Taws Ltd v Othaya Farmers’ Co-operative Society Ltd [1977] KECA 17 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a co-operative society's failure to counter-sign purchase orders internally did not make them illegal, so it had to pay the printer.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the contracts for the supply of stationery were illegal and void because the orders exceeding Shs 100 were not counter-signed by the Commissioner or his nominee
- 2.Whether rule 34(2)(c) of the Co-operative Societies Rules gave effect to the power in section 84(2)(w) of the Act to render uncounter-signed orders ineffective
- 3.Whether Anderson Ltd v Daniel applied to the present case
Key legal issues
#Whether rule 34(2)(c) made uncounter-signed orders ineffective under section 84(2)(w)
It did not; the Minister did not exercise the power under section 84(2)(w), so the orders were not illegal.
Section 84(2)(w) empowered the Minister to provide that orders in excess of a specified sum 'shall be ineffective unless counter-signed'. Rule 34(2)(c) merely enjoins the society's committee to ensure counter-signing; it does not state that an uncounter-signed order shall be ineffective. The rule governs internal administration and cannot affect the legality of transactions with third parties.
Whether Anderson Ltd v Daniel applied
It did not; in that case statutory formalities themselves rendered the contract illegal, whereas no such provision existed here.
In Anderson there were statutory provisions as to formalities in the sale of fertilisers whose non-observance rendered the contract illegal. Here there is no statutory prohibition on sale and delivery of goods under an uncounter-signed order, so the authority did not apply and the trial judge erred in being guided by it.
Legal principles established
#- A rule requiring internal counter-signature of orders does not, unless it so provides in terms, render uncounter-signed orders ineffective or illegal as against third parties.
- Anderson Ltd v Daniel is distinguishable where the statute contains no provision whose non-observance renders the contract illegal.
Court orders
#- 1.Appeal allowed with costs here and in the court below
- 2.Judgment and decree of the court below set aside
- 3.Judgment entered for the appellant as prayed in the plaint
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the lead judgment; held the orders were not illegal as rule 34(2)(c) does not render uncounter-signed orders ineffective.
I accordingly reject the submission of Mr Wamae, counsel for the respondent, that by implication rule 34(2)(c) covers section 84(2)(w) of the Act, and that the Minister exercised his powers under that section.p. 2
- On appeal from
- High Court at Nairobi
- Not stated in judgment
- Jurisdiction invoked
- Not stated in judgment; appeal to the Court of Appeal from the High Court
Relief refused
#Respondent's defence of illegality
The rule relied on does not render uncounter-signed orders ineffective; it merely directs the committee internally.
Costs
Appeal allowed with costs here and in the court below (costs of the appeal and of the court below to the appellant)
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The orders were not illegal.
I would set aside the judgment and decree of the court below and enter judgment for the appellant as prayed in the plaint.
Appeal allowed with costs.
In my view, this rule is a direction to the committee of a society as to how it shall perform its functions and is not intended to affect the legality of any transaction between the society and a third party.
Issues in the judgment
#The judgment does not state the names of the parties or the case number; the appellant is described only as a limited liability company (printer) and the respondent as a registered primary co-operative society.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Taws Ltd v Othaya Farmers’ Co-operative Society Ltd [1977] KECA 17 (KLR)", Case Analysis (1977). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1977/17/eng@1977-04-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.