[2025] UGHC 254

#### THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT MBALE

## CIVIL APPEAL NO. 85 OF 2023

#### (ARISING FROM CIVIL SUIT NO. 61 OF 2019)

#### 1. W. K'S HARDWARE LTD

2. WAMUKWE KADIRI :::::::::::::::::::::::::::::::::::

#### **VERSUS**

# BPC CHEMICALS LTD ::::::::::::::::::::::::::::::::::: **BEFORE: HON. JUSTICE LUBEGA FAROUQ**

## **JUDGMENT**

#### 1. Introduction

2. The Plaintiff/Respondent instituted a summary suit against the Defendants/Appellants for recovery of a sum of Ugx: $39,410,600/$ =, costs of the suit, interest at commercial rate from the date the claim arose and any other relief.

#### 3. Background of court

4. The facts constituting the case were that the Plaintiff is a private limited company incorporated under the laws of Uganda dealing in manufacture and sale of paint products. Sometime between the months of September 2017, October 2017 and January 2018, the Plaintiff company supplied to the Defendant company various goods including but not limited to paint products. That during the course of business between the parties, the Plaintiff kept the Defendants Ledger Account in its records which shows that for the period between 1^st January 2017 and 3^rd October 2018, the Defendant's outstanding amount owed to the Plaintiff was Ugx: 39,410,600/=. The Plaintiff on several occasions demanded for payment of the said amount from the 1^st Defendant which was met with several requests for more time to pay by the $2^{nd}$ Defendant. That after several extensions to pay, on the 11^th of December, 2017, the 2^nd Defendant in compliance to several demands for payment issued cheque No. 000796 drawn on Diamond Trust Bank No. 0081359359, Mbale branch worth Ugx: $5,000,000/$ = but the same bounced and the notice was brought to the attention of the Defendants.

- 5. The Plaintiff further contended that despite of the subsequent reminders by the Plaintiff, the Defendants have failed to pay to date. - 6. The Defendants on the other hand, in their joint written statement of defence denied the Plaintiff's claim and contended that the 1st Defendant was supplied with goods as alleged by the Plaintiff but in particular, the invoice dated 9^th September 2017 was rejected as the goods stated therein were not delivered to the defendant's company. That the goods supplied by the Plaintiff were not of merchantable quality and this followed several complaints from their customers who rejected the goods on account that the goods supplied were not of good quality and they are still lying in the defendant's store. - 7. That as a result of the above, the defendants could not effect payments to the plaintiff for goods supplied and this fact was communicated to the plaintiff through their agents and employees. - 8. That concerning the issue of dishonored cheques, the Defendants asserted that due to bad quality of the goods supplied and upon receiving several complaints from the customers the payments could not be completed and the Plaintiffs were notified not to deposit the said cheque to which it ignored and for that reason, the 2^nd Defendant is not liable.

### 9. Issues in the lower court

- (a) Whether there was breach of contract by the Defendants? - (b) What remedies are available to the parties? - 10. The trial magistrate resolved the above issues in favour of the Respondent. Specifically, she found that the Appellants were in total breach of their obligation to pay the goods supplied.

11. The Appellants were dissatisfied with the above decision hence this appeal

## 12. Grounds of Appeal

- (a) That the learned trial chief magistrate erred in law and fact when she held that the Appellants are in breach of contracts for supply of goods hence occasioning a miscarriage of justice. - (b) That the learned trial chief magistrate erred in law and fact when she ignored the appellants' evidence, upon holding that the appellants had admitted in evidence the respondent's claim hence occasioning a miscarriage of justice. - (c) That the learned trial chief magistrate erred in law and fact when she held that goods supplied by the Respondent were not proved to be of not merchantable quality hence occasioning a miscarriage of justice. - (d) That the learned chief magistrate erred in law and fact when she relied on the respondent's evidence which was corroborated as some of the goods had not been delivered to the 1^st Appellant hence occasioning a miscarriage of justice. - 13. The Appellants prayed that the appeal be allowed, the orders of the lower court be set aside, the Respondents suit be dismissed and costs of this court and of the lower court be awarded to the appellants.

## 14. Legal Representation

- 15. Counsel Wambi Jude represented the Appellants whereas Counsel Bwayo Dison on brief for Magezi Derrick represented the Respondent. - 16. When this matter came up for hearing on 25^th of November, 2024, Counsel for the Appellants prayed that the matter proceeds by way of written submissions which this court granted, and both counsel complied.

