[2017] KEHC 1391 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL APPEAL NO. 117 OF 2014

AFRICA RETAIL TRADERS (2005) LIMITED..........................APPELLANT

- V E R S U S –

ELECTRONIQ WAREHOUSE LIMITED............................... RESPONDENT

(Being an appeal from the judgement and orders of Hon. C. Obulutsa

(Mr) Ag. Chief Magistrate at Nairobi Commercial Courtsdelivered

on 17th March 2014 in CMCC No. 2683 of 2008)

JUDGEMENT

1. Electroniq Warehouse Limited the respondent herein, filed a suit against African Retail Traders (2005) Limited the appellant herein for payment of kshs.1,752,325. 10 plus interests and costs. This amount according to the respondent was due and payable by the appellant in respect of goods specifically ordered and supplied to the respondent by the appellant.

2. The learned trial magistrate C. Obulutsa (Mr) entered judgement for the respondnet for ksh.1,752,375. 10 plus interest at court rates from the date of filing the suit till payment. The appellant aggrieved by the judgment, preferred this appeal.

3. On appeal the appellant put forward 7 grounds of appeal in its memorandum:

1. THAT the honourable trial magistrate erred in fact and in law by failing to find that there was a partially written and partially oral contract between the parties herein.

2. THAT the honourable trial magistrate erred in fact and in law by failing to find that the terms of the agreement could be reasonably inferred by the conduct of the parties herein.

3. THAT the honourable trial magistrate erred in fact and in law by failing to find that there existed a sale or return basis agreement between the appellant and respondent.

4. THAT the honourable trial magistrate erred in fact and in law by failing to find that the testimony offered on behalf of the plaintiff company was hearsay evidence hence inadmissible in this case.

5. THAT the honourable trial magistrate erred in fact by failing to consider the evidence adduced by the appellant in its entirety hence arrived at an erroneous decision.

6. THAT the honourable trial magistrate erred in law in failing to consider the appellant’s submissions and authorities herein hence arrived at an erroneous determination.

7. THAT the learned magistrate erred in finding that the respondent was entitled to the sum of kshs.1,752,375. 10/- being the value of the stock held by the appellant on a sale or return basis agreement.

The seven grounds of appeal can be summarised into three grounds namely

i. Whether or not the trial magistrate erred in law and fact by failing to find that there was a partially written and a partially oral contract between the parties herein (grounds 1 & 2)

ii. Whether or not the trial magistrate erred in law and fact by failing to find that there existed a sale or return basis agreement between the parties herein. (grounds 3)

iii. Whether or not the trial magistrate erred in law and fact in the evidence he relied on to arrive at his judgement (grounds 4, 5, 6, 7)

4. When the appeal came up for hearing, learned counsels appearing in this matter recorded a consent order to have the appeal disposed of by written submissions. I have re-evaluated the case that was before the trial court and considered the appellant’s submissions. At the time of writing this judgement, the respondent had not filed its submissions.

5. The 1st ground of appeal relates to the question as to whether or not there existed a written and oral contracts between the parties. It is not disputed that there was an agreement between the parties. PW1 Mr. Mamunjue and Dw1 Mr. Abdulla both agreed that indeed a contract existed between the parties. The parties’ Chief Executive Officers carried on negotiations to bring their contractual relations into being.

6. The law relating to contracts is set out under Section 2(1) of the law of contract Act Cap 23 Laws of Kenya as follows:

“..... Save as may be provided by any written law for the time being in force, the common law of England relating to contract as modified by the doctrines of equity by the Acts of parliament of the United Kingdom specified in the schedule to this Act, to the extend and subject to the modification mentioned in the said schedule, shall extend and apply to Kenya provided that no contract in writing shall be void or unenforceable by reason only that it is not under seal.”

