In the case of Kaija Karoli V Centenary Rural Development Bank & Others Civil Suit No.29 Of 2011, In the High Court of Uganda At Masindi.
Coram; Justice Paul Gadenya Wolimbwa, Judgment delivered on the 07th day of July 2020.
In this case, the Plaintiff sued the Defendants in the High Court to answer a question on the legality of a transfer of land to the 2nd Defendant. In brief, the 2nd Defendant, who is a son to the Plaintiff, sought financial help from the Plaintiff through a loan procured by the bank. The Plaintiff went ahead to execute powers of attorney in favor of the 2nd Defendant to get a loan from the bank while using the suit land as security. The bank denied the application for a loan by the 2nd Defendant and advised him to transfer the land into his names in order to procure the loan. This was agreed upon by the Plaintiff and his son and that after two (2) years, he would re-transfer the title into the Plaintiffs name. This was followed by the Plaintiff putting a caveat on the land to protect his interest.
After six (6) months, the Plaintiff came across an advert in the newspapers selling off this land and immediately brought this suit to Court.
The issue for determination was whether the sale of the land by the bank was legal and whether the Plaintiff still had an interest in the land.
In resolving this issue, his Lordship Paul Gadenya relied on the principles of contract and dismissed the Plaintiffs claim. The dismissal was because the contract to re-transfer the title into the Plaintiffs’ name was between two parties only and, therefore, could not be binding on the whole world. This, therefore, means that the Plaintiff lost interest in the land upon transfer to his son, and thus the caveat put on the land was of no effect as well.
In conclusion, therefore, a contract between two people is not binding on the whole world.