https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9670

 **REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT KISUMU** **CIVIL APPEAL NO. E007 OF 2025** **SAMMY TRADERS LIMITED………………………………………….…….... APPELLANT** **-VERSUS-** **LUKE SAWANDA ODERA ………………...…………………………………RESPONDENT** **JUDGMENT** ***(Being an Appeal from the Judgment and Decree of Hon. G.C. Serem, Resident Magistrate in Kisumu SCCOMM No. E1228 OF 2024, delivered on 19th March, 2025, and Stay of Execution of the said Decree/Judgment)*** 1. **INTRODUCTION/ FACTS OF THE CASE** 2. The background of the appeal is a claim filed in the Small Claims Court through a Statement of Claim dated 4th November, 2024, where the Claimant averred that they entered into a contract for sale and purchase of Motor vehicle, Silver Toyota Harrier Registration Number KAZ 447U for Kshs. 850, 000/= which vehicle had mechanical faults immediately the claimant took possession of the same. 3. The Claimant prayed for judgment in the sum of Kshs. 912, 500/=, compensation to be determined by the Court, costs of the claim, and interest from time of default at court rate. 4. The Respondent entered appearance and filed a response to the statement of claim denying the allegation and breach of the aforementioned agreement, and indicated that he owed the Claimant only a portion of the amount, amounting to Kshs. 510,000/=. The Respondent stated that the said motor vehicle was sold on “AS IT IS” basis and the buyer took possession upon being satisfied. 5. This suit was heard in the Small Claims Court and Judgment was delivered on 19th March, 2025, in which the learned Magistrate held that: ***"The vehicle that was sold was not in good mechanical conditions and hence the claimant is entitled to rescind the contract and be refunded the purchase price. The vehicle sold was not in good mercantile quality herein.”*** 1. As a result, the court awarded the claimant judgment in the sum of Kshs 850,000/= plus cost of the suit and interests from the date of filing till full payment. 2. Being dissatisfied with the judgement of the trial court, the Appellant appealed the judgment through the Memorandum of Appeal dated 7th July, 2025, on the following grounds: - 3. ***That Honourable Magistrate/Adjudicator erred in law by failing to consider the legal principle of freedom of contracts and proceeding to re-write the terms of contract.*** 4. ***The*** ***Honourable Magistrate erred in law by failing in her judgement to lay basis upon which she was persuaded that the Respondent had breached the terms of the contract.*** 5. ***The Honourable Magistrate erred in law by failing to consider the fundamental term of the contract that indicated that the aforementioned suit motor vehicle was sold on a condition of ON AS IT IS BASIS.*** 6. ***The*** ***Honourable court erred in law by making a finding without evidentiary specificity that engine fault could not be determined by one test drive and by naked eye, while it was a term of the agreement and as a caveat that the Appellant did not give the Respondent any guarantee whatsoever of the suit motor vehicle.*** 7. ***The Honourable court erred in failure to make an order for the dismissal of the claim based on the overwhelming evidence.*** 8. ***The Honourable court erred in making an order for award of Khs. 850,000/= plus cost*** 9. The Appellant prayed that the appeal be allowed with cost to the appellant and the judgment of the trial court be set aside in its entirety, and that this Honourable court grant any other orders it may deem fit and just. The appeal was canvassed by way of written submissions. Before delving into the submissions of both parties, this court notes that, being the first appellate court, it is required under Section 78 of the Civil Procedure Act and as was held in ***Selle v. Associated Motor Boat Co. Ltd [1969] E.A 123***, to re-evaluate, re-assess and analyse the evidence adduced before the trial court and arrive at its own independent conclusions, while bearing in mind that it neither saw nor heard the witness when they testified. **SUBMISSIONS BY PARTIES** **Appellant’s Submissions** 1. The sole issue in contention by the Appellant is whether the trial court erred in law and fact by disregarding the principles of freedom of contract, misapplying the Sale of Goods Act, and awarding damages without evidentiary basis. 2. The Appellants first issue was whether the learned trial magistrate erred in law by disregarding the sanctity of contract and purporting to re-write the bargain freely entered into by the parties. The Appellant submitted that parties who freely negotiate and execute a contract are entitled to have their bargain enforced, and not re-written. In support of this proposition, reliance was placed on ***National Bank of Kenya Ltd v. Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR,*** where the court held that, a court of law cannot re-write a contract between parties. Unless fraud, coercion, or misrepresentation is pleaded and proved. The submission emphasized that none of that was alleged & therefore the court was bound to enforce the contract as written. 