The plaintiff company brought this suit against the defendant company to recover Ushs.19,250,000/= for breach of contract. The case
for the plaintiffs is that pursuant to an order dated 25th August 2003 they supplied the defendant company 3,500 galvanised bolts and nuts. However, when officers of the plaintiff company
sought to be paid for the supply, their managing director was instead arrested and charged with receiving stolen property and retaining
it. Todate they have not been paid for the goods they supplied.
The defendant company (hereinafter referred to us gUEDCLh) is charged with the duty of distribution of electricity in Uganda. It is the case for the defendants that the goods supplied by
the plaintiff did not conform to the description of the goods contracted for and were not fit for the purpose contracted. The defendant
avers that in order to get paid the defendant had to issue the plaintiff with an gacceptance certificateh to certify that goods were acceptable but this was not done. This is because the said bolts had their lengths crudely shortened from
11 to 10 inches to meet with the contract specifications.
The defendants also counter-claim the sum of US$39,040- for the conversion of the said bolts. It is the defendants counter-claim that
the bolts supplied by the plaintiff to the defendants were actually originally part of the defendants own stock of bolts that were
stolen from them a year earlier in 2002. It is therefore the case of the defendant/counterclaimants that the plaintiffs fraudulent
tried to sell back their property to them.
The parties then agreed on the following issues for trial;
1-
Whether it was an express or implied term of the contract that the suit goods would only be accepted by the defendant upon the issuance
of an acceptance certificate.
2-
Whether the suit goods were part of the defendantsf property which were stolen from the depot at Lugogo in March 2002.
3-
Whether or not this suit goods were in good order and condition.
4-
Whether the plaintiff is entitled to the recoveries sought in the suit or whether the defendant is entitled to the remedies sought
in the counter-claim.
Mr. D.S Mubiru-Kalenge appeared for the plaintiff while Mr. J.F. Kanyemibwa appeared for the defendants.
Issue No. 1:
Whether it was an express or implied term of the contract that the suit goods would only be accepted by the defendant upon the issuance
of an acceptance certificate?
Counsel to the parties elected to argue issue No. 1 and 3 together. I shall therefore address the two issues in the same way.
Counsel for the plaintiff submitted that the plaintiffs received a Local Purchase Order (LPO) from the defendants dated 25th August 2003 (Exh. PE1) to supply 3500 galvanised bolts and nuts specifications 5/8h x 10h at a total price of Ughs. 19,250,000/=.
The suit goods were then supplied by the plaintiff and received by the defendant against a delivery note dated 5th September 2003 (Exh. PE2) showing the said goods had been received in ggood order and conditionh (these words being printed
on the delivery note). Counsel for the plaintiff submitted that there was no contractual term express or implied that payment would
be made against a gcertificate of acceptanceh.
Counsel for the defendant on the other hand refer to a delivery note marked Exh. D.15 whereby the officer of the defendant who signed
the delivery note affixed a stamp of the defendant with the words
gGoods received subject to a valid inspection report and valid purchase orderh
Counsel for the defendant submitted that Exh. PE2 lacked this stamp of the defendant and therefore was not the delivery note used
in the transaction. He submitted that when the suit goods were inspected they were found to be unacceptable.
To establish what the terms of a contract are, one must look at the contract itself. In this particular case there was no single document
that embraced the terms of the contract. One therefore has to look to the transactional documents like the L.P.O and delivery note
to establish what the terms of the contract were. The plaintiff seeks to rely on wording to be found on Exh. PE1 while the defendant
seeks to rely on wording to be found in Exh.D15. Both are delivery notes from the plaintiff company. My close scrutiny of the two
delivery notes suggests to me that both Exh.PE2 and Exh. D15 are actually the same document but with varying degrees of clarity as
to their details.
Exhibit D15 in particular appears to be a carbon copy of Exhibit PE2. Both delivery notes are numbered No. 48 of the g5th September 2003h. Both have printed on them the words.
gThe above goods have been received in good order and conditionh
Both also have on them the defendantfs stamp with the inscription
gGoods received subject to clean inspection report and valid purchase orderh
The difference in my reading is that the defendantfs stamp on Exh. D15 is much clearer than that on Exh. PE2 (where you can
just about make out the impression of the defendantfs stamp). I therefore find it surprising that counsel for the defendant
did not see the defendantfs stamp, an argument in favour of his client. Perhaps his own copy was even more faint than that
on court record.
