purchase price as opposed to rental or merely instalment payment.
What are the specific outcomes?	(a) Understand hire purchase contracts. (b) Understand buyer/hirer rights and duties. (c) Understand seller/owner rights and duties. (d) Understand termination. (e) Understand finance/equipment leasing and its importance to Zambia.
Does the Act apply to all hire purchase transactions?
What does Section 2 provide?	Section 2 provides that the Act does not apply to agreements under which the Government is the Seller.
What may the Minister do under Section 28?	Under Section 28 the Minister may be Statutory Instrument order that any agreement or class of agreements entered into by anybody corporate established directly by a law of Zambia shall be exempted from any of the provisions of the Hire Purchase Act.
What does Section 4 provide?	Section 4 provides that except for the provisions of Sections 5, 23 and 24 which shall apply to every agreement, the provisions of Part II of the Act shall not apply to an agreement under which the purchase price exceeds the sum of three thousand Kwacha.
What requirements must Hire Purchase Agreements comply with?	Hire Purchase Agreements must comply with certain laid down requirements.
What does Section 5 provide for?	Section 5 provides for the formalities and states that a Hire Purchase Agreement must:
What must a Hire Purchase Agreement be reduced to?	Be reduced to writing and signed by or on behalf of all the parties to the agreement.
What must a Hire Purchase Agreement contain?	Contain a statement of the cash price.
What happens if an agreement does not comply with these formalities?	The goods which are subject of the agreement shall be deemed to have been sold to the purchaser.
What happens to ownership if an agreement does not comply with these formalities?	without any reservation as to the ownership of the goods or without any stipulation as to the seller’s right to the return of the goods;
At what price are the goods deemed to have been sold?	on credit at a price payable in the same manner as that stipulated in the agreement, which is 25% less than the purchase price;
Can the seller enforce any contract of suretyship, indemnity or guarantee relating to the agreement?	The seller shall not be entitled to enforce any contract of suretyship, indemnity or guarantee relating to the agreement.
What does Hire Purchase apply to at common law?	At common law, Hire Purchase applies only to contracts of hire which confer an option to purchase.
What is Hire Purchase generally used to describe?	It is generally used to describe contracts which are in fact agreements for the purchase of chattels by instalments.
When will the property in the chattels pass to the purchaser?	There is a proviso that the property in the chattels will not pass to the purchaser until all the instalments have been paid.
What is the obligation of the purchaser under a contract to purchase by instalments?	Under an instalment purchase contract, the purchaser is bound to buy and can pass good title to a good-faith purchaser or pledgee who has no notice of the true owner’s rights.
What is the position under a contract which merely confers an option to purchase?	In the case of a contract which merely confers an option to purchase, there is no binding obligation on the part of the hirer to buy and a purchaser or pledgee can obtain no better title than the hirer has.
What is Hire Purchase under common law?	It is a bailment of goods.
Who are the goods let out to?	The goods are let out to the bailee (hirer).
What does the owner of the goods do?	The owner of the goods is not selling them but merely hiring them out.
What is the hirer obliged to pay?	The hirer is obliged to pay a monthly or other periodic rent for the use of goods.
Does the hirer have an obligation to buy/purchase the goods?	The hirer has no obligation to buy/purchase the goods.
What can the hirer do with the agreement?	He can determine the agreement at any time and return the goods.
What can the owner do if the hirer defaults on the payment or breaches a material term of the agreement?	If the hirer defaults, on the payment, or breaches a material term of the agreement the owner of the goods can terminate the agreement and retake the goods.
What happens once the agreement is determined?	Once the agreement is determined the hirer has no claim for past rentals, nor can the owner claim future rentals.
What does a hire purchase agreement normally contain?	A hire purchase agreement normally contains a clause which allows the hirer to either return the goods or purchase them at the end of payment of rent.
What option does the hirer have?	The hirer has an option to purchase the goods.
What happens if the option to buy has not been exercised?	If the option to buy has not been exercised, there is no agreement to sale.
How many parties are necessary to a Hire Purchase Agreement?	Only two (2) parties are necessary to a Hire Purchase Agreement, namely the owner and the hirer.
What determines capacity to enter into a Hire Purchase Agreement?	Regarding capacity to enter into a Hire Purchase Agreement, this depends upon the same ordinary rules governing the capacity to enter into contract.
What do Most Hire Purchase agreements contain?	Most Hire Purchase agreements contain elaborate and express provisions which regulate the rights and obligations of the parties.
What is the purchase price of the goods?	The purchase price of the goods.
What is the amount paid or to be paid by the purchaser?	The amount paid or to be paid by the purchaser.
What is the amount of the instalments payable?	The amount of the instalments payable.
What is the mode of payment of the instalments?	The mode of payment of the instalments.
What must be stated about the date of instalment payment?	The date or mode of determining the date on which instalments are payable.
What rate of interest is payable on instalments in arrears?	The rate of interest payable on instalments in arrears.
What description of the goods must be included?	A description of the goods let, sold or delivered under the agreement.
What terms must be included as to ownership?	Terms as to the reservation and passing of ownership of the goods or as to the seller’s right to the return of the goods.
Which provisions are prescribed by Section 7(1) of the Hire Purchase Act?	(a) to (h) are prescribed by Section 7(1) of the Hire Purchase Act.]
What are the other provisions?	(a) Insurance of the goods. (b) Termination of the Agreement. (c) The keeping of the goods in the possession or control of the hirer. (d) Keeping of the goods free from distress or any other execution.
What happens where an Agreement does not comply with the requirements of Section 7(1)?	If an Agreement fails to meet Section 7(1), the goods are deemed sold to the Purchaser without ownership reservation or the seller’s right to their return, on credit at 25% less than the purchase price.
What are the implied terms as to title found in Section 12?	Implied terms as to title.
What is the implied condition on the part of the owner under Section 12(1)(b)?	The owner/seller is implied to have the right to transfer ownership when it is due to pass—i.e., when all instalments have been paid [Section 12(1)(b)].
What is the implied warranty under Section 12(1)(c)?	There is an implied warranty that the goods are free from any charge or encumbrance in favor of any third party not disclosed or known to the hirer before the agreement is made. (Section 12(1)(c).
What is the implied warranty regarding quiet possession?	There is an implied warranty that the hirer (purchaser) shall have and enjoy quiet possession of the goods.
What are the implied conditions as to quality and fitness?	Every agreement shall be deemed to contain any warranties or conditions implied in a contract for the sale of goods.
What is the implied condition regarding merchantable quality?	There is an implied condition that the goods are of merchantable quality.
What is the implied condition regarding fitness?	There is an implied condition that the hired goods are reasonably fit for the intended purpose.
What case is cited regarding implied conditions as to quality and fitness?	Sprite, KM (Pvt) Ltd V Tawurai (High Court of Southern Rhodesia (1961) R & N 290).
What other case is cited?	WARMAN V SOUTHERN COUNTIES CAR FINANCE CORPORATION LIMITED W J AMERIS CAR SALES (THIRD PARTY) (1949) 2KN 576 1 ALL ER 711
What must the owner or seller do at Common Law?	At Common Law, the owner or seller must deliver the goods to the hirer or buyer.
What is the remedy if the hirer or buyer refuses to take delivery?	If the hirer or buyer refuses to take delivery, the remedy of the owner in the absence of express provision is not to sue for the instalments but to sue for damages for breach of contract.
What is the duty of the hirer or buyer regarding the whereabouts of the goods?	The hirer or buyer has a duty to inform the owner/seller the whereabouts of the goods on receipt of a written notice to do so.
Which section provides for the duty to inform the owner/seller the whereabouts of the goods?	Section 10 of the Hire Purchase Act.
What must the hirer/buyer pay?	The hirer/buyer must pay the agreed instalments of the purchase price of the goods.
What right does the owner/seller have in default?	In default the owner/seller has a right to retake possession of the goods.
What right does the hirer have to exercise the option to purchase?	The hirer has a right to exercise his option to purchase the goods by paying a lump sum at any time during the currency of the Hire Purchase Agreement.
What does Section 16 of the Act allow?	Section 16 of the Act allows the purchaser to make accelerated payments of the outstanding balance of the purchase price.
What statutory concession applies to accelerated payments?	Where the purchaser makes accelerated payments of the instalments due the Act allows a statutory concession.
What happens if a purchaser pays the whole of the purchase price remaining unpaid in one amount?	If the purchaser pays the remaining purchase price in full early, each future instalment is reduced by 5% per year for the period it is paid ahead of schedule.
What is the obligation of the hirer/buyer regarding care of the chattel?	The hirer/buyer is under an obligation to take reasonable care of the chattel but he is not liable for loss unless such loss is a consequence of his negligence or that of his employees.
Is the hirer/buyer liable for damage caused by wear and tear?	The hirer/buyer is not liable for damage caused by wear and tear.
What restriction applies to use of a chattel?	A hirer/buyer must not use a chattel for any purpose other than that for which it was hired or agreed to be sold.
What must the hirer/buyer do on termination if he fails to complete the purchase?	The hirer/buyer must return the goods to the Owner/Seller on termination of the agreement, if he fails to complete the purchase.
What is the duty of the owner/seller regarding the Hire Purchase Agreement?	The owner/seller has a duty to provide to the hirer/purchaser a copy of the Hire Purchase Agreement.
Which section provides for the duty to provide a copy of the Hire Purchase Agreement?	Section 6.
What does the Section create for a seller who breaches the provision?	The Section creates criminal sanctions for a seller who breaches the provision.
What duty does the owner/seller have under Section 9?	The owner/seller has a duty to provide to the Hirer/Purchaser certain information (Section 9).
What information may a Purchaser request for?	Statement of amounts paid and payment dates; unpaid amounts and when due; total amount remaining payable; and the date/method for determining future instalment dates and the amount of each instalment.
When does the purchaser have a right to be reinstated?	The purchaser has a right to be reinstated if he pays his arrears within a period of 21 days after the seller recovered possession of the goods (Section 15).
When does the right to be reinstated not apply?	This right does not apply where the seller recovered possession of the goods pursuant to an Order of a Court.
What protects the purchaser against waiver of his rights?	The purchaser is protected against waiver of his rights Purchase Act by virtue of Section 22 and Section 8 of the Act.
What are invalid provisions of Hire Purchase Agreements?	Invalid provisions of Hire Purchase Agreements are those:
What provision authorizes the seller to enter premises to take possession of goods?	Authorizing seller to enter premises to take possession of goods.
What provision excludes the purchaser’s right to determine the Agreement?	Excluding purchaser’s right to determine the Agreement.
What provision imposes liability on the purchaser for terminating the Agreement?	Imposing a liability on the purchaser for terminating the Agreement.
What provision makes a person acting for the seller the agent of the purchaser?	Making any person acting for the seller to be treated or deemed to be the agent of the purchaser.
What provision relieves the seller from liability for acts or defaults?	Relieving the seller from liability for acts or defaults of any person acting on behalf of the seller.
What provision imposes excessive interest?	Imposing a rate of interest which exceeds the maximum rate stipulated by Subsection 2 on interest payable by the purchaser on instalments in arrears.
What happens by performance?	Where the hirer pays all the instalments necessary to excise the option to purchase the goods or the buyer discharges all his liability under the Agreement.
What statutory right does Section 18 give the purchaser?	Section 18 of the Act gives a statutory right to the purchaser to terminate the Agreement by giving notice of termination.
What must the purchaser do after termination?	The purchaser must return the goods to the seller but will be liable in damages for any liability which may have occurred before termination and is also liable to pay certain penalties.
What case is cited regarding termination?	CREDIT FINANCE CORPORATION LTD V ABDUL AZIZ LANANI (1964) EA P 317 CA Page 354, Mumba Malila – Commercial Law in Zambia.
When may the seller terminate the Agreement?	The seller may terminate the Agreement where the buyer is in default in making payments or where the buyer is guilty of breach of some terms of the Agreement.
What does Section 20 provide when the seller terminates after 50% payment?	If the seller terminates the Agreement after he has been paid 50% of the purchase price – Section 20 provides for the procedure to be followed in selling the goods.
What amounts to repudiation of the Agreement?	A breach by either party amounting to a repudiation of the Agreement i.e. hirer stops paying instalments, hirer returns the goods, the owner collects his goods.
On what grounds may the Agreement be rescinded?	Rescission of the Agreement for fraud, misrepresentation or mistake.
What powers is the Court vested with in relation to the goods?	The Court is vested with wide powers in relation to the goods subject of hire purchase.
Where are the powers of the Court set out?	The powers are set out in Section 21.
What power does the Court have regarding return of goods?	The power to order the return of the goods to the seller.
What condition may the Court impose regarding instalments?	The power to impose a condition that the seller must return to the purchaser a part of the instalments which have already been paid under the agreement.
What must be satisfied for the Court to exercise the powers under Section 21?	The Section contains various conditions which must be satisfied for the Court to exercise the powers under that Section.
What does the Act control under the miscellaneous provisions?	The Act controls the period at which the price has to be paid (4th Column of the Schedule).
When does the date start from for payment?	The date starts from the initial payment.
For goods outside Zambia, when does the date start?	For goods outside Zambia, the date starts from the day of importation into Zambia.
What are the penal consequences under Section 25(3)?	Section 25(3) imposes penal consequences if the purchaser fails to pay the initial payment.
What happens if the purchaser fails to pay the initial payment?	Goods are deemed to be sold outright without reservation of ownership on credit at 25% less than the purchase price.
What case is cited?	See BURTON CONSTRUCTION LIMITED V ZAMINCO LIMITED (1983) ZR 20.
What is a Contract of Hire Purchase?	A Contract of Hire Purchase is a bailment of goods coupled with an option on the part of the hirer to purchase the goods when all the instalments have been paid.
What is a Sale transaction?	A Sale transaction is either a contract for the transfer of property in the goods outrightly or an agreement to transfer property in the goods at a future date or subject to a condition.
What is the ultimate objective of both hire purchase and contract of sale?	Ultimate objective of both hire purchase and contract of sale is the transfer of property in the goods to the buyer in case of contract of sale and to the hirer in case of hire purchase agreement.
Which two pieces of legislation govern the transactions?	Sale of Goods Act 1893 – contracts of sale; Hire Purchase Act, Chapter 399 of the Laws of Zambia – Hire purchase contracts
How are hire purchase contracts usually structured?	Hire purchase contracts are usually standard term contracts.
How are many contracts of sale concluded?	Many contracts of sale are concluded by the parties agreeing the terms by negotiation.
What obligation does a contract of sale impose on the buyer?	A contract of sale imposes an obligation on the part of the buyer to pay the price for the goods sold and delivered to him.
What right does the Seller have when the buyer fails to pay?	The Seller has the right to maintain an action for the price against the buyer where the buyer fails to pay for the goods.
What happens in hire purchase contracts when the hirer returns the goods?	In hire purchase contracts, an action on the balance of the hire purchase instalments cannot be maintained when the hirer returns the goods.
Can a buyer return the goods in a contract of sale and consider himself discharged?	In a contract of sale the buyer cannot return the goods and consider himself discharged from the obligation to pay the price (unless the buyer is exercising his statutory right of rejection).
What right does the hirer have in a hire purchase contract?	In a hire purchase contract, the hirer has the right to terminate the agreement by returning the goods.
When does property generally pass in a contract of sale?	In a contract of sale property generally passes at the time when the contract is made or soon thereafter.
When does property generally pass in a contract of hire purchase?	In a contract of hire purchase, there is generally no guarantee that property will pass from the owner to the hirer.
What is a credit sale?	A credit sale is one where goods bought are paid for in instalments.
What is the nature of a credit sale?	It is an out and out disposal of the goods comprised in the contract.
When does property pass under a Credit Sale?	Under a Credit Sale Property in the goods passes to the buyer at once.
What is a hire purchase arrangement?	A hire purchase arrangement is essentially a bailment of goods coupled with the option to purchase at the end of the period of hire.
What does the definition of ‘agreement’ in the Hire Purchase Act include?	The definition of ‘agreement’ in the Hire Purchase Act includes ‘an instalment sale’.
What is a credit sale?	A credit sale is a species of a sale of goods contract.
What is the similarity between hire purchase and conditional sale?	Hire purchase and conditional sale are similar.
What happens in both hire purchase and conditional sale?	In both transactions, possession of the goods is transferred from the owner subject to fulfillment of some condition, normally the payment of the price.
What is a conditional sale?	A conditional sale is however a type of sale agreement whereby the sale is subject to a condition, often other than the payment of the price, to be satisfied.
What happens in a conditional sale?	In a conditional sale the seller retains the property in the goods until the condition is fulfilled e.g. until the whole of the price is paid.
How does Section 189 of Sale of Goods Act 1893 define a Conditional Sale?	Section 189 of Sale of Goods Act 1893 defines a Conditional Sale as “an agreement for the sale of goods… under which the purchase price or part of it is payable by instalments, and the property in the goods…. is to remain in the seller”.
What is the essence of an instalment sale?	The essence of an instalment sale is that title passes immediately to the buyer.
What right does the Seller have in an instalment sale?	The Seller has no right to repossess the goods because title has already passed.
How many instalments must the purchase price be payable in?	The purchase price must be payable in two or more instalments.
What is the contractual position in both a credit sale and a conditional sale?	In both a credit sale and a conditional sale the buyer is contractually bound to complete the transaction.
What is the position under hire purchase?	Under hire purchase the hirer only has an option to buy.
What can the hirer do before the expiry of the hiring?	He can terminate the hiring before the expiry (HELEY V MATTHEWS (1895) AC 471.
What is Finance Leasing?	A new form of leasing involving the hiring of capital goods on long term basis by business concerns.
What is the difference between Finance Leasing and a hire purchase agreement?	Under hire purchase, the hirer can acquire legal ownership by exercising an option to buy after paying the agreed instalments. A finance/equipment lease does not give the lessee this option.
Who selects the equipment in a Finance Lease?	In a Finance Lease, the lessee selects the equipment to be supplied.
Who provides the funds in a Finance Lease?	The lessor provides the funds for procuring that asset, acquires title to the equipment and allows the lease to use it.
Who bears the risks during the lease period?	During the lease period, the lease bears the risks of loss, destruction and depreciation or malfunctioning.
Who bears maintenance and repair costs?	He also bears maintenance and repair costs as well as insurance costs.
What happens if the lease is terminated before its expiry date?	An important feature of a Finance Lease is that if the lease is terminated before its expiry date, the lessor is in addition to possessing the leased equipment also entitled to recoup its capital investment and Finance Charges.
How are equipment leasing arrangements regulated?	Equipment leasing arrangements are wholly contractual.
What goods usually feature in a hire purchase transaction?	goods usually involved in a hire purchase transaction are consumer durables
What goods are involved in Finance or Equipment leasing?	those involved in Finance or Equipment leasing are capital goods – often of considerable monetary value.
What are examples of goods involved in Finance or Equipment leasing?	Such goods as mining equipment, oil rigs, aircraft, oil tankers, luxury buses.
Who is usually the hirer under a hire purchase transaction?	the hirer under a hire purchase transaction is usually an ordinary member of the public
Who is usually the lessee under an equipment leasing agreement?	under an equipment leasing agreement, it is a big concern.
What case did the Supreme Court of Zambia consider regarding an equipment leasing agreement?	MERIDIEN LEASING LIMITED V MATTY AUTO SERVICES LIMITED SCZ Appeal No. 8164197
How did the Supreme Court of Zambia treat the equipment leasing agreement?	The Court treated the agreement as if it was an ordinary contract agreement between individuals and did not attempt to employ special consideration in dealing with the dispute.
What is Leasing according to JAMES DARKINS LOAN AND SECURITY DOCUMENTS?	An alternative to secured lending: the lender buys the asset and leases it to the borrower (lessee), who may use and possess it in return for regular rental payments.
What is Finance leasing according to Chitty On Contracts?	Finance leasing is long-term financing where the lessee chooses the equipment, while a finance company buys and owns it, then lets the lessee use it for all or most of its useful life.
What happens to the usual risks and rewards of ownership during the period of the lease?	During the lease, most ownership risks and rewards pass to the lessee, who bears risks of loss, destruction, depreciation, obsolescence and malfunction, except normal wear and tear.
What costs does the lessee bear?	The lessee also bears the costs of maintenance, repairs and insurance.
How are the regular rental payments during the primary period calculated?	The regular rental payments during the primary period of the lease are calculated to enable the lessor amortize its capital outlay and to make a profit from its finance charges.
What may happen at the end of the primary leasing period?	After the primary lease, a secondary period may allow the lessee to continue at nominal rent, or the equipment may be sold and part of the proceeds returned as a rental rebate.
What does the lessee acquire after the lessor recoups its investment and charges?	The lessee thus acquires any residual value in the equipment, after the lessor has recouped its investment and charges.
What is the lessor entitled to if the lease is terminated prematurely?	If the lease is terminated prematurely, the lessor is entitled to recoup its capital investment (less the realizable value of the equipment at the time) and its expected finance charges (less an allowance to reflect the accelerated return of the capital).
What is the bailment which underlies finance leasing?	The bailment which underlies finance leasing is therefore only a device to provide the finance company with a security interest (its reversionary right); a finance lease is similar in function to outright purchase or hire purchase”.
What is an Operating Lease?	Where the lessee pays rent for the hire of an asset or equipment for a period of time which is normally less than its useful economic life.
What risks and rewards are retained by the lessor in an Operating Lease?	Most of the risks and rewards of ownership of the asset are retained by the lessor.
What does an Operating Lease not contemplate?	It does not contemplate purchase by the lessee at the termination of the lease term.
How does Section 2 of the Movable Property (Security Interest) Act No. 3 of 2016 define an Operating Lease?	An agreement lasting over one year where the asset outlasts the lease, but the lessee cannot buy it cheaply and ownership does not automatically transfer at the lease’s end.