3. On whether the Respondent discharged the evidential burden under Section 107 of the Evidence Act to prove breach of contract, the Appellant argued that, the law is settled, and it is elementary, that he who alleges must prove. The Appellant submitted that, despite the Respondent alleging that the vehicle was defective, that it suffered latent engine faults, and that the Appellant was in breach, no single expert report, mechanics affidavit, or contemporaneous diagnostic record was adduced in court. What was tendered were mere assertions, which in law cannot substitute for proof. In support, they placed reliance on ***Kenya Power & Lighting Co. Ltd v. Nathan Karanja Gachoka & Another [2016] eKLR*** where the Court of Appeal stated that: ´The burden of proof lies on the person who would fail if no evidence at all were tendered.” 4. On whether the doctrine of merchantable quality under the sale of Goods Act was properly applicable in light of the contractual caveat, the Appellant argued that the trial court misdirected itself by importing an implied warranty of merchantability quality despite the parties having expressly agreed that the motor vehicle was sold on an ‘as is” basis. They submitted that the Respondent inspected and test-drove the vehicle prior to purchase, did not rely on Appellant’s skill or judgment, and did not disclose any special purpose for the purchase. The Appellant placed reliance on: ***Kenya Breweries Ltd v. Kiambu General Transport Agency Ltd [2000] eKLR.*** 5. The Appellant, on the issue of whether the award of Kshs 850,000/= plus costs and interest was legally and evidentially sustainable, submitted that, the receipts produced by the Respondent only proved that consideration was paid, but failed to tender probative evidence of Appellant’s breach of contract. They argued that, as such, the trial magistrate conflated proof of payment with proof of breach, and therefore unjustly enriched the Respondent and obliterated the contractual caveat that the vehicle was sold “on as-is basis”. 6. On the final issue on whether the Respondent’s claim ought to have been dismissed with costs, the Appellant submitted that the trial magistrate having misdirected herself on the first three issues, arrived at a conclusion that was not only legally untenable but also commercially destabilizing. The Appellant argued that the Respondent had only established evidence of payment of the vehicle and that payment without proof of breach cannot ground rescission, and that to hold otherwise is to convert every disappointed buyer into a successful litigant, regardless of the contractual caveats. In support of this proposition, reliance was placed on ***Pius Kimaiyo Langat v. Co-operative Bank of Kenya Ltd [2017] eKLR****,* where the Court of Appeal reiterated that, courts must enforce bargains freely entered into, not substitute their own notions of fairness. 7. The Appellant urged the appellate court to allow the appeal, set aside the trial court’s judgment, and dismiss the Respondents claim with costs. **Respondent’s submissions** 1. The Respondent’s first issue for determination was whether the suit vehicle was unmerchantable and not fit for purpose. The Respondent placed reliance on **Section 16 of the Sale of Goods Act**, submitting that where a buyer relies on the seller’s skill and judgement, and purchases goods from a seller dealing in such goods, there is an implied condition that the goods shall be reasonably fit for their intended purpose and of merchantable quality. It was further submitted that, notwithstanding any express terms of sale, the law imposes an obligation on a seller to ensure that goods sold are free from defects that render them unsuitable for use. 2. The Respondent further submitted that upon purchasing the motor vehicle, he was assured that it was in a “buy and drive” condition, thereby representing that it was in perfect condition. He contended that shortly after taking possession of the vehicle, it developed mechanical problems, prompting him to notify the Appellant. According to the Respondent, the vehicle was subsequently taken back for repairs at the Appellant’s request, but the defects persisted even after the repairs had been undertaken. The Respondent also submitted that he purchased the vehicle on his own and was not accompanied by a mechanic at the time of the transaction. 3. The Respondent further submitted that although the Appellant relied on the sale agreement indicating that the vehicle was sold on an “as is” basis, the evidence adduced before the trial court remained largely uncontroverted. It was submitted that the Appellant’s representative who testified lacked personal knowledge of the material facts surrounding the sale. The Respondent contended that the Appellant nonetheless acknowledged that a complaint had been lodged immediately after the vehicle was purchased and further admitted that certain visible defects had been repaired. Consequently, the Respondent urged the court to find that the vehicle was not of merchantable quality and was unfit for purpose for which it had been purchased. 