7. From the above excerpt, it is clear that the law of contract in Kenya is to be construed in reference to the English Common law and the doctrines of equity. A contract can be oral or written, but the requirements of a valid contract apply to both oral and written contracts. To constitute a valid contract, there must be two or more separate and definite parties to the contract. These parties must be in agreement. Those parties must intend to create legal relationship.

8. The promises of each party must be supported by consideration or by some other factor which the law considers sufficient. The law does not enforce a bare promise but only a bargain.

9. Under the Contract Act, acceptance can either be express or by conduct. For courts to prove the existence of a simple contract they have to examine the conduct of the parties, the express words used and in case of uncertainty the court can refer to another contract between the parties and/or a third party.

10. The learned trial magistrate considered all the components in arriving at the existence of a contract. He had to find out if there were any contractual obligation between the parties whether oral or written. The issue as to whether the contract was partially oral and partially written does not in any way determine the conduct and way of business what matters is if what was agreed upon orally or written is fulfilled legally.

11. The inference drawn from the invoices and delivery notes and payments is that indeed a contractual obligation for the supply of goods existed between the parties.

This ground of appeal can therefore not be faulted, the decision of the trial magistrate was well founded.

12. The second ground of appeal relates to the question as to whether or not there existed a sale on return basis agreement between the parties. The appellant’s case was that they supplied goods to the respondent with warrants. Those that were defective were returned and credit notes issued. The respondent however failed to pay for the balance owed. The respondent denied there being any sale or return agreement.

13. The appellant submits that this honourable court should note that several consignment goods were returned to the respondent after the lapse of the 120 day period which goods were received by the respondent hence it is estopped from denying the existence of the sale or return basis agreement. PW1 admitted that by stating as follows “we issue receipts for goods paid. We also issued credit notes. I see one for 287, 747 and on 24. 5.2006 goods were returned.”

14. The appellant is asking this court to rely on PW1’s statement above. It infers that there existed an oral contract for the appellant to sell the respondent’s goods on a sale or return basis. From the submission and evidence, it is not in dispute that the parties herein were involved in a contract for the supply of goods. This is evidenced in the LPO dated 4. 4.2006. The invoices and delivery notes presented by the respondent are the same as the ones the appellant presented in their list of documents. The respondent vide the letter dated 3. 3.2008 asked the appellant to collect the unsold goods which he says was based on a no sale nature of agreement. I am convinced that the issue of sale or return agreement therefore does not arise and cannot be a defence. Once goods are supplied and received, ownership passes and that is why a buyer proceeds to make payments.

15. The conduct of the parties in their normal cause of business allowed return of unsold goods, but not under a sale or return agreement. After a careful consideration of the appellant’s submission vis-s-vis the evidence tendered before the trial court, I am convinced that the trial magistrate did not err in finding that “ a sale or return” agreement never existed between the parties.

16. In the third ground of appeal is whether or not the trial magistrate took into account all the evidence tendered to arrive at his judgment.

The appellant submits that the learned magistrate ought to have dismissed PW1’s testimony. This is so because PW1 Mr. Mamujue was not privy to the negotiations. During the trial the issues in contention which were framed by respondent were; whether the transaction between the parties was a sale or a sale on return basis and if the appellant was entitled to storage charges.

17. On the part of the appellant the, issues were the existence of an oral or written contract between the parties, hearsay evidence and right to counter claim as was then pleaded. The trial magistrate before arriving at his finding made a proper analysis of the submissions and evidence laid before the court. The parties are always at liberty to furnish court with all that it intends to rely upon as pleaded and evidence for court’s observation from which inference is drawn to arrive at a sound judgment. The trial magistrate reiterated in his judgment the same position. This ground of appeal can therefore not succeed.

18. With respect, I am not persuaded by the arguments of the appellant. Consequently this appeal is hereby dismissed with costs to the respondent.

Dated, Signed and Delivered in open court this 6th day of November, 2017.

J. K. SERGON

JUDGE

In the presence of:

.......................... for the Appellant

..........................for the Respondent