Contract Law in East Africa: Drafting and Breach
Clear contracts are not only documents for lawyers. They are working instructions for businesses, suppliers, consultants and customers. Across the eight East African Community Partner States, the legal systems differ, but courts repeatedly return to one practical idea: a party is usually held to the bargain that it made, not the bargain it later wishes it had made. Good drafting therefore prevents disputes by making performance measurable, changes manageable and remedies usable.
Contents
Why a contract fails before anyone goes
to court
The legal map across the eight EAC
states
What careful drafting should settle
What contract review should expose
What
decided cases teach about winning and losing
How
breach, termination and remedies should be handled
The
regional and dissenting judgment lesson
The
practical rule for a business owner
Why a
contract fails before anyone goes to court
A contract dispute often begins long before
a missed payment or a late delivery. It begins when the parties use a template
that describes the transaction in general words but does not explain what must
actually happen. “Supply on time”, “reasonable quality”, “market price”,
“unforeseen circumstances” and “terminate for convenience” may sound sensible.
Each can become a dispute if the contract does not say who decides, by what
evidence, within what period and with what consequence.
This matters more when economic conditions
move quickly. A supplier may face a currency fall, a fuel shock or a shortage
of imported material. A customer may experience a fall in demand or a delay in
its own project. Those events do not automatically release a party from its
promise. The legal question is normally whether the contract, the governing
statute or a recognised doctrine excuses, adjusts or ends the obligation. A
lawyer helps the parties answer that question before the commercial
relationship becomes hostile.
The
legal map across the eight EAC states
The comparison must begin with
jurisdiction. The EAC currently has eight Partner States: Burundi, the
Democratic Republic of the Congo, Kenya, Rwanda, Somalia, South Sudan, Tanzania
and Uganda. They do not operate under one private contract code. Kenya, Uganda
and Tanzania retain strong common law and statutory traditions. Rwanda,
Burundi, Somalia and the DRC have civil law foundations, although their
commercial rules and institutions have developed in different directions. South
Sudan combines its own post-independence legislation with inherited legal
influences.
In Kenya, the Constitution of Kenya 2010
makes the rule of law a national value and directs courts to promote
alternative dispute resolution under article 159(2)(c). The Law of Contract
Act, Cap 23, and the Arbitration Act, 1995 remain central for commercial
agreements. In Uganda, the Constitution of 1995, especially the commitment to
substantive justice in article 126(2)(e), sits alongside the Contracts Act 2010
and the Arbitration and Conciliation Act. In Tanzania, the Constitution of the
United Republic of Tanzania 1977 recognises the authority and independence of
the judiciary, while the Law of Contract Act, Cap 345, and the Arbitration Act,
2020 provide the principal private-law framework.
Rwanda’s Constitution, the Law Number
45/2011 of 25 November 2011 Governing Contracts and the Law Number 005/2008 on
Arbitration and Conciliation provide a more codified route. In Burundi, the
Constitution of 2018, the Civil Code, Book III, the Code of Civil Procedure and
commercial legislation must be read together. The DRC’s Constitution of 2006,
the Civil Code, Book III, and the OHADA Uniform Acts are particularly important
for commercial transactions. The OHADA Uniform Act on General Commercial Law and
the Uniform Act on Arbitration can alter the answer to a commercial question in
the DRC even when the parties think only in terms of domestic law.
Somalia’s Provisional Constitution of 2012,
the Somali Civil Code, Law Number 37 of 1973, and the Civil Procedure Code
provide the basic private-law setting. South Sudan’s Transitional Constitution
of 2011 must be read with the Contract Act 2008 and the arbitration legislation
used for commercial disputes. In all eight states, sector rules can add another
layer: public procurement law, employment legislation, consumer protection,
banking regulation, construction standards, tax law, data protection and licensing
conditions may limit what a private contract can lawfully do.
