Wasukira & 2 Ors v Harmony Group Ltd (HCT-04-CV-CS-0040-2009)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
The High Court struck out the suit on preliminary objection for non-disclosure of a cause of action. The court held that no suit can be founded on an unstamped instrument where stamp duty is chargeable, as the Stamps Act renders such instruments inadmissible in evidence. Additionally, a company cannot ratify or be bound by contracts purportedly made on its behalf before its incorporation. The plaintiffs' claim failed because the commission agreement was unstamped and the third plaintiff company did not exist when the alleged contractual relationship was formed.
Outcome
Suit struck out with costs to the defendant
Facts
The plaintiffs sued the defendant for breach of a commission agreement, claiming the defendant instructed them in April 2009 to secure approximately 300 acres of land in exchange for 20% commission on the purchase price. The plaintiffs identified land in Budaka District and the defendant ultimately purchased 56 acres at UGX 7,000,000 per acre. On 3 August 2009, the first and second plaintiffs incorporated the third plaintiff company. A written commission agreement was executed on 21 August 2009 between the third plaintiff and the defendant. The plaintiffs demanded payment of commission totaling UGX 107,274,000 on 1 September 2009. On 11 September 2009, the defendant purported to rescind the contract. The defendant raised a preliminary objection that the suit disclosed no cause of action because the commission agreement was unstamped contrary to the Stamps Act and because the third plaintiff company did not exist when the alleged contractual relationship was formed.
Issues
- Whether the suit discloses a cause of action where the underlying agreement is unstamped contrary to the Stamps Act.
- Whether a company incorporated after alleged contractual acts can ratify or be bound by pre-incorporation contracts purportedly made on its behalf.
Orders
- Preliminary objection upheld.
- Plaint/suit struck out on account of non-disclosure of a cause of action.
- Costs awarded to the defendant.
Rules and key headnotes
Legislation cited (4)
- Stamps Act Cap.342 s.42
- Stamps Act s.38
- Civil Procedure Rules O.7 r.1(a)
- Stamps Act s.2
Cases cited (5)
- LERAJ SHARIFF & CO. CHOTAI FANCY STORES 1960 EA.374, 375
- Proline Soccer Academy Ltd v Lawrence Mulindwa and Others (HCMA 0459 of 2009)
- YOKOYADA KAGWA V. MARY KIWANUKA AND ANOR [1979] HCB 23
- Micro Finance Support Centre Ltd v Uganda Micro Enterprenuers and Others (HCCS 1007 of 2004)
- NEC and Others v Nile Bank Ltd (SCCA 17 of 1997)
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.