Steadfirst Trainers & Consultants Ltd v Action Africa Help International [2023] KEHC 23696 (KLR) | Contract Formation | Esheria

Steadfirst Trainers & Consultants Ltd v Action Africa Help International [2023] KEHC 23696 (KLR)

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Steadfirst Trainers & Consultants Ltd v Action Africa Help International (Civil Appeal E724 of 2021) [2023] KEHC 23696 (KLR) (Civ) (19 October 2023) (Judgment)

Neutral citation: [2023] KEHC 23696 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E724 of 2021

AN Ongeri, J

October 19, 2023

Between

Steadfirst Trainers & Consultants Ltd

Appellant

and

Action Africa Help International

Respondent

(Being an appeal from the ruling and order of Hon. E. M. Kagoni (PM) in Milimani CMCC No. 9817 of 2018 delivered on 21/5/2021)

Judgment

1. The appellant Steadfirst Trainers & Consultants was the plaintiff in Milimani CMCC No. 9817 of 2018 where the appellant sued the respondent, Action Africa Help International seeking a sum of Kshs.323,350 and for an order of specific performance for the respondent to take goods contracted and were ready for delivery together with costs of the suit and interest.

2. The trial court after hearing the suit found that the appellant proceeded to production before approval of the sample and therefore the respondent was not liable to pay for the goods.

3. The trial court dismissed the appellant’s suit with costs to the respondents.

4. The appellants have appealed against the dismissal of their suit on the following grounds;a.The Learned Trial Magistrate erred both in fact and law by failing to find that a contract for the supply of goods existed between the Appellant and the Respondent.b.The Learned Trial Magistrate erred both in fact and in law in failing to find that the contract was to be performed in stages; the first stage being the cutting and sewing of the raw material into the desired articles and the second stage entailed printing the artworks (approved digital mocks) onto the sewn materials.c.The Learned Trial Magistrate erred both in fact and law in failing to find that it was the intention of the parties that samples were to be provided twice; the first instance was before the Local Purchase Orders No. 203663, 203663, 203661 (LPOs) were issued to the Appellant and the second time, after the approval by the Respondent of digital logo positions and printing of the same on the sewn material.d.The Learned Trial Magistrate erred both in fact and law in finding that the condition appearing on the LPOs that "samples to be provided before final print’’ meant that samples were to be provided to the Defendant before any further work could proceed."e.The Learned Trial Magistrate erred both in fact and law in failing to find the Appellant supplied samples as was requested in the emails of 6/3/2018 and on the basis of which the Appellant was awarded the LPO’s after the Respondent was satisfied with the and quality of the Appellant's sewing work on the samples supplied.f.The Learned Trial Magistrate erred both in fact and law in failing to find that there were both oral and written communications which led to Respondent's variations of colour specifications in the LPOs to the colours specified in the Respondent's email of 26/3/ 2018. g.The Learned Trial magistrate erred both in fact in failing to find that the Appellant forwarded to the Respondent the digital sample mocks ("Mocks") for approval on 16/4/2018 to pave way for physical sample generation and final print and despite numerous reminders, the Respondent refused to give approval.h.The Learned Trial Magistrate erred both in law and fact in failing to find that in refusing and/or neglecting to give approval on the logo positions, the Respondent frustrated the contract and prevented the Plaintiff from doing the final print to complete the contract.i.The Learned Trial Magistrate erred both in law and fact in finding that there was no evidence before court that the Appellant produced the goods.j.The Learned Trial Magistrate erred in law and fact in failing to take cognizance of the evidence tendered on behalf of the Appellant during the hearing of the defence case.k.That the Learned Trial Magistrate erred both in fact and law in finding that the Appellant had not discharged its evidential burden of proof.l.The Learned Trial Magistrate erred both in fact and law by proceeding to dismiss the Plaintiffs case in total disregard of the Appellant's case, written facts, evidence and submissions.