What is a Conditional Sale?	The conditional Sale is a transaction in which possession of the goods is transferred from the owner to the purchaser but the property (title) in the goods remains in the seller until fulfilment of some condition.
What is a conditional sale usually subject to?	Usually but not limited to the payment of the price.
What section applies to Conditional Sale?	Section 189 of the Sale of Goods Act, 1893.
What are the similarities between Hire Purchase and Finance Leasing?	(a) Bailment of goods comprised in agreement by their owners on instalment credit. (b) Property (title) in goods retained by owner during course of agreement.
What does hire purchase contemplate?	Hire purchase contemplate eventual sale of goods to a hirer; while equipment leasing never contemplates this.
How are hire purchase and equipment leasing regulated?	hire purchase regulated by Statute i.e. the Hire Purchase Act Cap. 399 (including terms of each agreement); whereas equipment leasing agreements are wholly contractual.
What goods are involved in hire purchase transactions?	Goods involved in hire purchase transactions are consumer durables; while Capital goods often of considerable monetary value are involved in equipment leasing.
Who is usually involved in hire purchase?	The hirer under a hire purchase agreement is usually an ordinary member of the public; whereas under the equipment leasing, it is usually a big business concern.
Why will the use of a leasing agreement be preferred?	The use of a leasing agreement will be preferred because of either: (a) The capital cost of the equipment or asset; or (b) The custom of the trade, business or profession in which the lessee is engaged.
What is a finance leasing transaction?	An agreement lasting over one year where the asset outlasts the lease, but the lessee cannot buy it cheaply and ownership does not automatically transfer at the lease’s end. An agreement lasting over one year where the asset outlasts the lease, but t
What is the VAT treatment of an Operating Lease?	Regarding Value Added Tax (VAT), there is VAT charged on both the capital component and interest component in respect of an Operating Lease.
What is the VAT treatment of a Finance Lease?	However as regards a Finance Lease VAT is only charged on the capital component while the interest component is exempt.
Which Order is cited for VAT treatment?	The Value Added Tax (Exemption) Order, Statutory Instrument No. 49 of 2011.
What is hire purchase?	Hire purchase is an instalment-based method of procuring expensive consumer goods or assets.
Who uses hire purchase?	This method is used both by individuals and firms.
What does the buyer make initially?	The buyer makes a down payment which is a partial sum or a percentage of the total price.
How is the remaining amount paid?	The remaining amount is paid in instalments—inclusive of interest.
What does the purchaser pay for an agreed period?	The purchaser pays a rent (hiring charge) for an agreed period.
What could the frequency of instalments be?	The frequency of instalments could be yearly, quarterly, or monthly.
When can the buyer acquire goods?	The buyer can acquire goods immediately, but the ownership of goods remains with the seller till the final payment is completed.
What happens if the buyer defaults?	If the buyer defaults, the seller has the right to seize assets.

What does the law of sale of goods in Zambia cover?	It covers transactions ranging from buying a product from a local grocery store to buying furniture and bulks of goods for resale.
What law governs the sale of goods in Zambia?	The English Sale of Goods Act, 1893.
What is the first specific outcome?	To understand a contract of sale of goods.
What is the second specific outcome?	To distinguish between a contract of sale of goods and an agreement to sale.
What is the third specific outcome?	To understand the different types of goods under a contract of sale of goods and the effect thereof.
What is the fourth specific outcome?	To understand the rights and duties of a seller under a sale of goods contract.
What is the fifth specific outcome?	To understand the rights and duties of a buyer under a sale of goods contract.
What is the sixth specific outcome?	The understand the exceptions under the “Nemo dat quod non habet” rule.
What is a contract of sale of goods?	It is one of the oldest forms of contracts and covers almost all transactions involving the buying and selling of goods.
How frequently are contracts of sale of goods concluded?	Millions are concluded each single day and the majority of them do not give rise to any problem.
What law governs the sale of goods in Zambia?	The English Sale of Goods Act of 1893, supplemented by common law principles where these have not been altered by statute.
What amendments have been made to the law governing sale of goods?	The law has been amended by the Misrepresentation Act and 1979 Sale of Goods Act.
Why is the Sale of Goods Act not fully comprehensive?	Common law rules apply if not inconsistent with provisions of the Act under S. 61(2).
What freedom do parties have when concluding a sale contract?	Parties are free to conclude a contract on terms they please.
What is a contract of sale under S.I1?	A contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a money consideration called the price.
Can a contract of sale be absolute or conditional?	Yes. By S.I (2), the contract may be absolute or conditional.
What is a sale?	Where the transfer of property (ownership) takes place immediately from seller to buyer, the contract is called a sale.
What is an agreement to sell?	Where transfer of property is to take place at a future time or subject to a condition, the contract is an agreement to sell.
Why is the distinction between a sale and an agreement to sell important?	Several consequences flow from the passing of property (ownership).
When does risk of accidental loss or damage pass?	Unless otherwise agreed, the risk of accidental loss or damage passes with property.
When can a seller sue for the price?	Once property has passed from seller to buyer, the seller can sue for the price even if there has not been delivery.
What happens if the buyer owns the goods and the seller becomes bankrupt?	If property has passed to the buyer, he may claim the goods if the seller becomes bankrupt or goes into liquidation.
What happens if a seller resells goods after property has passed?	The second buyer acquires no title unless protected by one of the exceptions to the nemo dat rule.
What does Nemo dat quod non habet mean?	No one gives who possesses not.
What are the four basic ingredients of a contract of sale?	It is a contract between a seller and buyer; the subject matter is goods; ownership is transferred; and transfer is for money consideration called the price.
Who are the parties to a contract of sale?	A seller and a buyer.
What is the subject matter of a contract of sale?	Goods.
What is the purpose of a contract of sale?	To transfer property (ownership) in the goods.
What is the consideration in a contract of sale?	A money consideration called the price.
What minimum requirements must a contract of sale satisfy?	There must be an offer and acceptance, sufficient consideration and an intention to enter into legal relations.
What must a contract of sale not fail?	It must not fail any tests for a valid contract, such as being unlawful or contrary to public policy.
Which vitiating factors apply to contracts of sale?	Duress, mistake and misrepresentation apply to contracts of sale to the same extent as any other contract.
How may a contract of sale be made under Section 3?	In writing with or without seal, orally, partly in writing and partly by word of mouth, or implied from conduct.
Is there generally any formality required for a contract of sale?	No, there is generally no formality that must be satisfied in concluding a contract of sale.
What is an exceptional case requiring formality?	Certain Installment Sales covered by the Hire Purchase Act Cap 399.
What law governs offer and acceptance in a sale contract?	The Act does not provide for offer and acceptance, so the general law of contract applies.
What must the terms of a sale contract be?	The terms must be certain, and depending on the facts, the Court may imply terms into the contract.
How must acceptance of an offer be made?	Acceptance of an offer must be communicated.
When does a statement become a term of a sale of goods contract?	If the maker warrants it to be true and intends it to be binding.
What is a mere representation?	A mere representation may not be contractual.
What case concerns a statement becoming a contractual term?	Oscar Chess Ltd V. William (1957) 1 WLR 370.
How may contractual terms be classified?	Contractual terms may be classified as Warranties or Conditions.
How does the Act distinguish conditions and warranties?	The Act distinguishes them by reference to the buyers’ remedies and not their nature.
What is a condition?	A more vital term whose breach entitles the innocent party to treat the contract as repudiated.
What is a warranty?	A subsidiary term whose breach only entitles the innocent party to damages.
What does Section 11 allow a buyer to do when a condition is breached?	The buyer may waive the condition or elect to treat its breach as a breach of warranty, not as a ground for repudiating the contract.
What is the subject matter of a contract of sale?	The subject matter of a contract of sale is goods.
How are goods defined in Section 62?	Goods include all chattels personal other than things in action and money.
What does the definition of goods include?	Emblements, industrial growing crops and things attached to or forming part of land agreed to be severed under the contract.
What things are excluded from goods?	Land and things in action such as shares, trademarks, debts and negotiable instruments.
What can goods include besides ordinary chattels?	Goods include crops, minerals, energy and things forming part of the land, but not land itself.
What is the essence of a contract of sale?	The transfer of property in goods.
What does “property” signify under the Act?	The term property signifies ownership rather than the physical chattel subject of the contract.
What must the consideration be in a sale of goods?	The consideration must be money.
Is barter within the scope of the Sale of Goods Act?	No. A barter transaction is not within the scope of the Act under S.1.
What governs contracts of sale?	Contracts of Sale are governed by the Sale of Goods Act.
Does the Sale of Goods Act apply to gifts?	No. Provisions of the Act do not apply to a gift.
What is a gift?	A gift involves a transfer of property in goods without any consideration.
When does a gift bind the parties?	Unless the transfer is by deed, it does not bind the parties to it.
Can a “free gift” in a sales promotion create a contract?	Yes, there may be a contract, but it will generally not be one of sale.
What case concerned free coins given with petrol?	Esso Petroleum Limited V. Customs & Excise Commissioners (1976) 1 All ER 117.
What was given to drivers in the Esso case?	Free coins were given to drivers who bought 4 gallons of petrol as a sales promotion.
What did the coins in the Esso case depict?	Each coin bore the likeness of a member of the 1970 England Football World Cup Squad.
Why were motorists encouraged to collect the coins?	Motorists were encouraged to collect a full set.
What did HOL have to decide in Esso Petroleum?	Whether the coins were supplied for retail sale to determine whether the company was liable to pay purchase tax value.
What was held in Esso Petroleum?	There was no contract of sale.
What distinguishes sale from exchange?	A contract of sale transfers property for a money consideration called the price; barter is not a sale.
What does Section 61 exclude from goods?	Money is excluded from the definition of goods.
What is a transaction of barter?	A transaction of barter cannot be treated as a sale.
What is the distinction between sale and supply of services?	Implied duties as to quality and fitness in sale of goods may not apply to supply contracts, where suppliers’ duties are those of due care only.
What governs sale and hire purchase?	They are governed by two separate statutes.
What are Hire Purchase contracts typically like?	Hire Purchase contracts are typically standard term contracts.
When can a seller maintain an action for price?	The seller has a right to maintain an action for price where the buyer fails to pay for goods under S.49 S.O.G.A.
Can an action for hire purchase instalment balance be maintained if goods are returned?	No. In Hire Purchase, an action on the balance of hire purchase instalments cannot be maintained when the hirer returns the goods.
What governs capacity to buy and sell?	The general law concerning capacity to contract and to transfer and acquire property under S.2.
What are infants and persons with mental incapacity obligated to pay for?	They are obligated to pay a reasonable price for any necessaries sold and delivered to them.
What are necessaries?	Goods suitable to the condition in life of the infant, minor or other person and to actual requirements at the time of sale and delivery.
What statute concerns infant contracts?	Infant Relief Act 1874.
What is the effect of contracts for goods supplied to infants other than necessaries?	Contracts for goods supplied or to be supplied, other than contracts for necessaries with infants shall be void.
Can goods under a sale contract be existing or future?	Yes. S.5(i) provides that goods may be in existence or may be future goods.
What are specific goods?	Goods identified and agreed upon by parties at the time the contract is made.
What are future goods?	Goods to be manufactured or acquired by the seller after conclusion of the contract.
What are unascertained goods?	Goods referred to by the parties by description only, e.g. 200 reams of bond paper out of cargo of 1,000 reams.
What case concerned future and unascertained goods?	Majory Mambwe Masiye V Cosmas Phiri (2008) ZR 56.
What are ascertained goods?	Goods identified in accordance with the agreement after the contract is made.
What was Lord Atkin’s view in Re Wait?	In RE Wait (1927) 1 Ch 606, Lord Atkin said ascertained goods probably means identified in accordance with the agreement after the contract is made.
Are future goods usually unascertained?	Yes. Future goods are usually unascertained.
When does property in unascertained goods pass?	Under S.16, property will not pass until such goods have been ascertained.
Can passing of property be deferred after goods are ascertained?	Yes. Passing may be deferred until fulfillment of a condition making them deliverable.
Can a buyer obtain specific performance before property passes?	No. During this time the buyer would not obtain specific performance because property will not have passed.
What do Sections 6 and 7 deal with?	They deal with perishing of specific goods.
What does Section 6 provide?	If specific goods perish without the seller’s knowledge at the time the contract is made, the contract is void.
How may the price be fixed under Section 8(1)?	The price may be fixed by the contract or left to be fixed in an agreed manner, such as by a third-party valuer.
How else may the price be determined?	It may be determined by the course of dealings between the parties.
What may a Court imply if parties have not agreed on the price?	A Court may imply the price intended, based on other similar transactions between the same parties.
What determines price when parties have a course of dealings?	The price is determined with reference to the course of dealings between the parties.
Why may course of dealing be difficult to use?	Course of dealing between the parties may be difficult to ascertain.
What is the Court's approach to unilateral price variation?	The Courts are reluctant to allow unilateral variation of price agreed upon by the parties.
What case concerns unilateral variation of price?	Keembe Estates Ltd V. Galaunia Farms Ltd, Appeal No. 33 of 2003.
What does Section 10 state about time of payment?	Time of payment is not deemed to be of the essence unless the contract indicates a contrary intention.
Are other time stipulations normally essential?	Yes. All other time stipulations are normally considered to be of the essence.
What did Harley V. Hymans state about delivery time?	In ordinary commercial contracts for sale of goods, time is prima facie of the essence with respect to delivery.
What is the effect of failure to comply with a time stipulation other than payment?	It is a breach of a condition and the buyer may reject the goods without proof of damage.
What did Bowes V. Shand decide?	Early delivery of goods is as much a breach as late delivery.
What sections imply terms and conditions in contracts of sale?	Sections 12 to 15 set out terms implied in every contract of sale.
What does Section 12 protect the buyer against?	It protects the buyer by guaranteeing that the seller is the owner of the goods being sold.
What is the implied condition regarding the seller’s right to sell?	In a sale, the seller has the right to sell the goods; in an agreement to sell, he will have that right when property is to pass.
What is the implied warranty of quiet possession?	The buyer shall have and enjoy quiet possession of the goods.
What is the implied warranty concerning encumbrances?	The goods shall be free from any charge or encumbrance in favour of a third party not declared or made known to the buyer.
What case concerns the implied terms under Section 12?	Clement H. Mweempe V The Attorney General, International Police, Avis Rent A Car (2012 Vol 2) ZR 155.
What happens if a buyer purchases goods from a seller with no good title?	The buyer acquires a defective title and must generally return the goods to the true owner.
Is liability under Section 12(1) dependent on seller fault?	No. Liability is strict and does not depend on fault, negligence or knowledge of the seller.
When is Section 12 breached?	It is breached even if the seller honestly believed that he had the right to sell.
What does Section 13 imply?	It implies a condition that goods must comply with the description supplied.
What is a sale by description?	A sale where words are used to identify the goods sold.
Are future and unascertained goods sold by description?	Yes. A sale of future or unascertained goods is a sale by description.
What did Bowes V Shands say about description?	If you contract to sell peas, you cannot oblige a party to take beans; if the description differs, the other party need not take them.
What must be true for Section 13 to apply?	The descriptive statement must be or form a term of the contract in question.
What was the traditional principle concerning quality and fitness?	Caveat emptor or buyer beware was the primary principle in the sale of goods.
What does Section 14 generally provide?	Except as provided by the Act, there is no implied condition or warranty as to quality or fitness for a particular purpose.
What are the main exceptions under Section 14?	Merchantable quality; fitness for purpose; conditions and warranties for purpose; and freedom from latent defect on a sale by sample.
When is there an implied condition of merchantable quality?	Where the seller sells goods in the course of a business, the goods supplied are implied to be of merchantable quality.
When does the merchantable quality condition not apply after defects are disclosed?	It does not apply to defects drawn to the buyer’s attention before the contract is made.
When does examination exclude the merchantable quality condition?	If the buyer examines the goods before the contract, it does not apply to defects that examination ought to reveal.
What must a buyer do to rely on Section 14(i)?	The buyer must have made known to the seller the particular purpose for which the goods are required.
When is no further indication of purpose required?	Where goods have one purpose only or the purpose is obvious, the law implies no further indication is required.
What case concerned a hot water bottle?	Priest V Last (1903) 2 KB 148.
Why is a hot water bottle relevant to Section 14?	A hot water bottle is required for a particular purpose within the provisions of Section 14.
What must a buyer do where goods have a range of purposes?	The buyer must indicate the particular purpose for which he requires the goods.
When are goods unmerchantable if they have only one purpose?	If they have defects rendering them unfit for that purpose.
What case illustrates defects making goods unmerchantable?	Grant V. Australian Knitting Mills (1936) AC 85.
When must goods intended for immediate use be merchantable?	They must be merchantable when sold and delivered.
When must goods be merchantable where transit occurs before use?	They must be merchantable when the contract is made and for a reasonable period thereafter.
What happens if the buyer examines the goods?	The buyer is not protected regarding defects that the examination ought to have revealed.
When does an implied fitness condition arise?	Where a business seller is told the purpose, goods must be reasonably fit for that purpose.
Does the purpose need to be one for which such goods are commonly supplied?	No. The goods must be reasonably fit whether or not it is a purpose for which such goods are commonly supplied.
What must the buyer show to rely on fitness for purpose?	The buyer must show that he relied on the seller’s skill or judgment.
When is the seller not liable for a defect caused by a special situation?	When the buyer’s special or abnormal situation was not revealed to the seller at the time of sale.
What case concerns unusually sensitive skin?	Griffiths V Peter Conway Ltd (1939) 1 All ER 685.
What happened in Griffiths V Peter Conway?	The buyer of a Harris Tweed Coat contracted dermatitis due to unusually sensitive skin and sued, arguing the coat was not merchantable.
What was held in Griffiths V Peter Conway?	The seller was not liable because the coat would not have harmed a person with normal skin.
When are implied merchantability conditions excluded?	When defects are brought to the buyer’s attention before or at the contract, or when examination ought to reveal them.
What does Section 15 deal with?	Section 15 deals with sale by sample.
What is a sample?	A specimen, model, pattern, likeness etc.
When is a contract a sale by sample?	Where there is an express or implied term in the contract to that effect.
What are the three conditions in a sale by sample?	Bulk must correspond with sample in quality; buyer must have reasonable opportunity to compare; goods must be free from hidden unmerchantable defects.
What is the first condition in a sale by sample?	The bulk shall correspond with the sample in quality.
What is the second condition in a sale by sample?	The buyer shall have a reasonable opportunity of comparing the bulk with the sample.
What is the third condition in a sale by sample?	Goods shall be free from defects rendering them unmerchantable which would not be apparent on reasonable examination of the sample.
When is the seller liable for defects in a sale by sample?	The seller is liable if goods are defective, but escapes liability if reasonable examination of the sample could have revealed the defect.
What does Section 55 allow?	It allows complete freedom to contract out of obligations implied by the Act.
What implied terms does Section 55 concern?	It deals with exemption clauses relating to implied terms under Sections 10(i) and 12–15.
How do Courts treat exemption clauses involving fundamental breach?	Courts tend to frown upon exemption clauses protecting a party guilty of fundamental breach.
How are clauses excluding implied terms construed?	The Courts construe strictly terms purporting to exclude terms implied by the Act.
Does excluding “guarantees” or “warranties” exclude a condition?	No. Baldry V. Marshall (1925) 1 KB 260.
Does a clause excluding implied conditions exclude express conditions?	No. Andrew Brothers (Bornemouth) Ltd V. Singer & Co. Ltd (1934) 1 KB 17.
Can an express oral term override a written exemption clause?	Yes. An express oral term may override a printed or written exemption clause.
What is a fundamental term breach?	Failure to carry out the contract at all, such as delivering entirely different goods from those contracted for.
How do Courts normally construe exemption clauses after fundamental breach?	They normally construe the clause as not intended by the parties to apply to a fundamental breach.
What cases concern fundamental breach and exemption clauses?	Karsales (Harrow) Ltd V Wallis (1956) 2 All ER 866 and Harbutt’s Plasticine Ltd V Wayne Tank and Pump Co. Ltd (1970) 1 All ER 225.
What does Section 16 provide about unascertained goods?	No property in unascertained goods is transferred to the buyer unless and until the goods are ascertained.
When does property pass under Section 17?	Property passes at such time as the parties wish it to pass.
What is considered when ascertaining the parties’ intention?	The terms of the contract, conduct of the parties and surrounding circumstances of each case.
What does Section 18 provide?	Unless a different intention appears, it provides rules for ascertaining when property in goods passes to the buyer.
What is Rule 1 of Section 18?	For an unconditional contract of specific goods in a deliverable state, property passes when the contract is made.
Does postponement of payment or delivery affect Rule 1?	No. It is immaterial whether payment, delivery, or both are postponed.
What is Rule 2 of Section 18?	If the seller must do something to specific goods to make them deliverable, property does not pass until it is done and the buyer has notice.
What is Rule 3 of Section 18?	If the seller must weigh, measure, test or do another act to ascertain price, property does not pass until it is done and the buyer has notice.
What is Rule 4 of Section 18?	For goods delivered on approval or sale or return, property passes when the buyer signifies approval or acceptance or does an act adopting the transaction.
What happens under Rule 4 if the buyer retains goods without rejection?	If a return time is fixed, property passes on expiration; if not, on expiration of a reasonable time.
What is Rule 5(a) of Section 18?	For unascertained or future goods by description, property passes when goods in deliverable state are appropriated to the contract with assent of seller or buyer.
What is Rule 5(b) of Section 18?	If the seller delivers goods to the buyer, carrier, bailee or custodian for transmission without reserving disposal, he unconditionally appropriates them.
