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Court of AppealDismissedCivil Appeal No 148 of 1988· [1995] KECA 124 (KLR)

Associated Motors Ltd v J. M. Githongo & 2 others [1995] KECA 124 (KLR)

Court of Appeal
12 October 1995
JGJ. M. GachuhiRKR. O. KwachALA. A. Lakha
2,649 words in judgment
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The bottom line

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Kenya's Court of Appeal dismissed a Kshs 1 million land-sale claim because no written document admitted a contract existed, as the law requires.

What this practically means

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Executive summary

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This Court of Appeal decision concerned whether writings exchanged between the parties constituted a note or memorandum satisfying section 3(3) of the Law of Contract Act (Cap 23), which requires written evidence of contracts for the disposition of land. The appellant's Managing Director negotiated in May 1978 to purchase an industrial plot in Nairobi for Shs 800,000, paid a deposit of Shs 160,000 and enclosed the balance of Shs 640,000 through his advocates, who wrote describing an alleged concluded agreement. The respondents replied stating, without prejudice, that the sums were held on account pending negotiations and that acceptance was in no way to be construed as an agreement to sell. The High Court (Schofield J) dismissed the appellant's suit with costs, holding that no document acknowledged a binding agreement. The appellant relied on Bailey v Sweeting and Tiverton Estates v Wearwell, contending that even a repudiating letter could satisfy the statute if it set out the parties, price and property. The Court of Appeal rejected that argument, holding on the English authorities that a repudiating letter suffices only where it admits the contract and disputes its construction, and not where it denies that any contract was made. Since the respondents' letters expressly denied a binding agreement, none contained the requisite admission or recognition. The appeal was dismissed with costs to the respondents. This decision binds subordinate courts and the High Court on the construction of section 3(3) of Cap 23.

Key legal issues

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01

Whether a letter repudiating liability can serve as a note or memorandum under section 3(3) of the Law of Contract Act

Holding

A letter repudiating liability is sufficient only if it admits the terms of the contract but disputes their construction; it is insufficient where it denies that any contract was ever made

Reasoning

Drawing on Bailey v Sweeting, Tiverton Estates v Wearwell, Thirkell v Cambi and Societe Capa v Acatos, the court held that the statutory writing must acknowledge or recognise the existence of the contract. Repudiation does not prevent a letter being used as an admission where the contract is admitted, but the respondents' letters expressly stated that no binding agreement had been entered into, so they contained no recognition of a concluded contract and could not satisfy the statute.

p. 5
02

Whether the letters of 16th May 1978 and receipts relied on by the appellant constituted a sufficient memorandum

Holding

None of the documents relied upon by the appellant contained an admission or recognition of the existence of the contract, and the trial judge was right to so find

Reasoning

The respondents' reply of 16th May expressly recorded that they had 'still not entered into a binding agreement to sell' and that amounts received were held without prejudice pending negotiations with the receiver. The court agreed with Schofield J that the second paragraph of that letter was a denial of the existence of a binding agreement and that nothing in Tiverton Estates supported treating a denial as a sufficient memorandum.

p. 5

Legal principles established

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  • To satisfy section 3(3) of the Law of Contract Act, a note or memorandum of a contract for the sale of land must contain an admission or recognition of the existence of the contract as well as its terms; a written denial of the existence of any binding agreement cannot constitute a sufficient memorandum

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal to the respondents
On appeal from
High Court of Kenya at Nairobi
HCCC No 3325 of 1978
Jurisdiction invoked
Appeal from the High Court under the Court of Appeal's appellate jurisdiction (judgment does not cite a specific constitutional provision)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Associated Motors Ltd v J. M. Githongo & 2 others [1995] KECA 124 (KLR)", Case Analysis (1995). Civil Appeal No 148 of 1988. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1995/124/eng@1995-10-12

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.