Mr. Mujulizi, learned advocate for the respondent bank, forcefully resisted the appeal.
He submitted that the learned trial Judge was entitled under Order XIV of the Civil Procedure Code, 1966 to frame and record the
issues and that the issue, the subject matter of the complaint, did not prejudice the appellantsf case before the court below.
In addition, the learned advocate submitted that the court below considered issues nos. 4, 5, 6, and 7 which the learned trial Judge
termed as key issues. The question of the existence of a loan agreement was specifically dealt with and the learned trial Judge concluded
that there was indeed an agreement between the first appellant and the respondent bank. Moreover, he submitted that the subsequent
conduct of the first appellant showed that the overdraft facility was actually utilized. Mr. Mujulizi referred to the counter-claim
wherein the first appellant allegedly admitted that there was an overdraft facility of Shs. 400,000,000/= to be disbursed over a
period of one year.
Although the learned advocates for the appellants had preferred thirteen grounds
of appeal against the judgment of the court below, we propose to deal only with the fourth ground of appeal because, in our considered
view, the resolution of that ground is sufficient to dispose of the appeal. The fourth ground of appeal was framed in the following
manner ?
g4.
The learned trial Judge erred in law in holding that exh. P6 constituted acceptance by the
first appellant of the terms and conditions contained in the respondentfs letter, exh. P3.h
Exh. P3 is a letter from the respondent bank dated the 2.12.98 to the first appellant.
This letter signified willingness on the part of the respondent bank to extend to the first appellant overdraft facilities on the
terms and conditions enumerated therein. The concluding sentence was in the following terms ?
gKindly acknowledge acceptance of the terms and conditions on the duplicate hereof.h
Section 2 (1) of the Law of Contract Act Cap. 345 R.E. 2002 provides as follows ?
g2 (1)
In this Act, unless the context otherwise requires ?
g(a)
when one person signifies to another his willingness to do or to abstain from doing anything, with
a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.
a)
When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted, and a proposal when
accepted, becomes a promise;h
The real question for decision in this appeal is whether or not the first appellantfs
letter, exhibit P6 dated the 7.12.98 constituted acceptance. This takes us to Section 7 of the Law of Contract Act which provides
?
g7.
In order to convert a proposal into a promise, the acceptance must ?
a)
be absolute and unqualified;
b)
be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the
proposal provides a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within
a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner,
and not otherwise; but if he fails to do so he accepts the acceptance.h
Exhibit P6 is a letter from the first appellant to the respondent bank dated the
7.12.98. This letter is central to the resolution of this appeal. It reads in part as follows ?
g Please refer to your letter Ref. No. NBC (1997)/FB/adv/C50/1 of 2nd December, 1998 which I received on 5th December, 1998 regarding granting of T.Shs. 400,000,000/= with the terms and conditions attached. The main work now being undertaken is to complete valuation of Hotel Travertine building which will be ready during this week. A reply to your above quoted letter will also be ready during the same variation period.h
In the meantime, when valuation is being done at the same time a reply to your letter is being prepared, we request the service of the loan to continue being provided so as to enable us to make orders for the purchase of essential articles
such as three lifts and others.h (emphasis added)
This letter was a reply to exhibit P3, a letter from the respondent bank to the first
appellant which was rightly referred to by the learned trial Judge as gan offerh. The learned trial Judge was of the view that exhibits P3 and P6 read together constituted an offer from the respondent bank
and an acceptance by the first appellant respectively, thereby constituting a concluded agreement whose terms and conditions were
embodied in exhibit P3.
As rightly pointed out by the learned trial Judge, exhibit P3 was the offer from
the respondent bank. As stated before, the letter contained thirteen terms and conditions and concluded ?
gKindly acknowledge acceptance of the terms and conditions on the duplicate hereof.h (emphasis added)
The thrust of Mr. Nyangarikafs submission on this point is that the first appellant
did not accept these terms and conditions. The first appellant did not sign the duplicate of exhibit P3 thus signifying the acceptance
of its terms and conditions. On his part Mr. Mujulizi countered by submitting that the learned trial Judge considered the existence
of the loan agreement and his answer was in the affirmative. The learned advocate referred to section 7 (b) and 8 of the Law of Contract
Act and submitted that the subsequent conduct of the first appellant showed that the first appellant utilized the overdraft facility
in terms of the contract.
The learned trial Judge after considering exhibits P3 and P6 came to the following
settled conclusion ?
gI consider the contents of exh. P3 as being the offer and those of exh. P6 as the acceptance. Therefore in brief, there was a loan
agreement between the parties and governed by the terms and conditions acknowledged by J.D. Lamba in exhibit P6.h
In exhibit P3, the respondent bank had prescribed an express method by which the
terms and conditions of exhibit P3 were to be accepted, namely on the duplicate of that letter. This was not done. Instead, the first
appellant wrote a letter exhibit P6 quoted earlier on.
DW1 John Lamba, the second appellant, in his examination in chief also stated so
?
g Concerning clause 2, to deposit some money. I canft tell where I would get the money to deposit even before the hotel opened.
