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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT
KAMPALA
(COMMERCIAL DIVISION)
CIVIL SUIT NO. 366 OF
2004
COTTON PRODUCTS (U) LTD ::::::::::::::::::::::::::::::::::::::::::
PLAINTIFF
VERSUS
1. MOSES OLOWO a.k.a.
MOSES OYUKI
T/A
CONSUMER CONNECT LINK PROMOTIONS :::::::::::::::::::
DEFENDANT
BEFORE: THE HON. JUSTICE GEOFFREY
KIRYABWIRE.
J U D G M E N T:
The plaintiff company is the sole agent for M/S Kimberly Clark Vietnam
Ltd for Kotex sanitary pads in Uganda. The plaintiff claims
the recovery of
Shs.17,703,000/= interest, damages and costs from the defendant being the cost
of Kotex freedom sanitary pads supplied
to him to sell to the public as agent of
the plaintiff. The plaintiff claims that pads taken by the defendant would be
sold at Ug.Shs.1,400/=
to allow the defendant realize his expenses and earn some
profit.
In his defence the defendant pleads that he was never the sales
agent of the plaintiff on the contrary the defendant claim that he
was just an
advertising agent of the plaintiff. The defendant then counter claims for the
recovery from the plaintiff of a commission
of Ug.shs.5,400,000/= general
damages, interest and costs. It is the case for the defendant, that he was
hired by the plaintiff
as part of a promotion / advertising drive and that the
defendant would get Shs.5,400/= per carton sold in the drive. The defendant
alleges that 1000 cartons were sold and so is entitled to a commission of
Shs.5,400,000/=.
Three issues were framed for trial namely;
1. Whether there was a valid contract between the parties?
2. If there was a valid contract whether there was breach on the part of the defendant?
3. What remedies are available.
Mr. D. Ndyomugabe appeared for the
plaintiff.
Mr. Moses Olowo the defendant defended himself (though his
defence was filed by M/S Oging & Co. Advocates).
Issue No.
1: Whether there was a valid contract between the
parties?
Counsel for the plaintiff submitted that there was a
valid contract though it was an oral one. He referred me to the learned author
Cheshire and Fifoot book contract 8th edition at Plaintiff 107 where
they wrote;
“As a general rule however, no formality is needed. A contract may be wholly by word of mouth, or wholly in writing, or partly by word of mouth and partly in writing...”
in this case Counsel for the
plaintiff argues that the contract is evidence by invoices, delivery notes and
receipts.
According to evidence of Mr. William Oketcho (PW1) the Managing
Director of the plaintiff company the defendant in late November,
2003
approached the plaintiff so that the defendant may buy and sell their goods.
Mr. Oketcho testified that the defendant told
him that he wanted to buy on
credit as he did not have his own capital. He said that the defendant wanted to
sell at his own price
to cover his costs and give him a profit. Mr. Oketcho
then recommended a price of sale to the public at Ug.Shs.1,400/= a packet
and
Ug.Shs.50,400/= per carton. This was because the plaintiff company sold a
packet at Ug.Shs.1,250/= and Ug.Shs.45,000/= per carton.
Mr. Oketcho testified
that the defendant took goods worth Ug.Shs.23,328,000/= and made part payment
leaving a balance of Ug.Shs.17,703,000/=
to date.
Mr. Oketcho presented court
with a letter Exh. P1 to the defendant dated 28th February 2004
detailing the items of sanitary pads taken against listed delivery notes and
showing an outstanding unpaid amount of
Ug.Shs.17,103,000/=.
On the
15th March 2004 Mr. Oketcho also wrote another letter to the
defendant informing him that 2 cheques the defendant had issued the plaintiff
totaling Ug.Shs,3,100,000/= had been dishonoured. The plaintiff company pressed
criminal charges in respect of these dishonoured
cheques and the defendant was
charged in criminal court in this regard.
The defendant presented a
fairly disorganized defence. First of all he failed to attend court with his
lawyer. He failed to fully
explain the absence of his lawyer who had filed his
defence. He then ended up defending himself as he could not procure another
lawyer. After some time the defendant just disappeared without out cross
examining the plaintiff company’s witness and without
himself giving
evidence.
In the circumstances this court has no option but to review the
pleadings and evidence placed before it in coming to its findings
and
decisions.