When does Rule 1 of Section 18 apply?	Only when goods are specific or ascertained goods.
When are goods in a deliverable state?	When they are in a state where the buyer would under the contract be bound to take delivery.
When does Rule 3 not apply?	It does not apply if the act is for a purpose other than ascertaining price or is to be done by someone other than the seller.
What case concerned stolen goods sold in market overt?	Petro V Reginam (1957) The African Law Reports 515.
What happened in Petro V Reginam?	The appellant disposed of stolen goods, and a third party obtained them in market overt before the appellant's conviction.
What was held in Petro V Reginam?	Under the English Sale of Goods Act, property in stolen goods reverts to the owner upon conviction of the thief, despite intermediary dealings including market overt.
What happens when goods are pledged under sale or return terms?	Pledging goods is an act adopting the transaction, so property passes to the person who pledged them.
What case concerns goods on approval or sale or return?	Kirkham V. Attenborough (1897) 1 QB 201 (CA).
Can property pass when the seller delivers goods still mixed with other goods?	No. Property cannot pass until the goods have been unconditionally appropriated.
What case concerns unascertained goods and appropriation?	Healey V Howlett (1917) (1919) 1 KB 377.
What is required for appropriation of goods to a contract?	The parties must intend to attach the contract irrevocably to those goods so they become subject to the sale.
How is appropriation involving change of ownership made?	It is by agreement of the parties.
What does appropriation by the seller with buyer’s assent involve?	It involves actual or constructive delivery; if the seller retains possession, he does so as bailee for the buyer.
What is usually the appropriating act?	Usually, the appropriating act is the last act to be performed by the seller.
What does Section 19 allow a seller to reserve?	The seller may reserve the right of disposal until certain conditions are fulfilled.
What is the effect of reserving the right of disposal?	Despite delivery to the buyer, property does not pass until the seller’s conditions are fulfilled.
What happens when goods are shipped to the seller’s order?	If the bill of lading makes goods deliverable to the seller or his agent, the seller is prima facie deemed to reserve disposal.
What happens when the seller draws on the buyer for price and sends bills together?	The buyer must return the bill of lading if he does not honour the bill of exchange; if wrongfully retained, property does not pass.
How can unascertained goods become ascertained through exhaustion?	Lots may be sold to different purchasers until the remaining goods become ascertained and appropriated.
What case concerns ascertainment by exhaustion?	Wait and James v Midlands Bank (1926) 31 Cam Cas 172.
What was involved in Wait and James v Midlands Bank?	Wheat was held in a warehouse and lots were sold to different purchasers.
What is ascertainment by segregation?	It is ascertainment where goods are separated or identified for particular purchasers.
What case concerns ascertainment by segregation?	In Re Goldcorp Exchange (1994) 3 WLR 199 (PC).
What happened in Re Goldcorp Exchange?	One group bought bullion for future delivery at 7 days’ notice; another purchased bullion from a company later taken over by the seller.
What was held in Re Goldcorp Exchange?	The bullion under the first contracts was unascertained, so property could not pass; bullion from the company had been ascertained and passed to the second group.
Why is transfer of risk important?	It is critical because of the financial consequences of loss or damage.
What is the common law rule on passing of risk?	Risk follows property: whoever has general property in the goods at a given moment bears the risk.
What does Section 20 provide about risk?	Goods remain at seller’s risk until property transfers, then buyer bears risk, subject to fault causing loss.
Does risk necessarily go with possession?	No. Risk and possession do not necessarily go together.
When does risk pass to the buyer?	Risk passes with property even if the seller still has possession of the goods.
Can parties agree differently about risk?	Yes. They may allocate risk regardless of the passage of property.
What does Stern Ltd V. Vickers Ltd illustrate?	A party bearing loss may have neither property nor possession, but merely an intermediate and practical interest in the goods.
What happens where delivery is delayed through a party’s fault?	The goods are at the risk of the party in fault for loss that might not have occurred but for that fault.
What case concerns delay in delivery and risk?	Demby Hamilton & Co. Ltd V Barden (1949) 1 All ER 435.
What does the bailee proviso to Section 20 provide?	It does not affect the duties and liabilities of buyer or seller as bailee of goods on behalf of the other.
What happens when the seller sends goods by sea under Section 32(1)?	Delivery to an independent carrier is prima facie deemed delivery to the buyer.
What cases concern delivery to carrier and risk?	City Council of Ndola V. Colcom Co-Operative Zambia Limited (1968) ZR 182 and Dunlop V. Lambert (1839) Sol & Fin 600.
What does Section 21(1) provide about a non-owner selling goods?	A buyer gets no better title than the seller had unless the owner is precluded by conduct from denying the seller’s authority.
What is the nemo dat rule?	A person cannot give a better title to goods than he himself has, subject to statutory exceptions.
What case concerns nemo dat?	Clement H. Mweempe V The Attorney General, International Police, Avis Rent A Car (2012) Vol 2 ZR 155.
How many exceptions to the nemo dat rule are stated?	There are 8 exceptions under which a non-owner may pass good title.
What is the first nemo dat exception?	Estoppel.
What is the second nemo dat exception?	Sale under the Factors Act.
What is the third nemo dat exception?	Sale under special common law, statutory powers or Court Orders.
What is the fourth nemo dat exception?	Sale by an agent.
What is the fifth nemo dat exception?	Sale under voidable title.
What is the sixth nemo dat exception?	Sale in market overt.
What is the seventh nemo dat exception?	Disposition by seller in possession.
What is the eighth nemo dat exception?	Disposition by buyer in possession.
What is required to establish estoppel?	The owner must have represented that the seller could sell, or acted negligently so as to mislead the buyer.
What must the owner’s conduct do for estoppel?	The owner must act in a way that misleads the buyer into believing the seller is entitled to sell.
What case concerns estoppel by conduct?	Eastern Distributors Ltd V. Goldring (1957) 2 QB 600.
What must be shown for estoppel by negligence?	A duty of care, breach of that duty, and detriment to the buyer caused effectively by the breach.
What case concerns estoppel by negligence?	Merchantile Credit Co. V. Hamblin (1965) 2 QB 242.
What does Section 2(1) of the Factors Act provide?	A mercantile agent in possession with written owner consent may validly sell, pledge or dispose of goods in ordinary business as if expressly authorized.
What does Section 21(2) preserve?	It preserves the Factors Act provisions enabling an apparent owner to dispose of goods as if true owner.
What does Section 21(1)(b) preserve?	The validity of contracts under special common law or statutory power of sale or Court Order.
Who may exercise special powers of sale?	Pledgees, agents of necessity, executors and administrators.
What are examples of statutory powers of sale?	Bailees under the Disposal of Uncollected Goods Act and the Sheriff and bailiffs under the Sheriff Act.
What power does Section 3 of the Disposal of Uncollected Goods Act confer?	It allows bailees in certain circumstances to sell goods held for repair or treatment and not re-delivered.
What power does Section 15(1) of the Sheriff Act confer?	The Sheriff of Zambia and bailiffs may sell seized property and pass good title to purchasers.
Who else may have statutory power to sell?	Unpaid sellers, liquidators, trustees in bankruptcy and mortgagees in possession.
What power does the Court have under Order 29 Rule 4?	The Court may order sale of perishable goods, goods likely to deteriorate, or goods for which sale is otherwise desirable.
When does an agent pass good title?	An agent selling for his principal passes good title if the agent has authority to do so.
What is sale under voidable title?	Where a seller has voidable title not avoided at sale, a good-faith buyer without notice obtains good title.
What does Section 23 provide about voidable title?	A buyer obtains good title if the seller’s voidable title has not been avoided and the buyer acts in good faith without notice of the defect.
What is market overt?	An open public and legally constituted market operating between sunrise and sunset where goods are openly or publicly displayed.
What does Section 22(1) provide about market overt?	A buyer gets good title if goods are sold in market overt according to its usage and the buyer acts in good faith without notice of defective title.
What case concerns the meaning of market overt?	Lee V. Bayes (1856) 18 CB 601.
What rule applies to shops as market overt?	Shops are market overt for things which the owner’s trade puts there for sale.
What was held in Arath Tobacco V Ocker?	The sale must be by the shopkeeper and not to him.
What cases concern market overt in Zambia?	Lonrho Cotton Zambia Ltd V. Mukuba Textiles Ltd (2002) ZR 43 and Rajan Patel V. Attorney General (2002) ZR 59.
What is disposition by seller in possession?	It occurs where a seller remains in possession of property sold and sells the property to a third party.
What does Section 25(1) provide about a seller in possession?	A good-faith third party without notice of the previous sale may obtain the same title as if the seller had express authority.
What happens when a seller in possession wrongfully sells to a second buyer?	The second buyer acquires a title that supersedes the original buyer’s title.
What case concerns seller in possession?	Pacific Motor Auction V. Motor Credits (1965) AC 867.
What case concerns buyer in possession?	Power Equipment Limited V Goldtronics Limited, Barclays Bank Zambia Plc (2012) Volume 3) 358.
What is performance of a contract of sale?	Delivery of goods conforming to the contract by the seller and acceptance and payment by the buyer.
What are the duties of seller and buyer in performance?	The seller must deliver goods and the buyer must accept and pay for them according to the contract.
What are the three ways a buyer is deemed to accept goods under Section 35?	Express acceptance; an act inconsistent with seller ownership after delivery; or retaining goods beyond a reasonable time without rejection.
What case concerns an act inconsistent with seller ownership?	Jaffco Ltd. V. Northern Motors Ltd (1971) ZR 78.
What happens if a buyer retains goods beyond a reasonable time without rejection?	The buyer is deemed to have accepted them.
What case concerns retention beyond reasonable time?	Leaf V. International Galleries (1950) 1 ALL ER 693.
When is a buyer not deemed to have accepted unexamined goods?	Not until he has a reasonable opportunity to examine them for conformity with the contract.
What does Section 34(1) provide?	A buyer who has not previously examined delivered goods is not deemed to accept them until a reasonable opportunity to examine them.
What determines reasonable examination time?	Reasonableness of time will vary from goods to goods.
What case concerns reasonable time for examination?	Bernstein V. Pamson Motors (Golden Green) Ltd (1987) 2 All ER 220.
What are the conditions of delivery and payment?	Unless otherwise agreed, delivery of goods and payment of the price are concurrent conditions.
What is delivery under Section 62(2)?	Voluntary transfer of possession from one person to another.
What are the five ways delivery may occur?	Physical transfer of possession; transfer of means of control; transfer of document of title; attornment; and alteration in the character of seller’s possession.
What is physical transfer of means of control?	Giving the buyer the key to the warehouse where the goods are stored.
What is transfer of a document of title?	Physical transfer of a document of title, such as a bill of lading.
What is attornment?	Arranging that a third party holding goods acknowledges to the buyer that he holds them on the buyer’s behalf.
What is alteration in the character of seller’s possession?	Where the seller agrees to hold the goods until the buyer wants them.
What is the seller’s duty if there is no agreed delivery date?	The seller is bound to make delivery within a reasonable time.
What is the place of delivery if there is no agreement?	Under Section 29(1), it is the seller’s place of business or residence.
What is the place of delivery for specific goods known to be elsewhere?	The place where the goods were located when the contract was made.
What does Section 32 provide about delivery to a carrier?	If the seller is authorized or required to send goods, delivery to a carrier for transmission is prima facie delivery to the buyer.
What must the seller do when contracting with a carrier?	The seller must make a reasonable contract with the carrier on behalf of the buyer, considering the goods and circumstances.
What must the seller do when sea transit is usual to insure?	The seller must notify the buyer so the buyer can insure the goods.
What happens if the seller fails to give sea transit insurance notice?	The goods are deemed to remain at the seller’s risk during the sea transit.
What cases concern delivery to carrier?	City Council of Ndola V. Colcom Co-operative (Zambia) Ltd (1968) ZR 182 and Galbraith & Grant Ltd V. Block (1922) 2 KB 155.
What happens when the seller delivers less goods than contracted?	The buyer may reject them.
What happens if the buyer accepts a smaller quantity?	The buyer must pay for the goods at the contract price.
What happens when contracted goods are mixed with goods of another description?	The buyer may accept conforming goods and reject the rest, or reject the whole.
What is the seller’s duty concerning quantity?	The seller must deliver the quantity specified in the contract, no more and no less.
What is the effect of delivering the wrong quantity?	It entitles the buyer to reject the goods and treat the contract as repudiated.
What cases concern wrong quantity?	Shipton, Anderson & Co. V. Weil Brothers & Co. (1912) 1 KB 574 and Hart V. Mill (1846) 153 ER 771.
When is a seller in breach?	When he fails or neglects to deliver contracted goods according to the contract or fails to comply with a contract term.
What remedies does a buyer have for seller’s breach?	Reject goods and repudiate; claim damages; seek specific performance; claim money had and received; and bring an action in tort.
What is the buyer’s primary remedy for seller’s breach?	The right to reject the goods.
When is the right to reject available?	When the seller’s breach goes to the root of the contract.
What case concerns the buyer’s right to reject?	Lyons (JL) and CO. v May and Baker Ltd (1923) 1 KB 685.
How can a buyer lose the right to reject under Section 11(1)(a)?	The buyer may waive the condition or elect to treat its breach as a warranty rather than as a ground for repudiation.
When does Section 11(1)(c) limit rejection?	Where a contract is severable and goods are accepted, or where specific goods have passed in property to the buyer.
What happens when a buyer resells and delivers goods to a sub-buyer?	The buyer is deemed to have acted inconsistently with the seller’s ownership and loses the right to reject.
What case concerns resale and loss of rejection?	Perkins v Bell (1893) 1 QB 193.
What is the cash-on-delivery principle?	Delivery of goods and payment of price are concurrent conditions unless otherwise agreed.
What does Section 28 require?	The seller must be ready to give possession and the buyer must be ready to pay the price in exchange for possession.
What remedies does a seller have for buyer’s breach?	The seller may claim damages for non-acceptance and has other remedies including unpaid seller’s lien.
What happens if the buyer wrongfully refuses to accept and pay?	The seller may maintain an action for damages for non-acceptance under Section 50.
What is the measure of damages for non-acceptance?	The estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach.
How are damages measured where there is an available market?	Prima facie, by the difference between contract price and market/current price when goods ought to have been accepted or when refusal occurred.
What cases concern buyer’s breach and damages?	Zambia Consolidated Copper Mines Ltd V Good ward Enterprises Limited (2000) ZR 48 and Lombe Chibesakunda V Rajan Lekhraj Mahtani (1998) ZR 60.
What is an unpaid seller’s lien under Section 41?	The entitlement to retain goods until the buyer has paid or tendered the whole price.
What is the unpaid seller’s lien a qualification of?	It is a qualification on the seller’s duty to deliver goods to the buyer.
When does the unpaid seller’s lien arise?	It arises for specific goods or an executory contract to supply unascertained goods, but goods must be ascertained.
What does the unpaid seller’s lien cover?	It is limited to the price and does not cover expenses of keeping the goods.
What case concerns an unpaid seller’s lien?	Y B And F Transport Limited V Supersonic Motors Limited (2000) ZR 22.
When does an unpaid seller lose the lien when goods are sent to a carrier?	When goods are delivered to a carrier without reserving the right of disposal, such as taking a bill of lading in the seller’s own name.
When else does an unpaid seller lose the lien?	When the buyer or agent lawfully obtains possession of goods or by waiver.
What is stoppage in transitu?	If the buyer becomes insolvent, an unpaid seller may recover goods that have left his possession but remain in transit.
What happens when goods are auctioned in lots?	Each lot is prima facie deemed to be a separate contract of sale under Section 58(1).
What is each bid in an auction?	Each bid is an offer.
When is an auction sale complete?	When the auctioneer announces completion by the fall of the hammer or another customary manner.
Can a seller bid at his own auction?	No, unless the sale is notified to be subject to a right to bid.
What is the effect of an undisclosed seller bid?	A sale contrary to the rule may be set aside by the buyer as fraudulent.
What does an auctioneer warrant?	His authority to sell and that he knows of no defect in his principal’s title.
What does an auctioneer undertake regarding possession?	He undertakes to give possession against the price paid into his hands.
What further undertaking does an auctioneer make?	He undertakes that possession will not be disturbed by his principal or himself.
Does an auctioneer warrant his principal’s title if acting for a disclosed principal?	No. If he discloses that he acts for a principal, he does not warrant the principal’s title even if he does not name the principal.
What is the basic definition of a contract of sale of goods?	It is a contract where the seller transfers or agrees to transfer property in goods to the buyer for money consideration called the price.
Are barter transactions contracts for sale of goods?	No. The price is money, so barter transactions do not form part of contracts for sale of goods.
What does a contract of sale involve besides transfer of ownership?	It borders on a sale and an agreement to sale and involves various rights and duties due to buyer and seller.
What is the first exercise question?	Compare and contrast a conditional sale agreement and a credit sale agreement.
What is the second exercise question?	What are the essential elements of a contract under the Sale of Goods Act?
What is the third exercise question?	Distinguish between ascertained goods and future goods.
What is the fourth exercise question?	What constitutes consideration under the Sale of Goods Act?
What is the prescribed reading?	Mumba Malila SC, Commercial Law in Zambia: Cases and Materials, UNZA Press, 2006.
What is the first statute listed in the readings?	Sale of Goods Act 1893.
What is the second reading listed?	Sale of Goods by Ewan McKendrick, 2000.

Role of credit in commerce	Credit is essential in commerce, making external funding available to businesses and supporting trade.
What is a commercial security?	A financial instrument, normally a financial asset that can be traded.
What determines whether an asset is a security?	Whether an asset can be called a security generally depends on the jurisdiction where it is traded.
Why are commercial securities important?	They provide security beyond merely depositing or pledging an asset as a guarantee for loan repayment or performance.
What is the first specific outcome of commercial securities law?	To demonstrate an understanding of different types of security.
What is the second specific outcome?	To understand the legal implications of creating a security.
What is the third specific outcome?	To understand the remedies available to a mortgagee and mortgagor.
What is the fourth specific outcome?	To understand the law affecting mortgages.
Why is credit important in commerce?	Credit supports commerce, business, trade and industry when persons lack enough money to finance their activities.
Give an example of bank loan credit.	A seller may borrow money from a bank to finance business and supply goods to customers.
What is sale credit?	A buyer obtains goods from a seller and agrees to pay for them at a later stage.
What is credit by bill of exchange?	Payment is accepted through a bill of exchange payable at a later date, such as a cheque.
Why do creditors usually require security?	They want protection against the debtor's failure to pay, although the debtor's ability to repay remains most important.
What is credit?	Credit is financial accommodation where a benefit is provided and the recipient pays money for it at a later date.
What is loan credit?	Money is lent to a debtor on terms requiring repayment with interest in due course.
What does interest represent in loan credit?	Interest is what the creditor receives for being out-of-pocket while the debtor has use of the money.
What is sale credit?	Sale credit allows a debtor to defer payment for goods or services supplied.
What is fixed sum credit?	The debtor receives a fixed amount of credit repayable in a lump sum or installments over time.
What is revolving credit?	A debtor receives a credit facility that may be drawn as needed up to an overall credit limit.
What is an overdraft?	A bank sets a limit on a current account, allowing the debtor to draw funds as needed up to that limit.
How does a loan differ from an overdraft?	A loan provides the full sum upfront, with interest accruing during the repayment period.
What must be stated for overdraft security?	The security must be stated to be a continuing security.
What is reservation of title?	The seller retains ownership of goods until payment is made.
What is irrevocable documentary credit?	The seller requires payment through a document from the buyer showing that payment cannot be revoked and will be made later.
What is first-party security?	Security given directly by the borrower through a legal mortgage, equitable mortgage or company debenture.
What is third-party security?	Security requested from a third party by banks, financial institutions or money lenders, especially guarantees.
What is a facility letter?	A legally binding contract from a financial institution to a borrower setting out terms and mechanics of a credit facility or loan.
What else is a facility letter called?	It is often called a facility agreement or offer letter.
How is a facility letter commonly structured?	It is usually a formal offer from the lender which the borrower signs and returns to create a binding commitment.
What financing can a facility letter govern?	It can govern term loans, revolving credit facilities, overdrafts and trade finance lines.
What must a facility letter contain?	It must contain all financial covenants and may include covenants protecting the security.
What does a facility description specify?	It states the facility type, maximum amount or credit limit, and whether funds are available in one drawdown or several tranches.
What does the purpose clause of a facility letter do?	It restricts how borrowed funds may be used, such as for working capital, capital expenditure or refinancing debt.
What does repayment and prepayment cover?	It covers amortization, maturity or expiry, and rules, notice periods and fees for early repayment.
What do interest, fees and commissions provisions cover?	They set interest mechanisms, margins, arrangement fees, commitment fees, agency fees and how interest is paid.
What are conditions precedent?	They are mandatory conditions the borrower must satisfy before drawdown, such as resolutions, opinions, KYC and security proof.
What are representations and warranties?	They are borrower statements about legal status, financial condition and authority that must remain true during the facility.
What are affirmative or information covenants?	They require the borrower to take actions such as providing audited financial statements and maintaining insurance.
What are negative covenants?	They restrict actions such as taking new debt, selling major assets or creating new liens.
What are financial covenants?	They require maintenance of financial measures such as leverage ratios, interest coverage and minimum net worth.
What are events of default?	They are events allowing the lender to cancel the facility, demand repayment and enforce security.
Give examples of events of default.	Non-payment, covenant breach, insolvency and cross-defaults may trigger an event of default.
What does governing law and jurisdiction determine?	It determines the applicable legal framework and the courts or arbitration tribunals to be used.
