Hardware Deals (U) Ltd v Alam Construction EA Ltd (HCT-00-CC-CS 658 of 2003) [2005] UGCommC 25 (30 May 2005)

Key Facts

Transaction Type

Issues

• Whether Anthony Byaruhanga was introduced by the defendant to the plaintiff as an authorized employee to collect goods on credit on behalf of the defendant.
• Whether the defendant is indebted to the plaintiff for the sum of Shs.28,615,800.00 for goods supplied.
• Whether the court would grant remedies if the previous issues are resolved in favor of the plaintiff.
• If the defendant is indebted, whether cheques annexures a, b, c were issued by the defendant to settle the indebtedness to the plaintiff.

Holdings

• The judge ruled that the cheques annexures a, b, c were not issued by the defendant to settle any indebtedness. The defendant's testimony, supported by bank endorsements stating 'signature differs,' was accepted as credible evidence of forgery and lack of issuance.
• The court determined that the plaintiff failed to prove, on a balance of probability, that Anthony Byaruhanga was introduced to Hardware Deals (U) Ltd as an employee of Alam Construction E.A. Ltd with authority to collect goods on credit indefinitely. The judge accepted the defendant's testimony that Byaruhanga was a one-off subcontractor and that the initial transaction was a single agreement, not an ongoing arrangement.
• The court concluded that the defendant is not indebted to the plaintiff because the person they transacted with (Byaruhanga) lacked express authority to bind the defendant. Additionally, no ostensible authority was found to support the claim of indebtedness, as the plaintiff's case was based solely on alleged express authority.
• The court dismissed the plaintiff's suit with costs, finding no valid legal basis for the claim. The judgment was delivered on 30 May 2005, affirming the defendant's position that the transactions were fraudulent and not authorized by the company.

Remedies

Contract Value

Legal Principles

• The court determined that the burden of proof rested with the plaintiff to establish that Anthony Byaruhanga was introduced as an employee of the defendant with authority to collect goods on credit. The plaintiff failed to discharge this burden on a balance of probability, as the defendant's Managing Director denied the alleged introduction and the evidence did not support the claim.
• The standard of proof required was a balance of probability. The court found that the plaintiff's evidence did not meet this threshold to prove the defendant's indebtedness, given the defendant's denial of ongoing authority and the absence of corroborating documentation.

Key Disputed Contract Clauses

• The agreement between the parties involved supplying goods on credit with post-dated cheques as payment. The dispute centered on whether these terms were validly established and whether the cheques were issued by the defendant.
• The court analyzed whether Anthony Byaruhanga had express or implied authority to represent Alam Construction E.A. Ltd in ongoing credit transactions for goods, as alleged by the plaintiff. The defendant claimed Byaruhanga was a one-off subcontractor with no such authority.

Judge Name

Passage Text

• 20. I am inclined to accept the evidence of DW1 on this point in light of what transpired after the initial transaction. DW1 stated that the signatures on the cheques exhibited by the plaintiff and which accompanied these transactions were forged, and were not his signature.
• 22. Having answered Issue No. 1 as I have done, I do not find that the defendant is indebted to the plaintiff, as the person they dealt with had no express authority which they alleged he had, to transact the business he did.
• 24. DW1 denied ever writing and issuing the cheques in question. This evidence is not contradicted. I accept that DW1 did not issue these cheques. They were not issued by the defendant to the plaintiff to settle any indebtedness.

Damages / Relief Type