The Small Claims Court in Kenya was established to help resolve minor disputes quickly and affordably. While many cases are decided each year, only a handful of decisions from 2021 have been published. These cases covered issues like unfair interest rates, breach of contract, and landlord-tenant disputes.
Since laws and court interpretations change over time, it’s interesting to ask: Would the courts decide the same way today? Let’s break down some of the key lessons from these cases in simple terms.
1. A Deal is a Deal (Unless There’s Fraud)
In Tufaa Capital Limited v Otieno, the court clarified that when two people or businesses sign a contract, they must stick to its terms. Courts will not change a contract just because one party later finds it unfair—unless there’s proof of fraud, coercion, or duress (being forced into the contract).
Takeaway: If you sign a contract, be ready to honor it. The court will only intervene in cases where someone was tricked or pressured into agreeing.
2. Interest Must Be in Writing
In Mwangi v Gichagare, the court ruled that if a contract includes interest on a debt, it must be written down. If there’s no mention of interest, the court will apply the standard court rate instead.
Takeaway: If you expect interest on money owed to you, make sure it’s written in the contract. Otherwise, you’ll only get the court’s default rate.
3. Strong Evidence Wins the Case
The case of Changalwa t/a Champion Radiators v Passing Clouds Kenya Limited confirmed that if a claimant presents strong, unchallenged evidence, they are likely to win. If the other party doesn’t dispute the evidence, the court will assume it’s true.
Similarly, in John Kisiangani Welime v Resolution Health East Africa Limited, the court held that a defendant cannot deny the existence of a contract if they have already acknowledged it in their legal filings.
Takeaway: If you are making a claim, solid proof is your best weapon. If you’re being sued, denying a contract exists won’t work if you’ve already admitted to it in court papers.
4. VAT Responsibility in Business Deals
In Ujenzi Spreadmix Paints Co Ltd v Chasim Construction Co Ltd & Another, the court ruled that businesses acting as VAT collection agents for the Kenya Revenue Authority (KRA) must ensure VAT is accounted for in their supply contracts.
Takeaway: If you’re in business, understand who is responsible for VAT in your transactions to avoid unexpected tax liabilities.
5. Compensation for Breach of Contract
In John Kisiangani Welime v Resolution Health East Africa Limited, the court awarded nominal damages—a small amount of money—to recognize that a contract had been breached, even though the claimant may not have suffered significant financial loss.
Takeaway: Even if breaking a contract doesn’t cause major losses, the court can still award some compensation as a matter of principle.
Final Thoughts
These cases offer insights for anyone dealing with contracts, business transactions, or civil claims. The key lessons? Always put agreements in writing, be clear about interest and VAT, keep strong evidence, and remember that courts expect contracts to be honored unless fraud or coercion is involved.
As the Small Claims Court develops, it will be interesting to see if future cases follow these same principles.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. If you need specific legal guidance, talk or chat on 0708111222.