5. The parties filed written submissions as follows; the appellant submitted that there was an existing contract between the parties. The quotation dated 7/3/2014 constitutes a valid offer which was accepted by the Respondent by issuance of the LPOs dated 8/3/2018. In support the appellant cited Toyota Kenya Limited v Vehicle & Equipment Leasing Limited [2021] eKLR where the court had this say:“25. As the agreement between the parties is one for sale of goods, the Plaintiff is the seller in possession of the vehicles it wishes to sell. It proposed the terms of sale in the Quotation. The Quotation gives a description and specification, quantity and price of the vehicles, terms of payment and warranty. I therefore hold that the Quotation by the Plaintiff as seller constitutes the offer to the Defendant, as buyer, to accept the vehicles on the terms contained in the Quotation. This is consistent with the definition of the term offer in Black’s Law Dictionary (9th Ed.), meaning a, “display of willingness to enter into a contract on specified terms, made in a way that would lead a reasonable person to understand that an acceptance, having been sought, will result in a binding contract.”26. It follows therefore that the LPO, which accepted the terms set out in the Quotation, constituted the acceptance. Black’s Law Dictionary (9th Ed.) defines a, “Local Purchase Order’’ as, “A document that has been generated by the buyer in order to purchase products or property. This document allows a transaction to occur and when accepted by the seller becomes a legal binding contract of sale.” That the LPO constitutes the acceptance by the buyer is buttressed by the fact that it is upon the issuance of the LPO that the seller delivers the vehicle irrespective of the time of payment. Further, on its face, the Quotation states, “This quotation validity is to be confirmed at the time of placing order.” I therefore find and hold that once the Defendant issued the LPO, the agreement for sale of the vehicles was consummated on the terms set out in the Quotation.”

6. The appellant further submitted that the contract being for production and supply of branded goods was performed. Samples were provided before the award was made which the respondent was satisfied with the price and quality as evident from LPO. The appellant was further required to share a digital sample mock on how the logos were to be placed on the sewn materials. Upon approval of the sample, mock the appellant was then required to generate a physical sample of the garments for approval, and thereafter proceeded for final print once the mocks are approved.

7. The appellant submitted that the request for quotation and LPOs had specification on the colour, quantity, sizes material and price of the items to be supplied. In issuing the LPOs, there was meeting of minds, and hence contract on the production of the items contracted for. There was no requirement of approval before purchasing the material, cutting and sewing the desired articles hence why the Appellant proceeded to perform the contract-by buying, cutting as per the desired size and sewing the dust coats, jackets and overalls.

8. That upon being issued with the LPO’s the appellant committed its resources towards the purchase and production of the requested materials. There was various communication between the parties which led to the appellant accommodating the variations out of good will and went ahead to produce the desired articles. Finally, the respondent unjustifiably refused to approve the digital mocks for logo positions to pave way for final print thereby frustrating and/or preventing the final print and delivery of the goods. Consequently, the Appellant suffered loss that is attributable to the Respondent's conduct.

9. The respondent alternatively submitted that the contract entered by the parties was in the form of agreement to sell and that the transfer of property in the good was to take place subject to fulfillment of a condition in the contract. That section 3 (5) of the Sale of Goods Act provides that "an agreement to sell becomes a sale when the time elapses, or the conditions are fulfilled subject to which the property in the goods is transferred.

10. In this particular transaction, the condition in the contract was located in the Local Procurement Order (LPO) and it required that the Appellant provides the Respondent with a sample for approval before print. The Appellant failed to comply with the conditions contained in the LPO, as a result there was no transfer of property in the goods. Consequently, the agreement to sell did not materialize, it remained a mere contract that could not be enforced.

11. The respondent submitted that it is true that the appellants were provided samples in two stages however other than the initial samples supplied by the appellant for the previous work they had done the appellant did not thereafter provide samples for the work they were specifically assigned by the respondent. the appellants email availing the digital mock sample and seeking approval came a month later after the appellant had been requested to make changes on the color but they declined. The appellant in addition produced a bulk of the goods by the time they were forwarding the mock sample for approval. The email dated 29/3/2018 confirms that the respondent had raised concern on the need to change the color on the products procured.

12. It was submitted that section 17 of the Sale of Goods Act states that a buyer must have reasonable opportunity to examine the bulk to ensure it befits the sample and in this case the parties were still at the sampling stage to ensure they met the needs of the respondents.