What is a bilateral facility?	It is a facility where a single lender provides credit under a streamlined bilateral facility letter.
What is a syndicated facility?	It is a large loan provided by a group of lenders and documented through a comprehensive syndicated loan agreement.
What does LMA refer to in syndicated lending?	LMA refers to the Loan Market Association, whose templates are frequently used for syndicated loan agreements.
What is drawdown?	Drawdown is when a borrower requests and receives actual loan funds from a credit facility in one or more tranches.
What is interest duration?	It is the agreed period over which interest accrues and becomes due on the outstanding loan principal.
What is a drawdown notice?	It is a formal written request by the borrower, usually made within a specified notice period before the drawdown date.
What conditions normally precede drawdown?	Conditions precedent such as board resolutions, regulatory approvals and perfected security documents must be satisfied.
What is the availability period?	It is the agreed period during which the borrower may draw funds from the facility.
How is interest generally calculated?	Interest usually accrues daily based on actual days elapsed over a 360-day or 365-day year.
What are interest payment dates?	They are dates at the end of designated interest periods when accrued interest becomes payable.
How is the effective interest rate determined?	It is commonly a benchmark rate, such as SOFR or a local interbank rate, plus a margin.
When may drawdown be suspended or cancelled?	The lender may suspend or cancel it after an event or potential event of default or material adverse change.
How do term loans and revolving facilities differ in drawdown?	Term loans may require one or specified drawdowns, while revolving facilities permit repeated drawing and repayment up to the limit.
What is default interest?	It is a higher penalty rate applied to overdue amounts when the borrower fails to pay on time.
What is a market disruption clause?	It provides alternative interest mechanics or prepayment options when benchmark rates cannot be determined or funding costs rise greatly.
Does signing a facility letter automatically provide cash?	No. After signing and satisfying conditions precedent, the borrower must normally submit a drawdown notice.
What happens to an undrawn facility after the availability period?	Any undrawn portion typically lapses, and a commitment fee may have been payable for keeping funds reserved.
What are interest periods?	They are periods, often one, three or six months, during which interest accrues before becoming payable.
What happens if an interest payment is missed?	Failure to pay interest may trigger an event of default, allowing acceleration or enforcement of security.
What is personal security?	It is a separate contract where a person not otherwise liable to the creditor assumes liability if the debtor fails to perform.
Who are parties to a guarantee?	The guarantee is executed by the guarantor; the debtor is never a party to the guarantee contract.
What are other forms of personal security?	Other forms include cautions and performance bonds.
What are performance bonds?	They are important infrastructure securities, commonly required from contractors and provided by banks or insurance companies.
What is security over property?	It creates rights over property to improve the creditor's chance of receiving payment or performance.
What are real property securities?	Legal mortgages and equitable mortgages are securities relating to land and real property.
What is possessory security?	It depends on the lender having physical possession, such as a pledge or possessory lien.
What is non-possessory security?	It does not depend on lender possession; examples include mortgages and charges over land or corporate assets.
What is a mortgage?	A mortgage transfers an interest in property to a lender as security for debt or an obligation, subject to reconveyance or cessation after discharge.
Who is the mortgagor?	The mortgagor is the borrower or property owner who creates the mortgage.
Who is the mortgagee?	The mortgagee is the lender in whose favour the mortgage is created.
What is a legal mortgage?	It is created with required formalities, such as deed execution, registration and transfer of legal estate or statutory charge.
What is an equitable mortgage?	It arises through an agreement to create a legal mortgage, deposit of title deeds with security intent or a mortgage over an equitable interest.
What is a power of sale?	It allows a mortgagee to sell mortgaged property after default, subject to statutory notices and duties to obtain true market value.
What is an action for the mortgage debt?	The mortgagee may sue the mortgagor personally on the covenant to repay the debt.
What is appointment of a receiver?	A receiver may manage property, collect rents and profits, and apply them toward the mortgage debt.
What is foreclosure?	It is a court process extinguishing the mortgagor's equitable right of redemption and vesting absolute ownership in the mortgagee.
Why is foreclosure rarely used in modern commercial practice?	It is harsh under equity rules, so mortgagees generally prefer exercising a power of sale.
What is taking possession by a mortgagee?	The mortgagee enters physical or constructive possession to collect rents and income from the property.
What is the equity of redemption?	It is the mortgagor's right to have the property reconveyed free of the mortgage after principal, interest and costs are paid.
What is a clog on the equity of redemption?	A clause making redemption impossible or excessively burdensome is a clog and is void at law.
What is a lien?	A lien is the right to retain another person's property as security for performance of an obligation.
Can a lien holder sell the secured property?	No. A lien does not give a power of sale unless a court order permits the sale.
What happens when lien possession is lost?	If the secured item leaves the lien holder's possession, the lien is generally discharged.
What is a common law possessory lien?	It lasts only while the creditor retains physical possession and can be asserted against the whole world while retained.
What is an equitable lien?	It exists independently of possession but cannot defeat a purchaser of legal estate for value without notice.
What is a charging lien?	It is a right to charge property in another's possession for payment of a debt or performance of a duty.
What is a vendor's lien?	It is a seller's right to retain property until the purchase price is paid.
What does Section 39 of the Sale of Goods Act allow?	It allows an unpaid seller to retain goods until payment of the price.
What is a general lien?	It covers all liabilities owed by the item's owner to the person retaining possession.
Give an example of a general lien.	An advocate may retain all client documents until all money owed is settled, even if some services were paid.
What is a particular lien?	It permits retention of an item until liabilities relating specifically to that item are settled.
Give an example of a particular lien.	Accountants have at least a particular lien over books or files received while working for clients.
Why do creditors require security?	Creditors require security to avoid being left without recovery if the debtor fails to pay.
What is credit in financial terms?	Credit is provision of cash, land, goods, services or facilities for payment by the recipient in money later.
How can a seller provide credit?	A seller may defer payment for goods or accept a bill of exchange payable at a future date.
What is post-dated cheque credit?	A buyer may give the seller a cheque dated for payment at a future date.
How can a seller secure deferred payment?	The seller may reserve title in the goods until payment, as in hire purchase.
How can documentary credit secure payment?	The seller may require irrevocable documentary credit guaranteeing payment by the issuer.
What security may a bank require from a borrower?	A bank or financial institution may require security over other property belonging to the borrower.
What is a fourth form of security involving another person?	A financier may require a third-party guarantee.
What is long credit?	Long credit involves money lent to a debtor for repayment with interest in due course.
What are examples of long credit?	Examples include bank loans and overdraft facilities.
What is sale credit?	Sale credit allows deferred payment for goods and services supplied.
What are examples of sale credit?	Examples include hire-purchase, conditional sales and credit sale agreements.
What are the four effects of taking security?	The effects are coercion, insolvency priority, execution or diligence, and sale.
How does security create coercion?	The debtor may fear enforcement of the security and therefore be encouraged to pay.
What is the effect of security in insolvency?	Secured creditors have priority and may use their security to settle the debt.
What is execution or diligence?	A creditor may seek to execute against the debtor's goods to recover the debt.
What is the effect of security when the debtor sells property?	The security holder can execute the security if the debtor attempts to sell the secured property.
What is a mortgage?	A security effected by creating or transferring a legal or equitable interest in property as security for payment of a debt or discharge of another obligation.
How did Lord Lindley define a mortgage in SANTLEY V WILDE (1899)?	A conveyance of land or assignment of chattels as security for payment of a debt or discharge of another obligation.
What does Section 3 of the Companies Act No. 10 of 2017 include as a “Charge”?	A security interest or security agreement; a mortgage or agreement to give or execute a mortgage; and a debenture.
How did Millet J describe a charge in RE CHARGE CARD SERVICES LTD (1987)?	Specific property is expressly or constructively appropriated or made answerable for payment of a debt, giving the chargee rights to resort to the property.
What is a mortgage in simple terms?	A loan taken to purchase property and secured by the same property.
What type of property can be mortgaged in modern business?	Any type of property.
How may a mortgage be created?	By a demise of land, transfer of a chattel, or charge on an interest in real or personal property securing a loan or money.
What are the two basic things in a mortgage?	A personal contract for payment of a debt and a disposition or charge of the mortgagor’s interest as security for repayment.
What are the two types of mortgages?	Legal mortgage and equitable mortgage.
How can a legal mortgage of land be created?	By demise or a legal charge, and it must be by deed.
What is the effect of a legal mortgage by demise?	It vests the legal estate in the term of years created in the mortgagee, who is immediately entitled to possession.
What happens to the mortgagor’s legal estate in the reversion?	It is not transferred to the mortgagee until the right of redemption is destroyed by foreclosure.
What is a demise?	A transfer or conveyance of property from one person to another, or the grant of a lease for a term of years.
What is an equitable mortgage?	A contract creating a charge on property without conveying any legal estate or interest to the creditor or lender.
How is an equitable mortgage enforced?	It is enforceable under the Courts of equitable jurisdiction.
What property may generally be charged in equity?	All property, real or personal, which may be subject to a legal mortgage.
How may an equitable mortgage be created?	By agreement to create an equitable mortgage or by deposit of title deeds.
Why is a deposit of title deeds a good security in equity?	It creates security in equity and is better than merely agreeing verbally that there is an equitable mortgage.
Can title deeds secure a third person’s debt?	Yes. A borrower may use another person’s title deeds to secure a loan, creating a third-party mortgage.
How is a deposit of title deeds regarded?	As an imperfect mortgage.
What is usually the first operative part of a legal mortgage?	A covenant by the mortgagor to pay the principal and interest on a particular date.
Can the amount payable under a mortgage exceed the amount advanced?	Yes, the amount payable may exceed the sum advanced to the mortgagor.
What does a covenant fixing payment generally provide for?	Payment of interest.
What type of interest is usually provided for in a mortgage?	Simple interest.
Can a mortgagor agree to pay compound interest?	Yes, but only where there is agreement to that effect.
How may agreement to compound interest be established?	It may be express or implied from the nature of the dealings.
Is a mortgagee’s mere intention to charge compound interest sufficient?	No. There must be assent by the mortgagor.
What case concerns compound interest and mortgage dealings?	UNION BANK ZAMBIA LIMITED V SOUTHERN PROVINCE COOPERATIVE MARKETING UNION 1995/97 ZR 207.
When may a relation between mortgagee and mortgagor imply assent to compound interest?	Where a bank and customer relationship exists and compound interest is charged as part of the business dealings.
What provision may a mortgage contain for a company mortgagor in default?	Provision for appointment of a receiver or manager.
When is security under a mortgage redeemable?	On payment of the debt or discharge of the other obligation, notwithstanding any provision to the contrary.
What did Section 65(1) of the Lands and Deeds Registry Act alter?	It altered the common law nature of a mortgage as defined by Lord Lindley in Santley V Wilde.
What does Section 65(1) say about a mortgage?	A mortgage operates as security and not as a transfer or lease of the estate or interest mortgaged.
What powers and remedies does a mortgagee retain under Section 65(1)?	Protection, powers and remedies as if the mortgage operated as a transfer or lease, including power of sale and rights to possession and rents.
What is a charge in relation to a mortgage?	A charge is regarded as a particular type of mortgage.
What is the key difference between a mortgage and a charge?	A mortgage conveys an interest subject to redemption, while a charge conveys nothing but gives the chargee certain rights over property.
What is the right of redemption?	The right to have the mortgaged interest re-conveyed upon repayment of the loan or discharge of the obligation.
What case is cited for the distinction between a mortgage and a charge?	LONDON COUNTY AND WESTMINISTER BANK LTD V TOMPKINS (1918) 1 KB 515.
How does Fischer and Lightwood define a charge?	Appropriation of real or personal property for discharge of a debt without giving the creditor general or special property in or possession of it.
What happens when a mortgagor creates a legal mortgage?	The mortgagee is entitled to take possession of the mortgaged property.
Why do mortgagees usually allow mortgagors to retain possession?	Because a mortgage is simply a security, so possession is normally retained until default.
When is a landlord’s consent needed for a mortgage by sub-demise?	Where the mortgagor holds the term on condition that it cannot be sub-leased without the landlord’s consent.
Is landlord consent needed for a legal charge?	No. A legal charge does not involve granting a sub-lease.
Is penal interest permitted?	No. Penal interest in whatever form is forbidden by law.
What case concerns penal interest?	CREDIT AFRICA BANK LIMITED (IN LIQUIDATION) V JOHN DINGANI MUDENDA (2003) ZR 66.
When may a court delay possession of mortgaged residential property?	Where the court considers the mortgagor is likely to pay the money within a reasonable time.
Why does an equitable mortgagee generally have no right to possession?	Because an equitable mortgagee has no legal estate.
Can a mortgagee sell the mortgaged property to himself?	No. The process of sale does not include a sale by the mortgagee to himself.
What case concerns sale by a mortgagee to himself?	DAPONTE V SCHUBERT (1939) 3 ALL ER 495.
When does the statutory power of sale apply?	Only where the mortgage was made by deed.
What does Section 66(1) of the Lands and Deeds Registry Act provide?	The right to sell mortgaged property is exercisable only where the mortgage was made by deed.
What case concerns the statutory power of sale?	S. BRIAN MUSONDA (Receiver of First Merchant Bank Zambia Limited in Receivership) V HYPER FOOD PRODUCTS LIMITED & OTHERS SCZ Judgment No. 16 of 1999.
Can an equitable mortgagee sell mortgaged property to enforce the mortgage?	No. An equitable mortgagee does not have the power of sale.
What may an equitable mortgagee obtain instead of exercising a power of sale?	An order of Court for foreclosure.
What is the effect of foreclosure on the mortgagor’s right of redemption?	It completely extinguishes the right of redemption.
What does an equitable mortgagee generally lack because he has no legal estate?	The right to take possession.
What is the mortgagor’s equity of redemption?	The right to repay the debt so that the mortgaged property can come back to the mortgagor.
Does the right of redemption continue after failure to pay on the stated date?	Yes, the right continues even if the mortgagor has failed to pay according to the proviso for redemption.
Why does the right of redemption arise?	Because the transaction is considered a mere loan of money secured by a pledge of the estate.
What is a clog or fetter on the equity of redemption?	A mortgage provision that tends to prevent redemption after payment of the debt or performance of the secured obligation.
What is the legal effect of a clog on the equity of redemption?	It is void.
Can the mortgagor’s right to redeem be taken away by express agreement?	No. The right is inseparable from the mortgage and cannot be taken away by express agreement.
What case concerns the mortgagor’s right of redemption?	ESSO PETROLEUM CO. LTD V HARPERS GARAGE LIMITED (1968) AC 269.
When does the right of redemption end?	When the mortgagor’s title or interest is extinguished or destroyed, such as by sale pursuant to a Court Judgment.
What cancels the right of redemption?	Foreclosure.
What is foreclosure?	A legal process by which a lender cancels a borrower’s right of redemption through a court order.
What does the court set in a foreclosure process?	A date up to which the borrower may redeem by paying the entire loan balance and foreclosure expenses.
What happens after the foreclosure redemption date?	The lender is free to sell the property.
How are sale proceeds applied after foreclosure?	First to the amount due, with any remainder paid to the borrower.
Does the borrower remain liable if the property remains unsold?	Yes, for the amount due.
What happens if sale proceeds are insufficient to pay the debt?	The borrower remains liable for the shortfall.
At what value should the lender generally sell the property?	At or near its fair market value.
What is the equity of redemption?	The sum total of the mortgagor’s equitable rights in property subject to the mortgage.
What does the equity of redemption represent?	The mortgagor’s right of ownership of the property subject to the mortgage.
Is the equity of redemption an interest in land?	Yes, and it can be dealt with like any other interest in land.
What case confirms that the equity of redemption is an interest in land?	RE WELLS (1933) CH 29.
What remedies may a legal mortgagee pursue on mortgagor default?	Payment of principal and interest, possession, foreclosure or sale, and appointment of a receiver.
Can the legal mortgagee’s remedies be pursued concurrently?	Yes, they may be pursued concurrently.
What is the remedy for payment of principal and interest?	It enforces the mortgagor’s covenant in the mortgage deed to pay principal and interest on the stated date.
What is the possession remedy?	The mortgagee may take possession of the mortgaged property.
When may a mortgagee foreclose or sell after the redemption date?	When the time given to the mortgagor to pay the debt has expired.
How is foreclosure effected?	Only by an Order of the Court.
What is a foreclosure order nisi?	A court order giving the mortgagor an opportunity to redeem the mortgage within a specified period.
What happens if the mortgagor fails to redeem after an order nisi?	The order becomes absolute and destroys the mortgagor’s equity of redemption.
What happens after foreclosure becomes absolute?	The mortgagor’s right of redemption is extinguished and the property must be conveyed to the mortgagee unconditionally.
Who may execute the conveyance if the mortgagor fails to convey after foreclosure?	The Registrar of the High Court for Zambia, by order of the Court.
What section permits the Registrar to execute the conveyance?	Section 14 of the High Court Act, Chapter 27 of the Laws of Zambia.
When may a mortgagee apply for appointment of a receiver?	Where the mortgagor breaches an obligation to pay.
When does the power to appoint a receiver arise?	When the mortgage money has become due and notice to repay has been served followed by default.
What laws give a mortgagee power to appoint a receiver?	The Conveyancing Act 1881 and the Law of Property Act 1925.
What remedies does a mortgagor have?	Possession, redemption, and surrender or release.
When does the mortgagor have a remedy of possession?	When the mortgagee refuses to deliver possession after the mortgagor has paid the amount outstanding.
What is the mortgagor’s redemption remedy?	The mortgagor can exercise the right to re-redeem the mortgage.
What is the contractual right to redeem?	The normal contractual right to repay the mortgage loan on the legal redemption date.
What happened at common law if money was not repaid on the legal redemption date?	The property vested in the mortgagee.
Why did equity intervene in redemption?	Because it was unfair for the mortgagor to lose the property merely because repayment was late.
What is the equitable right to redeem?	The right to redeem the property after the legal redemption date by paying principal, interest and costs.
What case concerns the equitable right to redeem?	SALT V MARQUES OF NORTHAMPTON (1892) AC 1.
When does the equitable right to redeem arise?	After the legal date fixed for redemption has passed.
When does the equity of redemption exist?	As soon as the mortgage is made.
What is the difference between equity of redemption and equitable right to redeem?	Equity of redemption exists from creation; equitable right to redeem arises after the legal redemption date.
When may a mortgagor seek surrender or release?	When the mortgagee refuses to release the security, such as refusing to release title deeds in an equitable mortgage.
What is the primary remedy of an equitable mortgagee?	Foreclosure.
Why is foreclosure the primary remedy of an equitable mortgagee?	Because the equitable mortgagee has no legal estate.
What does an order absolute in foreclosure direct?	It directs the mortgagor to convey the land to the mortgagee unconditionally, free from any right to redeem.
Can an equitable mortgagee have a receiver appointed?	Yes, an equitable mortgagee has the right to have a receiver appointed by the Court in a proper case.
How may a mortgage action be commenced in the High Court?	By a Writ or Originating Summons.
What is a mortgage action?	An action by a mortgagee or mortgagor claiming relief relating to payment, sale, foreclosure, possession, redemption, or release of title deeds.
What relief may be claimed for payment?	Payment of money secured by a mortgage.
What relief may be claimed concerning the mortgaged property?	Sale of the mortgaged property.
What relief may be claimed by foreclosure?	Foreclosure of the mortgage.
What relief may a mortgagee claim concerning possession?	Delivery of possession to the mortgagee by the mortgagor.
What relief may a mortgagor claim concerning redemption?	Redemption of the mortgage.
What relief may a mortgagor claim after payment concerning possession?	Delivery of possession by the mortgagee to the mortgagor.
What relief may concern title deeds?	Release of title deeds by the mortgagee to the mortgagor.
When is an Originating Summons appropriate?	Where there is unlikely to be substantial dispute of fact and the matter is simple.
When is a Writ of Summons appropriate?	Where facts are complicated, pleadings are needed, or an injunction or declaration is sought.
When may a Writ of Summons be used where fraud is alleged?	Where an injunction or declaration is sought, such as in an alleged fraud case.
Can summary judgment be obtained in a mortgage action commenced by Writ?	Yes, summary judgment may be obtained.
Can judgment in default be obtained without leave if the defendant does not appear?	No. Leave of court is required under the stated rules.
Which rules are cited for leave where the defendant does not appear?	Order 12 Rule 9 of the High Court Rules, Cap 27 and Order 88 Rule 7 of the White Book 1999 Edition.
Under which rule are mortgage actions commenced by Originating Summons?	Order 30 Rule 14 of the High Court Rules, Chapter 27 of the Laws of Zambia.
What happens if respondents do not enter appearance?	Judgment or an order may be entered against or in relation to them as the Court considers expedient.
What is the Plaintiff’s Prayer in a mortgage action?	Payment of monies due, delivery and possession of the mortgaged property, foreclosure and sale, further or other relief, and costs.
Under which provision is the Plaintiff’s Prayer made?	Order 30 Rule 14 of the High Court Rules, Chapter 27, read with Order 88 of the Rules of the Supreme Court (White Book) 1999 Edition.
What exercise follows the mortgage Plaintiff’s Prayer?	Discuss the principle of floating charge in line with the Supreme Court decisions.
What is the recommended reading on Securities Law?	Securities Law by Hudson Alastair, 2nd edition, Sweet & Maxwell.
What other recommended reading is listed?	Megarry & Wade, The Law of Real Property, 9th edition, Sweet & Maxwell.
What is a debenture?	A document which either creates or acknowledges a debt.
What are the three specific outcomes concerning debentures?	Draft a debenture, understand the law affecting debentures in Zambia, and understand the obligations and rights of a debenture holder.
