Breach of contract and remedies in Uganda
In brief
Where a contract is breached, the innocent party is entitled to compensation for any loss or damage caused by the breach (Contracts Act, Cap. 284, s.60(1)) — but not for remote or indirect loss (s.60(2)). Where the contract fixes a penalty or liquidated sum, compensation is governed by s.61, and a party who rightfully rescinds is entitled to compensation for any damage sustained (s.62). Beyond damages, equitable remedies such as specific performance may be available (see that note), and frustration may discharge the contract (s.65).
1. Governing law
The Contracts Act, Cap. 284 sets the measure of damages for breach. Section 60(1) provides that where there is a breach of contract the party who suffers it is entitled to receive from the party in breach compensation for any loss or damage caused to them; section 60(2) limits that to losses that are not remote or indirect — codifying the principle that recoverable loss must flow naturally from the breach or have been within the parties' contemplation. Where the contract stipulates a penalty or a sum to be paid on breach, compensation is dealt with under section 61, and a party who rightfully rescinds the contract is entitled to compensation for damage sustained through non-fulfilment (s.62). A contract may also be discharged by frustration where performance becomes impossible or unlawful (s.65). Damages are the primary remedy, but the court may, in a proper case, grant the equitable remedy of specific performance — ordering actual performance rather than damages — where damages are inadequate (see the specific-performance note). Statutory text verified against the consolidated Laws of Uganda as at 31 December 2023. Sourced from the Uganda Legal Information Institute (ulii.org).
2. Key statutes & rules
- Contracts Act, Cap. 284 — s.60 (compensation for loss or damage caused by breach; not recoverable for remote or indirect loss); s.61 (compensation for breach where a penalty is stipulated); s.62 (a party rightfully rescinding is entitled to compensation); s.65 (discharge by frustration).
3. Practical guidance
Establish the breach and the loss it caused — keep records of the loss flowing from the breach (s.60(1)).
Claim losses that are not remote: those arising naturally from the breach or within the parties' contemplation (s.60(2)).
Check the contract for a penalty or liquidated-damages clause, which governs the recoverable sum (s.61).
If you rightfully rescind, claim compensation for the damage from non-fulfilment (s.62); if performance became impossible, consider frustration (s.65).
Where damages are inadequate (e.g. for unique property), consider specific performance (see that note), and mind the limitation period (generally six years for contract).
This note is a practitioner orientation, not legal advice, and does not create an advocate–client relationship. Ugandan law changes and chapter and section numbers were revised in the 2023 Laws of Uganda. Verify every statute, rule and authority against the current primary source — and the specific facts of your matter — before filing or relying on it.