Wakilii

Hiraa Traders (U) Ltd v Ndaula (Civil Suit No. 52 of 2012)

High Court · [2015] UGCOMMC 183 · 2015 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of unpaid purchase price and damages for breach of contract
Decision
Judgment entered for the plaintiff with orders for payment of unpaid purchase price, compensation, general damages, interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division held that the defendant breached the contract by failing to pay the balance purchase price of five motor vehicles totalling UGX 174,500,000. The 20% monthly interest clause was ruled a penalty and unenforceable as extravagant and unconscionable. The court found no duress in the issuance of cheques and held the defendant liable for their dishonour. The defendant's claim that two vehicles were defective failed where the sale agreement contained an 'as is' clause and the buyer had opportunity to inspect. The court awarded the plaintiff the unpaid purchase price of UGX 143,000,000, agreed compensation of UGX 70,000,000, general damages of UGX 30,000,000, and interest.

Outcome

Judgment entered for the plaintiff with orders for payment of unpaid purchase price, compensation, general damages, interest and costs

Facts

In January 2011, the defendant purchased five motor vehicles from the plaintiff for UGX 174,500,000, paying UGX 21,500,000 upfront with the balance to be paid in instalments under five separate agreements. The agreements contained a clause charging 20% per month on late payments. The defendant defaulted on instalments and issued 17 cheques totalling UGX 223,000,000 to cover the balance plus compensation of UGX 70,000,000 (comprising UGX 30,000,000 for the plaintiff's auctioned vehicle in Mombasa and UGX 40,000,000 for shilling depreciation). All cheques were dishonoured. The defendant claimed the cheques were signed under duress to protect his reputation as LCV Chairman of Luwero after threats of police action and press exposure. The defendant also claimed two vehicles were defective and sought a reduction of UGX 40,000,000. The plaintiff instituted criminal proceedings and filed this civil suit for recovery.

Issues

  1. Whether the defendant is in breach of contract
  2. Whether the liquidated damages clause in the sales agreement is legally enforceable against the defendant
  3. Whether the cheques were issued under duress and whether the defendant is liable for the dishonour
  4. Whether the defendant is entitled to claim that two of the trucks purchased were in poor mechanical condition and therefore, not liable to pay for them
  5. Whether there are remedies available to the parties

Orders

  • Judgment entered for the plaintiff
  • Defendant to pay UGX 143,000,000 being the unpaid purchase price
  • Defendant to pay UGX 70,000,000 being compensation agreed upon for breach
  • Defendant to pay UGX 30,000,000 being general damages
  • Interest of 18% per annum on UGX 143,000,000 from date of filing suit till payment in full
  • Interest of 25% per annum on UGX 30,000,000 from date of judgment till payment in full
  • Costs of the suit awarded to the plaintiff

Rules and key headnotes

Contract Law — Breach of Contract — Failure to Pay Purchase Price
A party who fails to pay the purchase price under a contract of sale commits a breach of contract entitling the seller to bring an action for recovery of the price under Sale of Goods Act section 49.
Contract Law — Penalty Clauses — Distinction from Liquidated Damages
A contractual provision requiring payment of 20% per month on outstanding sums constitutes an unenforceable penalty where the amount is extravagant and unconscionable in comparison with the greatest loss that could possibly follow the breach, rather than a genuine pre-estimate of loss.
Contract Law — Duress — Economic Pressure and Threats of Legal Action
Threats to report a matter to police or publish details in the press do not constitute duress sufficient to vitiate consent to issue cheques where the threatened action is lawful and the party sought time to pay rather than being deprived of free will.
Commercial Law — Sale of Goods — Implied Conditions — Merchantable Quality
Where a contract of sale contains an 'as is' clause and provides the buyer opportunity to inspect goods and bring a mechanic, there is no implied condition as to merchantable quality under Sale of Goods Act section 15(1)(b) where the buyer had examined or had opportunity to examine the goods.
Commercial Law — Sale of Second-Hand Goods — Standard of Merchantable Quality
On the sale of a second-hand motor vehicle, the vehicle is merchantable and reasonably fit for purpose if it is in a usable and roadworthy condition, even though not perfect, and a buyer should realise that defects may appear sooner or later.
Contract Law — Remedies for Breach — Damages Assessment
Where parties agree to a specific sum as compensation for breach after default has occurred, that sum may be awarded as damages where it reflects loss arising naturally from the breach or such loss as may reasonably have been in the contemplation of the parties at the time of agreement.
Damages & Quantum — General Damages — Assessment in Breach of Contract
General damages for breach of contract are assessed by the opinion and judgment of a reasonable tribunal where the court cannot point to any precise measure of assessment, and an award must be commensurate with the circumstances of the case.

Legislation cited (6)

  • Sale of Goods Act s.49
  • Sale of Goods Act s.15
  • Sale of Goods Act s.16
  • Sale of Goods Act s.15(1)(b)
  • Sale of Goods Act s.14(1)
  • Evidence Act s.102

Cases cited (11)

  • Ronald Kasibante v Shell Uganda Ltd (HCCS No. 542 of 2006)
  • Dunlop Pneumatic Tyre Co v New Garage and Motor Co Ltd [1915] AC 79
  • Wayne Tank and Pump Co Ltd v Employers Liability [1974] QB 57
  • Esther Nakulima v Anne Nandawula Kabali (Misc App No. 235 of 2013)
  • Sobetra (U) Ltd & Another v Leads Insurance Ltd (Misc App No. 454 of 2011)
  • Maureen Tumusiime v Macario Detoro & Another [2006] HCB Vol. 1 127
  • Bartlett v Sydney Marcus Ltd [1965] 2 All ER 753
  • Sebuliba v Co-operative Bank (1982) HCB 129
  • Lutale v Ssegawa (HCT-CC-CS-0292-2006)
  • Hadley v Baxendale (1854) 9 Ex 341
  • Haji Asumani Mutekanga v Equator Growers (U) Ltd (SCCA No. 7 of 1995)

Full judgment

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

Hiraa Traders (U) Ltd v Ndaula (Civil Suit No. 52 of 2012) [2015] UGCommC 183 (5 November 2015)
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.