LAW DEVELOPMENT CENTRE

DEPARTMENT OF POST
GRADUATE LEGAL STUDIES
AND LEGAL AID

CORPORATE AND COMMERCIAL

PRACTICE TEACHING MANUAL
LAW DEVELOPMENT CENTRE
Contents
4.0 SUBJECT TWO: CORPORATE AND COMMERCIAL PRACTICE................................................................5

4.1 Introduction...........................................................................................................................................................5

4.2 Course Justification.............................................................................................................................................5

4.3 Aims of the Course..............................................................................................................................................5

4.4 Course Objectives...............................................................................................................................................5

TERM ONE.................................................................................................................................................................5

4.5 MODULE ONE: BUSINESS SET UP AND MANAGEMENT......................................................................5

4.5.1 Introduction.......................................................................................................................................................6

4.5.2 Aims of the Module..........................................................................................................................................6

4.5.3 Learning outcomes..........................................................................................................................................6

4.5.4 Outline of Content............................................................................................................................................6

4.5.4.1 Existence of Partnership..............................................................................................................................6

4.5.5.1 Statutes..........................................................................................................................................................9

4.5.5.2 Rules/Regulations......................................................................................................................................10

4.5.5.3 Cases............................................................................................................................................................10

4.5.5.4 Text Books...................................................................................................................................................11

4.6 MODULE TWO: CORPORATE FINANCING...............................................................................................11

4.6.1 Introduction.....................................................................................................................................................11

4.6.2 Aims of the Module........................................................................................................................................12

4.6.3 Learning outcomes........................................................................................................................................12

4.6.7 Statutes............................................................................................................................................................13

4.6.9 Cases..............................................................................................................................................................13

4.7 MODULE THREE: PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS.......................13

4.7.1 Introduction.....................................................................................................................................................13

4.7.2 Aims of the Module........................................................................................................................................14

4.7.3 Learning outcomes........................................................................................................................................14

4.7.4 Outline of Content..........................................................................................................................................14

4.7.4.1 PROCUREMENT AND DISPOSAL.....................................................................................................14

4.7.4.2 SALE OF GOODS..................................................................................................................................17

4.7.4.3 Statutes........................................................................................................................................................18

4.7.4.4 Cases............................................................................................................................................................18

TERM TWO..............................................................................................................................................................20

4.8 MODULE FOUR: INTELLECTUAL PROPERTY.........................................................................................20

4.8.1 Introduction.....................................................................................................................................................20

4.8.2 Aims of the Module........................................................................................................................................20

4.8.3 Learning outcomes........................................................................................................................................20

4.8.4 Outline of Content..........................................................................................................................................20

4.9 MODULE FIVE: STRUCTURING BUSINESS CONTRACTS..................................................................27

4.9.1 Introduction.....................................................................................................................................................27

4.9.2 Aim of the Module..........................................................................................................................................27

4.9.2 Learning Outcomes.......................................................................................................................................28

4.9.3 Outline of Content..........................................................................................................................................28

4.9.3.1 Considerations in drafting an Agency Contract.................................................................................28

4.9.3.2 Considerations in drafting a Distributorship Agreement..................................................................28

4.9.3.3 Considerations in drafting a Franchise................................................................................................28

4.9.3.4 Considerations in drafting an Employment contract.............................................................................29

Rules/Regulations....................................................................................................................................................37

TERM THREE..........................................................................................................................................................39

4.10 MODULE SIX: BANKING AND FINANCE.................................................................................................39

4.10.1 Introduction...................................................................................................................................................39

4.10.2 Aim of the Module........................................................................................................................................40

4.10.3 Learning outcomes......................................................................................................................................40

4.10.11 Statutes.......................................................................................................................................................55

4.10.12 Rules/Regulations.....................................................................................................................................55

4.11 MODULE SEVEN: BUSINESS RESCUE AND INSOLVENCY..............................................................57

4.11.1 Introduction...................................................................................................................................................57

4.11.2 Aims of the Module......................................................................................................................................58

4.11.3 Learning outcomes......................................................................................................................................58

4.11.4 Outline of Content........................................................................................................................................58

 4.11.4.2 General Objectives of insolvency..........................................................................................................59

7.4.5.4 Rules/Regulations......................................................................................................................................73

GENERAL REFERENCE LIST..............................................................................................................................75

APPENDIX 1.................................................................................................................................................................82
4.0 SUBJECT TWO: CORPORATE AND COMMERCIAL PRACTICE

4.1 Introduction

Corporate and Commercial Practice is a core subject on the Bar Course dealing with the most
critical areas of commercial transactions and all related matters in Uganda. The subject
encompasses aspects of setting up various businesses, their structures and operations. It also
deals with the procurement by individuals, corporations and government Ministries, departments
or Agencies. It deals with execution of various commercial contacts with specific emphasis on
risk management. It deals with the establishment of various entities dealing with financial services
and financial institution business and the relationship between a banker and customer. It finally
introduces students to various mechanisms of dealing with business financial distress.

4.2 Course Justification

Business is an integral part of society and the economy. It directly impacts on the lives of people.
There cannot be any society without business. Through business various societies and countries
are interdependent. It has been the major source of conflicts between individuals, corporate
organizations and countries. There cannot be development and improvement of the people’s
livelihood without business.

Corporate and Commercial Practice give avenues for lawyers to study and appreciate the rules
and practices that govern business relationships and how to structure businesses and
transactions.

4.3 Aims of the Course

The aim of the course is to;

1. Develop ability to advice on various commercial transactions;

2. Develop the ability structure various commercial transaction;

3. Recognise ethical issues relating to commercial transactions.

4.4 Course Objectives

By the end of the course, students should be able to;

1. Explain the establishment and management of businesses;

2. Structure various commercial transactions;
3. Resolve legal issues resulting from various commercial transactions;
4. Draft documents relevant to the various Commercial transactions;
5. Develop ability to recognise ethical issues relating to commercial transactions.

TERM ONE
4.5 MODULE ONE: BUSINESS SET UP AND MANAGEMENT

4.5.1 Introduction

This module deals with the establishment of various businesses and structures that enable clients
to effectively run their businesses.

There is a very wide range of businesses that can be set up in Uganda. Legal practitioners are
oftentimes called upon to advice on formalities for the formation and management of these
businesses. It is therefore important that lawyers are equipped with skills to enable facilitate the
set up and running of these businesses.

4.5.2 Aims of the Module

The aim of this module is to;

1. Develop ability to advise on business setup and management;

2. Develop ability to set up businesses;
3. Develop ability to structure the management of businesses;
4. Develop ability to recognise ethical issues.

4.5.3 Learning outcomes

By the end of this module you should be able to;

1. Explain the various business associations;

2. Establish appropriate business associations;
3. Establish structures for business management;
4. Illustrate regulatory compliance processes;
5. Enforce shareholders’ rights;
6. Recognise and deal with ethical issues relating to business establishment and
management.

4.5.4 Outline of Content

4.5.4.1 Existence of Partnership

S.2(1) Partnership Act, 2010. a partnership is the relation that subsists between or among
persons, not exceeding 20 in number, who carry on a business in common with a view to
making profit.
W.V Commissioner of taxes of taxes 1969 (1) ACR COM 91
Maili & Ors V. Khan House of Lords Session 199-2000
Abubaker Walakira V. Abubakar Walusimbi C.S No. 579/2012
(2) Profession partnership - number of professionals shall not exceed 50
1.4.2 Rules for determination of the existence of a partnership
See NDA V John Chris Bakiza T/A Kabyesiza & Co. Adv C.S No. 34/2008
Emorut Omella V Ojakol Raymond 1984 HCB 62
 Bubare Company V Meble Kente 1982 HCB 143
All parts Fright services V Julius Kamanyi & Anor (1996) VKAIR 21
1.4.3 Capacity to form a partnership-S.10 and 11 of the Contracts Act
1.4.4 Mandatory registration of a partnership S.4 (1) a firm carrying on business which a
business name which does not consist the true names of all the partners.
Petro Sonko V Patel HCA No. 74/1952-20 EACA 99- Non registration does not effect rights
of the partners.
1.4.5 Extent to which Acts of partners bind the firm section S.5,6,7,8 and 12 of the Partnership
Act.
1.4.6 Liability of partners S.9 and 13
1.4.7 Partnership property sections 22, 23, 24, 25 and 26 Partnership Act. All property, rights
acquired in property, bought/acquired on account of firm and in the course of partnership
property and must be held and applied by the partner exclusively for the purpose of the
partnership and in accordance with the partnership agreement.
1.4.8 Retirement, dissolution of partnership S. 28, 34-37 partnership Act
1.4.9 Limited liability partnerships to be registered in accordance with section S. 50-3. 48
S. 50- Particulars of limited liability partnership
S.52- Management of LLP
S.53- Winding up of a LLP
S.49 -Reservation of name
1.4.10 Requirements as to registration in business name registration Act Cap 109.
S. 21- Firms and persons to be registered
S.4- Cap 109, particulars of registration to be furnished and the statement signed under S.5
Cap 109.
Registrar to register damages and to file statements and issue certificate of registration
S.7 and 12 of Cap 109.
Registrar empowered to reject misleading names and those that require a Minister’s
approval.
Registration of documents like partnerships under the registration of documents Act
Cap 81- See Section 3,4,6,7 and 9 of the Act.
Application for a trade licence under the Trading Licence Act Cap 101 as amended by
the Trading Licensing Amendment Act 2015.
Uganda Registration Services Bureau Act Cap 210 S.3 and 4- establishments of
URSB and its functions enteralia- to carry on all registration under the relevant Acts.
See also Stamp Duty Act as amended by stamps amendment Act 2016.
4.5.4.2 Incorporation of Companies
a) Pre-incorporation contracts.
S.54 -Companies Act-
(1) A contract made on behalf of a company before its formed has effect as one made with the
person purporting to act for a company.
(2) A company may adopt a pre- incorporation contract- novation.
See Kelner V Baxter (1866) LR 2CP 174
New Borne V Sensolid (Great Britian) (1953)/ALLER
Price V Kelsal (1954) EA 752

b) Incorporation of Companies
S.4(1) Companies Act 2012 as amended 2022 any one or more persons may incorporate a
Company with or without liability by filling in the particulars contained in a registration form.
S.4(2) Company may be
a) Limited by shares
b) Limited by guarantee
c) Unlimited
d) Private or public
ii. Private Company- S.5 Company’s Act-
a. Restricts right to transfer of shares
b. Membership not to exceed 100
c. Prohibits invitation of public to subscribe for shares or debentures.
iii. Public Company S.6 Companies Act, a company which is not private under S.5 which
has atleast 75 shareholder at incorporation is a public company.
iv. Reg.3 the companies (Single member) Regulations 2016- single member company
means a company incorporated under the Act with one person (natural or corporate)
S.7-Requirement with respect of memorandum of association if any
Section 7 of the Companies Act
-Name of the company
-Registered of file
-May also state the objects
-Limited liability
-Amount of share capital for extent of liability for guarantors.
S.8 Signature of the Memorandum by subscribers
v. S.36 Companies Act-reservation of name and prohibition of undesirable names.
vi. S.18- Form of registration of a Company- A company shall be registered by filling in a
form contained in the 2nd schedule.
 S.19- Memorandum and articles if any shall be delivered to the registration
S.13 adoption and application of table “A” as the articles of the company.
vii. S.12- upon registration- memorandum and articles shall bind the company and the
members.
S.22 conclusiveness of certificate of incorporation.
Registration of a single member company- see regulations 4 to regulation 11 of the
companies (Single member) regulation 2016.
viii. Registration of NGO- NGO’s Act 2016- see part VII
S.3 an organization which is a private voluntary organization or association not for profit .
See Section 29 -33 of the Act.
ix Membership of a company-
Section 47 Defines a member to include subscribers to memorandum or persons who
agrees to become a member of the company and whose name is entered on its register of
members of a company. See Mathew Rukikaire V Incafex S.CA No. 3 of 2015.
x. Return of allotment- S.61 Companies Act;
(1) whenever a private company ltd by share or guarantee and having a share capital
makes any allotment of its shares, the company shall with sixty days thereafter deliver to
the Registrar for registration a return of allotments.
xi. Directors and Officers of the company
S.185- any company other than a private company to have atleast 2 Directors. Every
private company should have atleast 1 Director.
S.186- nominee Director of single member company.
S.187 company secretary.
Art. 75 of table “A”- unless otherwise stated the first subscribers to the memorandum to be
Directors of the company.
S.119- Register of members to e kept by the company.
S. 228- Particulars of Directors to be furnished
S.115- Company to furnish th situation of its registered office.
S.132- Annual Returns of the Company
S.118 Statement of nominal capital of the company
xii Meetings of the company
-Statutory meeting-see S.157
-Annual general meetings see S.138 Companies Act- Article 47(1) Table “A”
-Extra ordinary meeting see 139
 -Power of court to call a meeting S.142

4.5.5.1 Statutes
1. The Partnerships Act, 2010.
2. The Partnership Amendment Act, 2022.
3. The Contracts Act No.7 of 2010.
4. The Business Names Registration Act, Cap 109.
5. The Registration of Documents Act, Cap 81.
6. The Trade Licensing Act, Cap 101.
7. The Trade Licensing (Amendment) Act, 2015.
8. The Stamps Act, Cap 342 as amended.
9. The Stamps (Amendment) Act No. 2/2002
10. Uganda Registration Services Bureau Act, Cap 210.
11. The Advocates Act, Cap 267.
12. The Uganda Registration Services Bureau Act Cap 210
13. Electronic Transactions Act No. 8 of 2011
14. Electronic Signatures Act No. 7 of 2011
15. The Non-Governmental Organisations Act, 2016
16. The Trustees Incorporation Act Cap 165
17. The Investment Code Act Cap 92 - Part III
18. The Land Act Cap 227 (as amended) (Section 40)

4.5.5.2 Rules/Regulations
1. The Business Names Registration Rules S.I 109-1.
2. The Business Names Registration (Amendment) Rules S.I 53 of 2005.
3. The Registration of Documents (Fees) (Amendment) Rules S.I 55 of 2005.
4. The Registration of Documents Rules S.I 81-2.
5. The Companies Act (Single Member) Regulations, S.I 72/2016
6. The Companies (General) Regulations S.I 7/2016
7. The Companies (Powers of the Registrar) Regulation S.I 71/2016

4.5.5.3 Cases
a) Formation of Partnerships
1. W. Vs. Commissioner of taxes (1969) 1. ALR. Comm. 91
2. Mercantile Credit Co Ltd v. Garrod (1962) 3 ALL ER 1103.
3. Dubai Aluminum Co Ltd v. Salaam (2003) 1 ALL ER 97; (2002) 3 WLR 1913.
4. Lord Millett, Bristol & West Building Society v. Mothew (1998) Ch D.1.
5. Ass v. Benham (1891) 2 Ch D 244.
6. Bentley v. Craven (1453) 18 Bears 75.
7. Law v. Law (1905) 1 Ch D 140.
8. Kendal v. Hamilton (1879) AC 504.
9. Highly v. Walker (1910) 26 TLR 685.
10. Pocock v. Cater (1912) 1 Ch. D 663.
11. Miles v. Clark (1953) 1 ALL ER 779.

b) Existence of Partnership
1. Bubare Company v. Meble Kente [1982] HCB 143.
2. Wilson v. Commissioner of Taxes 161 F.2d 661 (7th Cir. 1947).
3. All port Ports Freight Service v. Julius Kamanyi & Anor. [1996] V KALR 21.
4. Kafero Mohamed v. Turyagenda [1980] HCB 122.
 5. Dr. Okello N. David v. Komakech Steven, HCCS No. 30 Of 2006.
6. Dawson v. White & Case 88 N.Y.2d 666 (N.Y. 1996).
7. Reamton Ltd. v. Uganda Co-Operative Creameries and another [1996] 3 KALR 28.
8. Sonko v. Patel 20 (EACA) 99.
9. Omella Emorut v. Raymond Ojakol [1984] HCB 62.
10. Okwera Donation Henry v. Abdalla Saleh [1982] HCB 123.
11. Hurst v. Brye & Ors [2000] 2 All ER 193.
12. Cyprian Inyangat v. Andrew Bob Oligo (HC Misc. Appl. No. 280 of 2000).
13. Uganda Freight Forwarders Association and Another v. Attorney General and Another,
Constitutional Petition No. 22/2009.
14. Francis Sembuya v. Allports Services (U) Ltd – SCCA No. 6 of 1999.
15. National Drug Authority v. John Chris Bakiza T/A Kabyesiza and Co. Advocates HCCS NO.
34 of 2008.
16. Miah & Ors v. Khan Anor [2000] All ER 1647
17. Abubaker Walakira v. Abubaker Walusimbi (H.C.C.S No. 579 of 2012).
18. Nankya Faridah T/a Offenders Rehabilitation International v. Tinasah Investments Limited
M.A 648 of 2011 (Commercial Court).

c) Pre-incorporation agreements.

