Wakilii

Karamshi v De Souza (Civil Appeal No. 13 of 1940)

East African Court of Appeal · [1941] EACA 1 · 1941 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of H.M. High Court of Kenya in action for specific performance
Decision
Respondent awarded Sh. 1,000 damages for breach of option agreement; specific performance not granted as land had been sold to third party

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court held that evidence of a collateral option agreement was admissible under section 92 of the Indian Evidence Act where not inconsistent with the formal transfer deed. The execution of the transfer was the consideration for the option agreement. The respondent transferred land to the appellant in extinction of a debt on condition that the appellant would re-transfer the land if the respondent paid Sh. 4,000 within four years. The appellant's subsequent sale to a third party did not extinguish the respondent's rights. Appeal dismissed.

Outcome

Respondent awarded Sh. 1,000 damages for breach of option agreement; specific performance not granted as land had been sold to third party

Facts

In 1931 the respondent borrowed Sh. 4,000 from the appellant secured by a charge on a plot of land. In 1936 the respondent was unable to repay. On 28 February 1936 the parties executed two documents: a formal transfer of the land to the appellant in consideration of the Sh. 4,000 debt, and an informal option agreement providing that the appellant would re-transfer the land if the respondent paid Sh. 4,000 within four years. The transfer deed contained no reference to the option. In December 1937 the appellant sold the land to a third party for Sh. 5,000. The respondent, living in Eldoret while the land was in Kitale, was unaware of this sale. On 8 February 1940 the respondent tendered Sh. 4,000 and demanded re-transfer. The appellant refused. The respondent sued for specific performance.

Issues

  1. Whether section 92 of the Indian Evidence Act precluded evidence that the execution of the transfer was consideration for the option agreement.
  2. Whether the option agreement was nudum pactum for want of consideration.
  3. Whether evidence of a collateral agreement was admissible where not inconsistent with the formal transfer deed.

Orders

  • Appeal dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Evidence — Parol Evidence — Admissibility of Evidence of Collateral Agreement — Indian Evidence Act s.92
Where a formal transfer deed is executed as consideration for a collateral agreement not referred to in the deed, parol evidence of that collateral agreement is admissible under section 92 of the Indian Evidence Act provided the evidence is not inconsistent with the terms of the transfer deed.
Contract Law — Consideration — Execution of One Document as Consideration for Another
The execution of a transfer deed may constitute valid consideration for a contemporaneous option agreement even where the transfer deed itself states a different consideration and makes no reference to the option.
Contract Law — Option Agreements — Enforceability — Nudum Pactum
An option agreement is not nudum pactum where the optionee has executed a transfer of property as consideration for the grant of the option, even if the option agreement itself does not recite that consideration.
Evidence — Indian Evidence Act s.92 — Codification of English Law — Parol Evidence Rule
Section 92 of the Indian Evidence Act codifies the English parol evidence rule and permits oral evidence of a contemporaneous agreement where that evidence is not inconsistent with the written instrument.

Legislation cited (1)

  • Indian Evidence Act s.92

Cases cited (3)

  • Frith v Frith (1906) AC 254
  • Townend v. Toker, L.R.I Ch. App. 446
  • Re Holland (1902) 2 Ch 360

Full judgment

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

Karamshi v De Souza (Civil Appeal No. 13 of 1940) [1941] EACA 1 (1 January 1941)
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.