Wakilii

andes (EAS) Ltd v Akoong Mulik Systems & 2 Ors (High Court Civil Suit No. 184 of 2008)

High Court · [2012] UGCOMMC 58 · 2012 Counterclaim Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Counterclaim proceeding ex parte after plaintiff's suit was dismissed for non-appearance under Order 9 rule 22 CPR
Decision
Counterclaim dismissed after the court found the counterclaimant had waived its right to claim for breach by accepting an alternative arrangement and failing to mitigate loss

Observed later treatment

No later-treatment classification is recorded for this judgment.

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AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that while a valid Memorandum of Understanding existed between the parties, and the counter defendant breached its obligation to deposit USD 100,000 within five days, the counterclaimant waived its right to claim damages by accepting an alternative arrangement and failing to rescind the contract after breach. The counterclaimant also failed to mitigate its loss by delaying action and not seeking alternative financing despite time being of the essence. The counterclaim was dismissed with no order as to costs.

Outcome

Counterclaim dismissed after the court found the counterclaimant had waived its right to claim for breach by accepting an alternative arrangement and failing to mitigate loss

Facts

The counterclaimant, a limited liability company, was awarded a contract by the Government of Southern Sudan to construct two education centres within 150 days from 1 December 2007. Needing financing, it entered into a Memorandum of Understanding with the counter defendant on 20 February 2008 whereby the counter defendant was to deposit USD 100,000 within 5 days in exchange for repayment at compound interest and 30% of gross profits. The counter defendant failed to deposit the money but instead offered to purchase construction materials and equipment. The counterclaimant accepted this alternative arrangement, though the counter defendant subsequently withheld materials and reported to police that a counterclaimant director was attempting to steal a purchased truck. No work commenced on the GOSS contract site, and by the time the counterclaimant sent a notice of termination to the counter defendant on 3 April 2008, 125 days had elapsed in the 150-day contract period. GOSS terminated the contract on 15 May 2009.

Issues

  1. Whether there was a valid contract between the counterclaimant and counter defendant.
  2. Whether the counter defendant breached the contract.
  3. Whether the counterclaimant is entitled to the remedies sought.

Orders

  • Counterclaim dismissed.
  • No order as to costs.

Rules and key headnotes

Contract Law — Misrepresentation — Burden of Proof
The burden of alleging and proving misrepresentation that vitiates a contract rests in every case on the party who sets it up. A representation is deemed false if material circumstances are incorrectly stated such that the discrepancy between facts as represented and actual facts would be considered material by a reasonable representee; the representor's knowledge, belief or state of mind is immaterial for determining whether a misrepresentation occurred.
Contract Law — Breach of Contract — Fundamental Breach
Failure to deposit a sum of money within the agreed time as a fundamental term of a contract that goes to its core or substance constitutes fundamental breach, which entitles the innocent party to treat the contract as repudiated, rescind it, and sue for damages.
Contract Law — Waiver — Distinguished from Variation
Waiver in contract describes the process whereby one party unequivocally but without consideration grants a concession to the other by not insisting upon the precise mode of performance provided for in the contract. It is distinguished from consensual variation, which requires a subsequent simple contract possessing all characteristics of a valid contract including consideration. Waiver may arise from conduct inconsistent with any intention other than to waive the right.
Contract Law — Oral Variation of Written Contract — Requirement of Writing
A contract which by law is required to be in writing can only be varied by a subsequent written agreement. An oral agreement cannot vary such a contract; an oral variation leaves the written contract intact and enforceable.
Contract Law — Waiver — Effect on Right to Claim Damages
Where a party waives a breach of contract by accepting an alternative arrangement and not insisting upon the precise mode of performance, that party cannot subsequently claim damages for the waived breach. The doctrine of estoppel by election bars a person who has intentionally exercised a choice between inconsistent alternatives from claiming the benefits of the option not selected.
Contract Law — Damages — Duty to Mitigate Loss
The innocent party following a breach is under a duty to take all reasonable steps to mitigate loss consequent on the breach and is debarred from claiming any part of damage due to neglect to take such steps. Where the innocent party fails to exercise its right to rescind the contract after a fundamental breach within a reasonable time, its failure to mitigate loss escalates damages for which the breaching party cannot be held fully responsible.
Evidence — Special Damages — Proof Required
Special damages must be specifically pleaded and strictly proved by the claimant. Where a claim for lost profits is made, documentary proof showing how the claimed amount was calculated must be adduced. Expert opinion such as an accountant's projected cash flow statement must be tendered through the maker who should explain the methodology; absent such testimony, the court cannot rely on the document to assess special damages.

Legislation cited (3)

Cases cited (9)

  • Ronald Kasibante v Shell Uganda Ltd (High Court Civil Suit No. 542 of 2006)
  • Hadley v Baxendale [1843-1860] ALLER 461
  • Agri-Industrial Management Agency Ltd v Kayonza Growers Tea Factory Ltd & Anor (High Court Civil Suit No. 819 of 2004)
  • Mujuni Ruhemba v Skanka Jensen (U) Ltd (Civil Appeal No. 56 of 2000)
  • Three Way Shipping Services (Group) Ltd v China Chongaing International Construction Corporation (High Court Civil Suit No. 538 of 2005)
  • African Highlands Produce Ltd v Kisorio [2001] EA 1
  • Eladam Enterprises Ltd v S.G.S (U) Ltd & others (Civil Appeal No. 20 of 2002)
  • KCC v Nakaye (1972) EA 446
  • Superior Construction and Engineering Ltd v Notay Engineering Industries (Ltd) (High Court Civil Suit No. 702 of 1989)

Full judgment

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

andes (EAS) Ltd v Akoong Mulik Systems & 2 Ors (High Court Civil Suit No. 184 of 2008) [2012] UGCommC 58 (5 June 2012)
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.