1. Salmon v. Salmon [1897] AC 22.

2. Kelner v. Baxter [1866] LR 2 CP 174.
3. Price v. Kelsall [1954] EA 752.
4. Ngaremntoni Estates Ltd. v. CIT [1969] 1 ALR Comm 186.
5. Kololo Curing Co. Ltd v. West Mengo Co-op Union Ltd (1981) HCB 60.

d) Name of a Company

1. Java Coffee & Tea Limited v. Uganda Registration Services Bureau, Café Javas Limited
& Mandela Auto Spares Limited Company Cause No. 16 of 2014.

e) Membership of the Company

1. Mathew Rukikaire v. Incafex S.C.C.A No. 3 of 2015.

2. Salim Jamal & Others v. Uganda Oxygen Ltd & Ors, S.C.C.A No. 64 of 1995.
3. Kakooza Lugunju Joseph v. Ethiopian Airlines Ltd. (1982) H.C.B 111.
4. Ssenyonga Ali & Ors v. Kakooza Rajab Hussein &Ors (1992-93) H.C.B 93.
5. Kenya Seed Company Limited v. Nathaniel Kipkorir Tum & Eufrazio Juliao Goes
HCCS No 180 of 2010 (unreported).
6. Twycross v. Grant (1877) 2 CPD 469.
7. Mawogola Farmers and Growers Ltd Vs. Kayanja & Ors
8. Olive Kigongo V. Mosa Courts Apartment Ltd Co. Cause No. 1/2015.

4.5.5.4 Text Books

1. Halsbury’s Laws of England, 4th Edition, Vol 35.

4.6 MODULE TWO: CORPORATE FINANCING

4.6.1 Introduction
A company is an integral part of the community in which it does business and it has a direct
impact not only on its creditors, shareholders and managers but also on the economic and thus
the social well-being of that community through its employees, suppliers and distributors. All
these constitute its stakeholders.

In this module, the process of incorporation of the various types of companies including
registration of foreign companies will be handled, the management of the said companies through
its various organs and the various ways a company can raise capital. The module will also cover
instances where a dispute arises between shareholders and how the same can be resolved.

4.6.2 Aims of the Module

The aim of this Module is to:

1. Develop ability to advise on corporate financing;

2. Develop ability to effect corporate financing;
3. Develop ability to recognise ethical issues relating to corporate financing.

4.6.3 Learning outcomes

By the end of this module you should able to;

1. Explain the modes of corporate financing;

2. Effect various modes of corporate financing;
3. Draft relevant documents;
4. Recognise and deal with ethical issues relating to corporate financing.

4.6.4 Outline of Content

S.83- shares in a company are movable property and transferable
Transfer of shares with an instrument of transfer S.85 Companies act articles 22 to 24 of Table A
Transmission of shares to personal representative see S.86 Art 29-32 Table A
Transfer of shares in a single member company see S.87 Companies Act.
Registration of transfer S.88 and notice of refusal to register a transfer see S. 89 Companies Act.
S.90 Certificate of transfer of shares.
Call on shares.
Art 15 Table “A”- A company may make a call on members for an unpaid monies due on the
shares. See Article 15-18 Table “A”.
Forfeiture of shares- where a member fails to pay any call on the day appointed-Directors any
time after service of notice requiring payment of the amount under the call with interest- accrued
Art-33-38 table “A”.
Directors power to bind the company see S.52 and 53 Companies Act.
Directors powers to borrow art 79(1) Directors powers to borrow not to exceed amount of shares
capital of the company issued without approval of general meeting.
=Raising of capital internally
a) Allotment of un issued shares- see S.183(2) n Companies Act
b) Increase of share capital see S.73 article 44
c) Issuance of shares at premium see S.66
d) Redeemable preference shares process of creation and redemption see Sections 66-68
Companies Act.
4.6.5 External financing
a) Loans
b) Capital Markets

4.6.6.Registration of charges
see S. 105 void if not registered.
S.105 Register of charges
S.108 Certificate of registration of a change.
S.203 Companies Act prohibition of loans and guarantees to Directors of the Company.

4.6.7 Statutes
1. The Anti Money-Laundering Act 2013 (Parts I, II & VII)
2. The Companies Act No. 1 of 2012
3. The Chattels Security Act, 2014
4. Capital Market Act

4.6.8 Rules and/Regulations

4.6.9 Cases

4.7 MODULE THREE: PUBLIC PROCUREMENT AND DISPOSAL OF PUBLIC ASSETS

4.7.1 Introduction

This module covers supplies, services and works and disposal in procurement and disposal
entities. It covers both domestic and international procurement and disposal.

The students will be equipped with skills to enable them to advise on application of the basic
principles regarding public procurement and disposal of public assets.

4.7.2 Aims of the Module

The aim of this module is to;

1. Develop ability to advise on public procurement and disposal of public assets;

2. Develop ability to structure public procurement and disposal of public assets;
3. Recognise ethical issues relating to public procurement and disposal of public assets.

4.7.3 Learning outcomes

By the end of this module you should be able to;

1. Explain the legal concepts and principles relating to public procurement and disposal of
public assets;
2. Illustrate aspects of statutory compliance in public procurement and disposal of public
assets;
3. Demonstrate the dispute resolution mechanisms in public procurement and disposal of
public assets;
4. Draft relevant documents relating to public procurement and disposal of public assets;
5. Recognise and deal with ethical issues relating to public procurement and disposal of
public assets.

4.7.4 Outline of Content

4.7.4.1 PROCUREMENT AND DISPOSAL

Public Procurement can be defined as a process of acquiring goods, services and works
through various means by public bodies while Public disposal is the process of giving away of
public goods and assets.
The above process is majorly governed by the Public Procurement and Disposal of Public Assets
Act 2003 as mended, PPDA Regulations 2006 as amended, the local government (Public
Procurement and Disposal of Public Assets)Regulations 2006, guidelines issued by PPDA
Authority, Standard Bidding Documents issued by PPDA Authority and circulars issued by the
Authority.
Application of the PPDA Act 2003 as amended
S.2 (1) PPDA Act, the Act shall apply to;
-All private finances
-Resources for National Programes under development co-operation agreement
-Activities of government entities within and outside Uganda
-Activities of entities, not of government, but which benefit from public funds.
S.2 (1a) and (1b) act as a mended create exceptions under which the PPDA Act does not apply
which include Auditor General in selection of private firms to under take any assignment under his
mandate and as provided under S.4 where it conflicts with international obligations arising out of
……………….agreements.
In the case of Galleria in Africa Ltd V. UEDCL S.CA No. 8 of 2017 held interalia- “There is no
way the Act can regulate practices in respect of Public Procurement and Disposal of Public Asset
unless if the provisions are adhered to strictly to the latter. The provisions are for all purposes and
intents mandatory and non compliance with them makes the proceedings fatal.
Institutional Frame Work
This include;
 Ministry of Finance
 Public Procurement and Public Disposal Assets Authority
 Procurement and Disposal entity section 3
 Procurement and Disposal Unit see section 30 and 31
 User Department S. 34 and 35 PPDA Act
 Evaluation committee section 37
 Contracts Committee S. 27, 28 and 29 PPDA Act as amended
 Contract Manager.
 Accounting Officer- S.26 PPDA Act as Amended
 PPDA Tribunal see S.91b and 91i
The above caters for their establishment and powers.
It should be noted that all the above are duty bound to act independently of each other as
provided for under S.38 PPDA Act as amended.
Basic Principles for procurement and disposal are provided for under S. 43 PPDA Act they
include;
1) Non discrimination see also S.44
2) Transparency, accountability and fairness see also S.45
3) Maximization of competition and ensure value for money see also S.46
4) Confidentiality. S. 47
5) Economy and efficiency S.48
6) Promotion of ethics S.49
Procurement Cycle
a) Planing and budgeting S.58
b) Procurement requisition, statement of requirements S.60
c) Choice of procurement methods S.79
d) Review of requirements, procurement methods evaluation criteria S.71
e) Preparation of solution/bidding documents S.62
f) Advertisement and invitation of bids/ quotations /proposals
g) Receipt and offering of bids S.69
h) Contract performance and evaluation
Procurement Methods
a. Open domestic bidding S.80
b. Open international bidding S.81
c. Restricted domestic bidding S.82
d. Restricted international bidding S.83
e. Quotations and proposals procurement S.84
f. Direct procurement S.85
g. Micro procurement S.86
h. Electronic reserve auction method S.86A
i. Competitive dialogue or negotiation method S. 88AA
Disposal Cycle
a) Disposal planing S.58
b) Initiation of disposal requirement and approval for disposal S.59
c) Conditions and rules for disposal
d) Disposal methods S.87 PPDA act.
These include
a) Public auction
b) Public bidding
c) Direct negotiation sale to public officers
d) Conversion or classification of assets into another form for disposal by sale.
e) Trade in;
e)a Electronic auctioning
f) Transfer to another procuring and disposal entity and
g) Donations
Administrative Review
S.89 (2) PPDA Act provides; a bidder may seek administrative review for any omission or breach
by a procuring and disposal entity of this Act, or any regulations, guidelines made under this act
of the provisions of bidding documents.
S.89 (1) PPDA Act as Amended provides for review by the accounting officer.
Review by tribunal see S.91(i)PPDA Act as amended.
Exceptions on matters that may not be subject to review by tribunal see S.91(i) (3)
Appeal to high court only on matters of law see S.91m(3) of the PPDA Act as amended
It should be noted that, the procurement is a process there is no way one can move to another
stage without complying with the first stage see Galleria in Africa Ltd V. UEDCL S.CA No. 8 of
2017 (Supra).

4.7.4.2 SALE OF GOODS

Formation of a contract of sale of goods.
Sale of goods and supply of services Act 2017
S.2(1)- contract of sale of goods is a contract by which the seller transfers or agrees to
transfer the property in the goods to the buyer for a money consideration called price
A sale is where under a contract of sale the property in the goods is transferred from the
seller to the buyer, S.2 (4)
Agreement to sell is where transfer of property in the goods is to take place at a future time
or subject to a certain conditions to be fulfilled after making the contract. S.2(5)
Goods include existing future, certained , unascertained and specific goods see S.1 and 6
of the Act.
Capacity to contract S.4
Passing of property between seller and buyer.
S.22- Property in unascertained goods shall not pass to the buyer until goods are
ascertained.
S.23- passing of property in undivided shares in goods forming part of the bulk.
S.25- property in specific or ascertained goods passes when parties intend it to pass
S.26 -Rules for ascertaining intention as to time when property passes.
S.27- Property primafacie passes with risk.
Implied conditions in a contract of sale of goods.
S.13-Implied terms as to title
S.14-Sale by description
S.15- Implied undertaking as to quality and fitness for purpose. See Hon Mable Bakeine V
Yuasa investments Ltd H.CC S No. 136 of 2013
S.17- Sale by sample
 S.19- Express terms not negative implied terms under this Act.
Contract for supply of services
S.3- Contract for supply of services means a contract where a person agrees to carry out a
service whether goods are
S.3(2)- A contract of service or apprenticeship is not a contract for supply of services
implied conditions in a contract for supplying of service
 S.16 - Where materials are used in a contract for the supply of services there is an implied
term that the materials will be sound and reasonably fix for the purpose for which they are
required.
S.18 where the supplier is acting in the course of business, there is an implied term that
the supplier will carry out the services with reasonable care and skill.
S.11(3) where there is no stipulation as to time, there is an implied term that the supplier
will carry out the service within reasonable time.
Duties of seller, supplier and buyer S.34.
 Payment and delivering concurrent conditions S.35
 S.42 Buyers right to examine the goods
 S.43 acceptance
 Rights of buyers in respect to damaged goods see S.47 and 48
 Rights of unpaid sellers against the goods see S.50,51, 52, 53 and 54.
 Stop page in transit see S.55, 56 and 57
 Remedies of seller and suppliers
S.60- Action for price
S.61-Action for non acceptance
 Remedies of buyer
S.62- Action for none delivery of goods
S.63- Specific performance
S.64- Remedy for breach of warranty
S.65-incidental and consequential
S.66-interest and special damages

4.7.4.3 Statutes
1. The Contracts Act No.7 of 2010 parts II, V and VIII
2. Public Procurement and Disposal of Public Assets Act, 2003 as amended
 3. The Sale of Goods and Supply of Services Act, 2017 – read all sections
4. Public Procurement and Disposal of Public Assets Regulations, 2014

4.7.4.4 Cases
a) Public Procurement and Disposal of Public Assets

1. Galleria in Africa Ltd v. Uganda Electricity Distribution Co. Ltd, Supreme Court of Uganda
Civil Appeal No. 08 of 2017.
2. Finishing Touches Ltd V. AG of Uganda Civil Suit No. 144 of 2010
3. Clear Chanel independent (U) Ltd Vs PPD Misc. Cause No. 156/2008
4. Edward Makubuya T/A M. Edward Engineering Works Vs Kampala City
Council Kawempe Division Civil Suit No. 59 Of 2003.
5. Arua Municipal Council Vs Arua United Transporter’s Sacco C.A No. 0025 of 2017.
6. Roko Construction Ltd Vs Public Procurement and Disposal of Public Assets Authority & 2
Ors HCCA No. 59 of 2017.
7. Vcon Construction (U) Ltd Vs Uganda Development Bank PPDA Appeals Tribunal
Application No. 22 of 2021
8. Gat Consults Ltd & Lee Construction Ltd (JV) Vs Public Procurement and Disposal of Public
Assets Authority(PPDA) & Anor Application No. 6 of 2021.
9. Abasania Hwolerane Association Ltd Vs. Jinja City Council PPDA Tribunal Application No.
18/2021

b) Sale of Goods

1. Frederick J.K Zaabwe Vs. Orient Bank & Others S.C.C.A 4 of 2006
2. Assist (U) Limited Versus Italian Asphalt & Haulage Limited & Anor H.C.C.S No.1291 of
1999 (Commercial Court)
3. OK Zimbabwe Limited V Msundire (Civil Appeal No. SC 111/12) [2015] ZWSC 23
4. Hon. Mable Bakeine Vs. YUASA H.C.C.S No. 136 of 2014 (Commercial
Division).
5. L’ Estrange Vs. Graucob [1934] 1 KB 394
6. Burnett v.Westminster bank Ltd [1966]1 QB 742
7. Thornton v Shoe Lane parking Thornton (2011) 74 M.L.R. 106
8. Tsakiroglou & Co. Ltd. v. Noblee Thorl G.m.b.H., [1960] 2 Q.B. 348; [1962] AC 93
9. Karsales (Harrow) Ltd. v Wallis, [1956] 2 All ER 866 (CA)
10. Suisse Atlantique Societe d’Armement Maritime S.A. v N.V. Rotterdamsche Kolen
Centrale, [1967] 1 AC 361
11. Photo Production Ltd. v Securicor Transport Ltd., [1980] A.C. 827 (HL)
12. Bishari –v- Vitafoam Ltd. (1994) VI KALR 180
13. Alex Olwor v Registered Trustees of Arua Diocese (1995) IV KALR 133
14. Jane Bwiriza v John Nathan Osapil, SCCA No. 5 of 2002
15. John Nagenda v Sabena Belgian World Airlines (1992) 1 KALR-
16. Sugar Corporation of Uganda Ltd –vs- Lawsam Chemical (U) Ltd SCCA No. 5 of
2001
17. Manchester Liners –vs- Rea [1922] 2 AC 14
18. Mubaraka Batesaki –V- Mubaraka Magala Civil Appeal NO. 29
19. Mbale Exporters and Importers Ltd V. Ibero (U) Ltd C Civil Appeal No.84 /2005
20. Ajay Industries Corporation Ltd & Anor V. Jersey Technical Services Ltd HCCS No.
129/2012
 c) Exemption clause

1. The rules of incorporation of an exemption clause into a contract

http://www.academia.edu/3709711/The_rules_of_incorporation_of_an_exemption_cla
use_into_a_contract. Accessed January 2, 2018.
2. https://ablawg.ca/2013/11/07/fundamental-breach-and-repudiatory-breach-of contract/
Accessed on January 2, 2018.

