Commercial Law Index

The first issue was whether the appellate court erred in law and in fact to conclude that the respondent could not be sued. The court observed a difference in the extent of immunity accorded in the domestic act and that granted in the Eastern and Southern African Trade and Development Bank Charter of the Preferential Trade Area (PTA) for Eastern and Southern African States (the charter) and Eastern and Southern African Trade and Development Bank Act (the act), with the charter providing for absolute immunity whilst the act offered functional immunity. It reasoned that the intention of the act is to govern the relationship between Uganda and the respondent. Applying the ejusdem generis rule (that a general term describing a list of specific terms denotes other things that are like the specific elements) to interpret the objectives of the act, the court concluded that immunity was not intended to extend to third party relationships as these are not covered by the functionality principle underpinning the act. The court held the appellate court erred in its finding and instead concluded against immunity.

The second question was whether it was a procedural requirement to obtain a waiver before instituting suit against the respondent. Reiterating the functionality basis of the respondent’s immunity and the fact that it did not extent to suits from third parties for contractual breach, the court reasoned that the waiver requirement was inapplicable and unnecessary. It thus concluded that there was no need to obtain a waiver before commencing suit and allowed the appeal. 

The plaintiff sued the defendant state organ for the balance of payment for construction services rendered in respect of a government-owned school premises. It contended that the defendant had failed to pay the agreed-upon amount timeously; his sum claim was therefore the unpaid balance plus compound interest. The defendant contended that the plaintiff had been paid in full – the principal amount plus simple interest for the period of delay. As the agreement was unwritten, the court had to establish its terms. The determination of the type of interest was integral as the parties had not considered this at the time of contracting.

That the defendant was in breach due to its prolonged delay in effecting payment was quickly established by the court. Considering the nature and purport of contractual damages, it established that compound interest was apposite. Examining the plaintiff’s exhibits of standard industry lending rates sourced from the Bank of Uganda, the court determined the correct rate of interest at 22% p.a. and ruled in favour of the plaintiff. It held further that the award of compound interest sufficiently compensated the plaintiff for its restitutionary and expectation interests, thereby obviating the need for general damages.

This case involved an allegation that the defendant had not paid fully for services stipulated within an advertising agreement with the plaintiff. This case illustrates the importance interpreting the terms within a contract in line with what the parties to that contract had agreed.

The court held that the court’s duty is to interpret clause 4 of the contract in order to determine what the parties had agreed to. The court had regard to statements of English authority on the interpretation of commercial contracts. In particular, 
 that ‘[t]here must be ascribed to the words a meaning that would make good commercial sense … and not some meaning imposed … that no businessman in his right senses would be willing to incur.’ 

The court was satisfied that the according to the terms of the contract, the plaintiff as the ‘landlord’ had provided the defendant as the ‘advertiser’ space for advertising, and undertaken the contested printing activities for its benefit. The court held that the only sensible interpretation of the contract was that the cost of this printing was to be borne by the defendant because the alternative view would lead to a conclusion that ‘flouts common business sense’. 

The court ruled that the defendant was supposed to pay the 3.5 million Ugandan shillings for the printing.
 

This case involved a memorandum of understanding that was departed from orally by both parties. This case illustrates how an oral variation leaves the written contract enforceable.

The court considered three issues, whether there was a valid contract, whether the counter-defendant had breached the contract, and if the counterclaimant is entitled to the remedies available.

The court held that the burden of proving misrepresentation rests on the party alleging it. Secondly, a breach of a contract arises when a party to a contract fails to meet its contractual obligation. However, where a party waives its rights, it cannot claim damages for breach on the same contract. Lastly, the court held that a party must take all reasonable steps to mitigate loss following a breach.

The court was satisfied that there was no proof of misrepresentation on the part of the counterclaimant. The court found that though there was breach of the contract by the counter-defendant, the counter-claimant had waived its rights and could not claim damages for breach on the same contract. The court was satisfied that the counter-claimant did not mitigate its loss and was therefore not entitled to any special damages.
 

