Wakilii

Liberty Construction Co Ltd v Lamba Enterprises Ltd (HCT-00-CC-CS 215 of 2008)

High Court · [2012] UGCOMMC 92 · 2012 Counter Claim Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Counter claim arising from terminated subcontracts, with head suit dismissed
Decision
Counter claim partly allowed with payment awarded on quantum meruit basis

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that a memorandum of understanding signed under economic duress after the defendant refused to vacate construction sites and placed armed guards on them was voidable. However, applying the doctrine of quantum meruit, the court awarded payment for work actually completed, finding that the party who executed the works was entitled to compensation based on joint measurements, despite the invalidity of the settlement agreement.

Outcome

Counter claim partly allowed with payment awarded on quantum meruit basis

Facts

Liberty Construction subcontracted Lamba Enterprises to construct four fish landing sites and rehabilitate a research center for contract sums totaling UGX 5,600,000,000. Following the 2008 Kenyan post-election violence and resulting fuel shortage, Lamba requested contract price revisions which Liberty rejected. Liberty terminated the subcontracts on 12 August 2008 and demanded vacant possession. Lamba refused to vacate and placed armed guards on the sites, demanding payment of UGX 678,952,860.70 for work completed. After private mediation involving MBW Consult and joint measurements of work done, the parties signed two memoranda of understanding on 22 August 2008 whereby Liberty agreed to pay UGX 500,000,000 for the four fishing sites and UGX 276,640,728 for Bushenyi. Liberty paid UGX 100,000,000 initially and Lamba released the sites. Liberty then refused further payment claiming the memoranda were signed under economic duress. The head suit was dismissed leaving the counter claim for trial.

Issues

  1. Whether the memorandum of understanding was entered into under undue influence and or economic duress?
  2. If not, how much if any does Lamba claim from the counter defendant under the memorandum of understanding?
  3. If entered into under duress how much does Lamba claim from the counter defendants?

Orders

  • The memorandum of understanding dated 22nd August 2008 is declared voidable as it was entered into under economic duress.
  • Lamba Enterprises Ltd is awarded UGX 253,308,223 as quantum meruit for work completed.
  • Interest at 21% per annum is awarded on UGX 253,308,223 from the date of filing suit until payment in full.
  • Each party to bear its own costs.

Rules and key headnotes

Contract Law — Economic Duress — Elements
Economic duress requires improper or illegitimate pressure that compels a party to enter a contract against their will, leaving them with no practical alternative course of action, and which pressure is a significant cause inducing entry into the contract.
Contract Law — Economic Duress — Burden of Proof
The victim of duress need only show that improper pressure was exerted by the opposing party to encourage entry into the contract; the party alleging duress is not required to prove the level of pressure that would vitiate consent in all circumstances.
Contract Law — Economic Duress — Withholding Property
Where a party refuses to hand over construction sites and deploys armed guards to prevent takeover unless a disputed sum is paid, this constitutes improper pressure amounting to economic duress where the other party has a significant financial interest in recovering the sites and faces serious financial consequences.
Contract Law — Economic Duress — Effect on Contract
A contract entered into under economic duress is voidable at the instance of the party subjected to the duress.
Contract Law — Quantum Meruit — Availability Despite Voidable Contract
Where a contract is found to be voidable due to economic duress, the court may still award payment on a quantum meruit basis for work actually completed, as quantum meruit is an equitable remedy against unjust enrichment that lies in the discretion of the court and is distinct from contractual remedies.
Civil Procedure — Pleadings — General Damages
General damages, being such damages as the law presumes to be the natural consequence of a default, may be averred generally and need not be specifically pleaded with the same particularity required for special damages.

Cases cited (10)

  • Allcard v Skinner (1887) 36 Ch D 145
  • Kenya Commercial Bank Ltd & 2 Others v Madhu Papers and Others (Civil Appeal No. 181 of 2002)
  • DSND Subsea v Petroleum Geo-Services [2000] QB 530
  • Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] AC 383
  • North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705
  • Pao On v Lau Yiu Long [1980] AC 614
  • Barton v Armstrong [1979] AC 104
  • Kananura Melvin Consultant Engineers v Connie Kabanda (Supreme Court Civil Appeal No. 11 of 1992)
  • Agri-Industrial Management Agency Ltd v Kayonza Growers Tea Factory & Anor (HCCS 0819 of 2004)
  • Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32

Full judgment

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

Liberty Construction Co Ltd v Lamba Enterprises Ltd (HCT-00-CC-CS 215 of 2008) [2012] UGCommC 92 (16 August 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.