4. The Respondent’s final issue for determination was whether or not the Appellant was in breach of contract. The Respondent submitted that the motor vehicle was not in perfect working condition at the point of sale, as evidenced by mechanical challenges twenty minutes after possession. It was further submitted that the claimant (respondent now) was not an expert and his inspection without a mechanic was insufficient. The Respondent placed reliance on ***Keri Aluminium Products Limited v. Hightech Air Conditioning [2018] eKLR*** in which the HighCourt held that a breakdown due to non-merchantable quality is a breach. The Respondent also argued that the repairs carried out by the Appellant indicate the vehicle was faulty, and the short test drive could not expose latent defects. 5. In further support of his position, the Respondent relied upon the decisions in ***Wood Products Limited v. Rufus Kithela Kobia [2019] eKLR****,* ***Vivid Printing Equipment Solutions Limited v. Monicah Ng’ong’oo t/a Identity Partner [2019] eKLR****,* ***and James Watenga Kamau v CMC Motors Group Limited [2020] eKLR****,* submitting that the reading of Section 16(b) of the Sale of Goods Act contends that a party is only exempted from the implied warranty that his goods are of merchantable quality where the buyer is an expert in that particular field and he examines the goods whose defects are identifiable upon ordinary examination. 6. The Respondent further submitted that, without a proper road test, the claimant (now respondent) would not have known of mechanical defects, especially since he was not a mechanic. The vehicle was not bought brand new, and a proper road test would have revealed that the vehicle was not of merchantable quality. The limited examination did not waive the implied condition of defects. This case is similar to ***Best Cars Limited t/a Impact Motors v. Omoke & Another (Civil Appeal E409 of 2023 [2025] KEHC 474 (KLR).*** 7. The Respondent urged the court to consider Section 16(b) of the Sale of Goods Act and hold that the vehicle sold was of unmatchable quality, thus the appellant breached the contract. He urged the court to dismiss the appeal with costs to the respondent as it lacks merit. 8. In the circumstances, I have considered the submissions from both the Appellant and the Respondent and I therefore wish to have the following as issues for determination; 9. **ISSUES FOR DETERMINATION** 1. **Whether the trial court erred in law in finding that the motor vehicle sold to the Respondent was not of merchantable quality and fit for purpose within the meaning of Section 16 of the Sale of Goods Act.** 2. **Whether the trial court erred in holding that the Appellant was in breach of the sale agreement notwithstanding the party’s agreement that the motor vehicle was sold on an “as is” basis** 3. **Whether the trial court properly exercised its discretion in rescinding the contract and awarding the Respondent a refund of the purchase price of Kshs. 850, 000/= together with costs and interest** 4. **Who should bear the costs of the appeal?** 10. **ANALYSIS AND DETERMINATION** * + 1. **Whether the trial court erred in law in finding that the motor vehicle sold to the Respondent was not of merchantable quality and fit for purpose within the meaning of section 16 of the Sale of Goods Act** 1. The Appellant contends that the trial court erred in finding that the motor vehicle was not of merchantable quality and fit for purpose, arguing that the Respondent failed to adduce expert evidence to establish the alleged defects. The Respondent, on the other hand, maintains that the vehicle developed serious mechanical problems almost immediately after purchase, thereby demonstrating that it was neither fit for use nor of merchantable quality. 2. Section 16 of the Sale of Goods Act provides for implied conditions as to quality or fitness where goods are purchased from a seller who deals in goods of that description and where the buyer relies on the seller's skill and judgment. The purpose of the provision is to protect purchasers from latent defects which may not be discoverable upon ordinary inspection 3. In **James Watenga Kamau v CMC Motors Group Limited [2020] eKLR**, the court observed that a seller dealing in motor vehicles is under an implied obligation to ensure that the vehicle sold is reasonably fit for its intended purpose and of merchantable quality, unless any defect complained of is one that could reasonably have been discovered upon ordinary examination by the buyer. Similarly, in **Kenya Breweries Ltd v Kiambu General Transport Agency Ltd [2000] eKLR,** the court held that goods are of merchantable quality if they are fit for the purpose for which goods of that description are ordinarily bought, and that failure to meet this standard constitutes a breach of the implied condition under the Sale of Goods Act. 4. Applying the foregoing principles to the present appeal, this court has carefully reconsidered the evidence on record, the rival submissions by the parties, and the impugned judgment. The central question is whether the trial court properly concluded that the subject motor vehicle failed to meet the statutory threshold of merchantable quality and fitness for purpose under Section 16 of the Sale of Goods Act. 5. It is not in dispute that the Respondent testified that shortly after taking possession of the motor vehicle, it developed mechanical problems which necessitated its return to the Appellant for attention. The record further indicates that the Appellant did not seriously dispute that complaints were raised shortly after the sale, and that the vehicle was subsequently taken back for repairs. This sequence of events is consistent with the existence of defects manifesting soon after delivery. 