#### 17. Duty of the first appellate court.

18. The duty of this court as the first appellate court has been discussed in a number of authorities.

19. In Kifamunte Henry V. Uganda, Criminal Appeal No. 10 of 1997, court stated that-

> "The first appellate court has a duty to review the evidence of the case and to reconsider the materials before the trial judge. The appellate court must then make its own mind not disregarding the judgment appealed from but carefully *weighing and considering it.*"

#### 20. Analysis of Court

- 21. I will determine the grounds of appeal as outlined in the memorandum of appeal. - 22. Ground No.1: That the learned trial chief magistrate erred in law and fact when she held that the Appellants are in breach of contract for supply of goods. - 23. Counsel for the Appellants submitted that there was no contract of supply of the alleged goods to the appellants and for that reason, the appellants could not breach a non-existing contract. - 24. He argued as per the evidence of PW1 on page 13 of the lower court proceedings that the business relationship of the plaintiff/respondent and the appellants is always in writing but he did not have any documents that were signed by the appellants even among the documents presented to court were not signed by the appellants. - 25. Counsel submitted that it was the evidence of PW1 testifying for the plaintiff/respondent at page 12 of the lower court proceedings that the customers for the plaintiff/respondent who receives goods would also sign and stamp necessary documents even if he has not paid for the goods immediately. - 26. Counsel contended that it is the evidence of Wamukwe Kadiri the 2^nd appellant as per paragraph 6 of his witness statement that there was no written contract between the appellants and the respondents in respect of the alleged contract of supply of goods. Counsel submitted

that since the subject of the alleged contract exceeded 25 currency points, there was no valid contract of supply of the alleged goods.

- 27. He argued that since the plaintiff alleged that the relationship between the defendants/appellants and the plaintiff was always in writing, the plaintiff was only required to adduce evidence of agreements of supply of the alleged goods. He referred to section 91 and 92 of the Evidence Act. - 28. Counsel for the Respondent on the other hand submitted that there is no merit in this ground. He argued that the trial magistrate found firstly that there was an admission of the fact of existence of an oral agreement of supply of goods. The admissions are well captured in the witness statements of DW3 in paragraphs 2 and 6. He argued that it was reproduced under paragraph 6 in particular which states that-"our supply agreement was not reduced into writing......" - 29. Counsel submitted that in the joint scheduling memorandum, the joint defence by the appellants and other pleadings, filed in the trial court, there is glaring admission of the existence of a verbal arrangement or contract of supply between the parties. It is vividly evident that the a trial magistrate took the trouble to examine the pleadings, exhibits, oral evidence of all parties and the law to reach a conclusion that the respondent's claim had been proved to the satisfaction of the court.

#### 30. Determination of court

- 31. From the evidence on the court record, it is important to note that the matter which was before the lower court and now on appeal, was on supply of goods or sale of goods. - 32. Before I establish whether there was breach of contract or not, I will first of all determine if there existed a valid contract between the Respondent and the Appellants. - **33.** For a contract to come into existence, there must be an offer made by one party which is, in turn, is accepted by another party. An offer is a promise to provide something specific if the other party agrees to do

5 | Page

something specific in return. The acceptance must be stated either by words spoken or written or by conduct. Either words or conduct constitute acceptance of an offer if it occurs in accordance with and in response to the specific terms of the offer. A contract may be partly in writing and partly oral. (See: Solomon Semakula Kayinda V. Auger Revival Ministries Limited Civil Suit No. 0880 OF 2020).

- 34. According to Lawteacher.net, March 2025, a contract has six important elements to be valid. That is; offer, acceptance, consideration, intention to create legal relation, certainty and capacity. It concluded by stating that, only if all the elements are there, then it would be called a valid contract. - 35. Section 10(1) of the Contract's Act Cap 284 defines a contract to mean "an agreement made with the free consent of the parties with capacity to contract, for a lawful consideration and with lawful object, with the intention to be legally bound.

$(2)$ a contract may be oral or written or partly oral and partly written or may be implied from the conduct of the parties.

(5) A contract the subject matter of which exceeds twenty-five currency points shall be in writing."