TERM TWO

4.8 MODULE FOUR: INTELLECTUAL PROPERTY

4.8.1 Introduction

Intellectual property is a category of property that includes intangible creations of the human
intellect. There are many forms of intellectual property but in this module we shall concentrate on
trademarks and copyright and neighbouring rights.

The law gives a person rights to certain intellectual property that they create. The law allows a
person to protect original ideas and prevent unauthorized copying. Creators are given greater
economic benefit from the information and intellectual property they create which is an incentive
to create them.

These intellectual property rights form the foundation of doing business worldwide. It is therefore
important that legal practitioners are equipped with skills to advise clients in respect of intellectual
property rights.

4.8.2 Aims of the Module

The aim of this module is to;

1. Develop ability to advise on intellectual property rights;

2. Develop ability to protect intellectual property rights;
3. Develop ability to recognize ethical issues relating to intellectual property rights.

4.8.3 Learning outcomes.

By the end of this module you should be able to;

1. Explain the existence of copyright, neighboring rights and trademarks;

2. Explain the protection of copyrights, neighboring rights and trademarks;
3. Illustrate the procedure for protection of copyright, neighboring rights and trademarks;
4. Draft documents relating to protection of copyrights, neighboring rights and trade mark.
5. Recognize and deal with ethical issues relating to copyright and neighboring rights and
trademarks.

4.8.4 Outline of Content

4.8.4.1 Trade marks
Definition and purpose of a trademark – S. 1 of the TMA No. 17/2010
Definition of a sign or mark - S.1 TMA
See - S.1 Article 1 and S. 2 Art. 15(1) TRIPS Agreement
Re Coca-Cola Co’s Applications [1986] 2 All ER 274, 276
The word ‘mark’ both in its normal meaning and in its statutory definition is apt only to
describe something which distinguishes goods rather that the goods themselves. A bottle
is a container not a mark. A mark must be something distinct from the thing being marked.
4.8.4.2 Protectable subject matter - Ss. 4 and 23(5) TMA
  Emphasise graphical representation under S. 4.
 Consider the whole of S. 23 and emphasise subsection (5) – See also regulations 13 to 15
See also Art. 15 (3) TRIPS
London Overseas Trading Company Limited v The Raleigh Cycle Company
Limited - [1959] 1 EA 1012, 1015-1016
Section 11(now s. 23) contains a prohibition as to what it shall not be lawful to
register, and it follows upon s. 9, which provides for the essentials of a registrable
trade mark in part A of the register.
  S. 4(3) A sign shall be capable of graphical representation in order to be registered
 Class of goods S. 8 - Trademark to be for particular goods or service (emphasise service
marks) – See also r. 12 of the Trademark Regulations SI No. 58 of 2012 - goods are
classified in accordance with the 3rd Schedule.
 R.12 (2) applies the Nice Agreement of 15th June 1992 in regard to classification of goods
and services and interpretation of the schedule.
A certification mark – S. 13
S. 19 - Registration subject to disclaimer – explain the circumstances under which a disclaimer
may be necessary
4.8.4.3 Considerations for registration in Parts A and B of the Register
S. 2(4) - The register is divided into two parts called Part A and Part B respectively
 S. 9 - Distinctiveness requisite for registration under Part A.
 S. 10 - Requisite for registration under Part B.
Coca Cola Export Corporation v. The Registrar of Trade Marks
[1969] E.A 677, 679
Almost every immediately attractive trade mark is, in some sense,
 descriptive or laudatory (admiring) of the goods and so in some degree
has reference to their character or quality.
Re An Application by American Cyanamid Co. [1968] E.A 270, 272 
Procedure for registration of a trademark in Uganda
  Appointment of Registrar; S4 and Schedule 1 to the Uganda Registration Services
Bureau Act, Cap. 210.
 Search and preliminary advice as to distinctiveness (sections 5 and 6; reg. 16,TM 28)
  In case an agent is to be used in the registration process – See appointment of agents-
section 93; reg. 10 and TM1.
 Application for Registration (Sections 7 and 8; regs. 17, 18 and 19).
Forms (TM 2 duly signed with a representation of the mark in the space
provided; four additional representation on TM3);
  Transliteration and translations – the words in French
  Registrar’s search of register and decision (reg. 23 and 24).
  Publication of application – section 11; reg. 25
  Certificate of Registration – S. 16 (2) and reg. 46
Opposition to registration
Objection to registration - grounds, procedure and documents. (S. 12; regs. 28– 39).
4.8.4.4 Rights that accrue from registration:
  Exclusive use and infringement of the trademark - sections 35, 36(1), 37 (1), 38
(1) , 39(1) Art 16(1) TRIPS
 Registered/Permitted User
Ss. 49-52, TMA read all the sections and r. 64 -65 TM 48 – Application
  Assignment
Sections 31,32,33 – Assignment and transmission
Article 21 – TRIPS
Registrar’s advice on whether mark assignable - S. 32(6)
S. 33 - Registration of assignments and transmission
o Procedure r. 54 Application conjointly with the registered proprietor
TM 14 or alternatively r. 55 if not conjoint application TM 15
R J Reuter Co Ltd v Ferd Mulhens [1953] 2 All ER 1160
An assignment of a trade mark, the assignor retains an exclusive
 right himself to use the same mark at common law
Duration and renewal of registration. (Ss. 21, 22 i.e. 10 years, renewal for 10 years
from time to time. See also reg 47 – 53
 S. 34 - A person may not institute proceedings to prevent or to recover damages for
an unregistered trademark

4.8.4.5 Action for infringement

 Nice House of Plastics v Hamidu Lubega, HCCS No. 695 of 2006
According to Yorokam Bamwine J, as he then was,
“a trademark infringement plaintiff must show a valid, protectable trademark
in which he has rights prior to those of the defendant. The test of infringement
is likelihood of confusion…….”
JB Chemicals & Pharmaceuticals Ltd. vs Glaxo Group Ltd. – S.C.C.A No.
18 of 2004. Registration of “RANTAC” alongside already registered
“ZANTAC” would cause confusion among the consumers in Uganda.
Yellow Pages Ltd. V Directel (U) Ltd. H.C.C.S. No. 1336 of 1998. No exclusive right to use a
colour.
Brooke Bond Kenya Ltd v Chai Ltd [1971] 1 EA 10
Proof of likelihood of confusion or deception - the test of comparison of the
marks side by side is not a sound one, since a purchaser will seldom have the
two marks actually before him when he makes his purchase;
4.8.4.6 Remedies
  Damages and injunction - Ss. 79 and 81 TMA See Article 44 TRIPS – Injunction and Article
45 TRIPS - Damages
  Account of profits — S. 81 TMA
  Delivery up – S. 81 (4) TMA
  Removal of trademark from register on proof of prior registration-section 45 –
expunge
Brooke Bond Kenya Ltd v Chai Ltd [1971] 1 EA 10
The remedies of damages or an account of profits are alternative
remedies in respect of which the plaintiff may make an election.
Dipak Emporium Vs Bonds Clothing [1973] EA 553, Brooke Bond
 Kenya Limited Vs Chai Limited [1971]EA 10 - Delivering up the
offending labels or marks
4.8.4.7 Defences to infringement
  Lack of a bona fide intention to use the trademark – S. 46
  Trademark not protectable
The mark is not distinctive – S.4
Trademark is descriptive of the goods – S.9 (1)(d)
  Trademark no longer protected – S. 21 not renewed
  Bona fide use – S. 24
Ali Abdul Kader Salehbhai Assa Bwalla v. Khadija Bint Gafoor
[1962] EA 571 (C.A) - use of own name by trader - similarity of
trademarks – bona fide use of one’s name.
  The other common defence, i.e. no confusion or deception
 Action for passing off
 Nice House of Plastics v Hamidu Lubega, HCCS No. 695 of 2006
A cause of action for passing off is a form of intellectual property enforcement
against the unauthorized use of a mark which is considered to be similar to another party’s
registered or unregistered trademark, particularly where the action for trademark infringement
based on a registered trademark is unlikely to be successful. It is a common law tort which can
be used to enforce unregistered trademarks.
  See S. 35 TMA – Passing off
NB: The students must analyse both causes of action and determine the most appropriate
in the circumstances.
4.8.4.8 Drafting all relevant documents
 Demonstrate ability to fill the requisite forms as provided for in
the regulations taking into account the international protection of Trademarks using the various
treaties, agreements and conventions.

4.8.5 COPYRIGHTAND NEIGHBOURING RIGHTS

4.8.5.1 Copyright
Meaning of Copyright – Copyright is not defined under Act – However copy is
defined under the Act to mean - “copy” means a production of a work in a written,
 recorded or fixation form or in any other material form, but an object shall not be
taken to be a copy of an architectural work unless the object is a building or a model.
 Author entitled to copyright protection - S. 4 - (CNRA)
S.4 (1) The author of any work specified in section 5 shall have a right of protection
of the work, where work is original and is reduced to material form in whatever
method irrespective of quality of the work or the purpose for which it is created.
Emphasise reduction or work in material form as per S.4 (1). The work provided for under S.
5 is work that is eligible for copyright protection. Therefore is imperative to first determine
whether there is a copy before considering acquisition of the right by the author.
 Meaning of Author – S.2 CRNR Act
“author” means the physical person who created or creates work protected under
section 5 and includes a person or authority commissioning work or employing a
person making work in the course of employment;

4.8.5.2 Work eligible for protection – S.5 CRNR Act - See also Article 2 of the Berne
Convention for the Protection of Literary and Artistic Works
The students should analyse all the work provided for thereunder and determine the
category, if any, in which Rasta’s work falls. Please emphasise derivative works as
defined in Ss. 2 and 5
Note: eligibility for protection must be judged by looking at the work as a whole
not merely at its components parts
Ladbroke (Football) Ltd. V. William Hill (Football) Ltd [1964] 1 W.L.R. 273
A work may be made up of a number of components. Each component may
itself be original, and, if it stood alone, may have copyright. Other components may not be
original. But when one asks whether a whole work has copyright, the question of originality
must be answered by looking at the work as a whole.
Kalamazoo Ltd and Anor Vs Systems Africa Ltd [1973] EA 242, Chanan
Singh, J. was of the view that for work to be original, sufficient effort (in terms
of knowledge, labour and skill) should be expended on its making.
 Works not protected
Ideas not protected- S. 6 CNA
Ideas, concepts, procedures, methods or other things of a similar nature shall
 not be protected by copyright under this Act.
Designers Guild Ltd v. Russell Williams (Textiles) Ltd [2001] 1 W.L.R. 2416 (U.K.:
House of Lords)
“Plainly there can be no copyright in an idea which is merely in the head, which has not
been expressed in copyrightable form, as literary, dramatic, musical or artistic works……”
The expression of these ideas is protected” Lord Hoffman
Public benefit works not protected - S.7 CAN
The students should analyse the facts and determine whether Rasta’s work is merely ideas
or not.
Registration of rights – Ss. 4 (2), 41 -43 –See also rr. 3-12 – whether mandatory for
protection
Employed authors and works for Government or international bodies - S. 8 CAN
4.8.5.3 Rights accruing from protection
Economic rights of author - S.9 CAN – Consider all rights thereunder
Consider what is included in the exclusive rights e,g. Assignment, licence or transfer of a
copyright - Copyright owner to prove that there is no assignment, licence or transfer.
Prerequisites for assignment, licence or transfer - S. 14 Act 19/2006 – Determine whether
there was any licence in the circumstances
Ladbroke (Football) Ltd v. William Hill (Football) Ltd [1964] 1 W.L.R. 273
Reproduction means copying, and does not include cases where an author or compiler
produces a substantially similar result by independent work without copying.
Jennings v. Stephens [1936] Ch. 460
Public performance right may be infringed even if the unauthorized performance benefits
the author
Performing Right Society Ltd v. Harlequin Record Shops Ltd [1979] 1
W.L.R. 851
Holding that a performance given to an audience consisting of the persons present in a shop
which the public at large are permitted, and indeed encouraged, to enter without payment or
invitation with a view to increasing the shop owner’s profit can only properly be described as
a public performance.
Determine whether the rights above were enjoyed by Rasta and if so whether there was or should
have been a licence or asignment
 Fair use - S. 15 CRNR
Moral Rights –S. 10 Act 19/2006 – Determine what KPI should have done or should
do to satisfy the section
Co-author’s right - S. 11 – determine whether Shark Faranga and Kipepewo Erasmus are
co-authors
Duration of copyright protection - S. 13

4.8.5.4 Neighbouring rights – persons entitled - S. 21-

 Rights of performers – consider moral rights too as provided for under S. 23 Act 19/2006
 Rights of Public performer
 Meaning of Public performer See. S. 2 of the Act.
 S. 37 of the Act - The rights are governed by contract- and may state the rights derived
thereunder- These may be exclusive or non- exclusive rights;
 The contract must be in writing, Ss. 35 to 40 Act 19/2006, inclusive, should be dealt with
– especially the formalities relating to contracts
 S. 37(2) (c) the performance contract is supposed to be for a period not exceeding 2
years from the date of making the contract.
 Broadcasting
 The rights are governed by contract See S. 38 (2) of the Act
 Legal Protection against third parties
 The owner of a copyright or a neighbouring right may register the right with the
Registrar for the purpose mentioned in S. 43 Act 19/2006
 Users of works to apply for licence. See S. 44 Act 19/2006
4.8.5.4.1 Collecting Societies
Registration of collecting societies and management of collecting societies see sections
57-78 of Act No. 19/2006
see also Regulations 13 -17 of the Copyright and Neighbouring Rights Regulations 2010.
4.8.5.4.2 Infringement
 Definition of infringement
S. 46 (1) and (2) Act 19/2006
S. 45(5) Act 19/2006 - the nature of infringement that is actionable. Whole or
substantial part.
 Remedies for infringement
S. 45 (1) Act 19/2006- Action for an injunction.
S. 45 (2) Anton Pillar order
S.45(3) Damages

4.9 MODULE FIVE: STRUCTURING BUSINESS CONTRACTS

4.9.1 Introduction
In modern business, various contracts are entered into by individuals and corporate bodies to
cater for specific business relationships and interests. It is therefore important that legal
practitioners are given skills in structuring appropriate contracts that cater for the specific needs of
the clients.

4.9.2 Aim of the Module

The aim of this module is to;

1. Develop ability to advise on the structuring of business contracts;

2. Develop ability to execute business contracts;
3. Develop ability to recognize ethical issues relating to structuring business contracts.

4.9.2 Learning Outcomes

1. Explain principles relating to the structuring of various business contracts;
2. Explore modes of managing risk in business contracts;
3. Draft various business contracts;
4. Recognise and deal with ethical issues relating to the structuring of various business
contracts.

