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Supreme Court Clarifies What Amounts To a Valid Contract

Supreme Court clarifies what amounts to a valid Contract in the case of Galleria in Africa Limited V Uganda Electricity Distribution Company Limited Civil Appeal N0 8 Of 2017:

The case discussed what constitutes formation of a valid contract between two parties under the PPDA Act and Regulations 2003.

CORAM: Arach Amoko, Mwangusya, Opio Aweri, Mwondha Tibatemwa Ekirikubinza JJSC

This was an appeal from the judgment of the Court of Appeal at Kampala delivered by Kavuma DCJ, Buteera, Musoke JSA which held that there was a contract between the parties, reversed the trial court’s decision and awarded damages. However, the applicant was dissatisfied with the quantum of the damages and he applied to the supreme court.

The issue presented before the Supreme Court was whether the damages awarded by the Court of the Appeal were sufficient in accordance with the contract made between the parties involved.

Court held that it is impossible to determine the quantum of the damages without first establishing whether there was a valid contract between the parties.

There are two factors which constitute a contract. A procurement entity must have received an application of the appropriate and approved procurement procedures and proceedings which culminated in conclusion of a bid award decision of the contracts committee or any other authority (in case of tender board in case of local governments).

In this case only a bid acceptance letter was shared with the contractee.

Court therefore held that It is apparent according to the PPDA Act, that there was no intention by the legislature to make the letter of bid acceptance amount to a contract. This judgement was given on the 26th day of April 2018.