Discharge of Contract

Mogas (U) Ltd Vs Benzina (U) Ltd (CIVIL SUIT NO 88 OF 2013) [2017] UGCOMMC 92 (5 September 2017);


Headnote and Holding: 

The plaintiff’s action against the defendant is for a declaration that the defendant breached the contract executed with the plaintiff for the supply of 1000 metric tons of bitumen.

The issue was whether the defendant breached the contract entered with the plaintiff. The court held that it amounted to a breach of a contract whilst reiterating that the plaintiff made it impossible for the defendant to perform the contract.

The court considered whether the defendant breached the contract for the agreed timeline or the plaintiff breached the contract by failure to take the supply of what the plaintiff ordered hence the counterclaim. It was then a question of fact as to whether any contract is frustrated by any even or factor looking into the obligations of the parties. In this case the frustrating event advanced by the defendant is blockage of its money.

The court explained the principle of frustration. Section 66 (1) of the Contracts Act 2010 provides for discharge of parties to a contract from future performance of the contract unless the opposite party assumed the risk of impossibility. It simply means that both parties ought to be discharged of their obligations for the future performance of the contract. In other words the defendant is discharged from the supply obligation as much as the plaintiff is discharged from the obligations of a buyer.

The court ruled that the contract had not been frustrated and the defendant was in breach of contract.

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