Wakilii

ZTE Corporation v Uganda Telecom (HCCS 169 of 2013)

High Court · [2015] UGCOMMC 80 · 2015 Preliminary Objection Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Ruling on preliminary objection to plaintiff's locus standi in a commercial suit for breach of contract
Decision
Matter remitted for trial as a preliminary issue with evidence to be adduced on identity of parties and authority to contract

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the preliminary objection raised questions of fact about the plaintiff's identity that could not be determined on the pleadings alone. The objection was stayed and converted into a preliminary issue to be tried with evidence on whether the plaintiff company executing the repayment agreement was the same entity as the original contracting party, and on the authority of signatories to bind the parties.

Outcome

Matter remitted for trial as a preliminary issue with evidence to be adduced on identity of parties and authority to contract

Facts

The plaintiff ZTE Corporation sued the defendant Uganda Telecom for US$6,738,272.38 for breach of contract. The original contract dated 29 October 2007 was executed between Uganda Telecom and ZTE (H.K.) Ltd, a Hong Kong incorporated company. The plaintiff, described as incorporated under the laws of the People's Republic of China with a different registered office, later executed a repayment agreement with the defendant on 21 June 2011. The defendant raised a preliminary objection that the plaintiff had no locus standi because it was not a party to the original contract and was a stranger to it. The defendant also contended that the officer who signed the repayment agreement lacked authority. The plaintiff argued it could sue based on the repayment agreement, purchase order requisitions, and as a third-party beneficiary under the payment clause in the original contract and under section 65 of the Contracts Act 2010.

Issues

  1. Whether the plaintiff has locus standi to bring the action given it was not a party to the original contract
  2. Whether the plaint discloses a cause of action against the defendant
  3. Whether the plaintiff can rely on the doctrine of third-party beneficiaries under section 65 of the Contracts Act 2010
  4. Whether the preliminary objection can be determined as a pure point of law without ascertaining disputed facts

Orders

  • Preliminary objection stayed.
  • Point of law to be tried as a preliminary issue after adducing evidence on the identity of the contracting parties and authority to execute agreements.
  • Costs of the preliminary objection to abide the outcome of the trial.

Rules and key headnotes

Civil Procedure — Preliminary Objections — Requirements for Pure Points of Law — Factual Disputes
A preliminary objection must raise a pure point of law that can be decided on facts agreed or not in issue on the pleadings. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The point of law must be one which can be decided fairly and squarely, one way or the other, and not one which will not arise if some fact or facts in issue should be proved.
Contract Law — Privity of Contract — Third Party Rights — Strangers to Contract
A contract cannot as a general rule confer rights or impose obligations arising under it on any person except the parties to it. A stranger to a contract cannot sue on it, and a stranger to a contract cannot take advantage of the provisions of the contract even if they were clearly intended to benefit him.
Contract Law — Retroactivity of Statutes — Third Party Beneficiary Rights
The court will not ascribe retrospective force to new laws affecting rights unless by express words or necessary implication such was the intention of the legislature. A party cannot rely on section 65 of the Contracts Act 2010 to enforce third-party rights in a contract executed in 2007 before the Act came into force, where the Act does not express any intention for retrospective application.
Commercial Law — Company Contracts — Authority to Bind Company — Section 33(1) Companies Act
Under section 33(1) of the Companies Act cap 110, contracts may be made on behalf of a company in writing signed only by persons acting under its authority, express or implied. If an officer of a company purports to act outside the scope of his apparent authority, a contracting party should make proper enquiry before entering into a contract, and the contract may not bind the company if the officer lacked actual or implied authority.

Legislation cited (7)

Cases cited (12)

  • Mukisa Biscuit Manufacturing Co Ltd v West End Distributors Ltd [1969] 1 EA 696
  • Ismail Serugo v Kampala City Council and Attorney General (Constitutional Appeal No. 2 of 1998)
  • Sun Air v Nanam Transpet Company Ltd (HCCS 2 to 9 of 2009)
  • Attorney General v Olouch [1972] EA 392
  • Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847
  • National Social Security Fund and Another v Alcon International (Supreme Court Civil Appeal No. 15 of 2009)
  • Larco Construction Ltd v Attorney General and Combined Ltd (HCCS No. 0318 of 2004)
  • Auto Garage and Others v Motokov (No. 3) [1971] EA 514
  • Halal Shipping Company Ltd v Securities Bremer Allegemeine and Another [1965] 1 EA 694
  • Butime Tom v Muhumuza David and Electoral Commission (Election Petition Appeal No. 11 of 2011)
  • Phillips v Eyre [1870] LR 6 QB 1
  • NAS Airport Services Ltd v Attorney-General of Kenya [1959] 1 EA 53

Full judgment

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

ZTE Corporation v Uganda Telecom (HCCS 169 of 2013) [2015] UGCommC 80 (8 May 2015)
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.