The constitutions do not usually supply
every answer to a broken supply agreement. Their importance is practical. They
shape the court’s authority, fair hearing standards, access to justice, public
policy and the acceptability of arbitration or mediation. A clause that chooses
a foreign law or foreign seat should therefore be reviewed against mandatory
rules in the place where performance, assets or enforcement will occur.
What
careful drafting should settle
The first job is to describe the
transaction in operational language. The contract should identify the parties
accurately, confirm their authority, state the goods or services, attach
specifications, identify milestones and define acceptance. If a vendor must
deliver software, “delivery” might mean sending a file, installing it, passing
a test, training staff or handing over source code. Each possibility has a
different legal and commercial effect. A lawyer turns the business expectation
into a sequence that can later be proved.
Payment terms need the same care. State the
currency, tax treatment, invoice requirements, payment date, permitted
deductions, interest on late payment and the effect of a disputed invoice. If
prices may change, specify the index, review date, evidence required and
whether either party may terminate when the adjustment exceeds a stated limit.
Without that machinery, a price-review clause may merely postpone the argument.
Change control is essential for service,
construction and technology contracts. The agreement should say who may request
a change, how the cost and time effect will be assessed, when the change
becomes binding and what happens if the parties do not agree. A short email
saying “please proceed” can otherwise become an argument about whether the
original scope was expanded.
Risk clauses should be connected, not
copied from unrelated templates. A force majeure clause should identify events,
notice, mitigation, temporary suspension, payment for work already completed
and the right to terminate after prolonged interruption. A hardship or economic
adjustment clause should be considered where currency, import or commodity
exposure is central to the deal. It should not promise automatic relief without
a workable calculation.
Liability, indemnity and limitation clauses
deserve plain explanation. A cap should identify what it covers and what it
excludes. The parties should consider whether the cap applies to
confidentiality, fraud, wilful misconduct, death or personal injury, intellectual
property infringement, unpaid fees and regulatory penalties. An indemnity
should identify the protected loss, the conduct that triggers it, the notice
procedure and the right to control the defence. A vague “all losses” clause may
generate more litigation than protection.
Termination must be drafted as a process.
Identify material breach, cure periods, insolvency, prolonged force majeure,
convenience termination and the consequences of ending the contract. State
which clauses survive, how work in progress is valued, how confidential
information is returned, whether licences continue and when final payment
becomes due. A party that accepts late performance for months may later face an
argument that it waived strict compliance or elected to keep the contract
alive. Notices should therefore reserve rights without creating unnecessary
escalation.
The dispute clause should be treated as
part of the commercial bargain. It should state the governing law, courts or
arbitral institution, seat, language, number of arbitrators, method of
appointment, interim relief and the stage at which negotiation or mediation
ends. A clause that merely says “disputes shall be referred to arbitration”
leaves important questions open. For a cross-border EAC contract, the clause
should also address service, evidence, currency, enforcement and the location
of assets.
The EAC Treaty adds a regional caution.
Under article 27, the East African Court of Justice principally interprets and
applies the Treaty. Article 30 permits a resident of a Partner State to
challenge certain acts or omissions for breach of the Treaty, subject to a
strict two-month period. Article 32 gives the Court jurisdiction where a
commercial contract contains an arbitration clause conferring jurisdiction on
it. Article 33 preserves the role of national courts, and article 34 permits a
national court to request a preliminary ruling on EAC law. The EACJ is
therefore not a general substitute for a national commercial court. A lawyer
who inserts “EACJ” into a contract without fitting the clause to the Treaty may
create uncertainty rather than regional protection.
What
contract review should expose
Review is not proofreading. It is a
controlled attempt to find the point at which the deal could fail. The reviewer
should compare the commercial promise with the legal text, schedules, purchase
orders and emails. Conflicting definitions, missing annexes, inconsistent
dates, one-sided discretion, automatic renewals and references to laws that do
not apply in the chosen jurisdiction should be marked for decision.
