https://new.kenyalaw.org/akn/ke/judgment/scc/2026/149

Kingsway Tyres Limited v Fair Logistics Agency Limited & 2 others (Commercial Case E447 of 2026) [2026] SCC 149 (KLR) (2 July 2026) (Judgment) Neutral citation: [2026] SCC 149 (KLR) Republic of Kenya In the Small Claims Court at Mombasa Commercial Case E447 of 2026 TN Mwangeka, RM July 2, 2026 Between Kingsway Tyres Limited Claimant and Fair Logistics Agency Limited 1st Respondent Charles Otieno Ongoya & another & another 2nd Respondent Judgment 1.This judgment relates to a Statement of Claim dated 12th May 2026 seeking judgment in the sum of Kshs. 574,600.01/- being the outstanding sum for the supply of tyres by the Claimant to the 1st Respondent through a credit agreement. The 2nd and 3rd Respondent’s signed a guarantee to pay the said sum but have since failed and or neglected to honor the same. 2.The Respondent denied the claim and raised various grounds in support thereof key being that there is no personal guarantee signed by the 2nd and 3rd Respondents as they are separate and distinct from the 1st Respondent. Even if the Directors could be liable, the 2nd and 3rd Respondent’s submit that the claimed interest rate of 3% per month (36% per annum) is unconscionable, penal, and contrary to public policy and the induplum rule. 3.On 12th June 2026 parties elected to proceed via Section 30. In consideration of the pleadings therefore and the submissions filed, the court has distilled the following as issues for determination; 1.Whether the 1st Respondent obtained credit facilities from the Claimant 2.Whether the 2nd and 3rd Respondent guaranteed the said credit facility 3.Whether the Claimant is entitled to the reliefs sought Whether the 1st Respondent Obtained Credit Facilities from the Claimant** 4.As per the documents filed by the Claimant, the court has perused the Credit Facility Application dated 7th April 2025 in which the 1st Respondent applied for the credit facility through the 2nd Respondent. The amount applied for was Kshs. 504,000/-payable within 45 days. Per the said application, the agreed interest was 3% per month on any outstanding amount from the due date to the date of actual repayment. 5.The 1st Respondent has neither entered appearance nor filed a response, as such there is no evidence in rebuttal. It is well established that the essential elements for a valid contract are offer, acceptance and consideration. This position was affirmed by the Learned Judges of the Court of Appeal in Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014] KECA 538 (KLR). In the present case, the court is satisfied that the Credit Facility Application is evidence of a valid contract. 6.Consequently, the agreed interest rate of 3% cannot be termed as unconscionable as the same was agreed to absent of any fraud, undue influence or mistake. This court shall therefore not attempt to rewrite the said term. Whether the 2nd and 3rd Respondent Guaranteed the said Credit Facility 7.The Claimant has equally filed a letter of guarantee dated 18th July 2025, in which the 2nd and 3rd Respondents acknowledged being the directors of the 1st Respondent and its guarantors. As such they committed to irrevocably and unconditionally repay the amount as from July 2025 and thereafter every Friday to be completed by September 12, 2025. The said guarantee agreement was witnessed by one Jeremy Ateng and signed by all parties thereto. 8.Again, the court will fall back on Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014] KECA 538 (KLR) to determine whether the said guarantee letter passes as a valid contract. In consideration of the law, the court is convinced that the said guarantee letter dated 18th July 2025 is a valid agreement and binding on the 2nd and 3rd Respondent as the same has not been challenged by any evidence to the contrary and is clear in its express admission of liability and guarantee. Whether the Claimant is entitled to the Reliefs Sought 9.From the evidence on record, the Claimant has proved its case on a balance of probabilities against the Respondent. As such, the Claimant is entitled to remedies for breach of contract. Further, it is well-established in contract law that for terms such as interest to be enforceable, there must be clear evidence of their agreement at the outset, Morjaria v Patel (Civil Case 153 of 2018) [2025] KEHC 2930 (KLR)(Commercial & Admiralty) (6 March 2025) (Judgment). 10.Consequently, judgment is entered in favor of the Claimant against the Respondent jointly and severally for Kshs. 574,600.01/- plus interest from July 2025 at court rates. In the interest of justice there shall be no orders as to costs. DATED SIGNED AND READ VIRTUALLY AT MOMBASA THE…2ND….DAYOF………JULY………2026HON. THERESA N. MWANGEKARESIDENT MAGISTRATE/ADJUDICATORIn the presence of;…Mr. Juma h/b for Mr. Adhoch…. for Claimant;…Mr. Egunza…… for Respondent C/A Ether