Wakilii

Uganda Baati v N.I.C and Another (Civil Suit 458 of 1995)

High Court · [1997] UGHC 31 · 1997 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of sum under security guarantee bond
Decision
Plaintiff's claim dismissed with costs to Defendant

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Where a creditor extends time for payment by the principal debtor without the surety's consent, the surety is wholly discharged from liability under the guarantee. The court held that the plaintiff's 17-day delay in making demand after the 30-day contractual period expired was not 'immediately' as required by the guarantee bond. The plaintiff was also found to have granted a seven-day extension to the principal debtor without the surety's knowledge or consent, thereby discharging the surety from all liability.

Outcome

Plaintiff's claim dismissed with costs to Defendant

Facts

The plaintiff supplied galvanised corrugated iron sheets worth UGX 43,150,000 to M/s Najjuma Capidev Ltd between 23 and 29 November 1994. The first defendant issued a security guarantee bond requiring the plaintiff to make demand immediately after 30 days from delivery if the principal debtor failed to pay. M/s Najjuma Capidev Ltd did not pay within 30 days. The plaintiff closed for the New Year period and made demand on 17 January 1995, 17 days after the 30-day period expired on 29 December 1994. Meanwhile, the plaintiff had received a letter dated 2 January 1995 from M/s Najjuma Capidev Ltd requesting a seven-day extension, to which the plaintiff agreed without informing or obtaining consent from the guarantor.

Issues

  1. Did the Plaintiff make a demand immediately after expiration of 30 days from delivery as required by the security guarantee bond?
  2. Whether the Plaintiff extended the time limit within which M/s Najjuma Capidev Ltd. was supposed to pay without the consent of the Defendant?
  3. Whether the Plaintiff is entitled to recover the amount specified in the guarantee from the Defendant?

Orders

  • Plaintiff's action dismissed.
  • Costs awarded to the Defendant.

Rules and key headnotes

Contract Law — Guarantee and Suretyship — Requirement of Immediate Demand — Interpretation of 'Immediately'
A provision requiring that demand under a guarantee be made 'immediately' after expiration of a specified period means the demand must be made as soon as possible in the circumstances, taking into account the nature of the act to be done and what constitutes reasonable time. A delay of 17 days after expiry of the contractual period is not 'immediately' and does not satisfy the condition precedent to liability under the guarantee.
Contract Law — Guarantee and Suretyship — Variation Without Surety's Consent — Effect on Liability
When a person becomes surety for another in a specific transaction, the terms and conditions of the principal obligation are also the terms of the suretyship contract. If the creditor, without the consent of the surety, alters those terms to the prejudice of the surety, the surety will be wholly discharged from liability. It is clearest and most evident equity not to carry on any transaction without the privity of the surety who must necessarily have a concern in every transaction with the principal debtor.
Contract Law — Guarantee and Suretyship — Extension of Time for Payment — Discharge of Surety
A creditor who grants an extension of time for payment to the principal debtor without the knowledge or consent of the surety discharges the surety wholly from liability under the guarantee, as the surety cannot be made liable for default in performance of a contract which is not the one the fulfilment of which he guaranteed.
Evidence — Documentary Evidence — Admissibility — Documents Not Annexed to Pleadings
A court may admit documentary evidence not annexed to pleadings where the document relates to a matter raised in the pleadings, both parties have knowledge of its existence through the evidence, and admitting it serves the interests of justice and determination of the real issues in controversy between the parties.

Legislation cited (3)

Cases cited (2)

  • R v Francis (1735) Lee temp Harp 113
  • Alexandi v Robinson (1861) 2 F & F 679

Full judgment

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

Uganda Baati v N.I.C and Another (Civil Suit 458 of 1995) [1997] UGHC 31 (23 October 1997)
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.