36. In Solomon Semakula Kayinda V. Auger Revival Ministries Limited (Supra), Justice Mubiru Stephen stated that-

> "According to section 10 (5) of The Contracts Act, 7 of 2010, a contract the subject matter of which exceeds twenty-five currency points $(500,000/=)$ must be in writing. This requirement is satisfied by any signed writing that; (i) reasonably identifies the subject matter of the contract; (ii) is sufficient to indicate that a contract exists; and (iii) states with reasonable certainty the material terms of the contract. Writing all material terms is not required; what is required at a minimum in a sales of goods contract is an acknowledgment of

agreement by the parties and a specification of the quantity of *goods that are to be exchanged.*

Multiple writings relating to each other can be combined to show that a single contract exists to satisfy this requirement. While this provision is designed to avoid fraudulent enforcement of contracts that never took place, and that the contract was carried out can also be powerful confirmation of *the agreement.*

Therefore, in a contract for the provision of material and services, delivery of the material and services and acceptance thereof by the other party is a sufficient substitute for writing. The agreement is enforceable to the extent of the material and services delivered and accepted. In other words, performance renders an oral contract for material and services enforceable, but only to the extent of the delivery and performance by way of services rendered.

- 37. What can be deduced from the above authority is that save for a written contract, multiple writings to each other for example for supply of goods and delivery of materials is sufficient to substitute for writing. In other words, performance renders an oral contract for material enforceable. I am persuaded by that authority given the facts on the court record. - 38. In this case, the evidence of PW1 and PW2 is that the Respondent always received orders from the $1^st$ Appellant to supply goods and the Respondent always supplied the said goods. That fact was admitted to by the Appellants when DW3 acknowledged in his evidence in chief that goods in invoice no. 19621 dated 26^th October 2017 and invoice no. 19942 dated 12^th January 2018 were received but the same were rejected by their customers.

39. Typically, following the above admission, it can be deduced that there was a business relationship between the 1st Appellant and the Respondent.

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- 40. Counsel for the Appellants submitted that the contract between the Appellants and the Respondent did not exist since it did not comply with section 10(5) of the Contracts Act which requires such contracts to be written. - 41. I would agree with counsel. However, considering the nature of the contract which was entered into between the 1st Appellant and the Respondent which was basically centered on supply of goods, it would defeat logic for one to deny the existence of such contract where the said goods were received. Therefore, in agreement with the persuasive decision of my brother Judge in Solomon Semakula Kayinda V. Auger Revival Ministries Limited (supra), Section 10(5) may not apply in the circumstance of this case. - 42. Further, this having been a contract of supply of goods which is the same as sale of goods, section 2(1) of the Sale of Goods Act Cap 292 defines a contract of sale to mean-

"A contract by which the seller transfers or agrees to transfer the buyer for $a$ money the property in *the goods to* consideration, called the price."

43. Section 2(3) of the same Act provides that-

"Where, under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a sale."

44. Section $5(1)$ of the same Act provides that-

"A contract of sale or supply of services may be made in writing, or by word of mouth, or partly in writing and partly by word of mouth, or in the form of a data message, or may be implied from the conduct of the parties."

- 45. In this case, according to the evidence of both parties, goods were supplied by the Respondent and the 1^st Appellant through the evidence of DW3 who admitted that it received the goods. Hence, as per section 2(3) of the Sale of Goods Act, there was a contract of sell between the 1^st Appellant and the Respondent. - 46. Further, section 5(1) provides that such contracts may be written or by word of mouth. From the evidence of PW1, PW2 and DW3, it is quite obvious that the contract between the 1st Appellant and the Respondent was by word of mouth or based on mutual understanding of the parties. - 47. It can therefore be said that the 1^st Appellant offered to purchase the goods from the Respondent and the Respondent accepted the said offer when it supplied them to the 1^st Appellant at an agreed consideration as indicated in PEXH.1, 2, 3 and PEXH.4. - 48. In other words, by virtue of that conduct, it can be infeered that there exixted a contract between the parties. - 49. In NBS Bank Ltd V. Cape Produce Co (Pty) Ltd Schutz JA noted with reference to Joel Melamed and Hurwitz V Vomer Investment (Pty) Ltd, stated that-

"In deciding whether a tacit contract has been concluded, the law objectively considers the conduct of both parties and the circumstances of the case generally."

