Ali Abdi Mohamed v Kenya Shell & Company Limited [2017] KECA 590 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that unwritten business deals can still be binding contracts, but losing this appeal means large damage claims fail without strict proof.
What this practically means
#Executive summary
#Key legal issues
#Whether a binding and enforceable contract existed between the parties
Yes - a valid and enforceable contract existed by reason of conduct, as there was offer, acceptance and consideration despite the absence of a formal written agreement
The parties carried on business together for about six months: the respondent supplied petroleum products to the appellant at specific prices over a period. Relying on RTS Flexible Systems and Steadman v Steadman, the Court held that a contract may be inferred objectively from words and conduct, and that a party who lets another incur expense on the faith of an agreement cannot later deny its enforceability.
Whether the respondent breached the contract by terminating without reasonable notice
No - the appellant was given reasonable notice before termination, as his account was inactive from January 2001 and a closure notice was issued in December 2001
The Court noted the account was inactive from 3rd January 2001 until closure in January 2003, and that a closure notice had been given in December 2001. On those facts the Court agreed with the learned Judge that reasonable notice of termination was given, so there was no breach of any implied term of notice.
Whether the appellant proved special damages of Kshs. 43,250,000
No - the special damages, though specifically pleaded, were not strictly proved; the rental payments predated the agreement and the agreement was non-exclusive
The rental payments claimed were incurred before the agreement with the respondent commenced, so the respondent was not responsible for that loss. The agreement was non-exclusive, so the appellant could have bought from other suppliers, and he ran a restaurant and other businesses on the leased premises that should have continued despite termination. Applying Hahn v Singh and Bonham-Carter v Hyde Park Hotel, strict proof was lacking.
Legal principles established
#- On a first appeal, the Court must reconsider and evaluate the evidence afresh and draw its own conclusions, bearing in mind that it has neither seen nor heard the witnesses
- The essential elements of a valid contract are offer, acceptance and consideration, and a contract may be inferred from the conduct of the parties without a writing
- There is no general rule that all agreements must be in writing; only specific agreements require writing or a memorandum
- Special damages must be specifically pleaded and strictly proved; they are not the natural or probable consequence of the act complained of and may not be inferred from it
Court orders
#- 1.The appeal is dismissed
- 2.Costs of the appeal awarded to the respondent
- On appeal from
- High Court of Kenya at Nairobi
- HCCC No. 66 of 2003
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (the judgment does not cite a specific enabling provision)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Gachichio v Twin Properties Limited (Miscellaneous Case 532 of 2021) [2026] KEELC 889 (KLR)[2026] KEELC 889 (KLR)19 Feb 2026applied
- Moniks Agencies Limited v Kenya Airports Authority[2025] KECA 471 (KLR)7 Mar 2025applied
Cite this brief
#Cite this brief
Caselaw, "Ali Abdi Mohamed v Kenya Shell & Company Limited [2017] KECA 590 (KLR)", Case Analysis (2017). Civil Appeal No. 187 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/590/eng@2017-03-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.