Wakilii

Sarah Kayaga Farm Ltd v The Attorney General (Civil Suit No. 351 of 1991) (Civil Suit No. 351 of 1991)

High Court · [2001] UGHC 3 · 2001 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 contract sum with compound interest
Decision
Judgment for plaintiff with award of contract balance plus compound interest and costs

Observed later treatment

Cited — treatment unverified cited in 3 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 3 times with no adverse treatment recorded; not yet tested on the merits. Citations fading — 3 citing cases on record, 3 in the most recent three data years. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

An unwritten construction contract was completed in 1988 with a final agreed sum of Shs.3,029,630. The parties subsequently agreed compound interest would apply to unpaid balances. The court held compound interest at commercial bank rates was a contractual term and properly compensates for delayed payment by addressing opportunity cost, risk, and inflation. The defendant breached the contract by delaying payment for thirteen years. The plaintiff was awarded the unpaid balance of Shs.42,891,515.28 calculated at varying commercial bank rates from 1988 to 2007, with continuing compound interest at 22% per annum until full payment.

Outcome

Judgment for plaintiff with award of contract balance plus compound interest and costs

Facts

In 1988, the plaintiff company entered an unwritten contract with the government to execute construction repairs on Kitante Hill School premises in Kampala. The plaintiff completed the works by 24 August 1988. After inspection, the parties agreed the contract sum was Shs.3,029,630. The defendant made partial payments: Shs.1,000,000 in February 1989, Shs.2,560,000 in September 1992, and Shs.14,339,000 in May 2001. The parties subsequently agreed that unpaid balances would bear compound interest at commercial bank rates. On 26 September 1990, the defendant's Permanent Secretary confirmed compound interest would apply at 50% annually. In May 2000, another Permanent Secretary justified compound interest based on World Bank standard construction contract provisions addressing payment delays. The plaintiff sued for the unpaid balance calculated with compound interest from 1988 to 2005.

Issues

  1. What were the terms of the contract between the Plaintiff Company and the Ministry of Education?
  2. Whether there was breach of contract.
  3. Whether the Plaintiff is entitled to the remedies sought.

Orders

  • Judgment entered for the Plaintiff against the Defendant in the sum of Shs.42,891,515.28 being the balance of the contract sum and accrued compound interest.
  • The decretal sum to continue bearing compound interest at the commercial bank rate of 22% per annum from the date of judgment until payment in full.
  • The Plaintiff to have the costs of the suit.

Rules and key headnotes

Contract Law — Interest on Delayed Payment — Compound Interest — When Payable by Agreement
Where parties to a contract agree, even after performance, that compound interest shall apply to unpaid sums, such agreement becomes a binding term of the payment contract and compound interest is payable accordingly.
Contract Law — Interest — Compound versus Simple Interest — Compensatory Nature
Compound interest is a more precise measure of the value of possessing money over time than simple interest because it accounts for opportunity cost, risk, and inflation, and thus better compensates a party deprived of payment under a contract.
Contract Law — Breach of Contract — Delayed Payment — Compound Interest as Compensatory Damages
Compound interest on delayed contract payments constitutes compensatory damages under the rule in Hadley v Baxendale, satisfying both expectation damages (the value the plaintiff would have received if the contract had been performed) and restitution damages (the advantage gained by the defendant from the breach).
Damages & Quantum — Calculation of Compound Interest — Commercial Bank Rates — Source of Rates
Where compound interest at commercial bank rates is payable, rates published by the Bank of Uganda are more reliable and credible than varied or inconsistent rates from other sources, given the Bank's role as overseer of the banking sector.
Damages & Quantum — General Damages — When Not Awarded — Compound Interest as Complete Compensation
Where compound interest on a contract sum adequately compensates for both expectation and restitution damages arising from delayed payment, general damages are not additionally awarded.

Cases cited (3)

  • London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429
  • Hadley v Baxendale (1854) 9 Exch 341
  • Robinson v Harman (1848) 1 Ex 850

Cases citing this judgment (3)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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

Sarah Kayaga Farm Ltd v The Attorney General (Civil Suit No. 351 of 1991) (Civil Suit No. 351 of 1991) [2001] UGHC 3 (9 February 2001)
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.