It is clear that the parties view this oral contract differently.
One says it’s a sales agency contract while the other sees
it as a
promotion/advertising contract.
The nearest independent evidence to
corroborate what happened is Exh. P6 which is a general letter to “whom
it may concern” from the plaintiff
company.
“
22/12/2003
Dear Sir/Madam,
TO WHOM IT MAY
CONCERN
This is to confirm that M/S Consumer Connect (link) Promotion Ltd of P.O. Box 16006 Kampala has been engaged by M/S Cotton Product (U) Ltd of the above address to promote our products in Uganda.
The company has commenced its work by promoting our sanitary pads brand named Kotex Freedom from M/S Kimbery Clark Vietnam Ltd. Cotton Products (U) Ltd is the sole agent in Uganda for Kimberly Clark Vietnam Ltd. for the sanitary pads.
Any assistance render to M/S Consumer Connect (Link) Promotions Ltd. in the course of their assignment will be highly appreciated.
Thank you and best
wishes.
William
Oketcho
CHAIRMAN “
The active words in
this letter “...to promote our products in Uganda...”.
So
it would appear to me that if a contract existed it was one of promotion as the
defendant had pleaded.
However, there is even more to this relationship than
meets the eye. First Mr. Oketcho tendered into evidence 15 separate delivery
notes (Exh. P4 i - xv) from the plaintiff to M/S Consumer Link which were
signed for by the defendant.
Mr. Olowo Okumu the defendant was in court
at the time and consented to the delivery notes being put in evidence as he
conceded that
he signed them. These delivery notes have a total value of
Ug.Shs.25,200,000/=. These delivery notes to my mind are consistent
with what
would happen in a sale. Indeed the sale price on the delivery note is
Ug.Shs.1,250/= per pad which tallies with Mr. Oketcho’s
testimony that,
that was the price the plaintiff company sold the pads.
It would appear
that the relationship between the parties was both one of promotion and sale.
Much of this speculation could have
been settled through a written contract.
Asked by the court why no written contract was made Mr. Oketcho replied that the
defendant
was personally known to him and they both came from Tororo district.
It further therefore appears to Court that at best there was
a contract albeit a
very informal/simple one that covered promotion and sale of the sanitary
pads.
Issue No. 2: If there was a valid contract whether there was breach on the part of the defendant?
I
have already found the existence of an informal/simple contract between the
parties.
As to the issue of breach the plaintiff company has adduced
evidence of non payment of Ug.Shs.17,703,000/= by the defendant as a breach
of
contract. This evidence has not been controverted as the defendant abandoned
the case midway. Court must assume that the defendant
has lost interest in
defending these allegations.
I therefore find that the defendant is in
breach of the contract. As to the extent of the breach however, I find a slight
arithmetical
error in the pleadings and evidence. The plaint and Mr. Oketcho
state that the outstanding amount is Ug.Shs.7,703,000/=. However
the evidence
in Exh. P1 will suggest that sanitary pads worth Ug.Shs.23,328,000/= were taken
by the defendant.
The defendant then paid Ug.Shs.6,220,000/= to the plaintiff
company. This leaves a balance unpaid of Ug.Shs.17,103,000/= and not
Ug.Shs.17,703,000. I therefore find that the defendant is in breach of the
contract in the sum of Ug.Shs.17,103,000/=.
Issue No.
3: Remedies.
In light of my findings above, I find that the
defendant is to pay the plaintiff company the sum of Shs.17,103,000/= as special
damages.
Counsel for the plaintiff has prayed for Shs.5,000,000/= as
general damages for breach as being fair and reasonable. No further
justification
was given to court for this figure. However, given the very
informal nature of this contract which makes the assessment of damages
difficult
I would award nominal damages at Shs.200,000/=.
Counsel for the plaintiff
prayed for interest at 30% p.a. from date of break (I believe of the contract)
until payment in full. First
I find it impossible to determine a date when
breach or break as counsel put took place. Secondly, I believe interest at 30%
p.a.
is excessive given the current ruling rates in commercial banks. I
accordingly award interest at 24% p.a. from date of judgment
until payment in
full.
I award costs to the plaintiff.
Finally I hereby dismiss
the counter claim for want of prosecution.
Geoffrey Kiryabwire
JUDGE
29/11/2005
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