Each of the parties accused the other of breach of contract. The plaintiff alleged breach in terms of non-payment for services conducted. The defendant counter-claimed breach in terms of failure to comply with the set completion time and providing substandard quality work.

The defendant also contended that should it be found liable, it should be indemnified by a third party as it has been negligent in doing its work.This court held that the defendant is not entitled to indemnity or any contribution from the third party.

The court found that there was no breach of contract by the plaintiff in so far as completion time is concerned. The defendant waived the right to complain about completion time and was estopped from raising the issue. The defendant was found to not be entitled to monies claimed in the counterclaim, as there was no basis for it and this court had already held that the defendant waived its rights.

The plaintiff was found to be entitled to the monies reflected on two certificates. The plaintiff was not awarded the contractual interest claimed because the court held that the the defendant was justified in not paying contractual interest for an erroneously issued certificate.

Following its non-payment for construction services rendered, the plaintiff sued the defendant for breach of contract. A counter-claim was lodged alleging that the plaintiff breached the parties’ agreement through a significant delay in performance and sub-standard discharge of its obligations. Insofar as the third party had issued unqualified certificates of completion for the plaintiff’s/counter-defendant’s alleged malperformance, the defendant/counter-claimant contended that it was negligent and therefore liable for a degree of indemnification.

The defendant/counter-claimant was found to have impliedly waived its right to liquidated damages for late performance and consequently estopped from enforcing it. The court found further that the plaintiff’s/counter-defendant’s performance, while flawed in some respects, was not materially defective. The issuing of a certificate of completion marks the close of liquidated damages liability and commences the period of defects liability, where errors in performance are identified and submitted to the contract debtor for rectification. Failure to rectify does not give a right to sue for breach but rather gives the employer the right to refuse to release retention monies.

The third party was found to have conducted its work competently, barring one erroneously issued certificate, and was under no obligation to indemnify the defendant. The defendant was therefore indebted to the plaintiff for the outstanding amounts stipulated by the lawfully issued certificates. Because the defendant had accepted and made use of the plaintiff’s performance, despite the erroneously issued certificate of completion, the court found that it was liable to compensate the latter under the law of unjustified enrichment. Judgment was entered for the plaintiff with costs.

The plaintiff company brought a suit against the defendant school and its deputy headmaster for breach of contract stating that the defendants failed to pay for services rendered by the plaintiff. 

There were two issues before the court: whether there was a valid contract between the parties and whether the plaintiff carried out their services in accordance with local purchase orders 1941 and 1942.

The court held that there was a valid contract between the parties. It was also held that in rendering services, the plaintiff did not supply and install certain items in accordance with local purchase orders 1941 and 1942. 

Regarding the validity of the contract, the court found that the second defendant had apparent authority to sign the local purchase orders meaning the contract was valid and that there was no express provision in the legislation stating that non-compliance vitiates legality of contract. In addition, the court found that the first defendant accepted the goods when they were delivered to it and had to pay accordingly. 

The court’s judgement relied on a report by the Ugandan National Bureau of Standards which found that some of the items installed by the plaintiff were substandard. 

The court awarded the plaintiff Shs 216,000 for delivery of goods and Shs 84,000 for general damages. In addition, the court awarded the plaintiff interest on the above amounts until payment was made in full. 
 

The plaintiff supplier sued the defendant – its Local Technical Representative (LTR) in accordance with the National Drug Authority Act for the distribution of pharmaceutical products – for breach of contract. The defendant failed to pay the plaintiff for the assorted products it supplied. The plaintiff consequently claimed for loss of income, damages, interest and costs of suit. The defendant lodged a counter-claim alleging that the plaintiff/first counter-defendant had breached the memorandum of understanding concluded between the parties and had, through various means, attempted to cripple the defendant’s/counter-claimant’s enterprise. It alleged further, as the basis of its challenge to the legality of the arrangement between the first and second counter-defendants, that the just-mentioned parties had colluded in this endeavour so as allow the latter to become the new LTR. 