4.9.3 Outline of Content

Business Contracts;

4.9.3.1 Considerations in drafting an Agency Contract

1. Examination of the modes of creation/formation of agency
a. Agency by Agreement - Authority - express or implied
b. Ratification
c. Agency by operation of the law -Agency of necessity
d. Agency by estoppel
e. Capacity
f. Sub-agency
2. Explanation of the types of agents and examples of such agencies in Uganda;
a. mercantile agent;
b. commission agent;
c. del credere agent;
d. brokers,
e. sole Agent,
f. Exclusive Agent
3. Illustration of the duties and entitlements of the parties
4. Termination of agency relationship
5. Enforcement of rights and duties under agency arrangement

4.9.3.2 Considerations in drafting a Distributorship Agreement

1. Meaning and Demonstration of the formation of a distributorship
2. Types of Distributor Agreements
a. Exclusive Distributorship
b. Non-Exclusive Distributorship
c. Selective Distributorship
3. Procedure for negotiating a Distributorship
4. Termination of agency relationship
5. Enforcement of rights and duties under agency arrangement
 4.9.3.3 Considerations in drafting a Franchise
1. Demonstration of a franchise
2. Meaning and relevance/ applicability of trademarks
3. Types of Franchise
a. Manufacturing Franchise
b. Business Format Franchise
c. Product Distribution Franchise
4. Procedure for negotiating a Franchise
5. Use of trade marks, trade secretes and other intellectual rights relating to Franchises.
6. Termination of agency relationship
7. Enforcement of rights and duties under agency arrangement

4.9.3.4 Considerations in drafting an Employment contract

1. Application of the employment Act 2006
S.3 (1) Except as otherwise provided , the Act applies to all employees employed by the
employer under a contract of service.
S.3(2)- The Act does not apply to;
a) Dependant relatives not exceeding 5
b) UPDF other than civilians
c) Minister may exclude the application of the Act.
2. Contract of service
S.2-Contract of service means any contract, whether oral or in writing, whether express or
implied where a person agree in return or renumeration, to work for an employer and includes a
contract of apprenticeship.
S.25-Contract of service can be oral or written
3. Contract of apprenticeship-
a) Where there is an obligation an employer to make all necessary steps to ensure that the
employee is taught and acquires knowledge of skills in that industry.
b) Where there is a provision for formal recognition of the fact that the employee has acquired
knowledge and skills.
Ready Mixed concrete(South East) Ltd V Minister of Pension and Natural Insurance(1968) 2
QB 497 conditions for contract of service
(i) Servant agrees in a consideration of a wage to provide his skill/work in performance of some
service to the master
(ii) Subject to the control of the master
(iii) Other provisions are consistent with the above:-
See also; NSSF V MTN and Unisis H.C.C. No. 94/2009.
Full line Distributors Ltd V Crown Beverages Ltd H.C.S (Com. Ct) No. 141/2012
Uber B.V, Uber Londan Ltd and Anor Vs. Yaslam J Farrar and Anor (2021)UK SC.5
Cassidy V Ministry of Healthy(1951) ALLER 574
S.4- Void provisions in a contract of service
S.27 -Exclusion of the provisions of the Act-Void
S.59- Employment is entitled to written particulars
1. Wages
S.41(1) Wages to be paid in legal tender
S.50- Employee is entitled to receive a payment statement -payslip
2.Casual Workers
 Means a person who works on a daily/hourly basis where payment of wage is due at the
completion of each day’s work.
Regulation 39 of the employment Regulation 2011
A person shall not be employed as a casual worker for a period exceeding 4 months.
Rule 39(2)-Where a casual workers has been employed in excess of 4 months, he/she is
entitled to a written contract and has a right to all benefits and rights of employees.
3.Rights and Obligations
 Duty to provide work (s. 40)
 Provide clean & health environment (OSHA)
 Duty to provide tools of work
 Payment of wages salary (ss.41-50 EA)
 Compensation in case of death or scheduled injury/disease
 Freedom from forced labour (s5 EA)
 Weekly rest (S.51, 53)
 Annual leave & public holidays (s.54
 Sick, maternity leave (s.55
 Severance allowance (ss 87- 92 EA)
 Repatriation (39
 Obligation to give reason for dismissal or termination (s.68)
 Not to discriminate employees (s.6)
 Observe the law, contracts and agreements (s.4,27, 59 EA)

4.Termination
 Termination by employee (Resignation)
 Termination by employer
- BoU vs Joseph Kibuka CACA No. 281/2016
 Collective termination- S. 81- Regulation 44
 Dismissal with notice
 Summary Dismissal – S.69 EA
 Constructive dismissal- s.65 (1) (c) EA
See Ben Kimuli V Sanyu FM LD No. 126/2015
Ug. Local Govenment Association V Kimera Innocent and Ors

5.Employment of Children
S.32(1) A child under 12 years shall not be employed.
(2) Children under 14 years- not to be employed except for light work under supervision of an
adult.
Children to be employed where it is injurious to their health and not to be employed between
7Pm and 7 Am
6.Foreign Workers
Uganda Citizenship and Immigrant Control Act Cap 66
S. 52-Prohibited Immigrants.
S.52 -No immigrant shall enter and remain in Uganda unless they have a valid entry permit
certificate of permanent resident or pass issued under this Act
S.54-Classification of entry permits
S.59- No employment of foreigners without a valid entry permit
S.37-No employment Act-Prohibits employment of migrant workers who are not lawfully present
in Uganda.
See Ahmed Ibrahim Bholm V Car and General Ltd S.CA 12/2002
S.68-Foreign Workers to register within 90 days

7. Recruitment of Uganda Migrant Workers

The employment (recruitment of Ugandan Migrant workers) Regulations S.I 47/2021
Regulation 4- A person to transact business as a recruitment agency in Uganda must
apply to a Minister for licence.
Regulation 5- Recruitment agencies shall be ;
a) Company incorporated in Uganda
b) All shareholders and directors to be Ugandans
c) Minimum authorized capital to be 50 million
Regulation 6- Business not eligible to being recruitment agencies
Regulation 7- Application for licence to be in writing- its contents.

8. Labour Unions
S.2- Labour Union Act 2006- Defines a labour union as any organization of employees
created by employees for purposes of representing their rights and interests.
Article 29 of constitution 1995-freedm of association.
Article 40-Economic rights-Article 40(1) -Parliament to make laws to;
a) Provide for right of persons to work under satisfactory safe and healthy conditions
b) Equal pay without discrimination
c) Rest and reasonable working hours
Article 40 (3) - Every worker has a right to
a) To form/join a labour union
b) Collective bargaining and representation
c) To withdraw labour in accordance with the law
S.3 of Labour Union Act-Rights of employees to organize into Labour Unions
S.4- Employer not to interfere with the right to association
S.75 Employment Act
(c ) belonging to labour union shall not be a reason for termination
See Dr Sam Lyomoki and Ors V AG Constitutional Petition No. 8/2004

4.9.3.5 Considerations in drafting a Construction agreement.

4.9.3.5.1 Definition

A construction contract is an agreement between an employer (sometimes referred to as the

client) and a contractor to construct, repair, modify, renovate or even demolish something in an
agreed time frame, for an agreed price and to agreed standards.
The contract is signed by both the employer and the contractor. As with any contract, once the
construction contract is signed, both the contractor and the employer must follow the terms of the
contract or face possible legal action.

4.9.3.5.2 Parties in a Construction contract

Employer/Client

Contractor Employer’s
Representative/Engin
eer

Subcontractor

4.9.3.5.3 Nature of the Contract

The type of contract form to be used will depend on the employer’s preference as well as the
works to be executed. Two common ways in which parties can contract are either through a
bespoke contract or a standard form contract.

Bespoke Contract

This is a type of contract that is specially drafted and fully tailored to cater for specific needs or
requirements of the parties.

Standard Form Contracts

“standard form” contracts have been developed which set out standard terms for a construction
contract to cover the related issues and risks that will most likely apply. There are standard form
contracts for both construction work and construction-related professional services (for example
pure design work, or supervision work for construction).

Standard form contracts are useful because they can be obtained and understood in advance
and, therefore, are usually easier to agree on instead of drafting the entire contract from scratch.
The parties simply agree on specific changes to the standard terms based on the requirements
for the specific construction project concerned.

Examples
  FIDIC
 NEC
 JCT
 PPDA

Standard form contracts usually General Conditions of contract and Special or Particular
Conditions of Contract. The former are general provisions that guide the nature of contract which
the parties have executed while the latter are provisions which amend the General Conditions in
order to tailor them to the requirements of the particular contract executed by the parties. In order
of precedence or priority, the Special Conditions take precedence over the General Conditions.

4.9.3.5.4 Rights

• Timely payments – the main contractor is entitled to be paid within the time stated in the
contract, failing which he or she should usually be able to claim interest on late payment.

• Extensions of time – the main contractor can claim for an extension of time for completion in
accordance with the instances catered for in the contract. The usual test is whether or not the
particular act/ incident that will delay time for completion is within his or her control or not.

• Access to site – the main contractor has a right to access to the site at which the works are to
be completed at the time stated and agreed in the contract agreement.

 Upon termination of the contract –

the main contractor usually has the right to terminate the contract should a material breach
or a force majeure event occur.

 Appointment of subcontractors –

the main contractor usually has the right to appoint subcontractors if not otherwise
provided for in the contract (see section regarding nominated subcontractors on page 11),
whom he or she will be held responsible and accountable for.

4.9.3.5.5 Responsibilities

 Completing works – the main contractor has the responsibility to complete the works
within the time allocated in the contract agreement.
 Guarantees – in some instances, especially where the contract is a design-build or EPC
(Engineer, Procure and Construct), the main contractor will be required to provide
performance guarantees. This is a mitigation of risk strategy on the part of the employer

to ensure that if the works are not performed to the correct standard or specifications, he or
she will be covered accordingly. This will usually be priced in by the contractor.

 Insurance – the main contractor will in some instances be required to acquire insurance for
the works, site, its employees, materials, etc. This is to ensure that risk remains mitigated at
all times.
• Administrative procedures/ compliance with all applicable laws – the main contractor has
to ensure that the required licences, permits and the like are obtained before, during and after the
construction works proceed. It is imperative for the contractor to obtain all licences within the time
periods allocated in order to avoid situations where these issues lead to a delay in the
construction process and therefore a delay in the works.

• Response to communications – the main contractor has an obligation

to respond to all communications from the employer or his or her representative at all times
during the subsistence of
the works. These might be variations, progress updates, suspension of works, access to site
issues, delayed payment notices, etc.

• Substantiation of claims – in the instance where the contract agreement makes provision for a
claim mechanism, unless otherwise stated in the contract agreement, the contractor must
substantiate such a claim in order to ensure swift settlement of such a payment.

• Subcontracts – main contractors should ensure that written agreements areentered into
between themselves andthe subcontractors. This is to ensurethat they are able to properly hold •
such subcontractors liable should any issue arise.

4.9.3.5.6 Risks

Financial loss:

 Errors in calculations – the main contractor should ensure that measurements regarding
the works price are done completely and accurately.

The contractor must also include a contingency amount within the price for loss that could
be suffered for risks for which no additional compensation is allowed under the contract.

 Poor management – the main contractor • should ensure that he or she manages the
project accordingly, especially when subcontractors are involved as this might lead to dire
financial consequences.

Delays – the main contractor should also ensure that materials are delivered on time, licences
obtained and that
his or her employees perform the works timeously. Failure to do so will lead to a situation where
delays occur and depending on the wording of the contract the main contractor might be subject
to delay damages.

Penalties – the main contractor should be aware of the fact that depending on the wording of the
contract, he or she might be liable for penalties should he or she fail to meet certain set dates or
fail to meet certain performance guarantees. It is important to note though, that if a penalty
applies, the employer does not have to prove that his or her loss stemming from the breach is
equal to the penalty, but may not claim further amounts from the contractor in respect of the
breach

to which the penalty applies. In other words the contractor’s liability to pay damages for the
breach is limited to the amount of the penalty.

Insolvency of employer – the main contractor is at risk of this occurring especially when the
employer is a private individual or small company. The main contractor can mitigate this risk by
acquiring bank guarantees from the employer guaranteeing performance (payment) of the
amounts owed. The main contractor must remember that he or she has a builder’s lien over the
constructed property which would stand against a claim for insolvency, provided that such a
contractor maintains possession of the works.

SEE APPENDIX FOR A STANDARD CONSTRACTION CONTRACT UNDER PPDA

4.9.3.6 Considerations in drafting an Insurance Contracts

4.9.3.6.1 Principles and elements to be considered;

a) - Definition of insurance
b) - The various classes/products of insurance
c) - Insurance distinguished from other contracts
d) - The requirement of insurable interest and consequences of lack of it
e) - Insurance contract as contract of indemnity

4.9.3.6.2 Formation of Insurance contract

a) material terms (conditions, warranties , exclusions and other clauses)
b) Nature of the risk
c) Rate of premium
d) offer and acceptance
e) Form of insurance contract
f) Marine Insurance Act and the requirement for written contracts
g) Other exceptions requiring special forms of contracts of insurance
h) Execution and Delivery of policy
i) Construction of insurance policies
j) The Role of intermediaries-brokers and agents
k) Payment of insurance commission
l) Vitiating factors- fraud, illegality, misrepresentation ,mistake ,non –disclosure, breach of
warranty
m) Special rights of insured and insurer (Indemnity and subrogation etc)
n) Third parties’ rights
o) Void and Voidable policies
p) Insurance contracts as contracts ‘uberrimae fidei ‘ and the effect of Non-disclosure of
material information
 q) -Warranties and effect of breach thereof
r) Insurance claims under various branches of insurance
4.9.3.6.3 Insurable Interest
The Insurance Act Cap 213
-The Insurance Regulations S.I 213-1
1.National Insurance Corporation vs Span International Ltd Civ.Appeal No.13/2002 (CAU)
-Insurable interest –possession of the subject matter suffices to bestow insurable interest
-Utmost good faith-evidence must be adduced to prove that insured
deliberately/intentionally withheld material information
2.National Insurance Corporation vs Pelican Air Services Civ. Appeal No.15/2003
-Insurable interest-the issue of insurable interest must be pleaded and proved and it is
improper to raise it in final submissions for the first time.
3.Madison Insurance Co Ltd Vs Kinara & Another (2005) E.A 240 (CAK)
-Ordinary contracts of insurance are contracts of indemnity and cover direct losses and not
consequential losses unless specific provision is made therefor.
4.Sugar Corporation of Uganda Ltd vs Motrex Limited and Others HCCS No.743/2005-
Justice Kasule R.K adopted the principle in Madison Insurance Co Ltd case (above).
4.9.3.6.4 Proposal and policy
4.9.3.6.5 The Regulatory roles of the Uganda Insurance Commission and the Uganda
Insurers Association

4.9.3.6.6 Considerations in drafting other Risk management Contracts.

a) Guarantees see sections 68-87 of Contracts Act

S.68 of Contracts Act 2010 defines a contract of guarantee as a contract to
perform a promise or to discharge the liability of 3 rd party in case of default of that 3 rd
party which ma be oral or written.
See Sections 69 to 80 of the Contracts Act No.7 / 2010
See also George William Semivule Vs. Barclays Bank (U) Ltd H.c Misc.
Application No. 267/2008.
b) Bonds
4.4.5 Statutes
1. The Contracts Act, 2010
2. The Sale of Goods and Supply of Services Act, 2017
3. The Trade Secrets Protection Act, 2009.
4. Trade Marks Act, 2010
 5. The Patents Act Cap, 216 as amended by Act 7/2022 and Act 15/2005
6. The Employment Act, No. 6 of 2006.
7. The Labour Unions Act 2006.
8. The National Social Security Fund Act Cap 222.
9. The Income Tax Act Cap 340, as amended.
10. The Contracts Act, 2010.
11. Uganda Citizenship and Immigration Control Act, Cap. 66.
12. The Uganda Citizenship and Immigration Control (Amendment) Act, No. 5 of 2009.
13. The Uganda Citizenship and Immigration Control (Amendment) Act, 2006.
14. Insurance Act Cap 213

Rules/Regulations

1. Contracts Act

2. The Employment Regulations, S.I 219-1.

3. The Employment (Employment of Children) Regulations, S.I No. 17 of 2012.

4. The Employment (Sexual Harassment) Regulations, S.151 of 2012

5. The Employment Act (recruitment of Ugandan Migrant workers)Regulations 2021

6. The Uganda Citizenship and Immigration Control Regulations, S.I No. 16. of 2004.

7. Insurance Regulations S.I 213-1

4.4.6 Cases

a) Employment

1. Ready Mixed Concrete (SE) v.. Minister of Pensions (1968) 1 ALL ER 433.

2. Ashabhai Bhailabhai Patel v. Bhanubhai Chunbhai Gajjar (1964) EA 27.

3. National Trading Corporation v. Moses Kityo (1972) HCB 216.

4. Otto John Okori v. Uganda Electricity Board (1981) HCB 52.

5. Ruth Kijjambu v. Attorney General Constitutional Application No. 44 of 2010.

6. Ahmed Ibrahim Bholm v. Car & General Ltd S.C.C.A No. 12 of 2002.

7. R v. Chapman, ex p Aldridge [1901] AC 240.

8. Bedford Insurance Co. Ltd v. Instituto de Ressrguros do Brasil [1985] Q.B 966.

9. Eastern Construction Co. Ltd v. National Trust Co. Ltd. [1914] AC 197
10. Isaac. Nsereko v. MTN (U) Limited H.C.C.S No. 156 of 2012.