50. Also in the case of Greenboat Entertainment LTD V. City Council of Kampala H. C. C. S No. 0580 of 2003, court held that-

> "In general, oral contracts are just as valid as written ones. An oral contract is a contract the terms of which have been agreed by spoken communication, in contrast with a written one, where the contract is oral or written, it must have the essentials of a valid contract, the essentials of a valid contract were pointed out in the same cases as; - in law, when we talk of an oral contract, we mean an agreement enforceable at law. For a

contract to be valid and legally enforceable there must be capacity to contract; intention to contract, consensus ad idem; valuable consideration; legality of purpose and sufficient certainty of terms. If in a given transaction any of them is missing, it could as well be called something other than a contract."

- 51. Therefore, since an oral contract is valid as a written contract, in absence of a written contract, a valid contract can as well be inferred from the conduct of the parties. - 52. In light of the above discussion, I find that, there was a valid contract of supply of goods or sale of goods between the Respondent and the 1^st Appellant. - 53. I will now handle the issue of whether the aforementioned contract was breached by the Appellants. - The Black's Law Dictionary 11^th Edition at page 171 54. defines a breach of contract to mean;

"Where one party to a contract fails to carry out a term" In other words, if a party fails to fulfill the obligation of a contract 55. that they freely entered into, it will be termed as a breach of contract. In legal terms, a breach of contract is defined as breaking any of the promised terms of a legally enforceable contract by a party without a lawful excuse.

In Ronald Kasibante V. Shell Uganda Ltd HCCS No. 542 of 2006 56. [2008] ULR 690, Honorable Justice Hellen Obura (as she then was) defined breach of contract as:

> "The breaking of the obligation which a contract imposes which confers a right of action for damages on the injured party. It entitles him to treat the contract as discharged if the other Party renounces the contract or makes the performance impossible or substantially fails to perform his promise; the victim is left suing for damages, treating the contract as discharged or seeking a discretionary remedy."

Also GB Bradfield, Christie's Law of Contract in South Africa 8th 57. ed. (LexisNexis) at p.619 states that-

> *'The obligations imposed by a contract's terms are meant to be* performed, and if they are not performed at all, or performed late, or performed in the wrong manner, the party on whom the duty of performance lay (the debtor) is said to have committed a breach of the contract or, in the first two cases, to be in mora, *and, in the last case, to be guilty of positive mal-performance.*"

58. In this case, PW1 testified in chief- "Our business relationship with the defendants was very good and well established to a point that on some occasions, we would deliver goods to the $1^st$ defendant's premises, where they would then be inspected for any damages and if all was well, the $2^{nd}$ defendant or some of his agents would acknowledge receipt *of the delivered goods.*

Where there would be a damaged product and if the defendants rejected a product, there was always an instant communication to my office. That the $2^{nd}$ defendant or his agents would write on the delivery note that a particular product is rejected for whatever reason and therefore we would immediately start preparations for replacement."

- 59. PW1 in cross-examination at page 13 of the record of proceedings said that- "Our business relationship with the defendant is not in writing, it is mutual." - 60. PW2 testified in chief- In the course of execution of my duties, Mr. Wamukwe Kadiri, the $2^{nd}$ defendant used to place orders for some of our products for the business of his WK's Hardware the $1^{st}$ defendant company which I would transmit to the General Manager for receiving the relevant who after action appropriate authorization from the Account's department would then

## the same in the property of the Market of $\mathcal{L}^{\text{max}}_{\text{max}} = \mathcal{L}^{\text{max}}_{\text{max}} \mathcal{L}^{\text{max}}_{\text{max}} \mathcal{L}^{\text{max}}_{\text{max}} \mathcal{L}^{\text{max}}_{\text{max}} \mathcal{L}^{\text{max}}_{\text{max}} \mathcal{L}^{\text{max}}_{\text{max}}$ dispatch the goods for delivery accompanied by a delivery Note and its attendant Tax invoice. $\mathcal{A} = \mathcal{A} \oplus \mathcal{A} \oplus \mathcal{A} \oplus \mathcal{A} \oplus \mathcal{A} \oplus \mathcal{A}$

the second with the state of the secondary with a contain with a sufficient with a

$\mathcal{L} = \mathcal{L} = \mathcal{L} = \mathcal{L} = \mathcal{L} = \mathcal{L}$

그리다 나는 단계를 받아 나오 나와 나를 나서 나와 나오는 사람

ng da fat de playen. Andel de Brithel

If there were any damaged goods for any of the customer's consignments, the agents of the 1^st defendant would communicate the damage to our bosses by writing on the delivery note and tax invoice, and a replacement would instantly be dispatched.

