Wakilii

M S Spear Motors Ltd v M S Banyankole Kweterana Growers Cooperative Union (Civil Appeal No. 7 of 1991)

Supreme Court · [1992] UGSC 39 · 1992 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court judgment and decree ordering specific performance of a contract for the sale of goods
Decision
Appeal dismissed; High Court order of specific performance, or in the alternative payment of shs.30,000,000, affirmed

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Holding

The Supreme Court dismissed the appeal, upholding the High Court's order of specific performance, or in the alternative payment of shs.30m, of a contract to supply a Mercedes Benz lorry. The appellant's voluntary sale of the imported lorry, on an unjustified fear of looting, did not frustrate the contract; nor did the parties' fresh agreement of 16 June 1987 become frustrated by foreign-exchange difficulties or currency reform. The clear and unambiguous new agreement could not be re-shaped by the court. The Currency Reform Statute No. 2 of 1987 did not bar the award: a party who stipulates for a sum must take that sum, and the appellant could not deliver a smaller vehicle or require the respondent to top up the price.

Facts

In 1984 the respondent contracted with the appellant, a Mercedes Benz dealer, for the supply of a new imported Mercedes Benz lorry type L 1924/52, paying a total of shs.33m. The lorry arrived in Mombasa in July 1985 and was driven to Kampala. Fearing looting following a coup, the appellant's General Manager sold the imported lorry to a third party for shs.33,096,125 and never replaced it. At a meeting on 16 June 1987 the parties made a fresh agreement under which the appellant undertook to supply an equivalent new lorry; this was confirmed in correspondence. The Currency Reform Statute No. 2 of 1987 had come into force on 15 May 1987, devaluing the shilling. The appellant later sought either additional payment or to supply a smaller 12-tonne lorry, which the respondent refused. The respondent sued for specific performance or the current market price.

Issues

  1. Whether obtaining foreign exchange from the Bank of Uganda was a condition precedent of the contract for the supply of an imported vehicle.
  2. Whether the contract was frustrated by the appellant's failure or inability to obtain the necessary foreign exchange.
  3. Whether the trial Judge erred in ordering payment of shs.30m as an alternative to specific performance, contrary to the Currency Reform Statute No. 2 of 1987.

Orders

  • Appeal dismissed with costs to the respondent.

Key headnotes

Contract Law — Frustration — Self-induced events and unrealised risks
A contract is not frustrated by an event that a party voluntarily brings about, nor by a risk that is merely imagined rather than real; a seller who disposes of goods on an unfounded fear cannot rely on that act as frustration.
Contract Law — Construction — Clear and unambiguous terms
Where a contract is clear and unambiguous, the court's duty is to construe it according to its terms; it is not for the court to re-make or re-shape the bargain to achieve objectives the parties did not have in mind at the time of making it.
Commercial Law — Currency Reform and Devaluation — Nominalism
A contract to pay a sum of money is prima facie a contract to pay according to the currency of the country where payment is due; a change in or devaluation of the currency does not alter the obligation, and a party who stipulates for a sum must take that sum whatever it is worth at the time of payment.
Commercial Law — Sale of Goods — Specific performance under s.52 Sale of Goods Act
Under section 52 of the Sale of Goods Act the court has a discretion to decree specific performance of a contract to deliver specific or ascertained goods and may attach terms as to damages or payment of the price; an appellate court will not interfere with that discretion absent misdirection.

Legislation cited (6)

  • Sale of Goods Act Cap. 79 s.3(1)
  • Sale of Goods Act Cap. 79 s.28
  • Sale of Goods Act Cap. 79 s.51
  • Sale of Goods Act Cap. 79 s.52
  • Sale of Goods Act Cap. 79 s.55
  • Currency Reform Statute No. 2 of 1987 s.2

Cases cited (8)

  • Hughes v Metropolitan Railway Co (1877) 2 App Cas 439
  • Birmingham & District Land Co. vs. London & North Western Railway Co. (1877) 56 Ch.D 650
  • Kabale Industries Ltd v Uganda Cement Corporation (Civil Appeal No. 12 of 1948)
  • Treseder-Griffin v Co-operative Insurance Society Ltd [1956] 2 QB 127
  • British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166
  • Ottoman Bank of Nicosia v Chakarian [1938] AC 260
  • Karachi Gas Co Ltd v Issaq [1965] EA 42
  • Pinnel's Case (1602) 5 Co Rep 117a
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.