11. Bwayo v. DFCU Bank Limited Civil Suit No. 78 of 2012.

12. Bank of Uganda v. Betty Tinkamanyire S.C.C.A Mo. 12 of 2007.

13. David Iyamulemye v Attorney General C.A.C.A No. 81 of 2006.

14. Gulaballi Ushillni v. Kampala Pharmaceuticals Ltd S.C.C.A No. 6 of 1998.

15. Doreen Rugundu v. International Law Institute S.C.C.A No. 8 of 2005.

16. Francis Oyet Ojera v Uganda Telecom Ltd HCCS No. 161 of 2010

17. Uber Bv & Ors v. Aslam & Ors EWCA CIV 2748 of 2018.

18. Ahmed Ibrahim Bholm v. Car & General Ltd S.C.C.A No. 12 of 2002.

19. Ashabhai Bhailabhai Patel v. Bhanubhai Chunbhai Gajjar (1964) EA 27.

20. Atuzarirwe v. The Registration Services Bureau & 3 Ors (Miscellaneous Cause 249 of
2013).

21. Bank of Uganda v. Betty Tinkamanyire S.C.C.A Mo. 12 of 2007.

22. Bank of Uganda v. Joseph Kibuuka & Others CACA no. 281 of 2016.

23. Bedford Insurance Co. Ltd Instituto de Ressrguros do Brasil [1985] Q.B 966.

24. Ben Kimuli v. Sanyu FM 200 Limited Labour Dispute Claim No. 126 of 2015.

25. Bwayo v. DFCU Bank Limited Civil Suit No. 78 of 2012.

26. David Iyamulemye v. Attorney General C.A.C.A No. 81 of 2006.

27. De Souza v. Tanga Town Council (1961) EA. 377.

28. Doreen Rugundu v. International Law Institute S.C.C.A No. 8 of 2005.

29. Eastern Construction Co. Ltd v. National Trust Co. Ltd. [1914] AC 197.

30. Eng. John Eric Mugyenzi v. UEGCL CACA. No. 167 of 2018.

31. Francis Oyet Ojera v. Uganda Telecom Ltd HCCS No. 161 of 2010.

32. Gulaballi Ushillni v. Kampala Pharmaceuticals Ltd S.C.C.A No. 6 of 1998.

33. Isaac. Nsereko v. MTN (U) Limited H.C.C.S No. 156 of 2012.

34. Lusiba v. National Water and Sewerage Corporation Labour Dispute Reference
2016/160.

35. Mudoma Charles v. Kenfreight (U) Ltd; Labour Dispute Claim 2015/42.

36. National Trading Corporation v. Moses Kityo (1972) HCB 216.

 37. Otto John Okori v. Uganda Electricity Board (1981) HCB 52.

38. R v Chapman, ex p Aldridge [1901] AC 240.

39. Ready Mixed Concrete (SE) v. Minister of Pensions (1968) 1 ALL ER 433.

40. Ruth Kijjambu v. Attorney General Constitutional Application No. 44 of 2010.

41. Uber Bv & Ors v. Aslam & Ors EWCA CIV 2748 of 2018 (US. Supreme Court).

42. Uganda Local Government Association v. Kibira Innocent and 4 Others

43. Uganda Revenue Authority v. Siraje Hassan Kajura & Others (former employees of
Dairy Corporation) SCCA No. 09 of 2015

b) Agency, Distributorship and Franchise

Full Line Distributors Ltd v Crown Beverages Ltd H.C. Com. Division Suit No. 141 of
2012
c) Insurance

1. National Insurance Corporation vs Span International Ltd Civ.Appeal No.13/2002 (CAU)

2. National Insurance Corporation vs Pelican Air Services Civ. Appeal No.15/2003
3. Madison Insurance Co Ltd Vs Kinara & Another (2005) E.A 240 (CAK)
4. Sugar Corporation of Uganda Ltd vs Motrex Limited and Others HCCS No.743/2005-
Justice Kasule R.K
5. Kenindia Assurance Company vs Kamithi & Another (2004) 2 E.A 115 (CAK)
6. Uganda Baati Ltd vs National Insurance Corporation CA No.13/98
7. Mirembe Wire Products Ltd vs Goldstar Insurance Co.HCCS No.54/2002
(2003)UGCommC 2-www.ulii.org
8. Morrison vs Universal Marine Insurance co (1873)LR 8 Exc 197
9. Mackender vs Feldia (1967) 2 Q.B 590
10. General Accident Insurance Corp vs Cronk (1901) 17 TLR 233
11. Stockton vs Mason (1978) 2 Lloyd’s Rep 430
12. Beckett vs Nurse (1948) 1 K.B 535-
13. McNeil vs Law Union & Rock Insurance Company Ltd (1925) 23 Lloyds’s List L.R 341,
14. Alfa Insurance Consultants Ltd vs Empire Insurance Group SCCA No.9/94
15. Tiwangye vs National Insurance Corporation

Text Books
1. Friedman (1996). Law of Agency (7th ed.) Butterworth: Toronto
2. Professor Peter G Watts (2022). Bowstead & Reynolds on Agency (22nd ed.) Sweet &
Maxwell.
3. Halsbury’s Laws of England,Vol 25, 4th Edn

TERM THREE

4.10 MODULE SIX: BANKING AND FINANCE

4.10.1 Introduction

The aim of this module is to develop an understanding of the Ugandan banking and financial
system and its associated risks given the ever evolving regulatory regime. Students should be
able to understand the setup and operations of financial services and financial institutions
business.

4.10.2 Aim of the Module

The aim of the module is to;

1. Develop ability to advise on the set up of financial services and financial institution
businesses;
2. Develop ability to advise on various aspects of the banker-customer relationship;
3. Develop ability to set up financial services and financial institution businesses;
4. Develop ability to structure the management of financial services and financial institution
businesses;
5. Develop the ability to recognize ethical issues relating to financial services and financial
institution businesses;

4.10.3 Learning outcomes

By the end of this module you should be able to: -

1. Explain the principles relating to bank customer relationship and establishment of

financial services institutions;
2. Illustrate the structure of financial services and financial institution businesses;
3. Illustrate statutory compliance of financial services and financial institution
businesses;
4. Draft documents relating to financial services and financial institution businesses;
5. Recognize and deal with ethical issues relating to financial services and financial
institution businesses.

4.10.4 Various Financial Vehicles

4.10.4.1 BANKS
 A bank is defined under Section 3 (c) of the Financial Institutions Act 2004 as any
company licensed to carry on financial institution business as its principal business as
specified in 2nd schedule to this Act, including all branches and offices of that company
in Uganda.
Section 26(1) of the FIA 2004 provides that a person proposing to transact financial
institution business in the capacity of a bank in Uganda shall have a minimum paid up cash
capital of not less than two hundred thousand currency points invested initially in such
liquid assets in Uganda as the central bank may approve.
Section 52 (1) FIA provides that every financial institution shall have a board of directors
of not less than 5 directors.
4.10.4.2 Licence Requirements
Section 4(1) of the Financial Institutions Act of 2004;
a) Regulation 11(1) of the Financial Institutions (Licensing) Regulations ,2005 (1): An application
for a license shall be made in duplicate, in the form set out in Schedule I and shall be
accompanied by the supporting documents specified in regulation 12.
b) Section 6(1) – Consent of Central bank to open up and additional branch
c) Section 10(1) and Regulation 11 of the Financial Institutions (Licensing)
Regulations ,2005 – Application for license to central bank in writing.
d) Section 10 (2) (a) – (k) and Regulation 12 of the Financial Institutions (Licensing)
Regulations ,2005 provides for the contents of the application for the License.
4.10.4.3 Granting, revocation and refusal of license – Section 12 of the FIA 2004 Section
12(2) FIA - Grant of license 14 days after application.
License fee – Section 13(1) – Fee prescribed by Central Bank by notice.
4.10.4.4 Microfinance
Section 3 of the Financial Institutions Act, 2004 as amended defines microfinance
business to mean the business of accepting deposits from and providing short-term loans
to small micro enterprises and low income households, usually characterized by the use of
collateral substitutes, such as group guarantees. Section 5 of the Tier 4 Microfinance
Institutions and Money Lenders Act, 2016 defines microfinance activities as extending
micro-loans, accepting savings and providing other financial services as provided for in this
Act.
Section 2 of the Micro Finance Deposit Taking Institutions Act No. 5 of 2003 defines
microfinance business to mean the business carried on as a principal business of; -
a) Acceptance of deposit.
b) Employing such deposits either wholly or partly by lending or extending credit for the
account and at the risk of the person accepting those deposits, including the provision
of short term loans to small or micro enterprises and low income households, usually
characterised by the use of collateral substitutes, such as group guarantees or
compulsory savings;
c) Transacting such other activities as may, by regulations under section 89 of this Act, be
prescribed by the Central Bank.
 4.10.4.5 The minimum capital requirement
a) Under Section 15(1) of the microfinance Act supra, provides for the minimum capital
requirement, hence that a company shall not be granted a license, unless it has a minimum
paid-up capital of twenty-five thousand currency points invested in such liquid assets in
Uganda as the central bank may approve. Per the first schedule to this Act, a currency point is
equivalent to UGX 20,000/=. Hence the minimum capital required is UGX 500,000,000.
b) Section 5(2) of the Act supra, provides for a deposit taking microfinance institution as a
company shall use the word ―MDI after its name.
e) The Act requires minimum capital of UGX 500,000,000/=;

4.10.4.6 Opening up new branches of business.

Under section 81 of the microfinance Act supra, prohibits a financial institution to open
up a new place of business without submitting a written application for the purpose to the
Central bank. Therefor for the company to open up other branches it has to apply to the
central bank for approval of the same.
4.10.4.7 Directorship
a. Under section 22(1) of the microfinance Act supra, states that the operations of every
institution shall be directed by a board consisting of at least five directors headed by a
chairperson who is a non-executive director of the institution.
b. Under second schedule to this Act; Section, 22 (2) provides that no person shall become a
director of an institution without the approval of the central bank and the central bank shall
have due regard to the fit and proper person criteria prescribed in second schedule to this
Act. thus in applying
paragraph 2(a) the said schedule, which states that for the purpose of and without prejudice
to the generality of the provision of paragraph (a), the central bank may have regard to the
previous conduct and conduct and activities of the person concerned in business or financial
matters, and, in particular to any evidence that such person has been convicted of the offence
of fraud or any other offence of which dishonesty is an element.
4.10.4.8 Requirement of a company.
For any microfinance to be licensed to carry on the financial business under the act, it should be a
company. Under section 4 (1) of the Microfinance Act supra, provides to the effect that no
microfinance business shall be transacted in Uganda except by a company.
4.10.4.9 The requirements for setting up MDI
Part II of the Microfinance Deposit Taking Institutions Act, 2013 and Parts II and III of the
Microfinance Deposit-Taking Institutions (Licensing) Regulations, 2004 provides as follows; -
a) Application. - The application for a license is provided for under s.7 the Act and reg. 7 and
schedule 1 of the Regulations;
b) Minimum capital requirements - S.15 provides for the minimum capital to hold a licence as
twenty-five thousand currency points invested in such liquid assets in Uganda as the Central
Bank may approve.
 c) Application Fee- Regulation 15 provides for the payment of an application fee of twenty-
five currency points to the Central Bank at the time of application.
d) Section 15(1) of the microfinance Act supra, provides for the minimum capital requirement,
hence that a company shall not be granted a license, unless it has a minimum paid-up capital
of twenty-five thousand currency points invested in such liquid assets in Uganda as the
central bank may approve. Per the first schedule to this Act,
e) Section 5(2) of the Act supra, provides for a deposit taking microfinance institution as a
company shall use the word “MDI” after its name.
f) Time frame: - Section 7(3) provides for a period of 6 months within which the Central Bank
has to have considered the application and granted or rejected it.

4.10.4.10 Self-help groups- According to S. 99 of the act, a self-help group shall mobilise and
manage its own savings, provide interest bearing loans to its members, offer a limited from of
insurance to its members, share out member equity at least once a year in proportion to the
savings and be time bound. S. 99(3) provide the various services that may be offered by a
self-help group.
A self-help group shall be registered for the purpose of developing the economic interests of
the group members and may provide services including; -
a) savings and credit;
b) revolving fund;
c) fundraising;
d) rotational group farming; or
e) barter trade
4.10.4.11 Commodity-based microfinance -
S.102 of the Act defines a commodity based microfinance as the provision of microfinance
services in the form of goods and services.

4.10.5 SACCO-
S. 5 of the Tier 4 Microfinance Institutions and Money Lenders Act. Defines;
Savings and Credit Cooperative‖ or ―SACCO‖ means a registered society licensed under
section 40; S. 36. Of the Act; SACCOs to be registered societies and licensed under this
Act. A SACCO shall not carry on the business of financial services unless it is; -
i) a registered society; and
ii) licensed under this Act.
iii) A SACCO shall provide financial services only to its members.
iv) Subject to subsection (1) a SACCO may carry on the business of financial services if
 v) It is operating on a probationary period pending registration under the Cooperatives
Societies Act; or
vi) It has applied for a licence under this Act.
S. 37 provides for the powers of a SACCO. -
S 38. Licensing of SACCO.
SACCO that intends to carry on the business of financial services among its members shall apply
to the Authority for a SACCO licence.
Section 40 of the tier 4 Act supra. Use of words ―Savings and Credit Cooperative Society‖ or
―SACCO.
Section 44 of the Act, ibid provides for, Revocation of SACCO licence
Section 46 of the Act, ibid provides for, Liquid assets. - A SACCO shall maintain minimum
holdings of liquid assets in relation to the savings of members.
Section 47 of the Act, ibid provides for, Equity.
Section 48 of the Act, ibid provides for, Shareholding.
Section 54 of the Act, ibid provides for, The SACCO Stabilization Fund.
Section 109 of the Act, ibid provides for, Application of Cooperative Societies Act.
i) The Cooperative Societies Act, shall not apply to SACCOs regulated
under this Act except as expressly provided by this Act.
ii) The Cooperative Societies Act shall apply to a SACCO in respect of—
a) governance of a SACCO;
b) investment of funds;
c) dividends or bonus
d) Reserve Fund;
e) Share Transfer Fund; and
f) contribution to the Education Fund.
iii) Where the Cooperative Societies Act requires that an act be done by the registrar, that
act shall for purposes of subsection (2), be done by the Authority.
4.10.6 Money lending
i) Section 5 of the Act defines a money lender as a company licensed under S.79. Under S. 78,
a person intending to engage in money lending business shall be a company not carrying on
the business of banking or insurance or a society registered under the Cooperative Societies
Act; or a body corporate, incorporated or empowered by an act of Parliament to lend money in
accordance with that Act.
ii) S. 78. An application for a licence for money lending shall be made in writing to the Authority.
 iii) A money lending licence shall not be granted under section 80 where: the Authority is not
satisfied that the shareholders and persons responsible for the management of the company
or firm are of good character, the applicant, or any person responsible for the management of
a company that is issued with a money lending licence has been convicted of an offence
relating to embezzlement or any other financial impropriety; or he applicant has not complied
with section 78(3).