6. While the Appellant contends that the Respondent ought to have produced expert mechanical evidence to prove the alleged defects, this court notes that proof of breach may, depending on the circumstances, be established through credible factual evidence and the conduct of the parties. As was observed in ***Galaxy Paints Co. Ltd v Falcon Guards Ltd* [2000] eKLR**, a court is required to consider the issues arising from the pleadings and the totality of the evidence placed before it, and not to approach the matter in a purely technical or compartmentalised manner. 7. In the present case, the relatively immediate breakdown of the vehicle after purchase, coupled with the Appellant’s own conduct in undertaking repairs, provides a strong evidential basis upon which the trial court could infer that the vehicle was not in a condition consistent with merchantable quality at the time of sale. 8. This court is therefore unable to fault the finding of the learned trial magistrate that the motor vehicle was not of merchantable quality and fit for purpose. The evidence on record, when viewed holistically, supports the conclusion that the defects manifested shortly after purchase and substantially affected the usability of the vehicle, thereby bringing the case within the ambit of Section 16 of the Sale of Goods Act. * 1. **Whether the trial court erred in law in holding that the Appellant was in breach of the sale agreement notwithstanding the parties’ agreement that the motor vehicle was sold on an “as is” basis.** 9. The Appellant further argues that the trial court disregarded the principle of freedom of contract by failing to give effect to the clause indicating that the motor vehicle was sold on an “as is” basis. Reliance was placed on the general principle that courts do not rewrite contracts for parties, as affirmed in ***National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another* [2001] eKLR.** 10. There is no dispute that courts are generally bound to enforce contracts freely entered into by parties. However, the principle of freedom of contract is not absolute. Contracts are subject to statutory provisions and implied terms imposed by law, particularly under the Sale of Goods Act, which may not be excluded where such exclusion would defeat the purpose of statutory protection relating to quality and fitness of goods. 11. In ***CMC Aviation Ltd v Crusair Ltd (No. 1) [1987] KLR 103***, the court affirmed that parties to a contract are bound not only by the express terms of their agreement but also by obligations imposed by law, and that a party in breach cannot rely on contractual stipulations to defeat a legitimate claim arising from such breach. Similarly, in ***Kenya Commercial Bank Ltd v Osebe* [1982] eKLR**, the court observed that contractual provisions must be construed in a manner consistent with the law, and cannot be used as a shield against liability arising from breach of legal obligations. 12. The evidence before the trial court established that the Respondent conducted only a basic inspection and test drive of the vehicle prior to purchase and was not shown to have had technical expertise in mechanical assessment. The defects complained of were not demonstrated to have been patent or discoverable upon ordinary inspection. Further, it is not disputed that the vehicle developed mechanical problems shortly after purchase and was returned to the Appellant for repairs, a fact which is consistent with the existence of latent defects at the time of sale. 13. In ***Kenya Bus Services Ltd v Mayende* [1991] eKLR**, the court held that where defects are latent and not discoverable upon reasonable inspection, liability may still arise notwithstanding contractual limitations, particularly where the goods fail to meet the basic standard expected of items sold for ordinary use. The court further emphasised that exclusion clauses must be construed strictly and cannot be used to defeat clear statutory obligations. 14. In light of the foregoing, this court is persuaded that the “as is” clause could not operate to absolve the Appellant from liability where the vehicle exhibited latent mechanical defects shortly after sale, thereby failing to meet the standard of merchantable quality required under Section 16 of the Sale of Goods Act. To hold otherwise would permit a seller to evade statutory responsibility merely by relying on a blanket disclaimer clause, even where the goods supplied are fundamentally defective. 15. Consequently, I find that the learned trial magistrate correctly held that the Appellant was in breach of the sale agreement. The finding did not amount to a rewriting of the parties’ contract but rather constituted a proper application of statutory implied terms governing the sale of goods, which operate notwithstanding express contractual clauses to the contrary. * 1. **Whether the trial court properly exercised its discretion in rescinding the contract and awarding the Respondent a refund of the purchase price of Khs. 850,000/= together with costs and interest** 16. Having found that the vehicle sold was not of merchantable quality and that the Appellant was in breach of the sale agreement, the next issue for determination is whether the trial court properly exercised its discretion in granting the remedy of rescission and ordering a refund of the purchase price. 