How does Section 2 of the Corporate Insolvency Act No. 9 of 2017 define a debenture?	A document issued by a corporate evidencing or acknowledging its debt, whether or not it constitutes a charge on the corporate’s property.
How did Chitty J define a debenture in LEVY V ABERCORRIS SLATE & SLAB CO?	A document which either creates a debt or acknowledges it; any document fulfilling either condition is a debenture.
What case held that a simple acknowledgement of indebtedness was a debenture?	BRITISH INDIA STEAM NAVIGATION CO. V INLAND REVENUE COMMISSIONERS (1880-81) LR 7 QBD.
What do most debentures represent?	Securities given by companies.
What charges may a debenture contain?	A fixed charge or floating charge on the company’s property and undertaking, real or personal, present or future.
What does a mortgage relate to?	Real and present property, and not personal and unascertained property.
What is a floating charge?	A charge or security not put into immediate operation but which floats, allowing the company to continue carrying on its business.
What happens to a floating charge while the company continues business?	It moves with the property it is intended to affect until an event or act causes it to settle and fasten on the subject of the charge.
How did Lord Macnaghten describe a floating charge in ILLINGWORTH V HOULDSWORTH?	It is ambulatory and shifting, hovering over and floating with the property until an event or act causes it to settle and fasten on the subject of the charge.
How did Lord Macnaghten describe a specific or fixed charge?	It fastens without more on ascertained and definite property or property capable of being ascertained or defined.
What case is associated with the definition of a floating charge by Lord Macnaghten?	ILLINGWORTH V HOULDSWORTH (1904) AC 355.
What are the three characteristics of a floating charge?	It covers present and future assets; the assets change in ordinary business; and the company may carry on business normally until a future step is taken.
Which case is associated with the three characteristics of a floating charge?	RE: YORKSHIRE WOOLCOMBERS ASSOCIATION LTD, HOULDSWORTH V YORKSHIRE (1903) 2 Ch. D 284.
What happens to a floating charge when the undertaking ceases to be a going concern?	It remains dormant until the undertaking charged ceases to be a going concern or the person in whose favour it was created intervenes.
When does a floating charge become fixed?	When the company ceases business, is wound up, a receiver is appointed, or a specified event occurs and notice is given under the charge.
What case is cited concerning crystallization of a floating charge?	GOVERNMENTS STOCK AND OTHER SECURITIES INVESTMENT COMPANY V MANILA RAILWAY COMPANY (1897) AC 81.
What is a fixed or specific charge?	A charge that fastens on ascertained or definite property or property capable of being ascertained and defined.
What example illustrates property subject to a fixed charge?	Plot Nos. 9 & 11 Andrew Mwenya Road, Rhodes Park Lusaka.
What is the effect of a floating charge before it becomes fixed?	The company may sell, mortgage or otherwise deal with its assets in ordinary business as if the floating charge had not been created.
Why can a company deal with assets subject to a floating charge?	Because the floating charge is only a charge on the assets for the time being until the security becomes fixed.
How are floating charges usually restricted?	The debenture may provide that the company shall not create a mortgage or charge ranking in priority to or pari passu with the debenture charge.
What happens when a company ceases its business?	The floating charge automatically becomes fixed to prevent the assets from being disposed of.
What happens to a floating charge when a company is wound up?	The floating charge becomes fixed.
What happens to a floating charge when a receiver is appointed?	The floating charge becomes fixed.
What other event can cause crystallization?	An event specified in the charge may cause it to become fixed if notice is given as required by the charge.
What may a debenture provide after a floating charge becomes fixed?	The company cannot thereafter deal with the charged property except subject to the terms of the charge.
What is the effect of crystallization on company assets?	The crystallized charge will bite on all assets covered by the charge.
What is the effect of crystallization on the company’s autonomy?	It deprives the company of autonomy to deal with assets subject to the charge in the normal course of business.
What is the most significant element about debentures?	Debenture holders of loans have no controlling interest in the company.
What financial role do debentures play?	They provide financial leverage and, particularly in depressed market conditions, provide a good source of finance for the company.
What are the two exercises on debentures?	Discuss circumstances that may crystallize a floating charge and explain the effect of a floating charge on company assets.
What is the prescribed reading on debentures?	Edward Manson, The Debentures and Debenture Stock of Trading and other Companies, (1999), Sweet and Maxwell.
What are the recommended readings and statute on debentures?	Securities Law by Hudson Alastair 2nd edition; Megarry & Wade, The Law of Real Property 9th edition; Corporate Insolvency Act No.9 of 2017.
What is a financing agreement?	A document outlining how a business plan or project is to be financed, usually taking the form of a contract between a lender and borrower.
What is the main purpose of a financing agreement?	To protect both the lender and the borrower.
What is an example of a financing agreement?	A loan agreement.
What are the three specific outcomes of financing agreements?	Understand different types of financing agreements, understand loan agreements, and be able to draft a loan agreement.
What is a loan agreement?	A contract creating a debtor/creditor relationship between borrower and lender and providing an extension of credit to the borrower.
What can a bank do if the borrower fails to pay the debt?	The bank may bring an action against the borrower for the amount due.
What type of action follows non-payment of a loan?	An action for the amount due rather than an action for general damages for non-performance of the contract.
What is a bilateral loan?	A loan facility provided by a single bank.
What is a syndicated loan?	A loan where a group of banks each commit a proportion of the loan under a syndicated loan agreement with the borrower.
Why use a syndicated loan?	Banks lending under one loan agreement save the time and expense of preparing and negotiating individual loan agreements.
What is the nature of each lender’s liability in a syndicated loan?	The liability of each bank to contribute its proportion is several and not joint.
What does several liability mean in a syndicated loan?	Each lender is only liable to provide its own proportion of the syndicated loan.
Is a lender relieved from its obligation because another lender fails to lend?	No. Each lender remains obligated to lend its own proportion.
Who must make good a lender’s failure to fund its share?	No other lender is obliged to make good the shortfall.
What happens when amounts become due under a syndicated loan?	Each bank is free to make its own decision about enforcement.
Does syndicated lending require collective enforcement action?	No. It does not imply collective action, although collective action is not precluded.
What are the four assumptions underlying syndicated lending?	Funding, the Agent, syndicate democracy, and pro rata distribution.
What is the interbank funding or matched funding assumption?	The syndicate is assumed to fund loan monies by taking short-term loans from other banks in the interbank market, whether or not it actually does so.
Why is the interbank funding assumption important?	It is key to many of the mechanics used in the facilities agreement.
Who coordinates the syndication and administration of a syndicated loan?	The arranger coordinates the pre-signing process and the agent performs post-signing administrative functions.
What is the arranger’s role?	The arranger fulfils the pre-signing managerial role in the syndication of the loan.
What is the agent’s role?	The agent acts for the syndicate and performs post-signing administrative functions.
What is syndicate democracy?	Within prescribed limits, lenders agree to abide by decisions of the majority of lenders on matters affecting loan administration.
Who are the Majority Lenders?	The majority of lenders in the syndicate whose decisions may bind the lenders within prescribed limits.
What is pro rata distribution?	Lenders contribute ratably according to commitments and expect to share ratably in amounts due from the borrower.
What happens if one bank receives more than its pro rata share?	It must share the excess on a pro rata basis with the other banks.
What are the main objectives of a borrower?	Getting the right amount of money at the right time, having flexibility to use it, and avoiding tripwires allowing early repayment.
What does a borrower want regarding loan timing and amount?	The right amount of money at the right time.
What flexibility does a borrower seek?	Sufficient flexibility to use the money for its required purpose.
What does a borrower seek to avoid in a loan agreement?	Tripwires in the document entitling the lender to ask for the money back.
What are the main lender objectives?	Assessing creditworthiness, protecting return, retaining value in the Obligor group, receiving early warnings, and having enforcement rights.
Why does a lender require information?	To assess the borrower’s creditworthiness.
What does a lender seek to maximize and protect?	Its return on the loan.
Why does a lender seek to retain value within the Obligor group?	To protect the value available to support repayment of the loan.
What does a lender seek after drawdown?	Early warning of problems.
What enforcement objective does a lender have?	The ability to enforce under certain conditions.
What is a term loan facility?	A specified amount of loan capital made available to the borrower for a fixed length of time called the term.
What is the purpose of a permitted purpose clause?	To state the purpose of the loan and protect lenders if the borrower does not use the loan for that purpose.
Why is the permitted purpose important on insolvency?	If the stated purpose fails, unspent drawn-down money may be held on resulting trust for the bank rather than becoming borrower assets.
What happens to unspent drawn-down money if the specified loan purpose fails?	It will be held by the borrower on resulting trust for the bank and will not become part of the borrower’s assets.
What is a Drawdown Notice or Utilization Request?	It sets out the process for the borrower to obtain the loan money.
Why do lenders need notice before drawdown?	They need time to arrange their funding in the interbank market and may have a right to draw-stop.
When can lenders exercise a draw-stop?	When an Event of Default or Potential Event of Default has occurred.
How long does it take to obtain sterling funds under the stated London market convention?	Sterling funds can be obtained on the same day.
How long does it take lenders to obtain funds in other currencies under the stated convention?	Two business days.
How much additional time should be allowed for the Agent to pass a drawdown request to lenders?	At least one additional day.
What should the Specified Time for a drawdown notice be under the stated convention?	At least one day for sterling and three days for all other currencies.
Why must a drawdown notice be irrevocable?	Because underlying funding has to be arranged in advance and the borrower cannot withdraw the notice at the last minute.
What must the borrower confirm in a drawdown notice?	That all conditions precedent to drawdown, including absence of any default, have been satisfied.
What are conditions precedent?	Requirements the bank wants established about the borrower before making loan monies available.
What can conditions precedent establish about a borrower?	Its ability to enter the loan agreement, execution of security documents, required licences and authorizations, and other matters important to the credit decision.
How do conditions precedent protect the bank?	The bank is not obliged to make the loan available until the conditions precedent are satisfied.
How may a term loan be repaid?	By a single bullet repayment at the end of the term or through an amortization schedule.
What is a bullet repayment?	A single repayment at the end of the term.
What is an amortization schedule?	A schedule providing repayment at regular intervals over the loan term.
What is a repayment holiday?	A period at the beginning of the loan during which scheduled repayment is deferred.
What are balloon repayments?	Repayments where the final instalment is larger than the previous equal or increasing instalments.
What determines the repayment profile?	The commercial circumstances of the transaction.
How are revolving facility advances repaid?	Each short-term advance must be repaid at the end of its term.
What is the rollover mechanism?	A procedure where an amount due on a revolving advance is automatically applied against a new advance if drawdown conditions are satisfied.
Why is the rollover mechanism called a rollover?	Because the advance is effectively rolled over into the next term as a new advance.
Is there a general right to prepay under many jurisdictions?	No.
What happens if a loan agreement is silent on prepayment?	The bank could object to unilateral prepayment by the borrower.
What must a borrower have to prepay a loan?	An express contractual right to prepay.
Why is voluntary prepayment mainly an issue for term loans?	Revolving facilities are borrowed short term and can be repaid at the end of the relevant interest period.
What notice must a borrower give for voluntary prepayment?	The borrower must give notice of prepayment.
Why must notice be given before voluntary prepayment?	Lenders may have already arranged funding for the new interest period and need time to plan redeployment of lending capacity.
What is the usual notice period for voluntary prepayment?	Usually about 30 days.
When might lenders require prepayment on the last day of an interest period?	Where the agreement provides that prepayments must be made on the last day of an interest period.
What are Break Costs?	Costs payable by the borrower to compensate lenders for loss of interest for the remainder of an interest period.
What is a prepayment fee?	A fee that may be payable by the borrower when exercising the right to repay early.
Why may lenders charge a prepayment fee?	To discourage refinancing at lower cost and compensate the bank for yield it expected if the loan ran for the full term.
Are prepayment fees generally regarded as penalty clauses?	The conventional view is that they are not penalty clauses.
Why are prepayment fees generally distinguished from penalty clauses?	They are the price for exercising a privilege rather than a sum payable for breach or default.
How may a prepayment fee commonly be calculated?	As a flat percentage of the prepaid amount, or preferably a percentage that decreases during the loan’s life.
Why may a decreasing prepayment fee be preferable?	It more closely reflects the lenders’ actual financial loss on prepayment.
How should a partial voluntary prepayment be applied?	The agreement should specify whether it reduces remaining instalments pro rata or is applied in inverse order of maturity.
What is the borrower’s preferred application of voluntary prepayment?	Application in inverse order of maturity so that the loan term is reduced.
What is a floating rate loan?	A loan whose interest rate varies during its life to reflect the bank’s cost of providing the loan money.
What is the funding principle for floating rate loans?	The bank keeps a margin or spread and otherwise charges the borrower its cost of funds.
What does the margin or spread represent?	The bank’s gross profit and remuneration for the funding risk it assumes.
What is the margin?	The element of interest payments representing the lenders’ profit on the loan.
What determines the amount of the margin?	It is a purely commercial matter.
What is a margin ratchet?	A mechanism allowing the margin to fluctuate during the facility according to factors such as financial ratios.
What do LIBOR and Euribor represent in the notes?	The element of the interest rate representing the lenders’ cost of funds.
What rate is used in syndicated lending instead of each lender’s actual cost of funds?	A single rate calculated by reference to an objective source.
What is a Screen Rate?	A rate used in loan agreements, including LMA agreements, with the average of Reference Bank rates as a fallback.
What is LIBOR?	The London Interbank Offered Rate, the rate a prime bank demands on deposits offered to other banks in the London Interbank Market.
Why should loan interest payment dates coincide with interbank payment dates?	The bank wants to use borrower interest payments to pay interest due on its interbank funding.
How long are interbank funding periods typically?	Most commonly three or six months, although shorter or longer periods are available.
How is interest generally calculated for most currencies?	Using the actual number of days elapsed and a 360-day year.
What are representations and warranties?	Statements of information made by the borrower on matters fundamental to the bank’s decision to lend.
What are the two categories of representations?	Assurances about legal validity of the borrower’s obligations and statements relating to the borrower’s commercial position.
When are representations initially given?	At the time of entering into the loan agreement.
Why are representations negotiated before signing?	They establish the borrower’s position and can reveal information assisting the lender’s due diligence.
When are representations usually repeated?	On particular dates during the loan, usually coinciding with drawings.
How are representations linked to conditions precedent?	The bank need not advance money if a representation is incorrect.
How are representations linked to events of default?	An untrue representation may constitute an event of default, allowing the bank to accelerate the loan.
What are undertakings?	Promises by the borrower about things it will and will not do in relation to its business.
Why are undertakings included in loan agreements?	To give the bank control over the borrower’s business and prevent increased credit risk after lending.
What are information covenants?	Covenants giving the bank information on the borrower’s business to help monitor its financial condition.
What are financial covenants?	Financial targets imposed on the borrower to preserve its ability to repay and service the loan.
What is the covenant restricting disposals?	A covenant intended to prevent asset-stripping and maintain value within the borrower group.
What is a negative pledge clause?	A prohibition on granting security over assets that could give later creditors priority over the lender in insolvency.
Why does a borrower need carve-outs from covenants?	To allow it to conduct its business, such as disposing of stock in trade or granting liens required by suppliers.
What is one heavily negotiated part of a loan agreement?	The extent of carve-outs from the borrower’s covenants.
How are undertakings linked to events of default?	A breach of covenant constitutes an event of default, allowing lenders to accelerate the loan.
When does breach of a financial covenant become an event of default?	Immediately upon breach.
When may a grace period apply to a breach of an undertaking?	Generally where the breach is capable of remedy.
How are undertakings indirectly linked to conditions precedent?	Lenders need not advance money if an event of default, including an unremedied covenant breach, has occurred.
What are events of default?	Events giving lenders a contractual right to cancel commitments, accelerate the loan, and demand repayment of outstanding monies.
What are common events of default?	Non-payment, breaches of material covenants, and insolvency events.
Why do borrowers seek materiality qualifiers and thresholds?	To prevent lenders exercising remedies for relatively minor problems that can be resolved.
Who decides whether to exercise remedies following an event of default?	The Majority Lenders.
Can a minority lender be compelled to lend into a default situation?	Yes, if the default has been waived by the majority lenders.
Do acceleration rights usually allow recovery of loss of profit or yield?	No. Market practice is that lenders usually cannot demand such amounts for the remaining loan term.
What is a Potential Event of Default?	A defined early trigger representing the potential occurrence of an Event of Default.
What is the purpose of a Potential Event of Default?	To trigger a draw stop and temporarily suspend further advances until lenders are satisfied the Event of Default will not occur.
Does a Potential Event of Default stop rollover loans?	No. It does not apply to Rollover Loans under a revolving facility.
When do Potential Event of Default provisions apply to advances?	They apply where lenders would be advancing new money.
Does a Potential Event of Default allow acceleration and cancellation?	No. Acceleration and cancellation are not in question where there is only a potential event of default.
What is default interest?	Interest payable at a rate above the usual loan interest rate when the borrower is in default.
Why is default interest charged?	To compensate the bank for dealing with a loan in default.
What does the default rate include?	The bank’s margin, covering the loss of profit while unpaid amounts remain outstanding.
Why must the default rate not be excessively high?	To reduce the risk that it will be construed as an unenforceable penalty clause.
What is set-off?	A remedy allowing lenders to use borrower deposits held with them to pay a defaulted loan.
Why is set-off useful to lenders?	It permits settlement of the lender’s claim without obtaining a judgment.
When are general law rights of set-off available?	Only where fairly strict conditions are fulfilled.
Why is an express set-off clause commonly included in loan agreements?	To expressly regulate the parties’ rights of set-off.
What is a limitation on widening a set-off clause?	It would generally be unfair to set off against an obligation of the borrower that is not yet payable.
What is an illegality clause?	A force majeure provision protecting a lender where its contractual lending obligation conflicts with a legal prohibition.
What is mandatory prepayment?	A provision requiring repayment when an event occurs, even though the borrower is not necessarily at fault, and lenders may seek repayment.
What is an increased costs clause?	A clause protecting the lender’s profit margin if capital adequacy costs increase during the loan.
What is a mitigation clause?	A clause requiring the lender to mitigate its losses before making a claim.
What limitation applies to a lender’s duty to mitigate?	The lender need not take steps in mitigation that might prejudice it.
Why are financing agreements important to the economy?	They afford protection to both lenders and borrowers and are important to the economy of any country, including Zambia.
What determines the extent of protection under a financing agreement?	Proper drafting of the financial agreement.
What should be the focus when drafting a financing agreement?	The interests of the client, whether borrower or lender.
What are the two exercises on loan agreements?	Discuss seven essential clauses in a loan agreement and identify which clauses protect the lender and which protect the borrower.
What is the prescribed reading for financing agreements?	SADC Protocol on Finance and Investment (2006) 4.20.
What are the recommended readings on financing agreements?	Tolley’s Commercial Loan Agreements by James R. Lingard; Negotiating International Loan Agreements, Sweet & Maxwell (Revised edition 1997); Banking and Financial Services Act No. 7 of 2017.
What law governs agricultural charges in Zambia?	The Agricultural Credits Act, 2010.
What are agricultural charges valuable for?	Agricultural charges are a valuable form of security for farmers.
Why are agricultural charges valuable to farmers?	Most farmers' assets are machinery, tools and land used for day-to-day business.
What assets are used to secure transactions by farmers?	Machinery, tools and land owned by farmers.
What are the specific outcomes of studying agricultural charges?	Understand the law, what constitutes security, and how agricultural charges are registered.
What Act repealed the Agricultural Credits Act, 1995?	The Agricultural Credits Act, 2010.
What authority does the Agricultural Credits Act, 2010 establish?	The Warehouse Licensing Authority.
What does the Act facilitate?	Borrowing money on security of charges created on farming stock and other agricultural assets.
What does the Act provide regarding charges?	It provides for the registration of charges.
What does the Act provide regarding warehouses?	It provides for certification of warehouses.
What does the Act provide regarding warehouse receipts?	It provides for issuance and negotiation of warehouse receipts and rights conferred by them.
What does the Act provide regarding warehouse operators?	It provides for the rights and obligations of warehouse operators.
What is farming stock?	All agricultural commodities excluding those subject to a negotiable or non-negotiable warehouse receipt, whether future, growing or severed from land.
What does farming stock include?	Livestock, poultry, bees, captive wild animals, fish stock, timber, seed, manure, fertilizer, insecticide, oil, fuel, agricultural vehicles, machinery, plant and moveable agricultural fixtures.
What are “additional assets”?	Tangible assets excluding land and warehouse receipts belonging to a farmer, trader or related business for agricultural production, processing or trade.
What can “additional assets” include?	Accounts receivable and savings accounts on deposit with a bank, credit union or savings institution.
What are “other agricultural assets”?	Any right of a tenant, including any right to compensation for improvements.
What is an “agricultural commodity”?	Anything derived directly or indirectly from cultivation.
When is a person taken to give value for a right acquired?	When it is acquired for a binding commitment to extend credit, security or satisfaction of a claim, delivery under a pre-existing purchase contract, or sufficient consideration.
What is an agricultural charge?	A charge on farming stock and assets, which may be fixed, floating, or both.
In what form may an agricultural charge be created?	In any form and upon conditions agreed by the parties.
Who may be a party to an agricultural charge?	Any surety may be a party to the charge.
What may an agricultural charge secure?	Inputs or cultivation items, sums advanced or to be advanced to the farmer, and sums paid or to be paid on the farmer’s behalf under a guarantee.
Who may create an agricultural charge on agricultural commodities?	A related business or trader may charge commodities purchased or intended to be purchased from a farmer.