Be that as it may, both wordings relied on by the parties do exist on the delivery order. Both wordings are equally signed against
by the same officers from both companies. To my mind the contradictory wordings cast some doubt as whether the parties were agreed
as to what constituted goods delivery of the suit goods. The stamp of the defendant being affixed on the delivery note at the time
of the delivery is a later counter term which I find negatives the printed words on the delivery note that the ggoods have been received in good order and conditionch
This is analogous to the reasoning in the rule laid down in the case of
Glynn V Margetson [1893] AC 351 quoted by the learned author R.W. Hodgin in his book gLaw of Contract in East Africah Kenya Literature Bureau 2006 at page 79 where he writes
gcwhere a contract is contained in a series of documents and there appears to be inconsistency between written terms in the correspondence
and printed terms, then the written terms shall take precedence over the printed wordsch
In other words there is legal authority for the proposition that where there is inconsistency between written terms, then the later
written term introduced by the parties takes precedence over the former.
If the plaintiff had not accepted the wording on the defendantfs stamp I am sure its officers would have protested them at the
time they were stamped on the delivery note. There is no evidence of such a protest. It is therefore my finding that the terms of
delivery of the suit goods were expressly altered by the introduction of the defendantfs stamp on the delivery note that
gcgoods received subject to a valid inspection report and valid purchase orderch (emphasis mine).
That now takes us to the third issue namely;
Issue No. 3:
Whether or not the suit goods were in good
order and condition.
Counsel for the Plaintiff made quick disposal of this issue when he submitted that if court found in Issue No. 1 that there was no
express or implied term for an inspection report then the delivery note was sufficient evidence that the suit goods were indeed delivered
in good order and condition. Of course the court has found other wise and there is therefore not much legal argument for the plaintiff
to continue to hang on in this regard.
That not withstanding, no inspection report was ever issued by the defendant suggesting that the suit goods supplied were satisfactory.
There is also the evidence of Ms. Rebecca Mungati DW1 the store keeper, Mr. J.A. Burly DW2 the manager glogistics and materialsh at the time, both of whom were involved in receiving the suit goods on behalf of the defendant that the bolts were cut. The sample
of the bolts allegedly delivered to the defendants were sent to the Uganda National Bureau of Standards for analysis and was marked
03/2005E. The certificate of analysis Exhibit D16 shows that the bolt had a greduced shankh and the bolt end was a grough finish and not galvanizedh.
Mr. Vincent Ochwo (CW1) a Standards Officer with the Uganda National Bureau of Standards who was an expert witness testified that
greduced shankh means that the bolt was cut and gnot galvanisedh means that it was prone to rust.
This in my view does not show that the suit goods were received in good order and condition as the plaintiff company would have it.
There is of course another cross cutting finding of fact on the issues for determination by this court that relates to this matter.
This relates to which bolts were supplied to defendant company. Both parties provided different samples to The Uganda National Bureau
of Standards which acted as courtfs expert witness. The plaintifffs provided sample 038/2005E while the defendants provide
sample 037/2005E (see Exhibit D16 and 17 which are essentially the same report from The Uganda National Bureau of Standards but addressed
individually to the two parties). The order for supply Exhibit PE1 was for the supply of Galvanised Bolts and nuts 5/8h x 10h.
The expert witness Mr. Ochwo (CW1) from the Uganda National Bureau of Standards while comparing the two samples made some observations.
He testified that the order meant that the bolts and nuts should be galvanized. He further testified that the nominal diameter around
the shank was to be 5/8h while the nominal length from the bolt head to the bolt end was to be 10h. He then testified
that sample No. 037/2005E provided by the defendant had a bolt diameter of 9/16h and a length of 10 3/8h and so did not
comply with the order. He also observed that the sample had a distinctive letter gSh on the bolt head. On the other hand
the sample No. 038/2005E which was supplied by the plaintiff had a bolt diameter of 5/8h and length of 10 ? which complies
with the order. He observed that this second sample did not have the letter gSh on its bolt head.
Counsel for the plaintiff submits that the sample supplied for analysis to The Uganda National Bureau of Standards was obtained from
stores of Mr. Jimmy Lumufs (PW2) late father who used to supply the said bolts to the defendant. Counsel for the plaintiff
submitted therefore that the sample was of the same type supplied to the defendant which complied with the order specification. He
further submitted that the allegation that the said bolts and nuts were stolen was baseless because the plaintifffs officers
were acquitted of the criminal charge of receiving and retaining stolen property at the Chief Magistrates Court of Nakawa in criminal
case No. NAK-COA 0025/2004 Uganda V Wanyusi and another.
