Wakilii

American Procurement Company, Inc (Amproc, Inc) v Arigye (Civil Suit 664 of 2021)

High Court · [2024] UGCOMMC 268 · 2024 Judgment for Defendant; Counterclaim Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of agency agreement and payment of commission, with counterclaim for declaration of contract voidness and refund
Decision
Plaintiff's claim dismissed; defendant's counterclaim for refund granted with order for payment of UGX 381,520,000

Observed later treatment

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Holding

The High Court Commercial Division held that an agency agreement entitling the agent to 60% of government compensation for land was unconscionable and unenforceable as against public policy. The court found the grossly unequal distribution of compensation coupled with execution of an irrevocable power of attorney demonstrated an unreasonably unfair bargain favouring the stronger party. The plaintiff's suit for commission was dismissed and the defendant's counterclaim succeeded with an order for refund of UGX 381,520,000.

Outcome

Plaintiff's claim dismissed; defendant's counterclaim for refund granted with order for payment of UGX 381,520,000

Facts

The plaintiff company was appointed by the defendant and two others as their agent to negotiate government compensation for land in Isingiro Block. Under a Memorandum of Understanding dated 13 May 2019 and irrevocable powers of attorney, the plaintiff was to receive 60% of any compensation secured. The plaintiff negotiated compensation of UGX 8,070,400,000 from the Ministry of Lands. After partial payment, the defendant revoked the MOU and power of attorney through his advocates, instructing the Ministry to stop further payments to the plaintiff and redirect funds. The plaintiff sued for breach of contract and payment of the agreed 60% commission. The defendant counterclaimed that the plaintiff's managing director had misled him by claiming presidential authority, that the 60% commission was unconscionable, and that the agreement contravened public policy by monetising access to government services.

Issues

  1. Whether the Defendant breached the agency agreement?
  2. Whether the Plaintiff is entitled to payment of the agreed commission in respect of the agency agreement?
  3. What remedies are available to the parties?
  4. Whether the agreement between the Counterclaimant and the Counter Defendant is void?
  5. Whether the Counterclaimant is entitled to the remedies sought?

Orders

  • The plaintiff's suit is dismissed.
  • The defendant's counterclaim succeeds.
  • The plaintiff is ordered to refund UGX 381,520,000/ to the defendant/counterclaimant.
  • No order as to general damages.
  • Costs of the counterclaim to be paid by the counter defendants.

Rules and key headnotes

Contract Law — Void Contracts — Agreements Against Public Policy — Influence Peddling
A contract for services to demand and negotiate government compensation payments on behalf of landowners is against public policy where the government had already ordered compensation and payment ought to have been made directly to the landowners.
Contract Law — Unconscionable Contracts — Grossly Unequal Terms
An agency agreement entitling the agent to 60% of compensation and the landowners to only 40% is unconscionable where the gross inequality of bargaining power, together with terms unreasonably favourable to the stronger party, indicates lack of meaningful choice or real alternative by the weaker party.
Contract Law — Unconscionable Contracts — Test for Unconscionability
A bargain is not unconscionable merely because the parties are in unequal bargaining positions or because of unequal allocation of risks, but gross inequality of bargaining power together with terms unreasonably favourable to the stronger party may show the transaction involved deception or compulsion or that the weaker party had no meaningful choice.
Contract Law — Formation — Essential Elements — Legality of Object
For a contract to be valid and legally enforceable there must be capacity to contract, intention to contract, consensus ad idem, valuable consideration, legality of purpose, and sufficient certainty of terms; if any element is missing the agreement is not a valid contract.
Contract Law — Void Contracts — Common Law Principle Ex Turpi Causa
The defence of illegality rests on the common law principle ex turpi causa non oritur actio, meaning no action can arise from an illegal act, and courts will not aid a party whose case is based on an immoral or illegal act.

Legislation cited (10)

Cases cited (3)

  • Greenboat Entertainment Ltd v City Council of Kampala (High Court Civil Suit No. 580 of 2003)
  • Namanya George & Frank Kabundu v Mukalagi Stephen (High Court Civil Suit No. 237 of 2012)
  • Charles Athembu v Commercial Microfinance Ltd & Another (High Court Civil Suit No. 0051 of 2009)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

American Procurement Company, Inc (Amproc, Inc) v Arigye (Civil Suit 664 of 2021) [2024] UGCommC 268 (31 January 2024)
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.