The nature of our dealings was that Mr. Kadiri Wamukwe would either personally be present or call up any of his workers to acknowledge receipt on the delivery note and sometimes when he would be personally present he would affix the 1^st defendant company's stamp on the delivery notes and invoices or simply state that payments would be prepared and made without stamping.

Among the other duties, I would also make follow ups for payments when am on my route in the Eastern region and in most cases, payment would be made by cheque issued by the $2^{nd}$ defendant Mr. Wamukwe Kadiri for which I would issue a receipt then deliver the same to my bosses.

61. DW3 on the other hand said that- "Our supply agreement was not reduced in writing but it was based on trust and it was our agreement that upon supply we sale the goods and we pay for them after the sale and in any event of rejection of the goods the plaintiff's company would take the goods back and replace with good ones.

In this particular case the goods which were received by the defendant were rejected and the 1^st defendant could not effect payment, the same information was passed over to the plaintiffs company through its sales representative who used to visit the company regularly. The total amount of the goods rejected is Ugx: $24,404$ 000/= to which the same are in the defendants' store."

62. From the above evidence, what can be deduced is that upon supply of the goods to the 1^st Appellant, the Respondent through its agents had to ensure the delivery note and the tax invoice were signed by the 1^st Appellant. And in case of any rejected goods, the 1^st Appellant would write on the delivery note that a particular product is rejected.

63. Section 42 (1) & (2) of the Sale of Goods Act provides that-

"Where goods are delivered to the buyer, which he or she has not previously examined, the buyer shall not be taken to have accepted them until he or she has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract. (2) Unless otherwise agreed, when the seller is the seller tender's delivery of goods to the buyer, *bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.*

64. The above provision, implies that upon receipt of the goods supplied, the Respondent was under a duty to afford the 1^st Appellant reasonable opportunity to examine the same. And in case of any damage, or expired goods, the 1^st Appellant had a right to reject such goods.

65. However, section 43 (1) of the Sale of Goods Act provides that-

*The buyer is taken to have accepted the goods—*

(a)when the buyer intimates to the seller that the buyer has $\frac{1}{2}$ *accepted them;*

(b) when the goods have been delivered to the buyer and the buyer does any act in relation to the goods which is inconsistent with the ownership of the seller; or

$(c)$ when, after the lapse of a reasonable time. the buyer retains the goods without intimating to the seller that he or she has rejected them".

66. Section 43 (3) of the same Act provides that-

$\mathcal{L}_{\mathcal{A}} = \mathcal{L}_{\mathcal{A}} \mathcal{L}_{\mathcal{A}} = \mathcal{L}_{\mathcal{A}} \mathcal{L}_{\mathcal{A}}$

"The buyer shall not by virtue of this section be taken to have accepted the goods merely because the buyer asks for, or agrees to their repair by or under an arrangement with the seller or the goods are delivered to another person under a *sub-sale or other disposition."*

proparties with more than 1 and 1 pages that the

- 67. In this case, DW3 said that the goods indicated in invoice no. 19621 dated 26^th of October, 2017 and invoice no 199945 dated 12^th January 2018 were received but the same were rejected by their customer on account of poor quality. He further said that the information of rejection was passed over to the plaintiff's company through its sales representative who used to visit the company regularly. - 68. The court record shows that the goods received by the 1st Appellant were delivered by the Respondent on 26/10/2017 and 12/01/2018, respectively. Dexh.1 and Dexh.3 indicate that these goods were rejected by the 1st Appellant's customers on 17/01/2018 and $26/03/2018.$ - 69. According to PEXH.39 the Respondent on 12^th of January, 2018, delivered economy emulsion 20 liters 200 pieces and economy emulsion 4 liters 130 pieces. The said goods were sub-sold to Tuni hardware stores on 20^th of February, 2018, but the same were rejected on 26^th of March, 2018 as per Dexh. 4 and Dexh.3 respectively. - 70. Following the above, I will now establish whether the goods supplied above were rejected within a reasonable time as required under section 43 (1) (c) of the Sale of Goods Act. $\frac{1}{2}$ - 71. Advanced law Lexicon by P. Ramanatha Aiyar 3rd Edition, 2005 defines reasonable time to mean-

"time that preserves to each party the rights and advantages" he possesses and protects each party from losses that he ought not to suffer OR time as is necessary, under the circumstances,

to do conveniently what the contract or duty requires should be done in a particular case".

