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Parties Are Bound By The Terms Of The Contract If Entered Willingly – Justices of the Court of Appeal

The Honorable Justices of the Court of Appeal in their judgment delivered on the 30th day of May 2019 stated that parties are bound by the terms of the contract if entered willingly.

CORAM; HON. JUSTICE KENNETH KAKURU, STEPHEN MUSOTA & CHRISTOPHER MADRAMA

This was a case of termination from employment. The Appellant terminated the Respondent’s employment in accordance with the Human Resource Manual of the Appellant entity. The Respondent contested this termination in the High Court before Hon. J Elizabeth Musoke who found in favour of the Respondent to the effect that his employment was terminated unlawfully and that he was entitled to a gratuity payment.

The Human Resource Manual stated that an employee was only entitled to a gratuity payment if he/she had worked for at least a year. The Respondent however, was holding a junior position previously and he was promoted to a senior position to which he signed a new contract.

Three months after his promotion, his employment was terminated. The issue for determination was whether he was entitled to a gratuity payment under the Human Resource Manual.

The Justices of the Court of Appeal unanimously held that he was not entitled to the gratuity payment since he had been in service of his new position for only three months.

The Justices further held that the parties to a contract are bound by the terms of the contract irrespective of how unreasonable and oppressive it may be and the duty of the Court in such instances, is to give effect to the intention of both parties as shown in the agreement.