Bakshish Singh & Brothers v Panafric hotels Limited [1986] KECA 72 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a building contract never existed because a key term—the site handover date—was left for future agreement.
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 contractor's tender and the employer's letter of September 5, 1975 constituted a concluded contract despite the date for possession of the site being left for later agreement
- 2.Whether the last paragraph of the acceptance letter made the employer's acceptance conditional or created a condition precedent
- 3.If there was a concluded contract, whether the contractor breached it
- 4.If there was a breach, what damages were payable, including whether Shs 10,000.00 per week for delay was a penalty and whether the employer mitigated its loss
Key legal issues
#Whether an agreement to agree on a critical term (date for possession of the site) prevents formation of a binding building contract
There was no concluded bargain because the date for possession was to be arranged or agreed by the parties and never was; hence no breach and no damages.
The tender and acceptance left the date for possession of the site to be agreed, and the contract conditions expressly stated it was 'to be arranged upon signing the contract'. Following May and Butcher, a crucial point left undetermined for future agreement means there is no contract. The court distinguished a blank term from one to be agreed. Without a concluded contract there could be no breach or damage.
Whether an agreement to execute a formal contract later makes the existing agreement incomplete
A provisional agreement intended to be binding until a formal agreement is executed is fully and immediately binding; but this only applies where a concluded bargain exists.
The court applied Branca v Cobarro and Tarmohamed v Lakhani for the principle that where parties intend to be bound provisionally pending a formal contract, the provisional agreement binds immediately. However, that principle could not assist the employer here because the essential date for possession was left for future agreement, so no concluded bargain ever existed.
Whether a contractor may raise defences at trial not raised when repudiating
A party may resist a breach of contract claim on any available ground even if it gave no reason before action.
Relying on British & Benningtons Ltd v NW Gahar Tea Co, the court affirmed that a defendant to a breach of contract action is not confined to the reasons it gave at the time of repudiation; it may rely on any available defence at trial, including absence of contractual formation.
Legal principles established
#- A concluded contract is one which settles everything necessary to be settled and leaves nothing to be settled by later agreement between the parties.
- Where the parties provide that a critical or crucial term (such as the date for possession of the site) is to be agreed later and they never agree it, there is no contract.
- A provisional agreement intended to be binding until a formal contract is executed is fully and immediately binding.
- A party may resist an action for breach of contract on any available ground even though it gave no reason before action.
Court orders
#- 1.The appeal is allowed with costs, including the costs of the abortive part-heard appeal overtaken by the retirement of Chesoni J
- 2.The judgment of the High Court is set aside and substituted with judgment for the contractor dismissing the employer's suit with costs
- 3.The cross-appeal is dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- Civil Case 2715 of 1976
- Jurisdiction invoked
- First appeal to the Court of Appeal under the applicable appellate statute; no specific provision cited in the judgment.
Relief refused
#The employer's cross-appeal seeking damages for Didar's delay in beginning and completing the works and restoration of the full Shs 217,871.12 claim
The cross-appeal failed because the appeal succeeded on the main issue that no contract was ever concluded, there being no agreed date for possession of the site
Costs
Appeal allowed with costs (including the abortive part-heard appeal); judgment of the High Court set aside and the employer's suit dismissed with costs; cross-appeal dismissed with costs.
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.
It follows that there was no breach of it and the employer suffered no damage. The appeal is allowed with costs
The appeal is allowed with costs (including the abortive part heard appeal which was overtaken by the retirement of Mr Justice Chesoni J), the judgment of the High Court is set aside and one for the contractor against the employer dismissing the latter’s suit with costs substituted. The cross-appeal is dismissed with costs.
a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties.
Where there is provision for the parties to agree the critical point later (and they never do) there is no contract.
Issues in the judgment
#The tender figure is given inconsistently in the judgment - Shs 675,038.37 in the opening account but Shs 675,938.37 when quoting the tender, and damages figures appear variously as Shs 217,871.12 and Shs 217,817.12; also Branca v Cobarro is cited as [1949] 2 All ER 101 in one place and [1947] 2 ALL ER 101 in another.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Bakshish Singh & Brothers v Panafric hotels Limited [1986] KECA 72 (KLR)", Case Analysis (1986). Civil Appeal 5 of 1984. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1986/72/eng@1986-10-08
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.