Some of the most expensive commercial disputes begin with four innocent words:
“We trust each other.”
Two friends go into business. One person provides the money. Another provides the opportunity. A relative buys property on behalf of another. Everyone understands the arrangement. Nobody wants to insult anybody by asking for a formal contract. Then circumstances change. Memories differ. Relationships deteriorate. And suddenly the question becomes:
“What exactly did we agree?”
The Supreme Court of Zambia’s decision in Militis v Chiwala [2009] ZMSC 170 provides an extraordinary example. Its lesson extends far beyond property law: Trust is valuable. Documentation protects that trust.
TWO FRIENDS AND A HOUSE
The parties had been friends for approximately 15 years. One had an opportunity to purchase a house but did not have the necessary money. His friend provided the funds. Their understanding was that the property would initially be acquired in one friend’s name and later transferred to the friend who had provided the money upon payment of an additional agreed amount. The property was Stand No. 2088, Lusaka. Mr Militis provided K70,000 to enable Mr Chiwala to purchase it. The understanding was that once Chiwala obtained ownership, the property would be transferred to Militis upon payment of another K70,000. But there was a major problem. There was no written agreement between the two friends.
THEY ACTUALLY WENT TO A LAWYER
This is what makes the case particularly memorable. The parties went to see a lawyer.
The lawyer suggested:
“Put the agreement in writing.”
They chose not to.
Why? Because they were friends.
Years later, their dispute reached the Supreme Court of Zambia. It is difficult to imagine a better illustration of why lawyers recommend documentation.
THE RELATIONSHIP CHANGED
Mr Chiwala later denied the arrangement. Suddenly, what everybody supposedly understood had to be established through evidence.
The Court had to determine:
Was there really an agreement?
The courts considered the surrounding circumstances. Mr Militis had provided substantial money towards the purchase. A lawyer who had met the parties also gave evidence concerning their arrangement. The courts accepted that an oral agreement existed, and the Supreme Court upheld the essential finding that the arrangement should be honoured.
THE COURT COULD RECONSTRUCT THE AGREEMENT — BUT WHY TAKE THE RISK?
This is where businesspeople should be careful when reading Militis.
The wrong lesson would be:
“Oral agreements are fine because the Court can enforce them.”
The better lesson is almost the opposite.
Mr Militis eventually succeeded, but only after a dispute serious enough to reach the Supreme Court. The absence of a written agreement transformed what could have been a straightforward transaction into litigation about what the parties had actually agreed. A successful lawsuit does not necessarily mean the original transaction was well managed.
WRITTEN AGREEMENTS ARE NOT EVIDENCE OF DISTRUST
People sometimes react emotionally when asked to sign an agreement.
“Why do you need a contract? Don’t you trust me?”
That is the wrong question. A written agreement does not say: “I expect you to cheat me.”
It says: “This transaction matters enough that neither of us should have to depend upon memory later.”
MEMORY IS NOT A RELIABLE COMMERCIAL RECORD
Imagine three people discussing a transaction over dinner. They agree that one will provide ZMW1 million. Five years later:
Person A remembers: “It was a loan.”
Person B remembers: “It was an investment.”
Person C remembers: “It was payment for shares.”
They may all genuinely believe their recollection is correct. The problem is not necessarily dishonesty. Human memory is imperfect. Contracts replace uncertain memory with an agreed record.
PROPERTY TRANSACTIONS REQUIRE PARTICULAR CARE
The stakes become even higher when land or buildings are involved.
Property transactions may involve:
- substantial sums;
- title registration;
- financing;
- development;
- long-term occupation;
- family wealth.
The Same Lesson Applies to Family Transactions
The principle extends beyond friends.
Many disputes begin with: “But he is my brother.”
Or: “She is my wife.”
Or: “We have been business partners for twenty years.”
The closer the relationship, the more reluctant people sometimes become to document important arrangements. Yet those relationships can make documentation even more valuable. A properly drafted agreement can prevent a financial disagreement from destroying a personal relationship.
BUSINESSES SHOULD APPLY THE SAME PRINCIPLE
Companies frequently make informal changes to commercial arrangements.
A director says: “Give them another six months. We know these people.”
A supplier delivers additional goods because: “We have worked together for years.”
A shareholder transfers money because: “We will document it later.”
This is precisely how avoidable disputes begin. Commercial trust and legal documentation are not opposites. Strong businesses use both.
DOCUMENTATION SHOULD ANSWER THE DIFFICULT QUESTIONS
A good agreement should not record only what happens when everything goes well. It should also consider:
- What happens if payment is late?
- What happens if one party changes their mind?
- What happens if one party dies?
- What happens if the relationship ends?
- How will disputes be resolved?
Those questions can feel uncomfortable at the beginning of a relationship. They become far more uncomfortable after the relationship has broken down.
THERE IS ALSO A LESSON FOR LAWYERS
The lawyer in Militis had done something sensible:
He recommended putting the arrangement in writing.
That advice matters. Lawyers should not simply facilitate transactions. We should identify where informality creates future risk.
Sometimes a client will still say:
“No, Counsel. We don’t need an agreement.”
Where the transaction is significant, the lawyer should explain clearly what risk the client is accepting. Important advice should also be properly recorded.
GOOD DOCUMENTATION IS PART OF BUSINESS INFRASTRUCTURE
Businesses often think of infrastructure as:
- offices;
- vehicles;
- computers;
- machinery.
But legal documentation is also infrastructure. Shareholder agreements; Employment contracts; Loan agreements; Property agreements; Supplier contracts; and Intellectual-property licences. These documents create the legal architecture within which the business operates. Good documentation becomes particularly valuable when something goes wrong.
The DAC View
At Dzekedzeke and Company, we believe Militis v Chiwala contains one of the simplest and most universal lessons in our Supreme Court Commentary Series. The parties trusted each other. They went to a lawyer. The lawyer suggested putting the arrangement in writing. They decided it was unnecessary. And the dispute eventually reached the Supreme Court.
The lesson almost writes itself: TRUST YOUR FRIENDS — BUT DOCUMENT YOUR AGREEMENTS.
For friends: Documentation does not weaken trust. It protects it.
For families: Do not leave important property arrangements entirely to memory.
For businesses: Informality may feel efficient today and become extremely expensive tomorrow.
And for lawyers: Sometimes the most valuable work we do is preventing the dispute that never reaches Court.
A HANDSHAKE MAY BEGIN THE DEAL. A WRITTEN AGREEMENT SHOULD RECORD IT.
Perhaps that is the real commercial lesson of Militis v Chiwala. A good contract does not mean you expect the relationship to fail. It means the relationship is important enough to protect.
For legal advice on property transactions, contracts, land disputes and commercial agreements, contact Dzekedzeke and Company.
Based on Militis v Chiwala (SCZ Judgment No. 3 of 2009) [2009] ZMSC 170 (13 February 2009).