13. The respondent further submitted that having established that there were no samples provided by the appellant as required by the LPO it follows therefore that there was no breach of contract. The breach of contract in this case could only have arisen in the event the appellant had supplied the relevant goods to the respondent, the goods be accepted by the respondent then the respondent declines to pay for the goods. There was no acceptance of the goods as there were no goods supplied and/or delivered to the respondent.

14. This being a first appeal, the duty of the first appellate court is to re-evaluate the evidence adduced before the trial court and to arrive at my own conclusion whether to support the findings of the trial court while bearing in mind that the trial court had the opportunity to see the witnesses. In Selle v Associated Motor Boat Co. [1968] EA 123 it was held in the following terms: -“An appeal from the High Court is by way of re-trial and the Court of Appeal is not bound to follow the trial judge’s finding of fact if it appears either that he failed to take account of particular circumstances or probabilities, or if the impression of the demeanour of a witness is inconsistent with the evidence generally.An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally.”

15. The issues for determination in this appeal are as follows;i.Whether the appellant proved its case to the required standard.ii.Whether the appellant is entitled to an order of specific performance.iii.Who breached the contract between the parties?iv.Who pays the costs of this suit?

16. On the issue as to whether the appellant proved it’s case against the respondent, I find that there a meeting of minds but there was a mistake that vitiated the contract since the appellant proceeded on the basis of previous works while the respondent was waiting to first receive a sample for approval.

17. I find that the Appellant did not provide the Respondent with a sample for approval before printing.

18. The Respondent should not have issued an LPO unless all preliminary conditions had been met. In this case why was one issued as purported, before the artwork was incomplete?

19. It was not clear whether the samples requested were paid for or why the LPO for mass production was issued before the artwork was approved.

20. The elements of a valid contract are as follows; In Charles Mwirigi Miriti v. Thananga Tea Growers Sacco Limited and Another (2014) eKLR the court of appeal stated that it is trite that there are three essential elements for a valid contract. That is an offer, acceptance and consideration.

21. I find that the parties were not in agreement on the issue of first approving the sample before the production.

22. I find that the appellant did not prove that the sample was supplied and approved before starting mass production.

23. I also find that the issuance of the LPO signified approval.

24. The respondent should not have issued the LPO before approval of the sample.

25. In the circumstances, I find that the appellant is not entitled to an order of specific performance.

26. As the respondents rightly put it, the sample was not availed for approval of colour coding which means a lot to an organization.

27. On the issue as to who breached the contract, I find that the parties were at cross-purposes and therefore the contract is voidable.

28. The appellants proceeded under the mistaken impression that the LPO was a green light to proceed to production while the respondents were waiting to approve the sample first.

29. In the circumstances I find that there was a mistake which rendered the contract voidable.

30. Lord Denning in Solle v Butcher [1949] 2 All ER 1107: stated as follows:“Let me next consider mistakes which render a contract voidable, that is, liable to be set aside on some equitable ground... The court had power to set aside the contract whenever it was of opinion that it was unconscientious for the other party to avail himself of the legal advantage which he had obtained. Torrance v. Bolton (19). This branch of equity has shown a progressive development. It is now clear that a contract will be set aside if the mistake of the one party has been induced by a material misrepresentation of the other, even though it was not fraudulent or fundamental, or if one party knowing that the other is mistaken about the terms of an offer, or the identity of the person by whom it is made, lets him remain under his delusion and conclude a contract on the mistaken terms instead of pointing out the mistake.”

31. In the circumstances, I find that the loss has to be borne by both parties.

32. By issuing the LPO the respondents gave a signal for production.

33. I order that the respondents pay half the production costs of the consignment.(Half of Kshs.323,350 =161,675)

34. The appellant to dispose of the consignment since the same does not meet the specifications of the respondents.

35. Judgment be and is hereby entered in favor of the Appellant against the Respondent in the sum of Kshs. 161,675 plus interest at court rates from the time of filing the original suit.

36. I order that each party bears its own costs of this appeal and the original suit.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023. .................A. N. ONGERIJUDGEIn the presence of:……………………………. for the Appellant……………………………. for the Respondent