iv) S.84 (1) (a) makes it an offence to carry on business as a moneylender without a money
lending licence;
In the case of Namusisi and others v. Ntabazi (2006)1 EA247 it was stated that a license is
necessary to prove that one is a money lender.
4.10.7 Money Agency.
The Contracts Act, 2010 defines an “Agent” under section 118 as a person who is employed
to do any act for another person or to represent another party in dealing with the third party
whereas the person for whom such act is represented is called the principal. Therefore, the
person who has delegated his or her authority will be the principal.
Section 41 of the Ban of Uganda Act provides for Financial institutions as agents of the central
bank and it states that the bank may appoint any financial institution as its agent for the issue,
reissue, exchange and withdrawal of notes and coins or for any other purpose on terms and
conditions that may be agreed upon by the bank and the institution appointed agent.
Regulation 4 of The Financial Institutions (Agent Banking) Regulations, 2017 defines
“agent banking” to mean the conduct by a person of financial institution business on behalf of a
financial institution as may be approved by the Central Bank.
Regulation 5 of the Regulations, provides that A financial institution shall not conduct agent
banking in Uganda without the prior written approval from the Central Bank.
Regulation 6 of the Regulations provides for persons that are eligible to undertake the
business of agency banking.
A financial institution is called upon not to conduct agent banking with its employees, affiliates
or associates. (Reg. (2))
The agency banking relationship is therefore one of a principal-agency relationship. Under
Regulation 9(1) of the Regulations, a financial institution approved to conduct agent banking is
liable for the actions or omissions of its agent relating to agent banking.
4.10.7.1 OBLIGATIONS ON THE BANK (PRINCIPAL)- these are provided for Under Reg 9(2) of
the Financial Institutions (Agent Regulations) Regulations, 2017
4.10.7.2 OBLIGATIONS OF BANK AGENTS - Bank agents are bound by the agency agreement
into between themselves and the principal. This agency banking is guided by the Agency
agreement that is provided for under Regulation 10(2) of the Regulations. The various
requirements of this agreement are provided for under Regulation 10(3) of the Regulations.
4.10.7.3 RIGHTS OF THE BANK (PRINCIPAL)-
Section 118 of contracts Act 2010 “principal” means a person who employs an agent to
do any act for him or her or to represent him or her in dealing with a third person; -
a) Right to assess the Agent. - Regulation 11(3) of the Financial Institutions (Agent Banking)
Regulations, 2017.
b) Right to supervise agent- Regulation 18(1) of The Financial Institutions (Agent Banking)
Regulations, 2017 provides for Supervision.
a) Right to property in Data and information received by agent Regulation 10(3) (g) of The
Financial Institutions (Agent Banking) Regulations, 2017. Section 147 Contracts Act Accounts
of an agent. An agent shall render proper accounts to a principal on demand.
b) Right to repudiate transaction.- Section 149 of Contracts Act Right of principal to repudiate
when agent deals without consent of principal that
c) Regulation 15(1)(a) provides for Prohibited activities that an Agent shall not offer financial
institution business on its own accord, except where it is the agent’s principal business as at the
time of engagement.
f) Right to benefit from agent's dealing on own accord- Section 150 Contracts act 2010
d) Right to approve agent in case of change of location of place of business, closure of
business, business hours Section 116 (3b) of Financial Institutions Act 2004.
4.10.7.4 RIGHTS OF BANK AGENTS
Section 118 of contracts Act 2010 defines an “agent” means a person employed by a principal
to do any act for that principal or to represent the principal in dealing with a third person.
Section 3 Financial Institutions (Amendment) Act 2016 “agent” means a person contracted by
a financial institution to provide financial institution business on behalf of the financial institution in
accordance with the Act and these Regulations.
a. Right to be assigned unique identification number Regulation 9(2) (a) of The
Financial Institutions (Agent Banking) Regulations, 2017.
b. Right to technological support- Regulation 9(2) (d) A financial institution shall ensure
that the technological infrastructure supporting agent banking runs effectively.
c. Right to enjoy non-exclusivity & Right to deal with other financial institutions.
Article 40(2) of the constitution provides for every person has right to practice his or her
profession and to carry on any lawful occupation, trade or business. Regulation 11(1) of
The Financial Institutions (Agent Banking) Regulations, 2017 and Regulation 11(2) (a)
(b)
d. Right to Equality and freedom from discrimination. Article 21(1)(2) of the 1995
constitution provides that no person shall be discriminated based on economic status.
Regulation 11(4) Financial Institutions (Agent Banking) Regulations, 2017.
e. Right to Remuneration- Regulation 10(3)(d) of The Financial Institutions (Agent
Banking) Regulations, 2017.agency agreement to specify and provide for the
remuneration arrangement between Agent and financial institution. See also Section
153 of Contracts act 2010
f. Right to be indemnity. Section 156(1) Contracts Act 2010 provides for Indemnity of
agent.
4.10.7.5 RIGHTS OF CUSTOMERS
 a) Right of transparent, fair and honest dealing - The contract between the banks and
customers should be easily understood by the common man. It is the responsibility of the
bank to make the customer understand interest rates, the risk involved and all other terms
and conditions especially when dealing with an agent, whether there are fees to be paid to the
agent, charges charged on transactions concluded with an agent.
b) Right to enjoy consumer protection- Regulation 17(1)
c) Right to have complaints heard. Regulations 17(2)(d) of The Financial Institutions (Agent
Banking) Regulations, 2017 complaints are handled by the financial institution in an appropriate
and effective manner.
d) Right to be informed in case of complaints. Paragraph 9 (5) (a)
e) Right to privacy and Right to confidentiality- Article 27 (2) of the 1995 constitution No
person shall be subjected to interference with privacy of that person's correspondence,
communication and other property. Regulation 17(2) (e) of The Financial Institutions (Agent
Banking) Regulations, 2017 provides that in a bid to ensure consumer protection both the
financial institution and its agent shall uphold privacy and confidentiality of customer
information and data; and data protection. Paragraph 7 (3) (a) of Bank of Uganda Financial
Consumer Protection Guidelines, 2011 provides for Safeguarding Consumer Information.
e) Right to Sue - Section159 Contracts Act 2010 provides for Enforcements and consequences
of contract of agent
f) Right to receive notice in case of termination of agency- Regulation 12(3) of the
Regulations

4.10.7.6 Foreign Exchange Business-

Section 3 of the Foreign Exchange Act defines foreign exchange means or includes bank
notes coins or electronic units of payment in any currency other than the currency of Uganda,
financial instruments denominated in foreign currency. Under section 5 of the Foreign Exchange
Act, there is requirement of a license for any person dealing in the business of foreign exchange.
Regulation 3 of the Foreign Exchange (Forex Bureau and Money Remittance) Regulations
2006 provides for money remittance business of foreign exchange transfers consisting of the
acceptance of monies for the purpose of transmitting them to persons resident in Uganda or
another country.
Regulation 15 (2) of the Foreign Exchange (Forex Bureau and Money Remittance)
Regulations 2006 provides for the classes to be issued or applied for. Class A International
Money Transfer Agency, Class B Forex Bureau and Money Remittance, Class C Direct Entrants
License, Class D Sub Agency License.

4.10.7.7 MONEY LAUNDERING

6.4.9.1 The Long title of the Anti-Money Laundering Act 2013 (the Act)
provides that it is an Act aimed at prohibition and preventing the activities of money laundering.
Money Laundering is defined in Section 1 of the Act as the process of turning illegitimately
obtained property into seemingly legitimate property and it includes concealing or disguising the
nature, source, location, disposition or movement of the proceeds of crime and any activity which
constitutes a crime under Section 3 of the Act.
a) Section 3 read together with Section 116 prohibits a person to engage in acts of money
laundering intentionally.
b) transaction reporting requirements provided in Part III of this Act; or Act Anti–Money
Laundering Act 2013.
c) Offenses under the Act;
i. Failure to keep records in Section 120 which states that an
Refusal, omission, neglect or
ii. failure to give assistance to the Authority under Section 123
iii. Failure to report cash transactions under Section 124
6.4.9.2 What steps can an accountable person take to mitigate potential breaches?
An Accountable Person is defined in Section (1) of the Act to include persons listed in the
Second Schedule of the Anti-Money Laundering Act.
a) An accountable person shall under Section 6 of the Amendment carry out identification of
clients, customers, other persons by maintaining accounts for clients or customers in the true
name of the account holder, and shall not open or keep anonymous accounts or accounts
which are in fictitious or incorrect names.
b) Under the Amendment in Section 6A, an accountable person shall take appropriate steps to
identify, assess and monitor its money laundering and terrorism financing risks.
c) Section 7 of the Amendment Act they shall maintain and establish the necessary books
which relate to the identity of a person obtained in accordance with customer due diligence
measures,
d) Record and report cash and monetary transactions under Section 8 of the Act which exceed
one thousand currency points, and record the transaction in Form A as may be appended to
regulations made by the Minister, on the advice of the Authority.
e) Under Section 9 an accountable person shall monitor and report suspicious transactions.
f) S. 9(2) they shall upon suspicion, report the transaction or attempted transaction to the
Authority no later than two working days from when they realize.
g) Notify URA under Section 10 of any Cross border movements of currency and negotiable
bearer instruments of both domestic and foreign currency exceeding one thousand five
hundred currency points which do not pass through the normal banking procedures, through
the form designated as Form C in the regulations made under this Act.
h) Under Section 11 of the Act, an accountable person shall make information available to the
court, or other competent authorities for use in criminal, civil, or administrative investigations,
prosecutions, or proceedings, as the case may be, regarding crimes under this Act;
i) An accountable person who transacts in electronic funds transfers and other forms of funds
transfers shall under Section 13 of the Anti-Money Laundering Act include accurate
originator information and other messages related to the transfers.
j) An accountable person shall refrain from doing business with money launderers under
Section 16 of the Act.
4.10.7.8 The Know Your Customer (KYC) requirements;
The phrase Know Your Customer hereafter referred to as (KYC) prima facie connotes to knowing
the kind of person a financial institution is dealing with.
Regulation 5(1) of the Financial Institutions (Anti-Money Laundering) Regulations, 2010
requires every Financial Institution in Uganda to develop programmes against money laundering
some of which include the ―Know Your Customer” rules and procedures as per Regulation
5(2) (b).
The Financial Institutions (Anti-Money Laundering) Regulations, 2010 provide for the rules and
procedures followed by financial institutions in complying with the principle of KYC.
Regulation 7(1) provides for the essential elements or requirements for a financial institution
to include in the design of their ―Know Your Customer‖ rules and procedures.
4.10.7.9 BANK CUSTOMER RELATIONSHIP

4.10.7.10 BANK / BANKER

 Bills of Exchange Act, Cap 68 defines a Banker to include a body of persons whether
incorporated or not who carry on the business of banking. This is a 1933 law.
 The Financial Institutions Act, 2004 as amended defines a Bank to mean any company
licensed to carry on banking business as its principal business and includes all branches and
offices of that company in Uganda
 Section 1 (b) of the FIA as amended defines Banking Business to mean the principal
business involving;
i. accepting deposits of money from the public repayable on demand or at the expiry of a fixed
period or after notice;
ii. employing such deposits wholly or partly by lending or any other means for the account and
at the risk of the person accepting such deposits; and
iii. presenting to another bank, for payment, cheques, drafts or orders received from customers
in the capacity of a banker;
In the case of United Dominions Trust vs Kirkwood (1966) 2 QB
Lord Denning MR: Normally a company would only constitute a bank if it undertook certain
activities:
i. the acceptance of money from, and the collection of cheques for, customers and the placing
of the funds to the customers’ credit;
ii. honoring cheques or orders drawn on the bank by their customers when presented for
payment and the debiting of the customers' accounts accordingly; and
iii. keeping some form of current or running accounts for the entries of customers' credits and
debits.
Diplock LJ stated: “What I think is common to all modern definitions and essential to the carrying
on of the business of banking is that the banker should accept from his customers loans of money
on "deposit," that is to say, loans for an indefinite period upon running account, repayable as to
the whole or any part thereof upon demand by the customer either without notice or upon an
agreed period of notice.”
4.10.7.11 A CUSTOMER
In the case of Commissioners of Taxation vs English Scottish & Australian Bank Ltd (1920)
AC 683 A customer was defined as;
A person whose money has been accepted by the Bank on the footing that;
i) They undertake to honour cheques up to the amount standing to his credit
ii) Duration is not of essence
Warren Metals Ltd v Colonial Catering Co Ltd (Supreme Court of New Zealand)
A customer is someone who has an account with a bank or who is in such a relationship with the
bank that the relationship of a banker and customer exists. Customers can be categorized as
current customers, Former Customers and Potential Customers.
4.10.7.12 a Bill of Exchange
S.2(1) of the Bill of Exchange’s Act Cap 68 defines a bill of exchange as an unconditional order
in writing, addressed by one person to another signed by the person giving it, requiring the person
to whom it is addressed to pay on demand or not at fixed or determined future time a sum certain
in money to or to the order of a specific person.
S.19(1)- inchoate Instruments
S.22-Signature is essential to create liability
S.23- Forged or unauthorized signature not o create liability
S.26-Valuable consideration for the bill
S.28- Holder in due course
4.10.7.12 BANKER –CUSTOMER RELATIONSHIP
Categorized as follows;
i. Contractual Relationship
ii. Debtor –Creditor Relationship
iii. Principal –Agent Relationship
iv. Fiduciary Relationship
v. Others
4.10.7.13 DEBTOR –CREDITOR RELATIONSHIP
Foley vs. Hill (1842) 2 HLC 28
“This trade of a banker is to receive money, and use it as if it were his own, he becoming debtor
to the person who has lent or deposited with him the money to use as his own, and for which
money he is accountable as a debtor.”

The implication is that all the money held by the bank, though actually collected from various
Customers who bank it there, is the property of the bank and not of those customers who pay it
in.
4.10.7.14 CONTRACTUAL RELATIONSHIP
 The relationship of banker/customer is a contractual one, with the bank having duties relating
to carrying out the customer’s payment instructions, dealing with securities deposited with the
bank and the way the banker handles information concerning the affairs of the customer.
(See; Joachimson Vs Swiss Bank Corp (1921) 3 KB 110 at 127).
 The Supreme Court of Uganda has held that the relationship of a banker and a customer is
contractual. The customer, if the relationship is breached, is entitled to a tracing order. (Esso
Petroleum vs Uganda Commercial Bank (Civil App No. 14 of 1992)
“The terms of that contract involve obligations on both sides and require careful statement. They
appear upon consideration to include the following provisions. The bank undertakes to receive
money and to collect bills for its customer's account. The proceeds so received are not to be held
in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The
promise to repay is to repay at the branch of the bank where the account is kept, and during
banking hours. It includes a promise to repay any part of the amount due against the written order
of the customer addressed to the bank at the branch, and as such written orders may be
outstanding in the ordinary course of business for two or three days, it is a term of the contract
that the bank will not cease to do business with the customer except upon reasonable notice. The
customer on his part undertakes to exercise reasonable care in executing his written orders so as
not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such contract that
the bank is not liable to pay the customer the full amount of his balance until he demands
payment from the bank at the branch at which the current account is kept. Whether he must
demand it in writing it is not necessary now to determine.” (Per Atkin L.J in Joachimson v.
Swiss Bank Corporation [1921] 3 K.B. 110).
See also Progressive Group of Schools Ltd and 2 Ors Vs Barclays Bank (U) Ltd CCA No.
349 of 2020, Isanga Dauda Vs. Stanbic Bank (U) Ltd H.C.S No. 270 of 2014, Necta (U) Ltd
and Anor Vs. Crane Bank Ltd C.CA No. 219 of 2013.

4.10.7.15 PRINCIPAL –AGENT RELATIONSHIP

 The principal –Agent Relationship is of such a nature that an agent dealing with any property;
he obtains no interest himself in the subject-matter beyond his remuneration; he is dealing
throughout for another in respect to that particular transaction to which he is engaged. (Foley
vs. Hill (1842) 2 HLC 28)
 But it is equally well established that as regards the drawing and payment of the customer's
cheques as against money of the customer's in the banker's hands the relationship is that of
principal and agent. The cheque is an order of the principal (customer) addressed to the
agent (Bank) to pay out of the principal's money in the agent's hands the amount of the
cheque to the payee (third party) thereof. (Per Lord Atkin in Westminster Bank Ltd. v.
Hilton (1926) 43 T.L.R. 124, 126; 136 L.T. 315, H.L.)
4.10.7.16 FIDUCIARY RELATIONSHIP
Bristol and West Building Society v Mothew [1998] Ch.D 1
 The expression "fiduciary duty" is properly confined to those duties which are peculiar to
fiduciaries and the breach of which attracts legal consequences differing from those
consequent upon the breach of other equitable duties to exercise skill and care. In this sense
it is obvious that not every breach of duty by a fiduciary is a breach of fiduciary duty.
 A fiduciary duty can be understood as one that stems from the requirements of trust and
confidence imposed on a fiduciary.
 A fiduciary is someone who has undertaken to act for or on behalf of another in a particular
matter in circumstances which give rise to a relationship of trust and confidence
 The distinguishing obligation of a fiduciary is the obligation of loyalty.
 The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has
several facets which include; A fiduciary must act in good faith; he must not make a profit out
of his trust; he must not place himself in a position where his duty and his interest may
conflict; he may not act for his own benefit or the benefit of a third person without the
informed consent of his principal.