What must a fixed charge specify?	The property affected by the fixed charge must be specified.
What assets may a fixed charge include?	Farming stock, additional assets or other agricultural assets belonging to the farmer, trader or related business.
Can the principal sum secured by a charge fluctuate?	Yes. It may be a specific amount or a fluctuating amount advanced on current account.
Does a current-account charge continue despite changes in indebtedness?	Yes. It remains effective despite fluctuation or temporary extinction of indebtedness and notice of subsequent interests.
What are the effects of a fixed charge?	It gives the holder a right of seizure and possession and a right to sell the property.
When may property under a fixed charge be sold?	After 21 days.
How must proceeds from sale under a fixed charge be applied?	First to secured money and liabilities and costs of seizure and sale; any surplus goes to the farmer.
What obligations does a fixed charge impose on the farmer, trader or related business?	To pay sale proceeds and insurance money relating to charged property to the charge holder.
Can an insurer pay insurance money directly to the charge holder?	Yes, where money is due to the farmer, trader or related business on charged property.
Can charged property be sold by the farmer, trader or related business?	Yes, subject to complying with the obligations under the fixed charge.
What happens when charged property is sold by the farmer, trader or related business?	The proceeds of sale must be paid to the charge holder.
When can a holder recover wrongly paid sale proceeds?	Where the holder proves the recipient knew the proceeds were paid in breach of the farmer’s obligations.
What is the effect of a floating charge?	It has the effect of a charge created by a registered debenture issued by a company.
What terminology does the Act use instead of liquidation for a farmer?	Bankruptcy.
When does an agricultural floating charge become fixed?	On a bankruptcy receiving order, death of the farmer or trader, dissolution of a partnership, or written notice by the holder.
What obligations apply while an agricultural charge remains floating?	The farmer, trader or related business must pay sale, insurance or compensation proceeds to the holder.
Can proceeds received under a floating charge be used to buy farming stock?	Yes. Amounts received may purchase farming stock, which becomes subject to the charge.
What notice must be given when charged farming stock or additional assets are sold?	A written notice must be given before payment of the purchase price.
What must a notice of agricultural charge contain?	Names and addresses of charge holders, priority of charges, and amount secured by each charge.
What must a person receiving notice of an agricultural charge do?	Pay sale proceeds to the holder according to the notice, considering priority and amount.
What is the consequence of contravening the payment requirement?	It is an offence.
How do payments under Section 14 affect liability?	They reduce the farmer, trader or related business's liability according to priority and amount.
What protection does payment under Section 14 give a buyer?	It discharges the buyer or person effecting the sale from claims concerning sale proceeds.
What is the penalty for failure to give written notice?	A fine of 10% of the outstanding loan.
Is an agricultural charge a bill of sale?	No, it is not a bill of sale.
When must an agricultural charge be registered under Section 15?	Within 7 days, according to the stated supplementary provision.
How is priority between agricultural charges determined?	By the time of registration.
What charge has priority for payment of insurance premiums on farming stock?	An agricultural charge created solely to secure insurance premiums has priority over other agricultural charges.
What happens if a fixed charge is created over property already under a floating charge?	The later fixed charge has no effect.
Why does statutory priority motivate lenders or banks to create agricultural charges?	It motivates them to create a charge even if they already have legal mortgages.
What is stated about farming stock and bankruptcy?	Farming stock is not available in relation to the Bankruptcy Act; liquidation is not mentioned.
When must an agricultural charge be registered under Section 16?	Within 30 days of execution.
What is the effect of failing to register an agricultural charge within 30 days?	It is void against any person other than the farmer.
Who must attend to registration of an agricultural charge?	The holders must attend to registration.
Can the Registrar extend the registration period?	Yes, the Registrar may extend the time for registration.
How is registration of an agricultural charge effected?	By sending or delivering the charge memorandum, particulars of the charge and required fee to the Registrar.
What does registration constitute?	Actual notice, except regarding further advances on a current account and a purchaser under Section 14.
What priority does a charge including growing crops have over a mortgagee?	The holder’s rights have priority over those of the mortgagee regardless of the dates of the mortgage and charge.
What is the effect of an earlier floating charge on a later fixed charge?	The later fixed charge has no effect over property comprised in the earlier floating charge.
How widely is the Agricultural Credits Act used?	It enjoys wide usage by lenders providing facilities to individual farmers and partnerships.
When is a farmer, trader or related business guilty of fraud under Section 18?	When it creates an agricultural charge intending to defraud and fails to pay the holder or removes or permits removal of charged property.
What is the penalty for fraud under Section 18?	Imprisonment for a term not exceeding 7 years.
What happens if a related business misrepresents rights and obligations with intent to defraud?	Its directors and managers are liable to a 300,000 penalty unit fine or imprisonment up to 3 years.
What must a contract for advances on inputs and other items state?	The value of inputs, interest rate charged and any charges.
What must a depositor disclose about agricultural commodities?	Whether the commodities are subject to any agricultural charge.
What must a warehouse operator verify before accepting agricultural commodities?	Whether the commodity is subject to any agricultural charge.
What receipt must a warehouse operator issue for commodities subject to an agricultural charge?	A non-negotiable warehouse receipt.
What is the penalty for contravening the warehouse provisions?	A fine up to 500,000 penalty units, imprisonment for 5 years, or both.
What Act applies to disputes under the Agricultural Credits Act?	The Arbitration Act, 2000.
What does Section 90 provide?	The Arbitration Act, 2000 applies to settlement of disputes arising from interpretation or application of the Act.
How can farmers use farming stock in lending and borrowing?	They can use equipment, land and tools they own to secure charges with various institutions.
What is a guarantee?	A contract where a guarantor or surety undertakes responsibility to a creditor for the debt or default of a principal debtor.
What is the principal debtor?	The person who is primarily responsible for the debt or obligation to the creditor.
What is a guarantor or surety?	A person who undertakes to be responsible to the creditor for the debt or default of the principal debtor.
What is the nature of a guarantee?	It is a collateral, accessory or secondary contract different from the original contract between lender and principal debtor.
What must exist for a valid guarantee?	There must be a valid principal obligation between the principal debtor and creditor.
What is the extent of a surety's liability?	A surety's liability is co-extensive with that of the principal debtor.
When is a surety usually not liable?	When the underlying obligation is void or unenforceable.
When is a guarantor discharged?	When the principal debtor performs the guaranteed obligation, such as paying the debt.
What is a continuing guarantee?	A guarantee extending to a series of transactions rather than being confined to one credit or transaction.
What is the effect of Clayton's Case on a fluctuating overdraft?	Unless the guarantee is continuing security, payments in discharge the debt and payments out are unsecured advances.
What is Clayton's Case?	Clayton's Case (1816) 1 Mer 572.
What are the specific outcomes on guarantees?	To understand guarantees, explain guarantor liability, and distinguish a guarantee from an indemnity.
When is an agreement a guarantee?	When there is an existing or contemplated principal debtor and secondary debtor.
When may a guarantee be determined or terminated?	Unless otherwise provided, when the principal obligation is changed or terminated without the guarantor's consent.
What are the essentials of a guarantee?	There must be a valid agreement, the offer must be addressed to the creditor, and there must be a debt owed by someone to be guaranteed.
What makes an agreement valid for a guarantee?	There must be an offer on ascertainable terms and an unqualified acceptance by the person to whom it is made.
Who must a guarantee offer be addressed to?	The creditor.
Why is an offer not addressed to an individual creditor not a guarantee?	Because a guarantee offer must be addressed to the creditor.
What must exist besides an agreement for a guarantee?	There must be a debt owed by someone which has to be guaranteed.
What form must a contract of guarantee take?	It must be in writing and signed by the guarantor or a person lawfully authorized by him.
What satisfies the writing requirement for a guarantee?	Any sufficient note or memorandum of the promise, signed by the guarantor or his agent.
What are the two kinds of guarantor liability?	A promise effective if the principal debtor fails to perform, and a promise that the principal debtor will perform.
What is the nature of the guarantor's liability?	In both situations, the guarantor's liability is secondary.
When does a guarantor have no liability?	When the liability of the principal debtor has been discharged.
Can a creditor sue a guarantor before the principal debtor defaults?	No. The guarantor's liability arises only when the principal debtor is in default.
When does the guarantor's liability arise?	When the principal debtor is in default, not before then.
How can a creditor enforce a guarantee?	By bringing an action in court against the guarantor for judgment.
Must the principal debtor be sued with the guarantor?	No. The principal debtor may or may not be sued in the same action.
Who is normally sued in an action on a guarantee?	Creditors normally sue both the principal and secondary debtors in the same action.
What right does a guarantor have after paying the debt?	Unless waived, the guarantor is entitled to be subrogated to all rights possessed by the creditor regarding the debt.
When does the guarantor become entitled to subrogation?	As soon as the guarantor has paid the creditor the debt due under the guarantee.
What happens if the guaranteed debt is secured by a mortgage?	On payment, the guarantor is entitled to transfer of the mortgage, even if unaware of it originally.
What is an indemnity?	A contract by one party to keep the other harmless against loss.
What is the key difference between a guarantee and an indemnity?	A guarantee answers for another's debt or default; an indemnity provides a primary obligation against loss.
What is the nature of the surety's obligation under a guarantee?	It is a secondary obligation to the creditor.
What is the nature of the indemnifier's obligation?	It is a primary obligation.
What case explains the distinction between guarantee and indemnity?	Birkmyr v Danell (1704) 1 Salk 27 at 28.
How is it determined whether a contract is a guarantee or indemnity?	It is a matter of construction.
Why is the distinction between guarantee and indemnity important?	Guarantees must comply with Section 4 of the Statute of Frauds 1677 and the surety's liability is co-extensive with the principal debtor's liability.
When is a contract of guarantee unenforceable by the creditor?	If it does not comply with Section 4 of the Statute of Frauds 1677 by being in writing and signed.
What happens to a surety's liability when the principal debtor's liability is unenforceable or discharged?	It depends on whether the contract is one of guarantee or indemnity.
What is a guarantee according to the summary?	A contract where a guarantor agrees to pay a debt or perform a duty owed by a third person primarily liable for it.
What is the extent of the guarantor's obligation?	It is co-extensive with the obligation of the third party.
Why is a guarantee called a collateral contract?	It is secondary to the primary obligation and does not extinguish the original obligation.
What happens to a guarantee if the original obligation fails?	The guarantee is rendered null and void.
What are the four registries in the High Court?	Principal Registry, Family and Children’s Registry, Industrial Relations Registry and Commercial Registry.
Where is the Principal Registry located?	Lusaka, with District Registries in places such as Chipata and Livingstone.
What is the purpose of the Commercial Registry?	To fast track the adjudication of commercial disputes.
When was the commercial list established?	3rd April 2000.
What amendment led to creation of the commercial list?	An amendment to the High Court Act in 1999.
What Order regulates commercial actions?	Order 53 of the High Court Rules.
When was Order 53 published?	Under S.I. No. 29 of 1999.
What else regulates commercial actions besides Order 53?	The 2000 Practice Direction.
Do other High Court Rules apply to commercial actions?	Yes, the other rules in the High Court Act also apply to commercial actions.
When may judgment be entered in default?	Where the defendant fails to appear and defend, subject to filing an affidavit of service and acknowledgement of service.
What must a plaintiff file before default judgment is entered?	An affidavit of service together with an acknowledgement of service.
Why is care required before entering default judgment?	Once judgment is entered, it cannot be reversed except for very good reason.
What is a commercial transaction under O.53 rule 1?	Any cause arising from a transaction relating to commerce, trade, industry or any action of a business nature.
What may a Judge consider under O.53 rule 5(2)?	Whether the cause, issues of fact and law, or procedure make the action suitable for inclusion or exclusion from the Commercial List.
What applications have been excluded from the Commercial List?	Applications for Judicial Review, because they are governed by Administrative Law.
Why was the Commercial List created?	As a fast-track court to expedite decisions in commercial disputes.
What rules are unique to the Commercial List?	Order 53 and the 2000 Practice Directions.
What must counsel consider before issuing a Writ and Statement of Claim?	Whether to file the action in the Principal Registry or Commercial Registry.
What factors guide the choice of Commercial Registry?	The issues of fact, law and procedure likely to arise in the action.
What must accompany a Writ of Summons?	A Statement of Claim.
What must accompany a Memorandum of Appearance?	A Defence.
Does this requirement apply to both lists?	Yes, it applies to both the General List and Commercial List.
What must a Statement of Claim in a commercial action contain?	Clear material facts relied on by the plaintiff and, above all, a clear cause of action.
What may happen if a Statement of Claim lacks a clear cause of action?	The action may be struck out, set aside or dismissed summarily.
What does dismissal mean?	The action cannot be restored; a new action must be commenced.
What does setting aside mean?	It sets aside a default judgment, after which the action can proceed normally.
What does striking out mean?	An application must be made to restore the action to the active cause list.
What must a Defence do to each allegation of fact?	It must specifically traverse, meaning concede or rebut, each allegation paragraph by paragraph.
Is a general or bare denial allowed in a Defence?	No. A general or bare denial is not allowed.
What happens if a defendant fails to specifically traverse allegations?	The allegations not specifically traversed are deemed admitted.
When may the plaintiff obtain Judgment on admission?	Where the defendant fails to specifically traverse allegations and the case is appropriate.
What case upheld a decision based on bare denials?	Kawambwa Tea Co. (1996) Ltd. v Zygo Bonsai Ltd., SCZ Appeal No. 11 of 2003.
When is a Scheduling Conference held?	14 days after filing the Memorandum of Appearance and Defence.
What is the purpose of a Scheduling Conference?	To give directions on how the parties should proceed with the case.
What is the Scheduling Conference?	A conference where the Judge and parties chart the course of events and agree directions for the trial.
Who should attend the Scheduling Conference?	Lawyers personally seized with the conduct of the case.
Why should the lawyers attending be personally responsible for the case?	They agree to the scheduling and directions and cannot later be expected to advance excuses for non-compliance.
Who drives matters in the Commercial List?	The Judge.
What can the Judge do at a Scheduling Conference?	Give directions in consultation with the parties on how the case should proceed.
What happens if there has been no reply?	An order will be made specifying when the plaintiff must give the reply.
What may the parties decide at the Scheduling Conference?	Time needed to prepare, filing of bundles and skeleton arguments, status conference dates and witness matters.
What matters may directions at the Scheduling Conference cover?	Reply, defence to counterclaim, discovery, inspection, bundles, witness statements, skeleton arguments, witnesses, case time, status conference and trial date.
How is discovery conducted under the Scheduling Conference directions?	By List as agreed.
What happens regarding bundles of pleadings and documents?	They are exchanged and filed.
What is decided about witnesses at the Scheduling Conference?	The number of witnesses each party will summon.
What is decided about trial time?	The time required by each party to conduct its case is determined.
What trial date may be set at the Scheduling Conference?	A trial date may be set, although it may be agreed later at the Status Conference.
Can the Judge refer parties to mediation or arbitration?	Yes, at the Scheduling Conference.
What does the Judge consider about the pleadings?	Whether the Statement of Claim and Defence comply with the rules on clarity, materiality, cause of action and specific traverse.
What may happen to a defective Statement of Claim?	It may be struck out, set aside or dismissed.
What may happen to a Defence that fails to specifically traverse allegations?	It may be deemed an admission and Judgment may be entered on admission.
What rules guide the form of witness statements?	O.38 Rule 2 and O.38 2A(8) of the Rules of the Supreme Court 1999.
In what person should a witness statement be written?	The first person.
What must a witness statement state about the witness?	Full names, residential or official address, position and employer, occupation, and whether the witness is a party or employee.
How does a witness statement operate at trial?	It stands as evidence in chief and is treated as if the witness were testifying in the witness box.
How should a witness statement be written?	In a clear, straightforward narrative form.
How should events be arranged in a witness statement?	In chronological sequence.
How should paragraphs in a witness statement be arranged?	In consecutively numbered paragraphs.
How should dates, sums and numbers appear in witness statements?	In figures, not words.
What spacing is required for witness statements?	They should be typed double spaced.
What must be done to pages of a witness statement?	They must be paginated.
How must documents referred to in a witness statement be treated?	They must be clearly identified.
Who must sign a witness statement?	The witness, unless there is a good reason stated in an attached letter.
What must the maker state about the truth of a witness statement?	That its contents are true to the best of the maker’s knowledge and belief.
What follows the Defence when it is the last pleading before the Scheduling Conference?	The reply, followed by discovery and exchange of documents.
What is the Status Conference for?	To assess compliance with Scheduling Conference directions, determine readiness and set the trial date if not already set.
What must parties submit with skeleton arguments at the Scheduling Conference?	A list of authorities.
When are lists of authorities required?	At trial and at all interlocutory proceedings.
What must parties state about their witnesses?	The amount of time they expect their witnesses to take to give evidence.
When may interlocutory applications be made?	At any time.
What must an applicant file with an interlocutory application?	A skeleton argument stating the facts relied upon, the law and authorities relied upon, with copies where possible.
What must the respondent file for an interlocutory application?	The same: a skeleton argument, the law and authorities relied upon, with copies where possible.
Who hears interlocutory applications?	The Judge in Chambers having conduct of the case.
Who does not hear interlocutory applications?	The Deputy Registrar.
What must parties file for an application for further and better particulars?	The application and skeleton arguments stating the facts, law and authorities relied upon.
When must witness statements be exchanged and filed?	Not more than 21 days before the trial date.
Why are witness statements used in the Commercial List?	There is no examination in chief, which speeds up the trial.
When must skeletal arguments be filed?	Not more than 21 days before the trial date.
When will a Judge grant an adjournment?	Only in compelling and exceptional circumstances.
What may happen when an adjournment is granted for weak reasons?	The Judge may award costs and condemn the requesting party to pay a hearing fee.
When must a court hearing fee imposed for adjournment be paid?	Before the matter proceeds.
What happens if a non-applicant fails to pay the hearing fee before the next date?	The applicant shall be granted his application.
What happens if an applicant fails to pay the hearing fee before the next date?	The applicant’s application will be dismissed.
How can counsel seek an adjournment if unable to appear personally?	Through an agent or by notice of motion with an affidavit explaining the non-appearance.
Can an adjournment be requested by letter?	No. No application for adjournment by letter will be accepted.
What happens if an application is struck off for non-appearance?	An application to restore it attracts a higher fee.
How long does an applicant have to restore a struck-off application?	Within 30 days.
What happens if a struck-off application is not restored within 30 days?	The application stands dismissed.
What happens if a restored matter has another non-appearance by the applicant?	The Judge shall dismiss the application forthwith.
What happens where there is no progress for 60 days?	The action shall be taken to a Judge for dismissal.
How does the Commercial List differ from the General List regarding dismissal for want of prosecution?	Under O.53 Rule 13, time determines dismissal in the Commercial List; the General List requires an application.
What must an applicant prove after serving process?	The applicant must show proof of service by producing an exhibited signed letter of service enclosing the process.
What happens if no Memorandum of Appearance and Defence is filed after service?	The plaintiff’s counsel must file an affidavit of service, acknowledgement of service and default judgment.
Is the Commercial List Procedure still unique compared with the General List?	No. S.I. No. 58 of 2020 adopted rules similar to those under Order 53.
What is the Commercial List?	A High Court division dealing with commercial actions under Order 53 of the High Court Rules.
Where are the Commercial Courts in Zambia?	Lusaka and Kitwe on the Copperbelt Province.
What does Order 53 regulate?	Commencement of commercial actions, procedure, trial, adjournments and when matters are struck off.
Should Commercial List rules be read in isolation?	No. They must be read together with the rules of the General List.
What are the two main alternative dispute resolution mechanisms?	Mediation and arbitration.
What is mediation?	A negotiation process facilitated by a neutral third party known as a mediator.
What is the role of a mediator?	To help parties communicate their positions and explore settlement possibilities.
Does a mediator adjudicate the dispute?	No. Unlike a judge or arbitrator, a mediator facilitates communication and agreement.
What skills does a mediator use?	Listening, suggesting and brokering an agreement.
Is mediation voluntary and binding?	Mediation is voluntary and non-binding.
What must parties be willing to do in mediation?	They must be willing to reach some form of settlement.
What is the nature of mediation?	It is a non-adversarial process encouraging parties to consider broader aspects of their relationship.
Is mediation restricted by legal principles and litigation procedure?	No. Parties are not required to prove their cases on the balance of probabilities using legal principles.
What is a mediator usually more oriented toward?	Skill rather than legal knowledge.
When was mediation formally recognized in Zambia?	In May 1997 through the High Court Amendment Rules of 1997.
Which High Court Order provides for mediation?	Order 31 of the High Court Rules.
What is mandatory mediation?	Mediation that parties may be compelled to attend by a judge, although they cannot be compelled to settle.
What is non-mandatory mediation?	Mediation that parties may choose to undertake even without an order from a trial judge.
What is mediation in Zambia called?	Court Annexed Mediation.
What does Order 31 Rule 4 provide?	Except for specified cases, every action may be referred by the trial Judge for mediation after being set down for trial.
Which cases may be excluded from court-annexed mediation?	Cases involving constitutional issues, individual liberty, injunctions, or cases the trial Judge considers unsuitable.
What happens if court-annexed mediation fails?	The trial Judge summons the parties to fix a hearing date.
Who assigns a mediator after referral?	The Mediation Office assigns a mediator chosen by the parties.
When may a Commercial Registry matter be referred to mediation?	During the Scheduling Conference.
Can a judge force parties into mediation?	No. A judge may refer a matter only with the consent of the parties or their counsel.
What are the qualities of a good mediator?	Good listening, negotiating and problem-solving skills.
What does Order 31 Rule 5 provide about mediators?	The Mediation Office keeps a list of trained and certified mediators.