Counsel for the defendant on the other hand submitted that the bolts supplied to the bolts supplied to the defendants had a distinctive
letter gSh on the bolt head which was consistent with the testimony of all the defence witnesses. He submitted that the
letter gSh was also inscribed on the bolts that had been stolen from the defendants. He further submitted that the sample
given to The Uganda National Bureau of Standards for analysis was taken from the bolts delivered by the plaintiff to the defendant. He also submitted the results of the criminal
case had no bearing on the issues for determination before this court.
It is clear to my mind that only one of the two samples presented to The Uganda National Bureau of Standards could best reflect what
was delivered to the defendants. The fact of delivery of bolts by the plaintiff to the defendant is not contested. The question is
which of the two sample before court was it? This I have to determine on the balance of the evidence before me. I find that on the
evidence before me and the consistent reference to the distinctive letter gSh by the defence witnesses that sample 037/2005E
supplied by the defendants best represents what was supplied to them. The defendants still have custody of what was supplied to them
and it is more reasonable to expect therefore that they made available for analysis a correct sample of what they received. It is
much more difficult to find that the sample provided by the plaintiff is similar to the one that they supplied to the defendants
when in fact it was obtained from the stores of a third party altogether.
That being the case, since the certificate of analysis shows that sample 037/200E did not comply with the order and the evidence of
Mr. Ochwo shows that the shank was reduced and was not properly galvanised the defendants were correct to reject the said bolts.
I therefore find in answer to the third issue that the suit goods were not in good order and condition.
Issue No. 2:
Whether the suit goods were part of the defendants property which were stolen from the depot at Lugogo in March 2002.
This is largely an issue that addresses the counter-claim. It is the case for the defendant/counter-claimant that the suit goods actually
belong to them because they as they had earlier been stolen. The defendant/counter-claimant therefore allege that the plaintiff/counter-defendants
committed a fraud on them by attempting to sell to them, their own property. The defendant/counter-claimant therefore claim the value
of the stolen goods or in the alternative the value of the 3,500 bolts and nuts supplied to them.
Counsel for the plaintiff submitted that the officers of the plaintiff company testified as to the source and origin of the bolts
and nuts; being the stores of Mr. Lumufs (PW2) later father. Counsel for the plaintiff further submited that Mr. Lumu testified
that the bolts had been ordered from M/S Lovison Exports Ltd in India and that evidence adduced in court to this effect was not controverted.
It was therefore not possible that the goods supplied to the defendants had previously been stolen from them.
Counsel for the defendant on the other hand submitted that one of the bolts that had been delivered to the defendants was sent to
their suppliers in United Kingdom called M/S Sagewood Ltd who confirmed in Exhibit D7 (see e-mail dated 13th October 2003) that the said sample sent to them was indeed their product. The same correspondence stated that M/S Sagewood Ltd of
UK had no dealings with M/S Lovison Exports Ltd of India. Counsel for the defendant then submitted that this correspondence was evidence
that the bolts supplied by the plaintiff was part of the stores of bolts stolen from them.
I have perused the evidence adduced in court and the submissions of both counsel on this issue. The counter-claim raises very serious
issues of fraud and theft against the plaintiff company and its officers.
In situations such as this, the position of the law is that allegations of fraud must be strictly proved although the standard of
proof may not be so heavy as to require proof beyond reasonable doubt but rather something more than a mere balance of probabilities
is required. I refer to decision of the East African Court of Appeal (as it then was) in the case of
R.G. Patel V Lalji Mahanji [1957] EA P. 314.
In this case, I have already found that the bolts and nuts supplied to the defendants are those of sample No. 037/2005E which on the
evidence before court were supplied by M/S Sagewood Ltd of UK.
That in my view raises heightened suspicion that these could be the same bolts that were stolen from the defendants in 2002. Does
this however prove as is alleged in the particulars of fraud in paragraph 4 of the counter-claim that the plaintiffs received and
retained the defendantfs stolen property? I think not. There is a missing nexus between the plaintiffs supplying the goods
and having been involved in their actual theft. Clearly more evidence of this missing nexus is required in order to discharge the
burden set out in the R.G. Patel case (supra). Equally without that nexus being established it is difficult without more evidence to definitively find that the suit
goods are the actual goods which were stolen from the defendant in 2002.
Issue No. 4:
Remedies
As to the main suit the plaintiff prayed for
a)
Ushs.19,250,000/= being the value of the 3,500 bolts and nuts supplied to the defendant.
b)
General damages for breach of contract
c)
Interest on the above amounts.
d)
Costs of the main suit
Since I have found that the defendants rightly rejected the suit goods, I hereby dismiss the main suit with costs to the defendants.
.RTF of original document