- Therefore, in determining what is a reasonable time or unreasonable $72.$ time, regard has to be made to the nature of the instrument, the usage or trade or business, if any, with respect to such instrument, and the fact of the particular case. - 73. In K. S. Vidyanadam and Others V. Vairavan reported in 1997(1) CTC 628, the Supreme Court of India held that-

"the plaintiff must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the surrounding circumstances including the *express terms of the contract and the nature of the property.*"

- 74. In this case, the said goods (paint) were supplied on $12^th$ of January, 2018 and rejected on 26^th of March 2018, which is a difference of approximately two months. To this court, that was a reasonable period of time given the nature of the business between the $1$ ^st Appellant and the Respondent. - 75. The products delivered under invoice no. 19942 tendered in court as PEXH.39 were therefore not accepted by the 1^st Appellant since the same were rejected. - 76. Further, under PEXH.38, the Respondent on 26^th of October, 2017 supplied-

economy emulsion 20 litres 170 pieces,

economy emulsion 4 litres 70 pieces,

gloss paint 4 litres 60 pieces,

gloss paint ½ litres 192 pieces,

- vanish ½ litres 360 pieces and another - 4 litres 8 pieces though the product is not clear. - 77. However, according to DEXH.2, the 1^st Appellant on 3^rd of November. 2017 sub sold the following products- - 168 20 liters jerry cans emulsion,

- 60 tuni H/gloss 4 liters, - 8 tuni vanish 4 liters, - 180 tunis H/gloss $\frac{1}{2}$ liters and - 310 tunis varnish $\frac{1}{2}$ ltr $\frac{1}{2}$ ltr. - 78. On proper review of the above exhibits, it is clear that the products which were supplied by the Respondent in PEXH.38 though there is a small difference in the naming, the amount and the size of the products are similar to those in DEXH.2. For that reason, I am convinced that the goods supplied in PEXH.38 are the goods which were sub-sold by the $1^{st}$ Appellant in DEXH.2. - 79. The aforementioned products were supplied by the 1^st Appellant to Halali gets on 3^rd of November, 2017 and as per DEXH. 1 they were rejected on 17^th of January, 2018, which is still a period of approximately two months. This was to this court a reasonable period of time. - 80. PW1 in his evidence stated that in case of rejected goods, the 1st Appellant was under a duty to indicate on the delivery note that the goods were rejected. I reviewed the said exhibits, but there is no indication that the 1^st Appellant rejected the said products. - 81. DW3 said that the goods indicated in invoice no. 19621 dated 26^th of October, 2017 and invoice no 199945 dated 12^th January 2018 were received but the same were rejected by their customers on account of poor quality. He further said that the information of rejection was passed over to the plaintiff's company through its sales representative who used to visit the company regularly. - 82. PW2 the Respondent's sales executive in cross-examination said- "Yes I have ever received a complaint from the defendant that some goods were rejected by their customers and I would take the goods back whenever I would find any returned for being expired or damaged. I am aware there are some goods there which have been rejected. I have no authority for $n\phi w$ to pick them."

- 83. The above evidence buttressed DW3's allegation that he informed the sales executive about the rejected goods. - 84. Considering the fact that the 1^st Appellant used to pay after sale, it is not therefore practical that the information regarding rejection of the goods would be indicated on the delivery note like it was intimated by PW1 and PW2. - 85. The court record shows that the goods received by the 1^st Appellant were delivered by the Respondent on 26/10/2017 and 12/01/2018, respectively. Dexh.1 and Dexh.3 indicate the goods were rejected by the 1st Appellant's customers on $17/01/2018$ and $26/03/2018$ . Consequently, that information could not be reflected on the delivery notes, as these are supposed to be signed upon receipt of the goods and yet at that time, the 1^st Appellant had not sold the goods, making it impossible to ascertain their quality, particularly considering the nature of the goods being paint. - 86. Therefore, the said information would only pass through the Respondent's agent who admitted receiving the information about rejected goods. - 87. It was therefore his duty to ensure that the said information is passed on to his employers. - Section 44 of the Sale of Goods Act provides that-88.