The reviewer should also test the contract
against the client’s actual evidence. Can the client show that the goods were
delivered, that a milestone was accepted, that notice was received, or that
loss was calculated? A remedy that depends on a certificate, inspection or
written notice is only useful if someone is responsible for producing and
keeping it. The safest contract is one that tells the business what record to
create while performance is still ordinary.
Authority and capacity matter particularly
in public, regulated and cross-border transactions. The lawyer should confirm
the signatory, board or procurement approval, licences, mandatory forms,
language requirements, stamping or registration rules, sanctions and
restrictions on public bodies. A beautifully written agreement can still be
unenforceable or difficult to enforce if a statutory approval was required and
never obtained.
What
decided cases teach about winning and losing
Kenya’s Court of Appeal decision in
National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd and another [2002] 2
EA 503 remains a clear warning. The court rejected an attempt to alter the
parties’ bargain through judicial intervention and explained that courts do not
rewrite contracts merely because a term later appears harsh or commercially
inconvenient. The successful legal approach was to anchor the argument in the
written agreement and the limits of judicial power. The practical lesson for a
drafting lawyer is direct: do not leave a price, interest rate, renewal
mechanism or performance standard to a future appeal to fairness.
The Ugandan Supreme Court decision in
Kampala Bottlers Ltd v Damanico (U) Ltd, Civil Appeal Number 22 of 1992,
illustrates a different failure. The case shows the importance of properly
proving and pleading fraud rather than treating a serious allegation as a
substitute for particulars and evidence. Counsel seeking relief in a contract
dispute must identify the representation, its falsity, knowledge or
recklessness, reliance and resulting loss. If those elements are blurred, the
court may treat the claim as an ordinary disagreement about performance rather
than an actionable wrong.
The Tanzanian framework makes the same
practical point through statutory detail. Sections 37, 73 and 74 of the Law of
Contract Act, Cap 345, address performance, compensation and stipulated sums. A
party claiming a fixed amount after breach should therefore show whether the
clause is a genuine allocation of risk, a penalty or a sum subject to
reasonable compensation. A lawyer who simply labels every payment a “penalty”
or every payment a “liquidated damage” has not answered the statutory question.
The drafting should explain the commercial basis for the amount and preserve
evidence of the loss.
Rwanda’s codified approach under Law Number
45/2011 makes precision equally important. The contract should identify the
obligation, the event of default and the remedy in terms that can be applied
without reconstructing the bargain from informal negotiations. In the DRC, a
commercial lawyer must additionally check whether an OHADA Uniform Act governs
the transaction and whether the selected forum is consistent with the OHADA
arbitration and enforcement structure. In Burundi, Somalia and South Sudan, the
same discipline is necessary even where reported commercial decisions are less
accessible: identify the applicable code or statute, the court or tribunal with
authority, the proof required and the method for enforcing the result.
These cases also explain how lawyers lose
cases. They sometimes argue from commercial sympathy instead of the text, plead
breach without identifying the exact promise, seek damages without proving
causation and mitigation, or rely on a dispute clause without proving that the
notice and appointment steps were followed. A client may have suffered real
loss and still fail because the claim was brought in the wrong forum, outside
the contractual time limit, against the wrong party or without the required notice.
How
breach, termination and remedies should be handled
Breach should be classified before a remedy
is chosen. Non-payment, late delivery, defective performance, refusal to
perform and breach of confidentiality are not automatically treated in the same
way. The contract may distinguish a minor breach from a material breach, but
the court or arbitrator will still examine the wording, the facts and the
applicable statute. A party should not announce termination casually. It should
check whether notice, cure, certification, demand or an opportunity to remedy
is required.
The usual remedies include damages, payment
of the contract price, specific performance, an injunction, restitution or
termination. Damages are not a punishment for disappointment. The claimant
normally must connect the breach to a legally recoverable loss, act reasonably
to reduce it and prove the amount. A lawyer should prepare the evidence early:
invoices, delivery records, inspection reports, correspondence, bank
statements, replacement costs, project schedules and witness testimony.
