Wakilii

Uganda Commercial Co. v Uppal (CA. 3-1932.)

East African Court of Appeal · [1932] EACA 4 · 1932 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from High Court of Uganda judgment dismissing claim against guarantor
Decision
Guarantor discharged from liability under the guarantee

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A guarantor who undertakes to secure payment of instalments at fixed intervals is discharged when the creditor and debtor vary the payment terms by conduct without the guarantor's consent. Mere forbearance differs from acquiescence in altered payment conditions. Where the debtor paid irregular amounts at irregular intervals contrary to the agreed monthly instalments of a fixed sum, and the creditor accepted such payments without consulting the guarantor, the guarantor was released from liability.

Outcome

Guarantor discharged from liability under the guarantee

Facts

The Uganda Commercial Co. entered into an agreement with Din Mohamed (debtor) and Jamal Din Uppal (guarantor) on 31 August 1929. The debtor was to pay Sh. 14,732/70 in monthly instalments of Sh. 400 on the last day of each month. The guarantor undertook to guarantee payment in the time and manner specified. In July 1930, the debtor paid Sh. 300 instead of Sh. 400. The guarantor intervened when the creditor threatened action. Thereafter, instalments varied: August 1930 was Sh. 300, followed by irregular payments of Sh. 500 until June 1931 when payments ceased. Nothing was paid between September 1930 and January 1931. The debtor testified that the creditor told him he could pay at his convenience. The creditor sued the guarantor for Sh. 10,675/16. The High Court of Uganda found that the creditor's acceptance of irregular payments constituted a variation of the agreement without the guarantor's consent and discharged the guarantor.

Issues

  1. Whether variation of payment terms by creditor and debtor without consulting the guarantor discharged the guarantor from liability under the guarantee.

Orders

  • Appeal dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Guarantee — Discharge of Guarantor — Variation of Principal Contract
A guarantor is discharged from liability when the creditor and principal debtor vary the terms of the underlying contract by their conduct without the guarantor's consent, even where the variation consists of accepting irregular payments rather than the agreed fixed instalments.
Guarantee — Forbearance Distinguished from Variation
Mere forbearance by a creditor in enforcing payment differs from acquiescence in altered payment conditions. Where a creditor accepts payments under conditions entirely at variance with those guaranteed, this constitutes variation of the contract rather than forbearance.
Guarantee — Scope of Guarantor's Undertaking
Where a guarantor undertakes to secure payment of a debt by instalments as and when they fall due, and the manner of payment is departed from without reference to or consent of the guarantor, the guarantor is discharged from liability.

Legislation cited (4)

Cases cited (3)

  • Kermaii v Aliadina bin Imaniur (1 Uganda LR 31)
  • Pooley v Harradine (7 El & Bl 431)
  • Vasanji Golaidas v Jeraj Morali (Civil Appeal No. 20 of 1929)

Full judgment

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

Uganda Commercial Co. v Uppal (CA. 3-1932.) [1932] EACA 4 (1 January 1932)
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.