Wakilii

Habte Ghebrehiwot Zerizghi v Iman Shafik Bashir (Civil Suit 56 of 2024)

High Court · [2026] UGCOMMC 74 · 2026 Interest Rate Reduced AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of liquidated sum with partial judgment already entered on principal; trial limited to issue of whether contractual interest rate is unconscionable
Decision
Partial judgment previously entered for USD 130,000 principal; interest rate reduced from 10% per month to 20% per annum

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

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

The High Court held that a contractual interest rate of 10% per month (120% per annum) on a USD-denominated debt was manifestly harsh and unconscionable. Applying section 26(1) of the Civil Procedure Act, the court exercised its discretion to substitute the agreed rate with 20% per annum, noting that interest on dollar transactions is ordinarily lower than on Uganda shilling transactions and that the stipulated rate was penal rather than compensatory.

Outcome

Partial judgment previously entered for USD 130,000 principal; interest rate reduced from 10% per month to 20% per annum

Facts

On 22 June 2022, the plaintiff and defendant entered into a land sale agreement for property in Munyonyo at USD 410,000. The plaintiff paid USD 260,000, leaving a balance of USD 150,000 due by 26 June 2023. The agreement provided that default would attract interest at 10% per month. The defendant failed to pay the balance and acknowledged the debt but did not pay. The plaintiff sued for USD 150,000 plus 10% monthly interest. The court previously entered partial judgment for USD 130,000 principal but reserved the question of whether the 10% monthly interest rate was unconscionable for trial.

Issues

  1. Whether the interest rate of 10% per month is excessive and unconscionable?
  2. What remedies are available to the parties?

Orders

  • The unconscionable interest rate of 10% per month is substituted with a rate of 20% per annum.

Rules and key headnotes

Contract Law — Penalty Clauses — Unconscionable Interest Rates — Judicial Discretion under Civil Procedure Act s.26(1)
Where a contractual interest rate is manifestly harsh and unconscionable, the court has discretion under section 26(1) of the Civil Procedure Act to substitute it with a rate the court considers just, ensuring the rate is compensatory rather than penal.
Contract Law — Unconscionability — Test for Setting Aside Contractual Terms
For a contractual provision to be set aside as unconscionable, a party must show not only that the terms were harsh or oppressive, but also moral unfairness, such as inequality of bargaining power, coercion, or duress.
Banking & Finance — Interest Rates — Currency Considerations — USD vs UGX
Interest charged on United States Dollar transactions is ordinarily lower than that charged on Uganda shilling transactions due to exchange rate and central bank rate considerations.
Contract Law — Interest on Debt — Compensatory vs Penal Interest
In determining whether a contractual interest rate is harsh and unconscionable, the court must assess whether the rate is compensatory of the loss suffered by the innocent party or whether it operates as a penalty against the defaulting party.

Legislation cited (1)

Cases cited (6)

  • MTN Two One Two Staff Cooperative and Credit Society Limited v Samuel Majega Musoke (High Court Civil Suit No. 82 of 2021)
  • Dr. Maj Rtd Anthony Jallon Okullo v Attorney General (Civil Appeal No. 3 of 2020)
  • JAS Ventures International Limited v Atuhaire Juliet (Civil Suit No. 76 of 2021)
  • Nipun Norattam Bhatia v Crane Bank Ltd (Civil Appeal No. 75 of 2006)
  • Alice Okiror & Another v Global Capital Save 2004 & Anor (Civil Suit No. 149 of 2010)
  • Topline Investments Limited v Namuli and Another (Civil Suit No. 966 of 2023)

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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

Habte Ghebrehiwot Zerizghi v Iman Shafik Bashir (Civil Suit 56 of 2024) [2026] UGCommC 74 (13 February 2026)
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.