Wakilii

Mavid Pharmaceuticals Ltd v Royal Group of Pakistan (Civil Suit No. 319 of 2009)

High Court · [2015] UGCOMMC 97 · 2015 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 and recovery of purchase price of goods
Decision
Judgment entered for the plaintiff with damages and costs.

Observed later treatment

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Holding

The court held that the defendant's revocation of the plaintiff's authority to manufacture pharmaceutical products after receiving payment for raw materials and while the plaintiff was addressing regulatory issues constituted wrongful prevention of performance and breach of contract. The plaintiff was entitled to recover the purchase price of raw materials (less old debts set off), freight and clearing charges, and general damages for loss of business opportunity.

Outcome

Judgment entered for the plaintiff with damages and costs.

Facts

The plaintiff, a Ugandan pharmaceutical company, entered into a memorandum of understanding with the defendant, a Pakistani corporate entity, to manufacture 'Semodex Ointment' under license. The plaintiff paid US$62,093.79 for raw materials and packaging materials supplied by the defendant. The plaintiff manufactured trial batches and submitted them to the National Drug Authority (NDA) in August 2008. In November 2008, NDA deferred approval pending rectification of three issues: illegible batch numbers and dates, containers not closing tightly causing iodine sublimation, and a solubility test anomaly. Before the plaintiff could address these issues, the defendant cancelled the memorandum of understanding in February 2009 without providing reasons. The plaintiff demanded return of the raw materials or refund of the purchase price. The defendant refused. The plaintiff incurred storage, destruction supervision, and related charges.

Issues

  1. Whether there was breach of contract?
  2. Whether the Plaintiff is entitled to the full sum of US$62,039.79 as the cost of the raw materials?
  3. What remedies are available to the parties?

Orders

  • Judgment entered for the plaintiff.
  • Defendant to pay the plaintiff US$32,093.79 as the value of raw materials (US$62,093.79 less US$30,000 for old D/A dues).
  • Defendant to pay the plaintiff US$5,075 as freight charges.
  • Defendant to pay the plaintiff Uganda shillings 600,160/= for clearing charges and other costs.
  • Defendant to pay the plaintiff US$30,000 as general damages.
  • Interest at 20% per annum awarded on special damages from August 2009 until date of judgment.
  • Interest at 20% per annum awarded on aggregate amount from date of judgment until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Breach of Contract — Wrongful Prevention of Performance
Where a party has paid for goods under a contract and the other party revokes the authority to complete performance after receiving payment, the revocation constitutes wrongful prevention of performance and breach of contract, entitling the paying party to damages.
Contract Law — Rescission and Termination — Distinction
Rescission and termination are not interchangeable terms. Rescission ordinarily applies in cases of mistake, fraud or lack of consent and treats the contract as never having existed. Termination occurs when one party accepts the other's repudiation, discharging remaining obligations but not rescinding the contract itself.
Contract Law — Excuse for Non-Performance — Supervening Extraneous Event
An excuse for non-performance may be provided by a supervening extraneous event. Where regulatory approval is required and deferred pending rectification of specific issues, the failure to complete manufacture within a stipulated time is excused and does not constitute breach.
Damages & Quantum — Special Damages — Proof Required
Special damages are those which the law will not presume to be the consequences of the defendant's act and which depend on the special circumstances of each case. They must be specifically pleaded and proved in evidence both that the loss was incurred and that it was the direct result of the defendant's conduct.
Damages & Quantum — General Damages — Assessment Principles
General damages are compensatory, placing the innocent party, so far as money can do, in the same position as if the contract had been performed. Where the plaintiff invested in a business venture that was curtailed by the defendant's wrongful conduct, the plaintiff is entitled to general damages for loss of business opportunity even where exact quantification is not possible.
Commercial Law — Pharmaceutical Manufacturing — Regulatory Framework
Pharmaceutical manufacture in Uganda is subject to strict regulation under the National Drug Policy and Authority Act Cap 206. No person may manufacture any drug not included on the national formulary unless approved by the Authority. Where parties contract for pharmaceutical manufacture, regulatory approval is an implied term of the contract.

Legislation cited (8)

Cases cited (13)

  • Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528
  • Hedley v Baxendale (1854) 9 Exch 341
  • Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344
  • Musoke v Departed Asians Property Custodian Board [1990-1994] EA 419
  • Interfreight Forwarders (U) Ltd versus East African Development Bank
  • Sihra Singh Santokh v Faulu Uganda Ltd (High Court Civil Suit No. 517 of 2004)
  • Attorney-General v Oluoch [1972] 1 EA 392
  • Jeraj Shariff & Co v Chotai Fancy Stores [1960] EA 374
  • Attorney General v Tinyefunza (Constitutional Appeal No. 1 of 1997)
  • Buckland v Farmer & Moody [1978] 3 All ER 929
  • Mussen v Van Diemen's Land Co [1938] 1 All ER 210
  • Dharamshi v Karsan [1974] 1 EA 41
  • Johnson v Agnew [1979] 1 All ER 883

Full judgment

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

Mavid Pharmaceuticals Ltd v Royal Group of Pakistan (Civil Suit No. 319 of 2009) [2015] UGCommC 97 (24 July 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.