Arbitration can be faster and more private,
but it is not automatically cheaper or easier. The parties still need a valid
arbitration agreement, a defined scope, a competent tribunal, a workable
appointment process and assets against which the award can be enforced.
Litigation may be more appropriate where urgent public-law relief, multiple
third parties or non-arbitrable issues are involved. Mediation is valuable when
the relationship matters, but a settlement should state exactly what is
released, what remains payable and what happens if the settlement itself is
breached.
The
regional and dissenting judgment lesson
The EACJ’s decision in Manariyo Desire v
Attorney General of Burundi, Reference Number 8 of 2015, is not a contract
case, but it is useful for litigation strategy. The majority adopted a
demanding approach to when a national judicial decision could engage
international responsibility. Two judges dissented from that threshold and
questioned the idea that international law required a blatant, notorious or
gross miscarriage of justice before the regional court could examine the
conduct. Their reasoning illustrates the practical value of a dissent: it does
not bind a later court, but it can expose an assumption in the majority’s test,
preserve an alternative interpretation and help counsel frame an argument for a
future case or reform.
For contract lawyers, the lesson is to read
the whole judgment, including separate opinions. A dissent may reveal how a
clause, constitutional value or Treaty principle could be interpreted if the
facts change. It should be cited honestly as a minority view, not presented as
the law. The advocate who distinguishes the majority, uses the dissent to
explain the policy consequence and ties the argument to the text gives the
judge a reasoned route to develop the law without pretending that the dissent
already controls the result.
The
practical rule for a business owner
Before signing, ask four questions. What
exactly must each party do? What evidence will prove that it was done? What
happens if money, time, law or supply conditions change? Where and by whom will
the dispute be decided? If the contract answers those questions clearly, a
lawyer has already performed much of the most valuable work: reducing the space
in which disagreement can grow.
Contract law in East Africa is not one
uniform body of rules, but the commercial lesson travels well across the
region. Constitutions protect the institutional setting for justice; statutes
supply rules on formation, performance and remedies; courts insist that the
parties’ own words matter; and regional instruments reward careful choice of
forum. A contract is strongest when it is not merely signed, but understood,
reviewed, performed and updated through a disciplined process.
Ronald Serwanga is a Ugandan legal
researcher and an advocate admitted to the Rwanda Bar. He writes for East
Africa Legal Insight.
This legal training article provides
general information for education and contract planning. It is not legal
advice. Contract validity, remedies, limitation periods, regulatory
requirements and enforcement options depend on the facts, the transaction and
the law in force in the relevant jurisdiction. A qualified lawyer should review
a proposed agreement before signature or litigation.
Sources
Mentioned in This Training Article
The authorities referred to include the
Treaty for the Establishment of the East African Community, especially articles
6(d), 27, 30, 32, 33 and 34; the Constitution of Kenya 2010; the Constitution
of Uganda 1995; the Constitution of the United Republic of Tanzania 1977; the
Constitution of Rwanda; the Constitution of Burundi 2018; the Transitional
Constitution of the Republic of South Sudan 2011; the Constitution of the
Democratic Republic of the Congo 2006; the Provisional Constitution of Somalia
2012; Kenya’s Law of Contract Act and Arbitration Act; Uganda’s Contracts Act
2010 and Arbitration and Conciliation Act; Tanzania’s Law of Contract Act, Cap
345, and Arbitration Act 2020; Rwanda’s Law Number 45/2011 Governing Contracts
and Law Number 005/2008 on Arbitration and Conciliation; the Somali Civil Code
Law Number 37 of 1973; the OHADA Uniform Acts on General Commercial Law and
Arbitration; National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd and
another [2002] 2 EA 503; Kampala Bottlers Ltd v Damanico (U) Ltd, Civil Appeal
Number 22 of 1992; and Manariyo Desire v Attorney General of Burundi, EACJ
Reference Number 8 of 2015.
Suggested
Citation
Ronald Serwanga, “Contract Law in East Africa: Drafting and Breach” East Africa Legal Insight (21 September 2026).