Faulu Microfinance Bank Ltd v Mdzomba (Commercial Case E039 of 2026) [2026] SCC 178 (KLR)
The bottom line
#A Kenyan court ruled that financial hardship doesn't allow judges to change loan terms — borrowers remain bound by what they signed.
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 claim is merited
- 2.Whether the court can vary and/or restructure the loan agreement
- 3.Who pays the costs of the claim
Key legal issues
#Whether the court can vary and/or restructure the loan agreement
The court cannot rewrite or restructure an agreement voluntarily entered into; absent coercion, fraud or undue influence, its duty is to enforce the agreed terms.
The court held that asking it to restructure the loan was akin to asking it to renegotiate and rewrite a new agreement. Relying on National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd and Matex Commercial Supplies Limited v Euro Bank Ltd, the duty of the court is to enforce what parties agreed upon. No vitiating factor was pleaded, and the respondent's financial difficulties stemmed from his own further borrowing.
Whether the claim is merited
The claim was merited because the respondent did not oppose it in principle, only requesting restructuring.
The respondent's response did not deny the debt; he merely asked the court to restructure instalments due to unforeseen statutory deductions (SHA, housing levy and NSSF tier) shrinking his payslip. Since the principal claim was unopposed, it succeeded, but the restructuring request was declined as contrary to the binding contractual terms.
Legal principles established
#- A court of law cannot rewrite a contract between the parties; parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.
Court orders
#- 1.The claimant's claim contained in the statement of claim dated 12/5/2026 is allowed in the sum of Kshs.560,860.66 being the balance due as at 30/6/2026
- 2.Costs and interest at court rates from the date of filing until payment in full are awarded to the claimant
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Small Claims Court Act (Section 30 considered in the interest of justice on the ex parte hearing)
Relief refused
#Respondent's request to restructure and/or vary the monthly loan instalments
The court cannot rewrite a contract voluntarily entered into absent pleaded and proved coercion, fraud or undue influence
Costs
Costs of the claim awarded to the claimant, together with interest at court rates from the date of filing until payment in full
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.
A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.
It is therefore the finding of the court that guided by the decision of the cases I have referred to this court cannot grant the request to restructure and/or vary the terms of the agreement in terms of the monthly instalments. The request is therefore declined.
The claimant's claim contained in the statement of claim dated 12/5/2026 is allowed in the sum of Kshs.560,860.66/= being the balance due as at 30/6/2026.
Costs and interest at court rates from the date of filing until payment in full are awarded to the claimant.
Issues in the judgment
#Inconsistent case numbers: the header reads SCC COM NO. E039 OF 2026 while the page footer reads JUDGEMENT VOI SCCOM E020 OF 2026
Judgment contains grammatical/typographical irregularities, e.g. describing statutory deductions as 'introductions'
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Faulu Microfinance Bank Ltd v Mdzomba (Commercial Case E039 of 2026) [2026] SCC 178 (KLR)", Case Analysis (2026). SCC COM NO. E039 OF 2026. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2026/178/eng@2026-07-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.