"Unless otherwise agreed, where goods are delivered to the buyer, and the buyer refuses to accept them, having the right to do so, the buyer is not bound to return them to the seller, and it is sufficient if the buyer intimates to the seller that he or she refuses to accept them."

From the above, it is apparent that the 1^st Appellant communicated 89. to the Respondent's sales agent about the rejected goods. Hence, the goods supplied in PEXH.38 and PEXH.39 were not accepted by the 1st Appellant as required under section 43 of the Sale of Goods Act.

I am also aware that the 1^st Appellant on 11^th of December, 2017, 90. issued cheque no. 000796 but the same bounced. DW3 however, said in cross-examination that "we communicated to BPC not to bank this cheque because the goods were of poor quality and had been **rejected.**" This evidence was not rebutted by the Respondent.

$\mathcal{L} = \mathcal{L} \times \mathcal{L} \times \mathcal{L}$

- 91. Therefore, since the 1^st Appellant informed the Respondent about the rejected goods, an issue which was admitted by the Respondent's sales executive, I am not convinced that there was any breach of contract of supply of goods by the $1^{st}$ Appellant. - DW3 stated that the rejected goods are still stored at their facility on 92. Kumi Road and are valued at Ugx 24,404,000/=. The Respondent should therefore retrieve these goods for inventory and assessment. If their value is determined to be less than this amount, the 1^st Appellant will be responsible for paying the difference. - In addition, PW1 and PW2 said in case of rejected goods, the 93. Appellants would write on the delivery note or the tax invoice the word rejected. - 94. PW1 in cross-examination however contradicted his evidence in chief when he said that "sometimes the delivery notes and invoices would not be signed." PW2 said "sometimes they don't stamp but they have to confirm and receive the goods. They usually sign and stamp..... I did not demand for the stamp on this invoice" This typically meant that upon delivery of goods, the invoice and the delivery notes were supposed to be signed by the 1^st Appellant to prove receipt of the same. Therefore, I did not believe in the evidence that sometimes the delivery notes and the invoice were not signed and stamped. The only evidence which can prove to court that the said goods were supplied and received by the 1st Appellant in the circumstances were the 1^st Appellant denies receipt, is by acknowledgement of receipt of the same by its signature and receiving stamp.

- 95. The fact that some earlier receipts which are not in contention where not signed or stamped by the 1^st Appellant, cannot in itself convince this court that the goods were received in absence of such stamp and signature, in the face of denial of the same by the opposite party. - 96. I have seen PEXH 37 which is the delivery note no. 13249 dated 9^th of September, 2017 and invoice of the same dated 9/9/2017 and observed that it is only the invoice which was signed but one cannot establish who signed it, since it was not written in Latin character. - 97. Section 101(1) & (2) of the Evidence Act Cap 8, provides that-

Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he or she asserts must prove that those facts exist.

When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person."

98. Section 103 of the same Act provides that-

"The burden of proof as to any particular fact lies on that person who wishes the court to believe its existence, unless it is provided by any law that the proof of that fact shall lie on any *particular person.*"

- 99. The above principle was further elucidated in the case of Miller V Minister of Pensions [1947] 2 ALLER 372, where it was stated that the standard of proof in civil cases is on the balance of probabilities. - 100. In the circumstance, I find that the Respondent failed to prove that PEXH. 37 was received by the $1^{st}$ Appellant. - 101. In the upshot, it is found that the trial magistrate erred when she held that the Appellants breached a contract of supply of goods or sale of goods. - 102. Ground No. 1 is answered in the affirmative. - 103. Having answered the 1^st ground in the affirmative, the other grounds have become academic to resolve and for that reason, I will not delve into them.

- 104. This appeal accordingly succeeds in the terms below- - (a) The judgment, decision and orders of the trial court are set aside. - (b) The Respondent is ordered to collect the rejected goods from the 1^st Appellant's store. If the value of the rejected goods is less than Ugx 24,404,000/-(Twenty-four, million, four hundred and four thousand), the 1^st Appellant shall pay the remaining balance, accruing interest at a rate of 10% from the date of this judgment until full payment is made. - (c) costs of this court and those of the trial court are awarded to the Appellants.

I so order.

**LUBEGA FAROUQ** Ag. JUDGE

Judgment delivered via the emails of the Advocates of the parties on $5^{th}$ day of May, 2025