I didnft sign the letter because there was confusion regarding clause 2 as shown earlier.h (emphasis added)
In the case of Brogden v. Metropolitan Railway Co. (1877) 2 App. Cas. 666 (HL) Lord Blackburn observed as under -
gI have always believed the law to be this, that when an offer is made to another party, and in that offer there is a request express
or implied that he must signify his acceptance by doing some particular thing, then as soon as he does the thing, he is bound.h
The respondent bank had prescribed the mode of acceptance and the first appellant
did not comply with the full knowledge of the respondent bank. How did the learned trial Judge handle this issue? He stated as follows
?
g The next key issue is whether there was a loan agreement inter parties. My considered view is in the affirmative. The defence case
seems to suggest that there was none, as the defendants never countersigned any document accepting the same. This line of reasoning
seems to be shortsighted. Exh. P3, which advises the defendants of the facility, authorizing a revolving overdraft of Shs. 400 million,
was made in the form of a letter. Therefore it was up to the defendants to countersign it and send back a copy to the plaintiff or to adopt a different approach. It
seems the defendants opted for the latter.h (emphasis added)
With respect, we do not read anything in exhibit P3 which provides for an alternative
route of accepting the offer ? exhibit P3. The only method was to countersign the duplicate letter and the learned trial Judge clearly
said so in his judgment. There is no provision for ea different approachf in exhibit P3.
There is another aspect to exhibit P6. In this letter, the first appellant stated,
inter alia ?
gA reply to your above quoted letter will also be ready during the same valuation periodh.
The learned trial Judge quoted this letter in his judgment but he inadvertently omitted
this sentence. It is abundantly clear to us that this letter was not an acceptance of the letter dated 2.12.98 (exhibit P3). In the
first place, this was not the prescribed mode of acceptance. Secondly, assuming it was, it was not a mirror image of exhibit P3.
The import of exhibit P6 was to inform the respondent bank that a letter of reply was not ready as yet. In addition there was a request
that the respondent bank do provide funds to enable the first appellant to purchase gessential articles such as lifts and others.h
In the case of Gibson v. Manchester City Council (1979) 1 WLR 294 (HL) Lord Diplock at page 297 made the following pertinent observations ?
gMy Lords, there may be certain types of contract, though I think they are exceptional, which do not fit easily into the normal analysis
of a contract as being constituted by offer and acceptance; but a contract alleged to have been made by an exchange of correspondence
between the parties in which the successive communications other than the first are in reply to one another, is not one of these.
I can see no reason in the instant case for departing from the conventional approach of looking at the handful of documents relied
upon as constituting the contract sued upon the seeing whether upon their construction there is to be found in them a contractual
offer by the corporation to sell the house to Mr. Gibson and an acceptance of that offer by Mr. Gibson.h
With the greatest respect to the learned trial Judge, if we adopt the conventional
approach as outlined above, as we do, the first appellant in his letter, exhibit P6, did not in law, accept the offer, exhibit P3.
The parties it would appear were still locked up in negotiations. There is no evidence on the record that the first appellant had
accepted exhibit P3 at any time. A reply to exhibit P3 was not ready and in any case the notification of acceptance was supposed
to be on the duplicate letter of exhibit P3 and not a different letter from the first appellant.
Mr. Mujulizi, learned advocate for the respondent, like a good gsoldierh
he is, had also submitted that there was acceptance of the offer by conduct. The anchor of this submission was the alleged disbursement
of Shs. 373,378,200/= to the first appellant. On the face of it, this is an attractive argument. However, acceptance by conduct was
not pleaded. It should have been pleaded in the alternative instead of the respondent bank relying solely on exhibits P3 and P6.
Not surprisingly, the court below did not frame an issue along these lines and the learned trial Judge did not address his mind to
this issue as well. His decision on the liability of the appellants was squarely based on the purported breach of agreement contained
in exhibits P3 and P6. The issue of acceptance by conduct, if at all available, should have been pleaded and argued before the learned
trial Judge. As a matter of general principle, an appellate court cannot allow matters not taken or pleaded in the court below, to
be raised on appeal (see: Gandy v. Gaspar Air Charters Ltd. (1956) 23 EACA 139; James Funke Gwagilo v. Attorney General (CAT) Civil Appeal No. 67 of 2001 (unreported).
On a full consideration of the available evidence and the law on the issue we are
of the settled view that the learned trial Judge was wrong to conclude that there was an agreement based on exhibits P3 and P6. It
will be recalled that the first appellant had filed a counter-claim, claiming damages for the purported premature termination of
the overdraft facility by the respondent bank. This was ground No. 12 in the memorandum of appeal. In view of the conclusion we have
reached, the counter-claim has equally no leg upon which to stand.
In the result, we allow the appeal with costs and set aside the Judgment and order
of the High Court. The appeal on the counter-claim is also dismissed.
DATED at DAR ES SALAAM this 25th day of November, 2005.
D.Z. LUBUVA
JUSTICE OF APPEAL
.RTF of original document