Court orders contractor to pay sh109m over Moyo Hospital supplies
The dispute arose from a commercial transaction in which Jan Mohammed Enterprises said it was contracted to supply construction materials for Prism Construction's Moyo Hospital project.
Court orders contractor to pay sh109m over Moyo Hospital supplies
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The High Court in Arua has ordered Prism Construction Ltd to pay Jan Mohammed Enterprises Ltd sh109.2 million for construction materials supplied to the company's Moyo Hospital project after finding that the parties had a valid and enforceable contract despite the absence of a formal written agreement.
In a judgment delivered on July 6, 2026, Justice Harriet Grace Magala ruled that Jan Mohammed Enterprises proved, on a balance of probabilities, that it supplied building materials worth sh127.18 million to Prism Construction between 2014 and 2015. The court found that the contractor paid only sh18 million, leaving an outstanding balance of sh109,184,500.
The dispute arose from a commercial transaction in which Jan Mohammed Enterprises said it was contracted to supply construction materials for Prism Construction's Moyo Hospital project.
The supplier told the court that it delivered building materials worth sh127.18 million between 2014 and 2015.
Although Prism Construction made a partial payment of sh18 million, it allegedly failed to settle the remaining balance despite repeated demands.
The construction company denied liability, arguing that it had authorised purchases worth only sh20 million, which were secured by a post-dated cheque.|
During the hearing, Jan Mohammed Enterprises relied on ledger accounts, invoices, delivery notes, payment receipts and a dishonoured cheque to support its claim.
Its witnesses, Elias Baguma, a former accountant, and Ezra Ahmed, the company's sales manager, testified that the materials were supplied on credit and received at the Moyo Hospital site by Prism Construction officials, including director Maurice Kertho and site engineer Peter Amule.
The defence, through its witness Kato Owichi, argued that there was no written contract as required under the Contracts Act and claimed the delivery notes and invoices were self-generated documents that did not prove the existence of an agreement.
However, Justice Magala rejected that argument, holding that although contracts involving amounts exceeding 25 currency points are generally required to be in writing, courts have consistently held that such agreements may also be established through documentary evidence and the conduct of the parties.
The judge found that the delivery notes, invoices and ledger accounts produced by the supplier sufficiently demonstrated that the construction materials had been delivered and accepted by Prism Construction.
The court further held that Maurice Kertho, a director of Prism Construction, had apparent authority to bind the company and that the supplier was entitled to rely on his representations without investigating the company's internal procedures.
Justice Magala relied on the indoor management rule, which protects third parties dealing with companies in good faith, and held that Prism Construction could not avoid liability for the actions of its own director and employees.
The judge also observed that although the defendant alleged the documents had been fabricated, it failed to produce evidence challenging their authenticity or discrediting the supplier's records during cross-examination.
The court further found that the company's claim that supplies had been capped at sh20 million was unsupported by documentary evidence.
Justice Magala ordered Prism Construction Ltd to pay Jan Mohammed Enterprises Ltd sh109,184,500 together with interest at 18% per annum from the date the suit was filed until judgment.
The court also awarded the plaintiff the costs of the suit.
However, the judge declined to award general damages, holding that the claim had not been specifically pleaded in the plaint.