What experience must a certified mediator have?	At least 7 years' experience in their respective field.
What happens at the commencement of mediation?	The mediator reads and explains the Statement of Understanding and requires the parties to sign it.
What are three requirements of a mediator?	The mediator must be impartial, keep order and facilitate communication.
What is the mediator's role during the session?	To maintain control, frame issues, refocus problems and assist with alternative proposals.
Does a mediator decide the case?	No. A mediator does not decide the case like a judge or arbitrator.
What records does a mediator collect?	Writs, pleadings, bundles of documents, interrogatories and other records.
What does Order 31 Rule 6 require?	Mediators sign for and collect the records of the matter.
What does the mediator do after collecting records?	Gives the parties the date, time and venue of mediation.
How long must mediation be completed after records are collected?	Within 60 days.
What is the confidentiality rule in mediation?	Statements made during mediation are confidential and privileged.
Must a mediator keep a record of mediation proceedings?	No. The mediator is not required to keep a record.
What happens to records when mediation fails?	The mediator destroys the record at the end of the process in the presence of the parties.
Can a mediator communicate with the trial judge about mediation?	No. Mediators must not communicate with the trial judge about the mediation.
Why is mediation confidentiality important?	It allows parties to state objectives and needs openly without fear of prejudice if the matter returns to trial.
How does mediation usually begin?	With a joint session attended by the mediator, parties and representatives.
What happens at the joint session?	Introductions are made, issues are highlighted and ground rules such as confidentiality and civility are established.
Who may represent parties at mediation?	Counsel, company representatives and consultants.
What happens after issues are identified at the joint session?	The mediator invites solutions and options from the parties.
What are caucuses in mediation?	Private sessions between the mediator and parties held separately.
Why are caucuses useful?	They allow parties to be more forthcoming with ideas and suggestions than in the presence of the other party.
What happens when mediation reaches an agreement?	The agreement is recorded in writing and signed by the parties.
What is the effect of a signed mediation agreement?	It becomes a consent judgment enforceable like any judgment of the Court.
What does Order 31 Rule 12 provide?	It provides for a mediation settlement where parties agree to settle.
What must a mediation settlement state?	That the parties have agreed to settle and the terms of the settlement.
What is the legal effect of a mediation settlement?	It has the same force and effect as an order, decision or judgment of a judge.
Who owns a mediated agreement?	The parties, not the mediator.
What role should a mediator take in the final agreement?	A direct role in substance to ensure all settled issues are covered sufficiently and the agreement is complete.
Can a mediator dictate the terms of a settlement?	No. The mediator should ensure completeness without dictating the settlement terms.
Can a mediated agreement be appealed?	No. Under Order 31(14), no appeal lies against a mediated agreement.
Who must personally attend mediation?	The parties must appear in person.
What must an advocate do when representing a party at mediation?	The advocate must accompany the party.
Who must attend mediation for a non-individual party?	An officer or director of sufficient rank and authority to settle the matter.
What should counsel obtain for a non-individual client?	Written instructions confirming that the representative has authority to settle.
What are the advantages of mediation?	It can be informal and speedy, reduce costs, preserve relationships, avoid winners and losers, create commitment and maintain privacy.
Why can mediation be tailored to the parties' needs?	It is not constrained by legality or professional rules.
How quickly can mediation reach settlement?	It may reach settlement in a few days compared with litigation or arbitration taking months or years.
Why are mediation costs often reduced?	The process does not take too long.
How does mediation affect relationships?	It can preserve relationships, especially where ongoing contracts or transactions exist.
Does mediation declare a winner or loser?	No. It focuses on the parties' joint interests rather than what is legally correct.
Why are parties more committed to mediated solutions?	They fully participate in generating the solution, making the agreement more enduring.
What is a further advantage of mediation?	The privacy of the matter remains intact.
What is a major disadvantage of mediation?	It requires the parties' consent and goodwill.
When may mediation fail because of delay?	When one party is bent on causing delay through litigation.
When may mediation fail because of legal precedent?	When parties desire to establish legal precedents.
What is arbitration?	A process where a dispute is submitted to neutral third parties chosen by the parties for a final, binding and enforceable decision.
What happens first in arbitration?	The parties submit a dispute to a neutral arbitrator for a decision on the merits.
How do parties present evidence in arbitration?	In writing or through witnesses.
How does arbitration compare with court proceedings?	It is more informal and strict adherence to rules of evidence is not usually required.
What is an arbitral decision called?	An award.
What is the effect of an arbitral award?	It is final and binding on the parties, with recourse by setting it aside.
What disputes may be arbitrated under Section 6(1)?	Any dispute that the parties have agreed to submit to arbitration.
What agreements cannot be arbitrated under Section 6(2)?	Those contrary to public policy or not determinable by arbitration under law.
Can criminal matters be arbitrated?	Generally no, unless permitted by written law or a court grants leave.
Can matrimonial causes be arbitrated?	No, because only the High Court has power to dissolve or annul a marriage.
Can matters incidental to matrimonial causes be arbitrated?	Not unless the court grants leave, including custody, financial and property settlements.
What is an advantage of arbitration regarding expertise?	Parties can choose an arbitrator who is an expert in the subject matter.
How does arbitration differ from litigation regarding the decision maker?	Parties choose the arbitrator, unlike litigation where parties do not choose the judge.
What is an advantage of arbitration regarding finality?	Arbitration decisions are final and binding, discouraging appeals to court.
What is an advantage of arbitration regarding privacy?	Arbitration is a private forum that can shield proceedings from public scrutiny.
What is an advantage of arbitration regarding procedure?	Parties can determine procedural rules and choose simplicity and informality.
How can simplified arbitration procedures affect costs?	They tend to reduce the cost of disputes.
How can arbitration avoid delays?	Parties need not wait for a court trial date and can proceed when they and the arbitrator are ready.
Are the theoretical advantages of arbitration always realized?	No. They are theoretical advantages and are not always realized in practice.
Why can arbitration be expensive in practice?	One usual reason is the use of lawyers.
What happens when there is an arbitration agreement under Section 10(1)?	A Court must stay proceedings at the request of any party.
What interim measure may a Court grant concerning disputed goods?	An order for preservation, interim custody, sale or inspection of the goods.
What interim measure may secure the amount in dispute?	An order securing the amount in dispute or costs and expenses of arbitration.
What injunction may a Court grant during arbitration?	An interim injunction or other interim order.
What order may ensure an arbitral award remains effective?	An order ensuring that an award is not rendered ineffectual.
What is the doctrine of separability?	An arbitration agreement is separate and independent from the main contract and survives its termination.
What case established the doctrine of separability?	Heyman & Another v Darwins Ltd [1942].
What are three characteristics of an arbitration clause?	It is collateral to the main contract, creates obligations triggered by future events, and concerns a subject matter not susceptible to physical destruction.
What primary event activates an arbitration clause?	The existence of a dispute concerning the parties' obligations under the main contract.
What other event activates an arbitration clause?	A party invoking the arbitration clause to use the arbitration procedure.
What three things must every arbitration agreement provide?	Appointment of an arbitrator, place of arbitration, and law applicable to the arbitration.
What is a sample arbitration clause?	Any dispute shall be referred to arbitration by 3 arbitrators sitting at Lusaka, conducted in English, under Zambian law and the Arbitration Act.
When does the arbitral process begin?	When a dispute arises in connection with a contract between the parties.
What must a contract contain for a dispute to be referred to arbitration?	An arbitration clause.
What happens if the contract has no arbitration clause?	The parties must make an ad hoc arbitration agreement submitting the dispute to arbitration.
Who determines the procedure for appointing arbitrators?	The parties are free to agree on the appointment procedure under Section 12(2).
How may an arbitral tribunal be appointed?	By the parties, existing arbitrators, an appointing authority or a competent court.
How is a three-member tribunal generally appointed?	Each party appoints one arbitrator and the two appointed arbitrators appoint the third.
What happens if parties fail to agree on appointment?	The appointment is made according to Section 12(3), including by an arbitral institution where required.
What happens if the two arbitrators fail to agree on the third within 30 days?	An arbitral institution makes the appointment.
What is an arbitral institution?	An institution recognized in accordance with Section 23.
How can a professional body become an arbitral institution?	It may apply to the Minister to be recognized under Section 23.
What arbitral bodies are listed in the material?	Zambia Centre for Dispute Resolutions Limited, Zambia Association of Arbitrators, and Chartered Institute of Arbitrators–Zambia Branch.
What is the third arbitrator in a three-member tribunal called?	The Presiding Arbitrator or Chairman.
What is the first thing an arbitrator does after appointment?	Calls a preliminary meeting.
What is the purpose of the preliminary meeting?	It is like a scheduling conference where a roadmap for the arbitration is agreed.
What is normally considered at a preliminary meeting?	The agreement, issues in dispute, arbitrator's charges, rules, reasoned decision, programme, discovery and liberty to apply.
What further matters may be agreed at the preliminary meeting?	Documents-only arbitration, hearing timing and venue, experts, witnesses, statements, communication, transcription, opening and final submissions, taxation of costs and other business.
What authority does the Chairman have in a multi-member tribunal?	The Chairman is an arbitrator with authority like the other arbitrators.
How is a decision reached by an arbitral panel?	By majority vote.
What happens if a majority vote cannot be achieved?	The Chairman or Presiding Arbitrator's vote decides.
What happens if the Chairman is replaced?	The arbitration must commence afresh.
Does replacing a party-appointed arbitrator require a fresh arbitration?	No, unless a party requests it.
What qualifications must arbitrators have?	Section 12(6) sets out qualifications; an award by an unqualified arbitrator is void.
What is arbitrator independence?	Independence means the arbitrator has no professional connection with the parties.
What is arbitrator impartiality?	Impartiality means freedom from bias in favour of a party or concerning the issue in dispute.
What may indicate arbitrator partiality?	Applying an improper procedure or failing to follow arbitral due process and natural justice.
How may an arbitrator's mandate be terminated?	By a successful challenge, inability or failure to act, agreement of parties, withdrawal, or becoming functus officio.
When may an arbitrator be unable to act?	When incapacitated or when failing to act without undue delay.
When does an arbitrator become functus officio?	When the mandate is concluded by making the final award.
Who may challenge an arbitrator's appointment?	A party may challenge it only on valid grounds.
Why are challenges restricted to valid grounds?	To prevent parties from disrupting arbitration through frivolous challenges.
What should an arbitrator disclose to prevent challenges?	Circumstances likely to give rise to a challenge, preferably at appointment.
How can parties challenge an arbitrator under Article 13?	They may agree on a procedure or, without agreement, the challenging party sends written grounds within 15 days.
What can a challenged arbitrator do?	Withdraw, withdraw with the other party's agreement, or constitute himself into a tribunal to decide the challenge.
What must an arbitrator do when deciding a challenge?	Hear both parties on the grounds of the challenge.
What happens if the arbitrator finds the challenge successful?	The arbitrator must withdraw.
What happens if the arbitrator rejects the challenge?	The arbitrator may continue with the arbitration.
How long does a dissatisfied party have to apply to the High Court?	Within 30 days of notice of the arbitrator's decision to continue.
How does the High Court decide an arbitrator challenge?	It decides the merits itself, not as an appellate court.
Is the High Court's decision on the challenge appealable?	No. The decision is final and not subject to appeal.
Why should arbitrator challenges be raised early?	To avoid disrupting the arbitration later and appointing a new arbitrator.
Where does an arbitrator's jurisdiction come from?	The consent of the parties.
When does an arbitrator lack jurisdiction?	Where there is no arbitration clause, the agreement is invalid, appointment is invalid, qualifications are lacking, or the dispute is outside the agreement.
What is competence-competence?	The arbitrator's statutory power to rule on his or her own jurisdiction.
When does competence-competence arise?	When the arbitrator's jurisdiction is challenged.
What does competence-competence help avoid?	Delays and difficulties over the validity of the arbitration agreement, tribunal constitution and subject matter.
When must a jurisdiction plea be raised?	Not later than after submission of the Defence.
How may a tribunal decide a jurisdiction challenge?	As a preliminary issue or together with the merits.
Can a party apply to court regarding jurisdiction?	Yes, subject to the applicable provisions, and the Court's decision may not be subject to appeal.
What are the requirements for an arbitral award under Section 16(1)?	It must be in writing and signed by the arbitrator or arbitrators.
When are majority signatures sufficient on an award?	When there is more than one arbitrator and reasons are given for missing signatures.
Must an arbitral award give reasons?	Yes, unless the parties agree otherwise.
What must an arbitral award state under Section 16(3)?	Its date and place of arbitration, which is deemed the place where the award was made.
When is a signed copy of the award given to each party?	Subject to payment of the arbitrator's fees.
What lien do arbitrators have over awards?	A lien on written awards until their fees are paid in full.
What power does Article 33 give arbitrators?	The power to correct errors in an award.
Who may request correction of an award?	A party may request correction or the arbitrator may correct errors on his own initiative.
What is the effect of an arbitral award under Section 20(1)?	It is final and binding on the parties.
What is the only recourse against an arbitral award?	Setting it aside under Section 17(2) on the prescribed grounds.
How is an arbitral award treated by the Court?	As binding regardless of the country in which it was made, subject to the Act.
How is an arbitral award recognized?	The successful party files the award in Court for recognition.
When is recognition alone sufficient?	When the losing party willingly pays the amount awarded.
What happens if the losing party refuses to pay?	The successful party can enforce the award.
What does Section 18(1) provide?	An arbitral award, regardless of country, shall be recognized as binding upon written application to the High Court, subject to Section 19.
When may recognition or enforcement be refused?	On the grounds stated in Section 19 of the Arbitration Act.
How do Section 19 grounds compare with Section 17(2) grounds?	They are similar grounds for refusing recognition or enforcement and setting aside an award.
What governs recognition and enforcement of foreign arbitral awards?	The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also called the New York Convention.
Where is the New York Convention found in the Arbitration Act?	In the Second Schedule.
What are the most commonly used ADR mechanisms?	Mediation and arbitration.
What should advocates do when considering ADR?	Critically analyze each matter and determine whether ADR is appropriate instead of court proceedings.
What High Court Rules provision provides court-annexed mediation?	Order 31 of the High Court Rules.
What is a merger?	A combination of two companies to form a new company.
What is an acquisition?	The purchase of one company by another in which no new company is formed.
What is amalgamation under the Companies Act No. 10 of 2017?	The combination of two or more companies to form a new body corporate as provided in Section 282.
Which laws govern mergers and acquisitions in Zambia?	Companies Act No. 10 of 2017, Part XIII, and Competition and Consumer Protection Act No. 24 of 2010.
What does Section 24(1) of the Competition and Consumer Protection Act provide?	A merger occurs where an enterprise acquires or establishes control over another business, or enterprises agree to common ownership or control.
Does a merger necessarily involve formal legal unification?	No. Common ownership or control over whole or part of businesses is sufficient.
What is the role of the CCPC in mergers?	The Commission regulates mergers and implements competition and consumer protection legislation.
Do approvals by other regulators automatically mean CCPC approval?	No. Approval by other regulators does not automatically imply approval by the Commission, and vice versa.
Can a joint venture constitute a merger?	Yes. A joint venture between independent enterprises may constitute a merger through common ownership or control.
Can a person have control with less than 51% shareholding?	Yes. A person may have control if they can materially influence the policy of another enterprise.
What case illustrates control through material influence?	Eurocanadian Ship Holdings/Furness Withy/Manchester Liners HCP (1975-76) 639.
When does a merger require CCPC authorization?	When combined turnover or assets, whichever is higher, in Zambia is at least 15 million kwacha.
What financial period is used for the merger threshold?	The merging parties' most recent financial year in which the turnover or assets figures are available.
Can mergers below the prescribed threshold be investigated?	Yes, where the Commission has reasonable grounds to believe the merger meets specified factors for review.
What factor concerns dominance in a localized market?	The merger is likely to create a position of dominance in a localized product or geographical market.
What factor concerns a series of acquisitions?	The merger is likely to contribute to a dominant position through acquisitions not individually subject to prior notification.
What competition factor may justify review below the threshold?	The merger may substantially prevent or lessen competition.
When may an overseas merger be reviewed below the threshold?	Where it is concluded outside Zambia but has consequences in Zambia requiring further consideration.
What public interest factor may justify review below the threshold?	Competition and public interest factors which must be considered may result from the merger.
When is filing mandatory for a merger?	Only when the merger meets the prescribed threshold.
Is filing required below the prescribed threshold?	No, but a party may seek clarification through negative clearance.
What is negative clearance?	A request to the Commission to clarify whether a proposed merger must be notified.
What must be paid when applying for negative clearance?	The prescribed fee.
What is required for a merger to qualify for investigation?	At least one enterprise must be carried on in Zambia or be under the control of a company incorporated in Zambia.
What is the most common route to creating a merger?	Acquiring shares or otherwise exercising control of another enterprise.
How else may a merger occur without formal control?	Through acquiring part of another enterprise's business assets or common ownership arrangements.
How can financial arrangements confer material influence?	A lender may gain influence where an enterprise becomes dependent on the lender and loan conditions give rights beyond protecting its investment.
What may indicate lender material influence?	A lender threatens to withdraw facilities unless a particular activity is pursued, or loan conditions give excessive control rights.
What minority shareholder rights may indicate control?	Veto rights over strategic decisions such as budgets, business plans, major investments or senior management.
What technology-related right may indicate control?	A minority shareholder's right to veto decisions on technology where technology is key to the merged enterprise.
How can economic relationships create control?	A supplier may exercise decisive influence over a customer through economic dependence under important long-term supply agreements.
What is a foreign-to-foreign merger?	A merger or acquisition involving enterprises wholly domiciled outside Zambia.
Can foreign-to-foreign mergers be notifiable in Zambia?	Yes, if they have a direct or indirect effect on the structure of local markets.
How can a foreign-to-foreign merger affect local markets?	Through a subsidiary or interest in an undertaking operating or located in Zambia.
When will the CCPC assert jurisdiction over a foreign-to-foreign merger?	Only where it has a local nexus of sufficient materiality.
What is an example of a sufficient local nexus?	Either merging party has a Zambian subsidiary or has made 10% of its sales in Zambia over the last three years.
When should a foreign-to-foreign merger be notified?	When the prescribed threshold is met because the transaction may affect competition in Zambia.
What assets are assessed for the foreign-to-foreign merger threshold?	The assets of the enterprise present in Zambia.
What three assessments does the CCPC conduct for mergers?	Market Assessment, Competition Assessment, and Public Interest Assessment.
What section governs Market Assessment?	Section 29 of the Competition and Consumer Protection Act.
What section governs Competition Assessment?	Section 30 of the Competition and Consumer Protection Act.
What section governs Public Interest Assessment?	Section 31 of the Competition and Consumer Protection Act.
Why must competition authorities balance merger effects?	Mergers often have both procompetitive and anticompetitive effects.
What cases are cited on merger assessments?	Aton Austria Limited v CCPC, INVESCO v CCPC and Coca Cola Limited.
What are mergers and acquisitions generally?	The procedure of combining companies or their assets.
Do merger and acquisition have the same meaning?	No. They are often used interchangeably but have different meanings.
What are the exercises on mergers and acquisitions?	Reasons for amalgamation; distinguishing mergers and acquisitions; and outlining the merger procedure.
What is an agreement?	A promise between two entities creating mutual obligations by law.
What is a contract?	A lawful agreement or an agreement enforceable by law.
What is required to form an agreement?	Parties, offer/proposal, acceptance, promise and consideration.
What are the parties to an agreement?	Two or more parties are needed to form an agreement.
What is an offer/proposal?	A person's willingness to do or omit something with a view to obtaining another person's assent.
What is acceptance?	When the person receiving a proposal signifies assent to the same thing in the same sense as proposed.
What does an accepted proposal become?	A promise.
What is consideration?	The price for a promise; the return one gets for an act or omission.
When does an agreement become a contract?	When it is enforceable by law.
What does "enforceable by law" mean?	An aggrieved person may approach the court for remedies.
What are the essential requirements for an agreement to become a contract?	Free consent, capacity of parties, lawful consideration and lawful object or subject matter.
What makes consent free?	Absence of coercion, undue influence, fraud, misrepresentation and mistake.
Who has capacity to contract?	Persons of sound mind and persons not disqualified by law.
When is consideration and an object lawful?	Unless forbidden by law, defeating any law, fraudulent, injurious to person/property, or against public health, morality, peace and order.
What case illustrates lack of intention to create legal relations?	Balfour v Balfour [1919] 2 KB 571.
Why did Mrs. Balfour's claim fail?	There was no intention to create a legally binding agreement between Mr. and Mrs. Balfour.
Why is an agreement to kill someone not a contract?	Its object is illegal, so it cannot be enforced.
Why is a promise to bring someone the stars and moon not a contract?	The object is impossible to perform, so it is not enforceable.
Why is a promise made without intention to fulfil it not a contract?	It is not enforceable because it was not made with the intention to fulfil it.
Why is a gift of a pen generally not a contract?	The agreement has no consideration.
What is an exception to the rule that an agreement without consideration is not a contract?	Near relation and natural love and affection can be said to be consideration.
What are the seven elements of a contract?	Offer, acceptance, consideration, legal capacity, lawful subject matter, mutual agreement and mutual understanding of the obligation.
What are the three key beginning elements of a contract?	Offer, acceptance and consideration.
What is an offer?	A proposal containing specific terms for one party to enter an agreement with another.
What is the role of offer and acceptance in contract law?	They form the basis of contract law and identify the point of formation when parties are of one mind.
What is an invitation to treat?	An invitation or willingness to negotiate that does not show willingness to be bound on specific terms once accepted.
