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Justices Of The Court Of Appeal Discuss What Amounts To Sufficient Consideration In Contracts

Case Of Gerald Nsubuga V Petwa Rwomushoro, CA NO. 102 OF 2012.

The learned Justices of the Court of Appeal in their judgment delivered on the 10th April 2019 discussed what amounts to sufficient consideration in contracts

CORAM: Hon Justice Alphonse Owiny Dollo, Hon Justice Keneth Kakuru, Hon Justice Stephen Musota

The appellant was the registered proprietor of 75 acres of land, he sold 3 acres to the respondent for a consideration of 75million of which 70million was paid. The 75 acres were subdivided into different plots however his title was subsequently disputed by a one Tempora. Upon complaint the appellants name was cancelled from the subdivisions except the plots that had been registered in the respondent’s name. Respondent eventually had to pay more money to Tempora in order to retain his land. The respondent filed a suit against the appellant claiming refund of purchase price for total failure of consideration. The trial judge found in favour of the respondent that there was total failure of consideration and ordered a refund.

The question before the appellate court was whether there was a total failure of consideration. Court noted that, failure of consideration occurs if sufficient consideration was contemplated by parties at the time the contract was entered into, but either on account of some innate defect in the thing to be given or nonperformance in whole or in part to that which the promise agreed to do, nothing of value can be or is received by the promise.

The contract indicated that the purchaser would get land free of encumbrances. The evidence showed that the respondent did not get quiet possession as was agreed in the sale agreement. Whereas she obtained the land, it was after making another payment.

The court upheld the trial court’s decision relying on Joseph Muluuta V Katema Silvana SCCA No. 11 of 1999 in which it was stated that if a party receives consideration and does not receive anything in return, then he is entitled to a refund of the money.