The defendants/counter-claimants successfully raised the procedural bar of res judicata – which prohibits judicially-decided matters from being heard afresh a second time – concerning the plaintiff’s claim, given that the matter of their indebtedness thereto had been resolved in the settlement of antecedent winding-up proceedings. To what extent ought the defendant’s/counter-claimant’s challenge have been raised as part of the previous lawsuit? Suggesting that res judicata was applicable to both parties’ claims, the court nevertheless considered the counter-claimant’s’ case in respect of the first and second counter-defendants and found no measure of illegality or bad faith on the evidence. The counter-claimant was additionally time-barred from seeking review of the National Drug Authority’s decision over the LTR change. 

The plaintiff’s suit and defendants’ counter-claims were accordingly dismissed with costs.
 

The plaintiff brought an action for breach of contract, for the defendant to pay the balance of the money paid by the plaintiff to the defendant in terms of their contract, and for interest on the amount.

The sourt held that on the evidence the defendant failed to deliver all the sugar within the seven weeks. The defendants did not adduce any evidence to the contrary, and the plaintiff was entitled to refund of the money paid for the sugar. The issue was whether general damages ought to be awarded in addition to interest on the outstanding amount.

Section 50 of the Sale of Goods Act provided that the remedy for wrongful non-delivery was damages. The measure was the estimated loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract. General damages will usually be awarded to place the plaintiff in as close a position as possible they would have been had the injury not occurred. Where interest is awarded for deprivation of monies to be paid, then general damages will not be awarded in addition to interest. The award of interest would place the plaintiff in its original position. 

The court held that the plaintiff did not adduce evidence of what loss was suffered to warrant an award of general damages. Interest was therefore awarded in lieu of general damages. 
 

The plaintiff instituted a civil action against the defendant for breach of contract and sought the following remedies: an order for specific performance, special damages, general damages and interest. 

The court had to consider whether the plaintiff had a cause of action, whether the defendant was in breach or failed to perform and whether the plaintiff was entitled to any relief. 

The court held that a cause of action existed and that the defendant was indeed in breach as he failed to perform his part of the bargain, consequently the plaintiff was entitled to relief. 

The court stated that where a plaintiff has a liquidated demand, there is no need to assess the demand where no defense is presented. The court relied on previous judgments that made a distinction between a liquidated demand and pecuniary damages. With further reliance on existing civil procedure legislation, the court found that the plaintiff was entitled to judgement based on the liquidated demand.

The court awarded judgment in favour of the plaintiff for the amount on the liquidated demand. Due to no evidence being led, relief in the form of special and general damages was not awarded. The court granted the plaintiff 10% interest on the amount in the liquidated demand. 
 

This is a case relating to to a contractual dispute where the plaintiff was suing the defendant for breach of contract.

The defendant had been contracted by the Uganda Revenue Authority to construct a border post. The defendant then sub-contracted the plaintiff to perform certain work under three contracts. The plaintiff alleged that the defendant unlawfully terminated one of the contracts after they demanded payment. The defendant contended that it was the plaintiff who unilaterally terminated the contract by halting work at the site resulting in the defendant taking over the work. The defendant further counter-claimed that the plaintiff used some of their equipment and as result the plaintiff owes them compensation.
 
The court held that there were disparities between the plaintiff’s witnesses and that the defendant did not unilaterally terminate the contract. It ruled that the defendant could not be held liable for any sum of money beyond payment for work the plaintiff had actually performed. The court also found that there was no evidence to show that the amount of work done was to a value in excess of what was paid. 

The case was dismissed. The counter-claim was equally dismissed for lack of evidence
 

The plaintiff was contracted to supply a fleet of vehicles to the defendant. The parties agreed that the plaintiff would supply the vehicles on the specified date of the launch of a fundraising drive; as the cars were required as prizes in a lottery. Upon delivery, the defendant was to ensure that 100% of the purchase price was paid within two weeks after the launch.