4.10.7.16 OTHER RELATIONSHIPS

 Relationship as Trustee and Beneficiary (The bank performs the relationship as a trustee
with his customer when the customer deposits his/her property or other assets with the bank
e.g. documents.)
 Relationship as Lesser and Lessee (This happens in the relationship between banker and
customer when the bank provides a safe deposit locker to the customer of the bank to save
his important property for a certain period of time. The bank charges its customer who is
taking the benefit of the locker for a certain period of time.)
 Relationship as Pledger and Pledgee (The banker performs the relationship of Pledger and
Pledgee when the customer takes a loan from the bank and deposits some security to the
banker. The customer becomes a pledger and the bank is pledgee. The security of the
customer will remain in the custody of the bank until the person repays the money from the
loan taken by him from the bank)
 Relationship as Bailor and Bailee (The banker can perform the relationship of bailor and
bailee with its customer. There are many types of bailment under which the person delivers
his goods to another party for a specific period of time and take the goods back when the
purpose of bailment has been done)
 Relationship as Indemnity holder and Indemnifier. Indemnity is one of the types of
contract in which one person promise to save another party by paying his loss that occurred
due to the person who is making the contract or by the act of any other person.
 Relationship as Hypothecator and Hypothecatee. The relationship between banker and
customer converts into Hypothecator and Hypothecatee when the bank customer
hypothecates some movable or immovable property or any other assets into the bank to take
 the loan from the bank. In this case, the bank customer is a hypothecator and the banker is
Hypothecatee.)

4.10.8 DUTY OF THE BANK TO ACT WITH SKILL AND CARE

Section 18 of the Goods and Supply of Services Act, 2018 states;
“In a contract for the supply of services where the supplier is acting in the course of business,
there is an implied term that the supplier will carry out the services with reasonable care and
skill.
Stanbic Bank Uganda Ltd vs. Uganda Crocs Ltd SCCA 04 /2004
 Legal principles which govern the relationship between a bank and its customer are well
settled. The duty of a bank is to act in accordance with the lawful requests of its customer in
normal operation of its customer's account consequently, a banker who has paid a cheque
drawn without authority or in contravention of the customer's orders or negligently cannot
debit the customers account with the amount. A banker is under a duty of care to its customer
which may require him to question payment.
 Also see; Banex Ltd vs. Cold Trust Bank civil Appeal No 29 of 1995 (SCU) (unreported),
Harsbry's Laws of England, 4th Edition, volume 3 (1) paragraph 175, Barclays Bank of
Uganda Ltd Vs. Gamuli Tukahirwa CCA No. 88/2016 on requirement not act negligent.
 If the banker pays and debits it's customers in reliance on signature being his customer's,
which is not so, he cannot charge its customer with that payment, in paying cheques, a
banker must not be negligent and cannot charge its customer with money lost through its
negligence. See: Pagets Law of Banking 11th Edition by Megrah, Butterworths, 1966 at
page 365 and 269; Consultant Surveyors & Planners vs. Standard Bank (U) Ltd. (1984)
HCB,
 Where a red signal manifests itself the banker's duty may be even more stringent. See:
Barclay's Bank PLC Vs. Quin-acre Ltd & Another (1992) 4 All.E.R 331.

SELANGO UNITED RUBBER ESTATES LTD VS. CRADOCK [1968]1 WLR 1555
The crux in this case was that the paying Bank had made no inquiries before honoring a cheque.
 The relationship of banker to customer with regard to the customer's current account in credit
at the bank is not that of trustee or fiduciary to a beneficiary but sounds in contract (see Foley
v. Hill and Joachimson v. Swiss Bank Corporation,64 per Atkin L.J.)
 Negligence in the duty owed to the bank's customer, is negligence "arising out of the
obligations undertaken by the contract" between the bank and its customer and is, in my view,
clearly negligence in contract.
 The pivotal question in this case was “What is the liability of a bank in ‘negligence in contract’
between a paying bank and its customer?
 The law accords protection to a paying banker who pays "in good faith and in the ordinary
course of business, without negligence," though negligent. This provision protects only the
banker on whom the bill or cheque is drawn: It does not protect a collecting banker. Where,
 however, the paying banker fails to exact a proper indorsement and pays upon an
indorsement which is irregular, he is not protected.
 The rule in Ireland v. Livingston that the Bank (In the capacity of an Agent), acting honestly on
a possible interpretation of ambiguous instructions, cannot be held responsible for so acting. (
See; Ireland v. Livingston (1872) L.R. 5 H.L. 395, H.L)
 The duty of a bank to honor a cheque drawn on a customer's account up to the amount of the
customer's credit. On the contrary when the cheque is stopped another duty arises - namely,
to refuse payment (Lord Shaw in Westminster Bank Ltd. v. Hilton 43 T.L.R. 124, 129). A
bank can therefore be sued just as much for failing to honor a cheque as for cashing a
cheque that had been stopped.

Simba Commodities Ltd versus Citibank N.A. Civil Case No. 236 of 2003 (2013) eKLR

6.5.5 DUTY OF SECRECY /CONFIDENTIALITY

TOURNIER VS. NATIONAL PROVINCIAL & UNION BANK OF ENGLAND [1924]1 KB 461
 It is an implied term of the contract between a banker and his customer that the banker will
not divulge to third persons, without the consent of the customer express or implied, either the
state of the customer's account, or any of his transactions with the bank, or any information
relating to the customer acquired through the keeping of his account, unless the banker is
compelled to do so by order of a Court, or the circumstances give rise to a public duty of
disclosure, or the protection of the banker's own interests requires it.
 It therefore follows that this duty which arises out of contract is not absolute but qualified. On
principle, the qualifications can be classified under four heads:

4.10.9 Exceptions to the Duty of Secrecy / Confidentiality

 Where disclosure is under compulsion by law eg; an Order of Court
 Where there is a duty to the public to disclose eg; cases where a higher duty than the private
duty is involved, as where danger to the State or public duty may supersede the duty of the
agent to his principal.
 Where the interests of the bank require disclosure eg; where a bank issues a writ claiming
payment of an overdraft stating on the face of the writ the amount of the overdraft.
 Where the disclosure is made by the express or implied consent of the customer. Eg; where
the customer authorizes a reference to his banker
 Anti-money laundering Act, 2013 as amended by the FIA Amendment Act of 2017 (s. 8,
9, 9A, 14, 15) outlines role of Financial Institutions in reporting transactions as part of Anti-
Money Laundering Measures. In this case, liability arising from breach of secrecy
/confidentiality would be exempted.
 The Financial Institutions Act, 2004 as amended by the Financial Institutions
Amendment Act, 2016 (S. 78) on the obligation of Financial Institutions to promptly report
certain information to the Credit Reference Bureau. This information may include non-
performing loans, customers involved in financial malpractices etc.
4.10.10 DUTIES OF THE CUSTOMER TO THE BANKER
 To exercise reasonable care in drawing cheque (the Macmillan duty) London Joint Stock
Bank Ltd v Macmillan

 The duty not to disclose the particulars of his account to third parties including digital
information. Aida Atiku versus Centenary Rural Development Bank Limited, Civil Suit
No. 0754 of 2020.
 Customer has a duty to promptly inform the bank that his cheques have been forged.
Customer must have actual and not constructive knowledge of forgery. Duty extends to
notifying bank of any unauthorized operations on the account. Greenwood vs Martins Bank
Ltd

4.10.11 Statutes
1. The Constitution of the Republic of Uganda 1995, as amended.
2. The Financial Institutions Act No.2 of 2004, as amended by the Tier 4 Microfinance
Institutions and Money Lenders Act, 2016.
3. The Financial Institutions Act, 2004, as amended.
4. The Foreign Exchange Act, 2004.
5. The Bank of Uganda Act, Cap 51.
6. The Tier 4 Microfinance Institutions and Money Lenders Act, 2016.
7. Tier 4 Microfinance Institutions and Money Lenders Act, 2016.
8. The Anti-Money Money Laundering Act, 2013.
9. The Anti-Money Money Laundering (Amendment) Act, 2017.
10. The Uganda Communications Act, 2013.
11. The Collective Investment Schemes Act, 2003.
12. The Cooperative Societies Act, Cap. 112.
13. The Companies Act, 2012.
14. Electronic transactions Act No.8 of 2011.
15. Electronic Signatures Act No. 7 of 2011.

4.10.12 Rules/Regulations
1. The Collective Investment Schemes (Conduct of Business and Miscellaneous
Provisions) Regulations, 2007.
2. The Anti-Money Laundering Regulations 2013.
 3. Foreign Exchange (Forex Bureaus and Money Remittance) Regulations, 2006, S.I No.
10 of 2006).
4. The Financial Institutions (Foreign Exchange Business) Rules, 2010.
5. The Financial Institutions (Foreign Exchange Business Amendment) Rules 2013.
6. The Tier 4 Microfinance Institutions and Money Lenders (Non-Deposit Taking
Microfinance Institutions) Regulations No.10 of 2018.
7. The Microfinance Deposit-Taking Institutions (Licensing) Regulations, SI No. 61/2004.
8. The Microfinance Deposit-Taking Institutions (Capital Adequacy) Regulations, SI No.
63/2004.
9. The Financial Institutions (Licensing Regulations) 2005.
10. The Financial Institutions (Ownership Control) Regulations, 2005
11. The Financial Institutions (Anti Money-Laundering) Regulations, 2010
12. The Financial Institutions (Revision of Minimum Capital Requirements) Instrument,
2010.

13. 1The Financial Institutions (Capital Adequacy Requirements) Regulations No.21 of

2018

14. The Financial Institutions (Consolidated Supervision) Regulations, 2010

15. The Financial Institutions (Corporate Governance) Regulations, 2005
16. The Financial Institutions (Credit Reference) Regulations, 2005
17. The Financial Institutions (Insider Lending Limits) Regulations, 2005
18. The Financial Institutions (Liquidity) Regulations, 2005
19. The Foreign Exchange (Forex Bureaus and Money Remittance) Regulations, 2006
20. The Bank of Uganda Mobile Money Guidelines 2013.
21. The Financial Institutions (Protected Deposit) Instrument, SI 67 of 2019.
22. The Building Societies Regulations, SI 108-1.
23. The Cooperative Societies Regulations, S.I, 112-1.
24. The National Payments Systems Act No.15/2020.
25. National Payments Systems Regulations S.I, 18 of 2021.
26. National Payments Systems (Agents) Regulation 2021 S.I, 19.
27. National Payments Systems (Sandbox) Regulation 2021 S.I, 20.

Cases

a) Bank Customer Relationship

1. Commissioner of Taxation V. English Scottish and Australian Bank Ltd 1920 AC 683
2. Chesiryot Enterprises Limited v. National Bank of Kenya 2012 eklr (Unreported)

3. Fredrick J.K. Zaabwe v. Orient Bank & Others S.C.C.A 04/2006.

 4. Tournier v. National Provincial and Union Bank of England [1924] 1 KB 461.

5. Uganda Bankers Association v. Uganda Revenue Authority Misc App 28 of 2018.

6. Progressive Group of Schools Limited v. Barclays Bank of Uganda Limited T/A Absa
Bank (U) Limited & Anor C.A.C.A No. 349 of 2020.

7. Dynamic Consortium Limited v. DFCU Bank Limited H.C.C.S No. 848 of 2014.

8. Mackaka Hardware Ltd, lan duty London Joint Stock Bank Limited v. MacKaka
Hardware Ltdew & Arthur [1918] AC 777.

9. United Dominions Trust Ltd v Kirkwood (1966) 1 All ER 968.

10. Edward Owen Engineering Versus Barclays Bank (1978) QB 15.

11. Joachimson v Swiss Bank Corpn (1921) 3 KB 110.

12. Koecha v. Mohammed [2002]1 E.A 112.

13. James Lamont & Co. Limited v. Hyland Limited [1950] 1 K.B 585.

14. Brown Shipley & Co. Ltd. v. Alicia Hosiery Ltd [1966] (Lloyds) Rep 665.

15. Ddembe Trading Enterprises v. Bidco (U) Limited H.C.M.A No. 28/2008.

16. Ssembule Investments v. Uganda Baati H.C.M.A 664 of 2009.

17. Hassanali Issa & Co. v. Jeraj Produce Store [1967] E.A 555.

18. Bidco (U) Limited v. Western Distributors Ltd. H.C.C.S No. 271 of 2008.

19. L’Estrange v. Gracoub Ltd [1934] 2 KB 394.

20. Jacobs v. Batavia & General Plantations Ltd [1924] 1 Ch. 287.

21. Verschures Creameries Ltd v. Hull & Netherlands Steamship Co. Ltd (1921) 2 KB
608.

22. Halesowen Presswork & Assemblies Ltd v Westminster Bank Ltd (1972) 1 All ER
641.

23. Nkoloma v. NBC Holdings Corporation Ltd (2000) 1 EA 187.

24. Jacobs v. Batavia & General Plantations Ltd [1924] 1 Ch. 287.

25. Wilson v. United Counties Bank Ltd (1920) AC 102.

26. Gafabusa v. Bwesigye (1985) HCB 72.

27. Davidson v. Barclays Bank Ltd (1940) 1 All ER 316.

b) Duties of the Bank

1. Stanbic Bank v Uganda Crocs Limited, SCCA no. 4 of 2004.

2. Banex Ltd V. Gold Trust Bank Ltd SCCA 29/1995
 c) Duties of a Customer

1. Aida Atiko v. Centenary Bank Ltd Civil Suit No. 0754 of 2020.

d) Money Hand Received

1. Obed Tashobya v. DFCU Bank Limited HCT - 00 - CC - CS – 742 – 2004.

Text Books

1. Pagets Law of Banking 11th Edition, by Megrah, Butterworths,1966

4.11 MODULE SEVEN: BUSINESS RESCUE AND INSOLVENCY

4.11.1 Introduction

Business failure is a common phenomenon in both developing and developed economies. The
failure ranges from individual to corporate businesses. In times of financial distress lawyers are
required to advise on wide ranging aspects of business rescue and insolvency.

The module will explore the rationale for, & core principles of business rescue and insolvency.

4.11.2 Aims of the Module

The aim of this module is to;

1. Develop ability to advise on business rescue and insolvency;
2. Develop ability to undertake business rescue and insolvency processes;
3. Develop ability to recognise ethical issues relating to business rescue and insolvency.

4.11.3 Learning outcomes

By the end of this module you should be able to;

1. Explain principles relating to individual and corporate insolvency;

2. Explain principles relating to business rescue;
3. Illustrate the business rescue mechanisms;
4. Illustrate the process of individual and corporate;
5. Draft relevant documents relating to individual and corporate insolvency;
6. Recognise and deal with ethical issues relating to business rescue and insolvency.

4.11.4 Outline of Content

4.11.4.1 Business Rescue

Business rescue involves processes and all mechanisms employed by individual and corporate
businesses that are facing financial distress with the view to avert being declared insolvent.
Nelson Nerima in his book, “Uganda Insolvency Law Handbook Page 52” states;
 “Corporate Rescue comprises statutory, formal and informal mechanisms by which
companies in financial distress attempts to rescue themselves from the consequences of
insolvency”.
There are several rescue options available.
a) Government Bailouts
b) Court annex alternative dispute dissolution, mediation and conciliation
c) Contractual restructuring of loans and debts
d) Individual arrangement see Sections 119- 138 of the Insolvency Act as amended, see also
Regulation 63-84 of the Insolvency Regulations 2013.
e) Corporate Compromise and arrangement see Sections 234-245 of the Companies Act
2012 as amended.
f) Provisional administration and administration see Sections 139-161 and 162-169 of the
Insolvency Act as amended. See also Regulation 135 -163 of the Insolvency Regulations
g) Amalgamation and reconstruction see Sections 234-246 of the Companies Act
h) Receivership see Sections 176-181 of the Insolvency Act. See also Regulation 164-171 of
the Insolvency Regulation

a. Illustration of the alternatives to winding up and corporate receivership;

b. Compromise and arrangement
c. Restructuring
d. Bailout
e. Administration
i. Commencement of provisional administration
ii. Application to court
iii. Fundamental duties of a provisional administrator
iv. Commencement of provisional administration
v. Moratorium
vi. Administration
2. Identification of an insolvent company
3. Illustration of corporate insolvency solutions including;
a. Receivership,
i. Interpretation of terms of a debenture
ii. Formalities for appointment of a receiver and capacity
iii. Powers of the company and directors during receivership
iv. Effect of receivership
v. Conclusion of receivership
b. Administrative receivership,
c. Members and creditors’ voluntary liquidation,
i. relevant meetings, resolutions and notifications
ii. Appointment and remuneration of the liquidator
iii. Duties and powers of the Liquidator
iv. Dissolution
d. Compulsory liquidation
i. Grounds
ii. Who may petition
iii. filing and prosecution of the petition
iv. Proof, admission and ranking of creditor’s claims
 4. The role of the Central Bank in insolvency proceedings involving Financial institutions.
5. Winding up solvent companies
a. Identification of the grounds for winding up
b. Illustration of the procedure for commencement of the winding up
i. Relevant inquiries
ii. Declaration of solvency
iii. Relevant meetings and resolutions
iv. Notifications
v. Appointment and remuneration of the liquidator
vi. Duties and powers of the liquidator
vii. Dissolution

4.11.4.2 General Objectives of insolvency

a) Insolvency is not a debt recovery mechanism; it s intended to re-organize the affairs of
the debtor to provide for the general interest of creditors.
b) The debtor is given a fresh start.
c) It promotes the restructuring and reorganization of viable business and efficient closure
and transfer of assets of a failed business.

d) There is equal treatment of similarly situated creditors-those with equal rights are treated
equally.

e) Timely, efficient and impartial resolution of insolvency.