What is the key difference between an offer and an invitation to treat?	An offer can be accepted to form a contract; an invitation to treat merely invites negotiation.
Why does an invitation to treat give the issuer control?	It allows the issuer to decide whether or when the contract should be made.
When can an invitation to treat become an offer?	When its wording is clear, definite and explicit, leaving nothing open for further negotiation.
What is the general rule for an invitation to tender?	An invitation to tender is generally an invitation to treat.
When can an invitation to tender be regarded as an offer?	If it is addressed to everyone known to the inviter and agrees to accept the most competitive bid or states at least one tender will be considered.
Is a restaurant menu an offer?	No. A restaurant menu displaying prices is an example of an invitation to treat.
What is acceptance?	Agreement to the specific terms of an offer.
Can an offer be accepted through conduct?	Yes. Acceptance may occur through conduct as well as words.
What happens if an offeree accepts on different terms?	It constitutes a counter-offer rather than acceptance.
Must acceptance normally be communicated?	Yes. Acceptance must normally be communicated to the offeror.
Can silence normally amount to acceptance?	No. Silence cannot normally be treated as acceptance.
When may silence be treated as acceptance?	In exceptional circumstances, such as where terms of dealing are given and the offeree proceeds without formally communicating acceptance.
What is consideration?	Something of benefit to the promisor or something detrimental to the promisee.
Must consideration have an adequate value?	No. It is sufficient if some value is given for the promise.
What wording may be used where consideration is unclear?	“FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged”.
What is a deed?	A document under seal that transfers an interest, right or property, creates a binding obligation, or confirms such a transfer.
What can a deed do?	Transfer an interest/right/property, create a binding obligation, or confirm an act transferring an interest/right/property.
Does a contract contained in a deed require consideration?	No. A contract contained in a deed does not require consideration.
Are all documents under seal deeds?	No. There are special requirements for the execution and delivery of deeds.
Who can enforce a promise contained in a deed?	A person identified in the deed as someone to benefit from the promise.
What remedy may be unavailable without consideration?	Equitable remedies such as specific performance of obligations other than payment of money.
When is a contract illegal?	When the agreement relates to an illegal purpose.
Give examples of illegal contracts.	A contract for murder or a contract to defraud the Inland Revenue Department.
Why may some contracts be unenforceable even if not illegal?	They may be immoral or against public policy.
What is a severability clause?	A clause providing that an illegal, void or unenforceable provision has no effect without invalidating the remaining provisions.
What does the law presume about contractual capacity?	The law presumes that a party has capacity to contract.
Who generally lacks full contractual capacity?	Minors under 18 and mentally disordered people.
Who must prove incapacity?	The person claiming incapacity must prove their inability to enter the contract.
What special rules may apply to contracting parties?	Special rules may apply to corporations, associations, government, public authorities, organisations and charities.
Can a minor enter a contract for necessaries?	Yes. A minor can contract for goods or services suitable to the condition of life of the minor.
What happens if a minor fails to pay for necessaries?	The minor can be sued for breach of contract.
What is the general rule for agreements entered by mentally incapable persons?	In general, such an agreement is void.
How can a person who later becomes mentally incapable authorise another to make legal decisions?	By granting another person a power of attorney.
What is privity of contract?	The common law doctrine that a contract cannot confer rights or impose obligations on anyone other than its parties.
Who can normally sue to enforce contractual rights?	The parties to the contract.
Who can normally claim damages for breach of contract?	The parties to the contract.
What problem arises with contracts made for third-party benefit?	The third party may be unable to enforce contractual rights because they are not a contracting party.
In the Andrew, Ben and Carrie example, why can't Carrie sue Andrew?	Carrie is not a party to the contract.
What can Ben claim if Andrew fails to give Carrie the diamond?	Ben can sue for breach but is entitled only to nominal damages because he suffered no actual loss.
What do terms and conditions identify?	The rights and responsibilities of both parties.
What is a general condition?	A condition that is common and included in most contracts.
What are special conditions?	Conditions specific to a particular contract, such as payment, price variation or penalties.
Do terms and conditions refer to the overall contract?	No. They refer to certain legal terms within the contract or a non-negotiable contract document.
Are terms and conditions legally mandatory?	No. They are not legally mandatory but are highly beneficial.
Why are terms and conditions beneficial?	They can give a party the right to terminate a contract if the other party fails to comply with its terms.
How can SaaS terms and conditions help a business?	They can allow termination of a user's account for abuse of the website or application.
What provision can allow cancellation of incorrectly priced orders?	A provision allowing cancellation at the business's discretion where products are incorrectly priced due to manual errors.
How may contractual terms be agreed?	They may be expressly agreed orally or in writing.
How may terms be implied?	By law, conduct, trade custom, previous dealings or the parties' intentions.
What are the three types of contractual terms?	Conditions, warranties and innominate terms.
What is a condition?	A fundamental term whose breach gives the aggrieved party the right to terminate or affirm the contract and claim damages.
What is a warranty?	A term whose breach does not give the right to terminate, but gives rise to a right to claim damages.
What is an innominate term?	A term where the remedy depends on the effect of the breach when it occurs.
What happens if an innominate term is substantially breached?	The breach may be treated as fundamental, allowing termination and damages.
What happens if an innominate term is not substantially breached?	The aggrieved party may only claim damages.
What is the significance of a condition?	It is a fundamental term that goes to the heart of the contract.
What cases illustrate the distinction between conditions and warranties?	Poussard v Spiers (1875) L.R. 1 QBD 410 and Bettini v Gye (1875) L.R. 1 QBD 183.
What was held in Poussard v Spiers?	The singer's obligation to sing on the first night of a three-month concert series was a condition.
What was held in Bettini v Gye?	The singer's obligation to attend rehearsals was a warranty.
What is a representation?	A statement intended to induce another party to enter a contract but not intended to impose contractual liability.
Why is the distinction between a term and representation important?	Breach of a term gives contractual liability and damages, while a representation gives liability only for misrepresentation.
What must be shown to claim misrepresentation?	The aggrieved party must have relied on the statement.
What factors determine whether a statement is a term or representation?	The parties' intentions, time between statement and contract, importance, whether written into the contract, and parties' skill and knowledge.
What is the overall definition of a contract?	A legally enforceable agreement creating, defining and governing mutual rights and obligations among its parties.
What may a contract involve?	Transfer of goods, services, money, or a promise to transfer any of these at a future date.
What remedies may an injured party seek for breach of contract?	Judicial remedies such as damages or rescission.
What is a capital or securities market?	An aggregation of buyers and sellers of stocks, bonds and other securities where prices can be determined and participants can meet.
What are the two levels of securities markets?	Primary markets and secondary markets.
What is a primary market?	A market where new securities are issued.
What is a secondary market?	A market where existing securities can be bought and sold.
What are the two types of secondary markets?	Organized exchanges and over-the-counter markets.
What is an organized exchange?	A stock exchange where securities are bought and sold through an organized market.
What is an over-the-counter market?	A market where individual parties come together and buy or sell securities directly.
What is a stock market?	The aggregation of buyers and sellers of stocks or shares representing ownership claims on businesses.
Give examples of leading stock markets.	London Stock Exchange, New York Stock Exchange, Amsterdam Stock Exchange and Johannesburg Stock Exchange.
What is Zambia's principal stock market?	The Lusaka Stock Exchange.
Which Act governs the securities market in Zambia?	The Securities Act No. 41 of 2016.
How does the Securities Act define a securities market?	An exchange established and operated by a company licensed to do so under Section 22.
What is a securities exchange?	A place or facility, electronic or otherwise, where securities trading is regularly undertaken.
What may a securities exchange provide information about?	The prices or consideration at which particular persons or classes of people propose or may be expected to undertake securities transactions.
What does Section 22 of the Securities Act provide?	It gives the Securities and Exchange Commission power to consider and grant securities exchange licences.
What are the types of securities under Section 3?	Shares, debt securities, public debt securities, debentures, rights/options/derivatives, unit trusts, commercial papers, depositing receipts and other prescribed securities.
What is a share?	A portion of ownership interest in a company or corporation represented by a stock certificate stating the number of shares held.
How did Farwell J define a share in Borland's Trustee v Steel Brothers and Co. Ltd?	The shareholder's interest in a company measured by money for liability and by mutual covenants among shareholders.
What is a debt security?	A security relating to borrowed money that must be repaid, usually with a fixed amount, maturity date and interest rate.
What are common examples of debt securities?	Treasury bills and commercial paper.
What is a public debt security?	A financial asset entitling its owner to a stream of interest payments.
What is the main type of public debt security?	Bonds.
What distinguishes public debt securities from equity securities?	Public debt securities require the borrower to repay the principal borrowed.
What determines the interest rate on a public debt security?	The perceived creditworthiness of the borrower.
What are unit trusts?	Flexible long-term investments using collective investment schemes.
What is usually the minimum investment period for unit trusts?	Not less than 3 years.
What local unit trusts are given as examples?	Zambia Investment Unit Trusts, Kukula Capital Fund and Equity Capital Preserves Unit Trust.
What is commercial paper?	A short-term unsecured promissory note issued by companies, promising payment of a stated amount at maturity.
What is a depositing receipt (DR)?	A registrable certificate issued by a bank representing shares in a foreign company traded on a local stock exchange.
What opportunity does a depositing receipt give investors?	It allows investors to hold shares in foreign companies through a local stock exchange instead of trading on an international market.
What are bonds?	Government securities issued by the Government of Zambia through the Bank of Zambia.
What happens when the government issues bonds?	The government borrows money from buyers of the debt instruments.
What other debt instrument does the Bank of Zambia issue besides bonds?	Treasury bills.
What does the Zambian Government owe bond or treasury bill holders?	A fixed sum of money on the maturity date of the instrument.
What does purchasing a government bond mean?	It means lending money to the Zambian government.
Why does the Zambian government issue government securities?	To raise funds for maturing debt and operating and development expenditures not fully met by tax revenues.
What is a treasury bill?	A short-term debt investment issued by the Zambian government to borrow money for up to one year.
What is a government bond?	A relatively longer-term investment issued by the government to borrow money for more than one year.
How are treasury bills bought?	They are bought at a price below their face or par value.
How is interest earned on a treasury bill?	It is the difference between the purchase price and the face value received at maturity.
At what prices can government bonds be bought?	They can be bought at less than, equal to, or more than their face value.
How does the Zambian government pay interest on government bonds?	It pays a fixed interest rate called the coupon every six months.
What is paid on a government bond at maturity?	The face or par value is paid.
Who issues government bonds on behalf of the government?	The Bank of Zambia.
On what basis are government bonds sold?	On a competitive basis and a non-competitive basis.
What is the competitive basis for issuing government bonds?	Investors specify the interest rate and face value of securities they wish to purchase.
How are bidders ranked in a competitive auction?	The Bank of Zambia ranks bidders and allots securities first to investors offering the lowest rate.
When does allocation end in a competitive auction?	When the amount of bonds on offer has been fully allotted.
What is the non-competitive basis for issuing government bonds?	Investors do not specify an interest rate but accept the rate determined in the auction.
Who is the price taker in a non-competitive auction?	The investor is the price taker.
How is the return determined in a non-competitive auction?	By the rate or cut-off price prevailing at the auction.
What is the main difference between treasury bills and government bonds?	Treasury bills have a term of up to one year, while government bonds have a term of more than one year.
What is the principal stock market in Zambia?	The Lusaka Stock Exchange.
What Act governs Zambia's principal stock market?	The Securities Act No. 41 of 2016.
What is the coverage of the Movable Property (Security Interest) Act 2016?	It covers all movable property used as security and certain consignments and sales of accounts receivable.
What does the Act not cover?	Real property or mortgages of ships and aircraft regulated by statute.
What principles underlie the Act?	It is self-contained; common law and equitable principles apply only where specifically referred to in the statute.
What is the purpose of the Act?	To make financing attractive to individuals and businesses, especially SMEs without real estate to offer as security.
How does the Act make financing more attractive?	Through accessible registration, clear priority rules, efficient enforcement and conflict of law rules.
What types of security arrangements does the Act cover?	Chattel mortgages, conditional sales, hire-purchase contracts, financing leases and operating leases.
What non-security arrangements does the Act cover?	Consignments of movable property and sales or assignments of accounts receivable.
What types of movable property are covered?	Tangible assets, farm products, bank accounts, securities, cash and accounts receivable.
What tangible assets are included?	Inventory, equipment and machinery.
What farm products are included?	Crops, livestock, poultry, seeds and other farm products.
What rights of a security creditor does the Act cover?	Possessory and non-possessory rights in movable property.
What is an example of a possessory security interest?	A pledge.
What is an example of a non-possessory security interest?	A non-possessory chattel mortgage.
Does the Act cover present and future assets?	Yes. It covers after-acquired property and inventory in progress.
What is a security agreement?	An agreement between the debtor and secured party that creates or provides for a security interest.
What is a security interest?	A property right in movable property created by agreement or transaction to secure payment or performance of an obligation.
What does a security interest include?	Charges, chattel mortgages, consensual liens, retention of title, leases, transferee rights in accounts receivable and commercial consignor rights.
Can a security interest secure future obligations?	Yes. It may secure present, future, determined, determinable, conditional, unconditional, fixed or fluctuating obligations.
Who may create a security interest under Section 33?	A natural person, body corporate or unincorporated body.
How is a security interest in movable property created?	By a security agreement that is effective between the debtor and secured creditor according to its terms.
When can a debtor create a security interest in collateral?	When the debtor has rights or the power to create the security interest.
What must a security agreement contain under Section 34?	Intent to create a security interest, identity of creditor and debtor, secured obligation and maximum amount, and adequate collateral description.
What must a security agreement identify about the parties?	The secured creditor and the debtor.
What must a security agreement state about the secured obligation?	It must describe the obligation, including the maximum amount for which the security is enforceable.
What must a security agreement say about collateral?	It must describe collateral in a manner that reasonably allows its identification.
What is the Model Security Agreement?	The model security agreement referred to in Statutory Instrument No. 77 of 2016.
When is a description of collateral adequate under Section 35?	When described by item, kind, type or category, or by present and after-acquired movable property subject to agreed exceptions.
When is a description of collateral inadequate?	When it merely describes collateral as consumer goods without specific description.
When does a security interest become effective under Section 36?	When the debtor has rights in the collateral, the agreement is concluded, and value is given by the secured creditor.
Can parties agree that a security interest becomes effective later?	Yes. It becomes effective at the later time specified in the security agreement.
What is perfection of a security interest?	A security interest becoming effective against third parties through control, possession, registration or temporarily as provided by the Act.
Why is perfection important?	It establishes the secured party's rights against other secured parties and the debtor's bankruptcy trustee.
Does perfection affect the validity of a secured creditor's claim against the debtor?	No. It does not affect the validity of the claim against the debtor.
What are the methods of perfection under Section 44?	Registration of a financing statement, possession of collateral, or control of a bank account.
What two conditions are required for perfection?	The security interest must be created and perfected by registration, possession or control.
How can a security interest in a bank account be perfected?	Through control by the secured creditor or another person acting for the creditor.
When does a bank or financial institution automatically have control of an account?	When it maintains the bank account and is the secured creditor.
How can another creditor obtain control of a bank account?	Through a control agreement.
When is a secured creditor not considered in possession of collateral?	When the collateral is in the actual or apparent possession or control of the debtor or the debtor's agent.
What is the principal means of perfection?	Registration.
When must perfection by possession occur?	The secured creditor must have possession when the security interest is created, not merely at enforcement.
What is required for perfection by possession?	The debtor must not have actual or apparent possession or control of the collateral.
What property can be perfected by control?	Bank accounts with commercial banks.
What is the definition of farm products under the Act?	It broadly includes crops, seeds, fertilizer, manure, livestock, poultry, bees, products, progeny, supplies and farm equipment.
What is required for security over farm products?	A security agreement, an effective security interest and perfection by registration.
When is a security interest in farm products effective?	When the debtor has rights in the collateral and value is given by the creditor.
Where is a security interest in farm products effective under Section 51?	Wherever the farm products are grown, stored or kept.
Does a land transaction affect a security interest in farm products?	No. It is not affected by a sale, lease, mortgage or lien on the land.
Does a security interest in farm products extend to sale proceeds?	Yes. It extends to the proceeds of sale.
When does a buyer of farm products take them free of a security interest?	When buying in the ordinary course, unless the buyer knows of a breach of the security agreement.
What are the two general classes of priority claims?	Claims based on security interests under the Act, and a security interest under the Act versus another claim.
What is the general priority rule under Section 52?	A perfected security interest has priority over an unperfected security interest.
How is priority determined between perfected security interests?	By the first occurrence of registration, possession or control.
How is priority determined between unperfected security interests?	By the date of creation of the security interest.
What is a Purchase Money Security Interest (PMSI)?	A security interest securing purchase financing or certain interests of sellers, financial lessors, operating lessors and commercial consignors.
What are the four categories of PMSI creditors?	Seller or financial lessor, lender financing the purchase, operating lessor, and consignor of goods.
What collateral does a PMSI cover?	The goods involved in the transaction and their proceeds.
What is the general priority of a PMSI?	A perfected PMSI has priority over a non-PMSI security interest in the same collateral if perfected when the debtor receives the collateral.
What is a PMSI under Section 57 for a seller or financial lessor?	A security interest taken or retained to secure all or part of the purchase price of collateral.
What is a PMSI for a purchase-money lender?	A security interest taken by a person providing credit to enable the debtor to acquire collateral, where the credit is used for that purpose.
What operating lease can qualify as a PMSI?	An operating lease with a term exceeding one year.
What consignor interest can qualify as a PMSI?	An interest of a consignor delivering goods to a consignee under a commercial consignment.
What is excluded from the PMSI definition?	A transaction of sale and leaseback to the seller.
What is required for a PMSI in inventory to have priority?	It must be perfected before the debtor receives possession and the secured creditor must notify other secured creditors with registered financing statements against inventory.
What happens to priority when collateral is sold?	The proceeds retain the same priority under Section 53.
What happens when a secured creditor transfers the security interest?	The security interest retains the same priority under Section 54.
What happens with subsequent advances under the same security agreement?	They retain priority in respect of the same secured obligations under Section 56.
What happens when the debtor transfers collateral?	Priority is preserved against a security interest created by the transferee under Section 63.
When is a security interest in money paid from a bank account discharged?	Unless there is collusion, the security interest is discharged.
When does a buyer take goods free of an unperfected security interest?	When the buyer gives value and receives possession.
When does a buyer in the ordinary course take goods free of a security interest?	When buying in the ordinary course, unless the buyer knows the sale or lease breaches the security agreement.
What is a subordination agreement?	An agreement by which a secured creditor agrees to subordinate its priority in favour of another competing claimant.
Is a subordination agreement effective against third parties merely by agreement?	No. It is effective against third parties through registration of an amendment to the financing statement.
Does subordination affect non-parties to the agreement?	No. It does not adversely affect a party who is not a party to the agreement.
What are the main steps in enforcing a security interest?	Take possession, give notice of disposal, dispose of collateral, account, deal with surplus, or retain collateral in full satisfaction.
What section governs notice of disposal?	Section 79.
What section governs types of disposal?	Section 78.
What is the enforcement regime intended to provide?	Regulated self-help.
Does an under-secured debtor remain liable after disposal?	Yes. The under-secured debtor remains liable after disposal.
Can a creditor retain possession and sue for an alleged deficiency?	No.
What other enforcement option is available?	Appointment of a receiver under Section 70(2).
What events may constitute default?	Failure to pay or other defaults defined in the security agreement.
What are examples of other defaults?	Failure to comply with a covenant, bankruptcy, insolvency, ceasing business, death or institution of other proceedings against the debtor.
What relationships with other claims are covered by the Act?	Mortgages, possessory liens, bank accounts, judgment creditors and accounts receivable.
What is the general rule for fixtures?	Fixtures attach to the land.
What is the exception for PMSIs in fixtures?	A PMSI in fixtures can have priority over third-party rights in immovable property if properly registered first.
What is required for a PMSI in fixtures to have priority?	The financing statement must be registered in the Collateral Registry before the third party acquires rights in the immovable property.
What does registration for fixtures effectively need to occur before?	Before the movable property becomes a fixture.
What is a possessory lien?	A lien arising from materials or services provided in the ordinary course of business concerning goods.
Give examples of possessory liens.	Warehouseman's lien, storage lien and repair lien.
What priority does a possessory lien have under Section 68?	It has priority over the security interest up to the reasonable value of materials or services provided.
When does a bank have priority over a competing security interest in an account?	When the bank has control of the account.
What does Section 62 provide about a bank's controlled security interest?	A security interest in a bank account perfected by control has priority over a competing interest perfected by registration, regardless of when control was acquired.
What priority does a bank have if it automatically perfected by control?	Its security interest has priority over any other security interest in the bank account.
When does a judgment creditor have priority under Section 69?	When the debtor's security interest is unperfected at the time of execution.
What is the time of execution when collateral is seized?	The time of seizure by or on behalf of the execution creditor.
What is the time of execution when a judgment lien financing statement is registered?	The time the financing statement is registered.
What is the time of execution in other cases?	When a court order is served on the person holding property for or on behalf of the debtor.
What happens to the priority of an interest under Section 69?	It is determined against perfected security interests according to Section 52.
How does the Act treat credit disbursed after judgment execution steps?	Priority extends to credit disbursed within 30 days after notice or pursuant to an irrevocable pre-notification commitment.
What is the main purpose of the Movable Property (Security Interest) Act 2016?	To facilitate financing through movable property by providing accessible registration, clear priorities, efficient enforcement and conflict of law rules.

Created by: Eddard

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