Rossi Renata v Fabio Marelli & 2 others [2020] KEELC 2338 (KLR)
The bottom line
#The High Court dismissed an Italian buyer's multi-million shilling claims against Watamu property sellers, ruling companies, not their directors, bear contractual liability.
What this practically means
#Executive summary
#Key legal issues
#Personal liability of directors/agents for company contracts
The 1st Defendant, having signed the First Agreement as director of the 2nd Defendant (the named Vendor), and the 3rd Defendant, a non-signatory, were not personally liable under it
A perusal of the First Agreement showed the 2nd Defendant was the Vendor and the 1st Defendant signed as its shareholder and director. The 3rd Defendant was not a signatory to the First Agreement. Applying separate legal personality, the court held the company alone was bound by its terms.
Liability for delay in completion of construction
The Plaintiff's claim for delay penalty and demurrage failed because the delay clause was not imported into the Supplementary Agreement and her own non-payment contributed to the delay
The Supplementary Agreement, which governed construction, contained no Euros 200-per-day delay clause. PW1 conceded payments under items 8 to 11 of the schedule were not made in time. Delay was therefore not solely attributable to the Defendants, and the penalty claim could not arise.
Quantum of the balance due on the Counterclaim
The 3rd Defendant proved a balance of Kshs 1,950,000/-, being the figure admitted by PW1, not the Kshs 2,650,000/- claimed
The 3rd Defendant claimed Kshs 2,650,000/- but produced no documents or reconciliation supporting the higher figure. PW1 admitted Kshs 7,150,000/- had been paid against a contract of Kshs 9,100,000/-, leaving Kshs 1,950,000/-, which the court accepted as the balance due.
Legal principles established
#- A company is a legal entity separate and distinct from its directors and shareholders, who are not personally bound by its contracts merely by signing for it
- A party who has not completed payments due under a construction contract cannot attribute delay in completion to the contractor
- A claim for a contractual penalty must be anchored in the agreement sued upon; a clause in one agreement is not enforceable under a different agreement that does not incorporate it
Court orders
#- 1.Plaintiff's suit dismissed
- 2.Judgment entered for the 3rd Defendant in the sum of Kshs 1,950,000/- as prayed in the Counterclaim
- 3.The 3rd Defendant awarded the costs of both the Plaintiff's suit and the Counterclaim
- Jurisdiction invoked
- Original civil jurisdiction of the High Court in a contract and land dispute (PLEADINGS do not cite a specific constitutional/statutory provision)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Rossi Renata v Fabio Marelli & 2 others [2020] KEELC 2338 (KLR)", Case Analysis (2020). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/2338/eng@2020-05-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.