17. Rescission is an equitable remedy available where there is a fundamental breach going to the root of the contract. The effect of rescission is to discharge the contract and restore the parties, as far as possible, to the position they were in before the contract was entered into. In the context of sale of goods, where the subject matter is shown to be materially defective, the innocent party may be entitled to reject the goods and claim a refund of the purchase price. 18. In ***Kenya Airways Ltd v Satwant Singh Flora* [2013] eKLR,** the court emphasized that equitable remedies are discretionary and will be granted where the circumstances demonstrate that damages alone would not adequately remedy the wrong suffered. Similarly, in ***Standard Chartered Bank Kenya Ltd v Intercom Services Ltd & 4 Others* [2004] eKLR**, the court observed that the guiding principle in the exercise of discretion is to ensure that justice is achieved between the parties in light of the surrounding circumstances. 19. Applying the foregoing principles to the present appeal, the evidence on record demonstrates that the motor vehicle developed mechanical problems almost immediately after purchase. The Respondent raised complaints promptly and the Appellant undertook repairs, but the defects persisted. The trial court was therefore entitled to conclude that the breach was not merely minor or technical but went to the root of the contract, thereby justifying rescission. 20. The Appellant argued that proof of payment alone could not justify an order of rescission. While that position is correct as a matter of principle, the record shows that the trial court did not rely solely on proof of payment. Rather, it considered the totality of the evidence, including the timing of the breakdown, the repeated mechanical issues, and the unsuccessful repair attempts by the Appellant. These factors were relevant in determining that the Respondent had been deprived of the benefit of the bargain. 21. In ***Kenya Commercial Bank Ltd v Osebe* [1982] eKLR**, the court recognised that where a fundamental breach occurs, the innocent party is entitled to treat the contract as repudiated and seek appropriate reliefs, including restitutionary remedies aimed at restoring parties to their original positions. The principle underscores that courts will intervene where continuation of the contractual relationship is rendered untenable by breach. 22. In the circumstances of this case, the order directing refund of Kshs. 850,000/= was a natural consequence of the finding that the contract had been fundamentally breached. The award of costs and interest similarly fell within the discretionary powers of the trial court and has not been shown to have been exercised on wrong principles. 23. Accordingly, this court finds no basis for interfering with the trial court’s exercise of discretion. The decision to rescind the contract and order a refund of the purchase price together with costs and interest was sound in law and properly supported by the evidence on record. * 1. **Who bears the cost of the suit** 24. Costs are governed by Section 27 of the Civil Procedure Act, which provides that costs follow the event unless the court, for good reason, orders otherwise. 25. In the present appeal, the Appellant challenged the findings of the trial court regarding merchantable quality, breach of contract, and the remedies granted. Upon independently re-evaluating the evidence and the applicable law, this court has found that the learned trial magistrate properly directed herself on both the facts and the law and arrived at the correct conclusion. 26. The Respondent has successfully defended the judgment of the Small Claims Court and there are no exceptional circumstances warranting a departure from the general rule on costs. 27. Consequently, the costs of this appeal shall be borne by the Appellant. The Respondent shall be entitled to the costs of the appeal together with interest thereon at court rates from the date of taxation until payment in full. 28. **DISPOSITION** 29. Having carefully considered the pleadings, the record of appeal, and the rival submissions by counsel, together with the applicable law and authorities, this court now proceeds to render its determination on the issues arising for resolution in this appeal as follows; 1. The Appeal is hereby dismissed in its entirety. 2. The Judgment and Decree of the Chief Magistrate's Court in Kisumu SCCOMM No. E1228 of 2024, delivered on 19th March, 2025, are hereby upheld. 3. The Respondent shall have the costs of this Appeal. 4. Interest on the costs of the Appeal shall accrue at court rates from the date of taxation until payment in full. It is so ordered. **Dated, Signed and Delivered at Nakuru High Court on 6th July, 2026** **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_** **Hon. Justice Abdi M Hassan, OGW**