Court awards company sh1.1b over contract breach

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The Commercial Court has awarded trade finance company Recolte Ltd shillings 1.1 billion for breach of contract.

Justice Susan Odongo of the Commercial Division of the High Court on July 30, 2025, ordered Swift Engineering Uganda Ltd after court established that the company was in breach of its obligations.

Recolte Ltd filed a suit against Swift Engineering, a road construction company, for breach of contract arising from a third–party advance payment guarantee dated September 16, 2020.

According to the suit, in 2020, Swift Engineering was awarded a contract by Uganda National Roads Authority (UNRA), now defunct, requiring an advance payment guarantee of shillings 586 million, which Recolte Ltd provided through its bank.

Recolte wired the guarantee funds to the Swift Engineering's bank account. According to the Court record, an on–demand advance payment security was issued by dfcu Bank to UNRA for the amount of shillings 586.7 million. Subsequently, UNRA demanded payment under the guarantee, which was debited from Recolte Ltd account, and the amount was paid. Rocolte Ltd sought an award of consequential and profit at 30% of the total sum claimed. The company contends that the consequential loss arose out of the breach.

“I recognise that the parties had agreed to the interest of 10% per month should the plaintiff demand repayment of the amount. However, I will apply a 23% rate per annum to reflect the profit that the money would have generated during the breach period from the principal sum fell due for payment but was not paid, until payment in full, as general damages to be awarded to the plaintiff,” Odongo said.

The court, in addition, took into consideration that the outstanding advance payment should attract the costs of the suit. The court stated that there was no reason to deny costs, adding that Recolte Ltd is entitled to recover the money.

"An award to the plaintiff (Recolte Limited) of shillings 586 million, being the outstanding advance payment guarantee, general damages of 539.8 million. Regarding interest on the principal, this has been awarded. This court will not award interest on the general damages since interest on the principal is post-judgment,” Odongo said.