Wakilii

Pricilla Lopdrup ( suing through her Attorney Lutaaya ) v Mirembe Lubwama and 2 Others (Civil Suit No. 260 of 2015)

High Court · [2020] UGCOMMC 147 · 2020 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt under a guarantee agreement following partial default judgment
Decision
Judgment entered against 2nd and 3rd Defendants jointly and severally for UGX 80,000,000 plus interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that a guarantee agreement signed by the 2nd and 3rd Defendants was valid and enforceable. The Defendants failed to prove duress, having not protested at the time of signing, not being under detention, and having taken no steps to avoid the agreement. Upon default by the principal debtor (1st Defendant), the guarantors became jointly and severally liable under Contracts Act s.71. The court awarded the Plaintiff UGX 80,000,000 plus interest at 8% per annum from filing and costs.

Outcome

Judgment entered against 2nd and 3rd Defendants jointly and severally for UGX 80,000,000 plus interest and costs

Facts

The Plaintiff, a Stanbic Bank customer, transferred UGX 100,000,000 to the 1st Defendant's account after the 1st Defendant, a bank employee, promised to fix the money in a better interest-earning account. The 1st Defendant neither fixed the money nor returned it. Following a criminal complaint and arrest, the 1st Defendant acknowledged the debt and paid UGX 20,000,000, promising to pay the balance of UGX 80,000,000 in installments. The 2nd and 3rd Defendants signed an undertaking dated 31/1/2015 guaranteeing payment of the balance. The 1st Defendant defaulted. Default judgment was entered against the 1st Defendant but set aside against the 2nd and 3rd Defendants, who defended on grounds of duress. The land title offered as security by the 1st Defendant was discovered to be either forged or subject to competing claims.

Issues

  1. Whether the undertaking dated 31/1/2015 is legal, valid and enforceable as against the 2nd and 3rd Defendants.
  2. Whether the Plaintiff's claim against the 2nd and 3rd Defendants is sustainable at law.
  3. What remedies are available to the parties?

Orders

  • The Defendants are jointly and severally ordered to pay to the Plaintiff UGX 80,000,000.
  • The above amount shall attract interest at the rate of 8% per annum from filing this case until payment in full.
  • Costs are awarded to the Plaintiff.

Rules and key headnotes

Contract of Guarantee — Definition and Nature
A contract of guarantee is a secondary agreement in which a person (the guarantor) is liable for the debt on default of another (the principal debtor) who is the party primarily liable for the debt.
Contract of Guarantee — Liability of Guarantor
The liability of a guarantor arises only upon the default of the principal debtor in his or her obligations. The guarantor's liability crystallizes upon such default.
Duress — Test for Coercion of Will
To establish duress vitiating consent, a person must show that he protested to the duress, that he did not have any alternative course open to him such as an adequate legal remedy, that he was not independently advised, and that he took steps after entering the contract to avoid it.
Parol Evidence Rule — Exclusion of Oral Evidence
Where the terms of any document have been reduced into writing and have been proved, no oral evidence shall be admitted to challenge the written terms under Evidence Act s.92, unless an exception under s.92(a) applies.
Contract of Guarantee — Extent of Guarantor's Liability
Under Contracts Act s.71, the liability of a guarantor shall be to the extent to which a principal debtor is liable, unless otherwise provided by contract. The liability of a guarantor takes effect upon default by the principal debtor.

Legislation cited (5)

Cases cited (5)

  • Barclays Bank of Uganda Ltd v Jing Hong and Another (Civil Suit No. 35 of 2009)
  • Stanbic Bank v Atyaba Agencies (Supreme Court Civil Appeal No. 2 of 2005)
  • Pao On v Lau [1979] 3 All ER 65
  • Burton v Armstrong [1976] AC 104
  • Maskell v Home [1915] 3 KB 106

Full judgment

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

Pricilla Lopdrup ( suing through her Attorney Lutaaya ) v Mirembe Lubwama and 2 Others (Civil Suit No. 260 of 2015) [2020] UGCommC 147 (22 December 2020)
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.