Wakilii

Batchi and Saatchi Limited v MTN Uganda Limited (Commercial Case No. HCT -00 - CC - CS - 15 - 2013)

High Court · [2016] UGCOMMC 289 · 2016 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract
Decision
Judgment for plaintiff with damages, interest and costs awarded

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that termination of an advertising services agreement by effluxion of time requires six months' written notice under Clause 3.2. The defendant breached the contract by failing to provide written notice. Where parties had an established practice of the plaintiff receiving 3% agency commission, that practice persists absent communication changing the arrangement. Payment in lieu of notice is enforceable where the defendant made a counter-offer recognising the concept, even if the contract did not expressly provide for it.

Outcome

Judgment for plaintiff with damages, interest and costs awarded

Facts

The plaintiff and defendant executed an advertising services agreement dated 1 June 2009 commencing 1 March 2009 for a two-year period. The agreement contained a non-compete clause and required six months' written notice for termination by effluxion of time. On 31 January 2011, the defendant wrote informing the plaintiff their tender bid for advertising services was unsuccessful. The plaintiff alleged the contract was terminated without the required six months' written notice. The plaintiff claimed payment for six months in lieu of notice, 3% agency commission that had not been paid throughout the contract period, and payments due to third parties. The defendant contended the letter regarding the unsuccessful tender constituted sufficient notice and that no payment in lieu of notice was contractually required.

Issues

  1. Whether the Defendant breached the terms of the advertising agreement.
  2. Whether the plaintiff is entitled to six months' payment in lieu of notice of Ugx 559,498,887.
  3. Whether the plaintiff is entitled to 3% agency commission of Ugx 448,864,384.
  4. Whether the plaintiff is entitled to payments to third parties of USD$19,559.39.

Orders

  • Judgment entered in favour of the Plaintiff.
  • Recovery of Ugx 1,008,363,271 being the sum total of six months' payment in lieu of notice and 3% agency commission.
  • Recovery of USD$19,559.39.
  • General damages of Ugx 30,000,000.
  • Interest on special damages at 20% per annum from 28th February 2011 until payment in full.
  • Interest on general damages at court rate from date of judgment until payment in full.
  • Costs awarded to the Plaintiff.

Rules and key headnotes

Contract Termination — Notice Requirements — Interpretation of Mandatory Terms
Where a contract provides that termination by effluxion of time shall be effected by six months' notice in writing, and the contract contains a non-compete clause that would professionally bind a party until such notice is given, the notice requirement is a mandatory provision and not merely directory.
Contract Interpretation — Written Notice — Sufficiency of Communication
A letter regarding an unsuccessful tender bid that makes no reference to terminating the original contract between the parties does not constitute written notice of termination as required by a contractual clause requiring notice in writing.
Contract Interpretation — Use of 'Shall' — Mandatory versus Directory Provisions
The distinction between mandatory and directory provisions in legislative interpretation does not automatically apply to contract interpretation. In interpreting contracts, the primary consideration is to fulfill the reasonable shared expectations of the parties as expressed in the unequivocal language employed, giving due consideration to the intention the parties sought to accomplish.
Implied Terms — Payment in Lieu of Notice — Recognition by Conduct
Where a contract does not expressly provide for payment in lieu of notice, but one party makes an offer of payment in lieu of notice (albeit for a reduced period) and such offer is not rescinded, that party is bound by its own document and recognition of the concept of payment in lieu of notice.
Agency Commission — Course of Dealing — Continuing Practice
Where parties have an established practice throughout their business relationship of the agent receiving a specific percentage commission, and there is no communication from the principal retracting this commission or changing the agreed percentages, the past relationship and practice persists until the contract is terminated.
General Damages — Assessment in Breach of Contract — Compensatory Principle
General damages are in their fundamental character compensatory and not punitive. When assessing quantum, courts are guided by the value of the subject matter, the economic inconvenience suffered, and the nature and extent of the breach. An award must put the plaintiff in the position he would have been in had he not suffered the wrong.
Interest — Deprivation of Use of Money — Appropriate Rate
Where a party has been kept out of the use of money for an extended period while the other party has had use of it, the injured party ought to be compensated by an award of interest. The rate should take into account the depreciating value of currency and the period of deprivation.

Cases cited (14)

  • Holwell Securities Ltd v Hughes [1974] 1 All ER 160
  • Sitenda Sebalu v Sam Njuba & Another (Supreme Court Election Petition Appeal No. 26 of 2007)
  • Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896
  • Benjamin Developments Ltd v Robt Jones (Pacific) Ltd [1994] 3 NZLR 189
  • Chartbrook v Persimmon Homes [2009] 1 AC 1101
  • Rainy Sky S.A v Kookmin Bank [2011] 1 WLR 2900
  • Bank of Uganda v Betty Tinkamanyire (SCCA No. 12 of 2007)
  • Barclays Bank v Godfrey Mubiru (SCCA No. 1 of 1998)
  • James Sebagala v China Place (U) Ltd (HCMA No. 152 of 2015)
  • James Fredrick Nsubuga v Attorney General (HCCS No. 13 of 1993)
  • Erukana Kuwe v Isaac Patrick Matovu & Another (HCCS No. 177 of 2003)
  • Kibimba Rice Ltd v Umar Salim (SCCA No. 17 of 1992)
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 305
  • Harbutt's Plasticine Ltd v Wayne Tank & Pump Co Ltd [1970] 1 Ch 447

Full judgment

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

Batchi and Saatchi Limited v MTN Uganda Limited (Commercial Case No. HCT -00 - CC - CS - 15 - 2013) [2016] UGCommC 289 (13 May 2016)
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.