CRDB BANK PLC VS AFRICHICK HATCHERS LTD COMM CASE NO

CRDB BANK PLC VS AFRICHICK HATCHERS LTD COMM CASE NO

The 2nd and 3rd defendants were discharged as guarantors due to material variation of the loan facility without their consent, as required by section 87 of the Law of Contract Act. The first defendant defaulted in repayment, but interest after 10th October 2012 was not awarded due to the plaintiff's promise of additional funding, which created a legitimate expectation but not a binding contract. The demand notice was valid as the suit was not for enforcement of mortgage.

Citation
CRDB BANK PLC VS AFRICHICK HATCHERS LTD COMM CASE NO
Parties
Plaintiff: CRDB Bank PLC; 1st Defendant: Africhick Hatchers Ltd; 2nd Defendant: Innocent Mwankunga; 3rd Defendant: Gwitu Mwankunga
Court
TANZLII
Jurisdiction
Tanzania
Judgment Date
1 January 2014
Procedural Posture
Commercial Case / Judgment
Outcome
Partly allowed
Legal Topics
Loan Default, Guarantee Discharge, Variation of Contract, Mortgage Notice Requirements, Collateral Agreements
Source Language
English
Banking Law Contract Law Loan Default Guarantee Discharge Variation of Contract Mortgage Notice Requirements Collateral Agreements

Case Brief

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Parties

CRDB Bank PLC

Plaintiff

Africhick Hatchers Ltd

1st Defendant

Innocent Mwankunga

2nd Defendant

Gwitu Mwankunga

3rd Defendant

Procedural Posture

Commercial Case / Judgment

Legal Issues

  1. 1 Whether the defendants defaulted in repayment of the loan facility
  2. 2 Whether there was a fundamental breach by the plaintiff for not issuing a fresh loan repayment schedule after 24th September 2011
  3. 3 Whether there was a fundamental breach by the plaintiff for not providing additional financing of the project

Ratio Decidendi

The 2nd and 3rd defendants were discharged as guarantors due to material variation of the loan facility without their consent, as required by section 87 of the Law of Contract Act. The first defendant defaulted in repayment, but interest after 10th October 2012 was not awarded due to the plaintiff's promise of additional funding, which created a legitimate expectation but not a binding contract. The demand notice was valid as the suit was not for enforcement of mortgage.

Court Disposition

Partly allowed

Orders

  • The first defendant to pay the plaintiff TZS 1,795,000,000 plus interest at 17% per annum from 30th July 2010 to 10th October 2012.
  • The decretal amount to be paid within 6 months from the date of judgment.