The plaintiff supplied four vehicles timeously but the remaining were allegedly delivered late. The defendant subsequently failed to make payment for the vehicles. The plaintiff filed an action for breach of contract. The issue before the court was whether the defendant was liable for breach of contract and whether the plaintiff was entitled to the remedies sought.

This court held that the loss which the plaintiff claimed to have incurred was self-inflicted. This court found the plaintiff’s suit had no merit and suite was dismissed. The reason being that the plaintiff’s evidence was said to not proven supply of vehicles and breach of contract on the defendant's part.

The plaintiff’s action against the defendant is for a declaration that the defendant breached the contract executed with the plaintiff for the supply of 1000 metric tons of bitumen.

The issue was whether the defendant breached the contract entered with the plaintiff. The court held that it amounted to a breach of a contract whilst reiterating that the plaintiff made it impossible for the defendant to perform the contract.

The court considered whether the defendant breached the contract for the agreed timeline or the plaintiff breached the contract by failure to take the supply of what the plaintiff ordered hence the counterclaim. It was then a question of fact as to whether any contract is frustrated by any even or factor looking into the obligations of the parties. In this case the frustrating event advanced by the defendant is blockage of its money.

The court explained the principle of frustration. Section 66 (1) of the Contracts Act 2010 provides for discharge of parties to a contract from future performance of the contract unless the opposite party assumed the risk of impossibility. It simply means that both parties ought to be discharged of their obligations for the future performance of the contract. In other words the defendant is discharged from the supply obligation as much as the plaintiff is discharged from the obligations of a buyer.

The court ruled that the contract had not been frustrated and the defendant was in breach of contract.

Plaintiff instituted proceedings for breach of contract, special damages, and general damages. Defendant denied any breach took place, and contended that the dispute ought to have been referred to an arbitrator. Defendant also instituted a counterclaim for breach of contract.

The defendant approached the plaintiff for assistance in carrying out a contract with BCEG (Rwanda), and entered into a memorandum of understanding that the profits after expenses would be divided. The defendant failed to pay plaintiff an outstanding amount of monies, or for expenses incurred. 

The issues for determination were whether the matter ought to have been referred to arbitration; whether the defendant breached the contract; and the remedies available to the parties.

Regarding issue one, the court stated that the matter could only be referred to arbitration in terms of the parties’ agreement if any of the parties applied to court for arbitration. Though an arbitration clause existed, no application was made to refer the matter to arbitration. The court could not invoke its inherent jurisdiction to refer the matter to arbitration without an application being made.

As regards issue two, the court found that the plaintiff proved that the defendant breached the contract. The defendant failed to deal specifically with the claims of the plaintiff, and instead provided blanket denials which the court held to be insufficient to disprove the plaintiff’s claims.

As regards the remedies available to the parties, the plaintiff failed to prove liability for special damages, but was entitled to general damages.
 

This was an application for an order of specific performance compelling the defendants to sign transfers of an aircraft.

The court considered the indebtedness of both parties to each other and held that the plaintiff was indebted to the defendants in respect of leasing and purchasing. The court applied the rule that people who freely negotiate and conclude a contract should be held to their bargain and found that the plaintiff’s defence of duress was unviable, since the defendants were entitled to ground the aircraft on grounds of non-payment.

Secondly, the court determined whether the defendants/counterclaimants were entitled to the interest payments claimed in the counterclaim. The court held that the defendants were entitled to the interest as agreed upon in the reconciliation document.

Thirdly, the court considered whether the counter-claimants/ defendants have a cause of action against the second defendant. The court relied on the concept that only parties to a contract can sue for breach (privity of contract). It observed that there were exceptions to this rule where a third party can prove that he is a beneficiary of the contract between the two people. The court held that the defendants were third party beneficiaries since the loan agreement between the first defendant and the second defendant was for their benefit.

Accordingly the case was dismissed and the defendant was awarded special damages and general damages as prayed for, but denied aggravated damages.