 Re Tanganyika Produce Agency 1975 EA. 627

 Re Hoima Gimmers Ltd (20 1964EA 65. A petition for winding up made in view to
recover debt was dismissed.

 Macherson V. Wise (2011) Aller 146 (D) if there are disputes- one has to first institute a
proceeding and a judgement debt is verified.

 Contingent (current) and prospective debts (future).

 Re Global Tours and Travel Ltd (2001)195-Comm. Court of Kenya. Where an alleged
debt is disputed on substantial grounds or bonafide

 A claimant is not a creditor and does not have the locus stand to presnt a winding up
petition.

4.11.4.3 Inability to pay debts

R Vs. Vinubhai Chunibhai Amin 1962 EA 65 Court. defined it as In ability, to meet debts as
they become due is a factor and very important factor in determining whether a person is
insolvent but it is not the only factor which irrespective of anything else, determines that person
is insolvent.
In the matter of Kakyo (a debtor) in the matter of the Insolvency Act No.14/2011 Uganda
Commercial Court 167/2015. The petitioner committed an act of bankruptcy for she was unable
to pay her debtors and also had no tangible movable and immovable assets thus proving that
she is a proven debtor and thus a bankrupt.
 ASIC v Plymin (2003) 46 ACSR 126- the Judge referred to a checklist of the indicators of
Insolvency: Continuing losses; Liquidity ratio (current assets over current liabilities); Overdue
taxes; Poor relationship with present bank including inability to borrow additional funds (lack of
financial flexibility); no access to alternative finance; inability to raise further equity capital;
Supplier placing the person or company on 'Cash on Delivery' terms, other otherwise demanding
special payments before resuming supply; Creditors unpaid outside trading terms; issuing of
post-dated cheques; dishonoured cheques; special arrangements with selected creditors;
Solicitors’ letter, summons, judgments or warrants issued against the company; Inability to
produce timely and accurate financial information.
Section 3(1) of the Insolvency Act defines In ability to pay debts thus;
(i) Subject to subsection 2- a debtor is presumed to be unable to pay its debts if;
a) Debtor fails to comply with a statutory demand.
b) Execution issued against debtor returned unsatisfied whole /part.
c) All or substantially all property of debtor is in possession and control of a receiver or other
person enforcing a charge over that property.
Section 3 (2)- on a petition to court fr liquidation of a company or bankruptcy order-failure to
comply with statutory demand- not admissible-unless the application is made within 30 working
days after the last date of compliance with the demand.
Section 3(3) subsection (1) does not prevent proof of inability to pay debts by other means.
Section 3(4) contingent or prospective debts may be taken into account.
Section 2-Statutory demand-demand made in accordance with section 4.
Working days-any day other than Saturday, Sunday and other public holidays.
iii) Section 4 Statutory Demand.
(1) Demand by creditor in respect of a debt-in accordance to this section
(2) Statutory demand.
a) In respect of a debt that is not less than the prescribed amount and in case of debt owe by;
6. An individual is a judgement debtor or
7. A company is ascertained debt but need not to be a judgement debt.
b) Be in a prescribed form
c) Other than a judgement debt, be verified by a statutory declaration attached to the demand.
d) Be served on the debtor and
e) Require a debtor, to pay or compound with the creditor or give a charge over property to
secure payment of the debt, to the reasonable satisfaction of the creditor within 20 working
days- after the date of service or a longer period as the court may order.
Section 5 setting a side statutory demand
1) An application to set aside a statutory demand is made by a debtor
Section 6 ascertainment of amount claimed and interest include;
Section 8 un ascertained amount- liquidator/trustee shall estimate the amount or refer matter to
court to determine the claimed amount.
(2)Any aggrieved by the estimated amount may apply to court.
Section 10 unsecured creditors;
1) Unless required un secure creditor may make a debt claim informally in writing.
2) Where liquidator/trustee requires in writing a claim to be made, it be verified by statutory
declaration with;
a) Full particulars of the claim and
b) Documents as evidence of the claim
3) Liquidator/trustee may require production of documents.
Section 11 secured claims
(1),secured creditor may after public notice has been given of liquidation/bankruptcy deliver to
liquidator/trustee written notice of any debt secured by a charge over any asset specifying
particulars of asset charged and amount secured.
Section 11(2) Secured Creditor may;
a) Realize any asset to a charge where he is entitled
b) Claim as secured creditor or
c) Surrender charge for general benefit of creditors and claim as un secured creditor.
Section 11(3) secured creditor who realizes an asset subject to a charge may;
a) Claim as unsecured creditor for the balance
b) Account to liquidator/trustee for any surplus remaining from net amount realized.
Section 11(4) claims as a secured creditor claim to be verified by statutory declaration
a) Setting out full particulars of the claim
b) Particulars of a charge and date
c) Any documents proof of court S.6 and 8 to apply
Section 11(5) Liquidator/trustee may require production of documents in sub section 4(c).
Section 11(6) on claim by secured creditor liquidator/trustee shall;
a) Meet the claim in full and redeem the charge.
b) Realize the asset-subject to charge-pay secured creditor less the amount of the claim and net
amount realized taking into account remuneration of liquidation and trustee.
c) Reject the claim in whole or part.
 i. Where claim rejected; creditor may make a revised claim as a secured creditor within 10
working days of receiving the notice of rejection.
ii. Revise, revoke or amend decision if claim subsequently considered to be wrongly
rejected.
Section 11(7) secured creditor may claim as un secured for any balance.
Section 11(8) Liquidation or trustee may require secured creditor by notice in writing to;
i. To take possession of any asset subject to a charge, if entitled.
ii. Deliver a claim as secured creditor in accordance with subsection (1); within 20 working
days after receipt of notice if he intends to rely on the security.
vi) Section 12 preferential debts
1) Subject to S.11 subsection (2), the liquidator/trustee shall apply the assets to the
preferential debts listed in subsection (4), (5) and 6 which debts shall be paid in priority.

2) Preference debt shall so far as the assets are insufficient to meet them have priority over
the claims of secured creditors in respect of asset;
a) Which are subject to security interest and;
b) Become subject to security interest by reason of its application to certain existing
assets of the grantor and those of its future assets which were after acquired
property/proceeds; and shall be paid out those assets.
3) Preferred debt shall be paid as listed in (4), (5) and (6)
4) First to be paid are;
a) Remuneration and expenses properly incurred by the liquidation / trustee.
b) Any receiver’s or provisional; administrator’s indemnity under S.159 and any
remuneration and expense incurred by receiver., liquidator, provisional liquidator,
administrator of proposed supervisor /supervisor.
c) Reasonable costs of any person who petitioned court for bankruptcy / trustee whose
costs are allowed by court.
5) Next (second) to be paid are;
a) All wages or basic salary or earned commission for 4 months
b) All amounts due under worker’s compensation Act accrued before commencement of
liquidation/bankruptcy not exceeding prescribed amount
c) All amount that are preferential under section 33 or 105
6) Lastly, liquidator to pay;
 Tax withheld or due to URA for 12 months prior to the commencement of insolvency.
 Contributions payable to NSSF
 7) This section shall apply notwithstanding any other law.
Section 13 Non preferential debts
a) After payment of preferential debts under S.12, trustee/liquidator to apply assets to
satisfaction of other debts.
b) Claims under (1) to rank equally and paid in full unless assets are insufficient in such
cases equal proportions.
c) Creditor’s agreement to accept lower priority or effective
vii) Section 15 voidable Transaction
Section 16 Transactions at under value.
Section 17 Voidable Charges
Section 18 (1) Subject to sub section (3) a transaction entered into relating to an asset of
insolvency is voidable on application involving;
a) Spouses, siblings, children or any person with a closed social proximity.
b) Employee, officers, professionals and other services providers of the insolvent
c) Business associates, partners, shareholders, directors or other members.
Section 18(2) unless proved otherwise transaction in (1) above taken as aimed at aiding an
insolvent to put the assets of insolvent beyond the reach of creditors.
Section 18(3) section applies to transaction entered within 12 months’ preceding insolvency.
Procedure
Section 19 (1) liquidator, receiver, member or contributory, trustee or creditor shall;
1. File in court notice specifying the transaction
2. Serve a copy of notice to the person with who transaction was entered.
Section 19 (2) a person (a) who would be affected and
(b) who considers the transaction is not voidable; may apply to court for an order that
transaction should not be set aside.
Section 19 (3) unless person affected who has been served apply under (2), transaction shall be
set aside from twentieth working day from the date of service of notice.
Section 19 (4) where more than one application is made, transaction set aside on determination
of the last application.
Section 19 (5) where transaction is set aside;
a) a person affected, claim as accreditor in liquidation/bankruptcy
b) Court may make orders
i. Requiring a person to pay received benefits
ii. Restore property to company/bankruptcy estate
 iii. Property vested in trustee/company
iv. Realizing whole/part/charge given
v. Requiring security to be given
vi. Declaration that person affected is entered to as a creditor.
Section 19 (6) setting aside of transaction does not affect the title or interest of a person in
property acquired;
i. From person other than insolvent.
ii. For valuable consideration.
iii. Without knowledge of the circumstances of the transaction.
Section 19 (7) recovery may be denied where;
a) Person acquired property in good faith
b) It’s inevitable to order recovery

Section 19 (8) in this section, transaction includes;

a) Execution under any judicial proceedings
b) Payment in pursuance of judgement/order of court in respect of a transaction to which
section 15,16,17 & 18 applications.

4.11.4.4 INDIVIDUAL INSOLVENCY (BANKRUPTCY)

Section 20 (1) A debtor may petition court alleging that the debtor is unable to pay his/her
debts. Court may subject to S.21 and 22 make order for bankruptcy.
Section 20 (2) upon failure to satisfying statutory demand under S.4, creditor/debtor may
petition. Court may subject to S.21 and 22 order to bankruptcy.
Section 20 (3) Bankruptcy order shall declare the debtor bankrupt and appoint official
receiver as interim receiver of estate for preservation of the estate of bankrupt.
Section 20(3) Official receiver shall have power to sell /dispose of any perishable and any
other goods whose value may diminish unless court limits the powers.
Section 20 (5) Bankruptcy commence on date of issue of a bankruptcy order.
Section 21 STATEMENT OF AFFIARS
Section 21 (1) Court shall require debtor to file a statement of affair verified / supported by
affidavit.
Section 21 (2)contents of a statement of affairs
Section 21 (3) Debtor who contravenes (1) commits an offence and is liable on conviction to
24 currency points or imprisonment for a year or both.
 Section 22 PUBLIC EXAMINATION OF DEBTOR.

Section 24 official receiver shall within 14 days after commencement of bankruptcy;

a) Give public notice of bankruptcy commencement
b) Call the creditors’ 1st meeting.
Section 25 creditors first meeting shall appoint, a trustee and vest the property in bankruptcy
estate in the trustee.
Section 26 trustee’s notice of bankruptcy and particulars; within 5 working days, the trustee shall
give public notice of trustee’s full name -official address-date of commencement of bankruptcy.
Section 27 EFFECT OF BANKRUPTCY ORDER.
Section 29 DUTIES OF TRUSTEES
Section 30 Trustee’s notice to creditors
1) Within 4 working days after giving notice of appointment under Section 26, a trustee shall
send notice to every known creditor.
2) Noncompliance of debtor to S.21 calls for extension of time.
Section 31 BANKRUPTCY ESTATE include
1. a all property belonging to or vested in bankruptcy at commencement of bankruptcy
b. Property by virtue of S. 15,16,17,18 and 32 treated as to the bankruptcy
c. Portion of a debtor’s salary as determined by court.
2. Subsection (1) doesn’t apply to-
a) Tools, books and other equipment which are necessary use personally, by him/her in his/her
employment, business or vocation of value to be prescribed
b) Clothing, beddings and provisions necessary to satisfy basic domestic needs and his /her
family.
c) Property held in trust for another
d) Matrimonial home
e) Any property of value to be prescribed that the court may exempt.
3. Matrimonial home means building, where bankrupt, spouse, children ordinary reside together.
Section 32 Property acquired after commencement of bankruptcy.
Section 33 trustee’s powers to obtain documents
Section 34 trustee’s powers to allow bankrupt to manage property.
Section 35 trustee powers to disclaim enerous property;
Section 38 duties of a bankrupt are;
 i. Give all information
ii. Appear before trustee and
iii. Do all necessary things, to enable trustee carry out his functions
Section 39 compliance order where person does not comply with trustee’s requirement court
orders for compliance.
Section 40 search and serve, on application of trustee or interim-receiver- court may issues a
warrant for search and seize of property or documents.
Section 41 TERMINATION OF BANKRUPTCY
Bankruptcy terminates where (a) Bankrupt is discharged under S.42
(b) Bankruptcy order is annulled S.44
(c ) Upon withdraw of bankruptcy petition with leave of court.
Court cannot make an order under (c ) where creditors interests may be prejudiced.
Section 42 DISCHARGE
1) Bankrupt discharged by orders of court
2) Court to take into account official receiver’s report on bankruptcy/conduct of bankruptcy
3) Court may require a bankrupt to consent to a decree in favour of official receiver for balance
of debts.
4) Execution not issue against bankrupt unless with leave of court, and proof that he bankrupt
has since discharge acquired property income available towards payment of his/her debts.
Section 43 effect of discharge;
Section 44 annulment revocation and setting aside bankruptcy order
Section 45 consequences of bankruptcy
Section 48 declaration and distribution of dividends
Section 49 final distribution
Section 50 second bankruptcy
Section 51 Court supervision of trustees, on application of trustees, any committee of inspection,
official receiver or with leave of court, any creditor or the bankrupt court give various directives.
Section 52 enforcement of trustee’s duties.
On failure of the trustee to comply with his/her duties court;
a) Relieve trustee of duties
b) Order trustee to comply
c) Remove trustee from office
Application shall be by;
 a) Committee inspection
b) Any creditor
c) Receiver appointed
d) Official receiver
Copy of application served on trustee of less than 5 working days before hearing.
Bankruptcy Offences

7.4.5 CORPORATE INSOLVENCY (Part IV Insolvency Act No. 14/2011)

7.4.5.1 Winding up of a solvent Company
268 Companies Act (Voluntary Winding up)
a) A company may by special resolution resolve to be wound up voluntarily
b) Voluntary winding up taken to commence at the time of passing the resolution.
269 Companies Act Notice of resolution for voluntary winding up
S.270 (1) company shall, cease to carry on business except for purposes of winding up
(1) corporate status/power of the company continue until resolved.
Declaration of solvency, declaration of solvency for voluntary winding up section 271(1) of
the companies Act statutory
-Directors make a declaration in the prescribed form to the effect that they have made full
inquiry into the affairs of the company and have formed a opinion that the company will be
able to pay its debts in full within a period not exceeding 12 months from the
commencement of its liquidation.
(2)Declaration under (1) shall have no effect unless;
I. Made within 30 days before the passing of the resolution for winding up and delivered
to registrar with a copy to the official receiver for registration before that date and
II. Includes statements of the company assets and liabilities before making the
declaration.
(2) offences for face false declaration
Section 272 Companies Act, application of insolvency Act 2011 to voluntary winding of
the company
Please Note, After a resolution to appoint a liquidator is made, he convenes a meeting of
creditors and the procedure as in winding up of an insolvent company follows.
7.4.5.2 Winding up of an insolvent company
S.56 (1) Section 57-118 and 5th schedule to apply to liquidation of foreign companies.
(2)Companies include foreign Companies
 S.57 Insolvency Act, modes of liquidation(a) court (b) Voluntary © Subject to Court’s
Insolvency Act supervision.
S.58 VOLUNTARY LIQUIDATION
1) Company can by special resolution voluntary liquidate if it cannot by reason of its
liability conduct business.
2) Voluntary liquidation commences at the time of resolution.
S.59 Insolvency Act Notice of resolution for voluntary/liquidation
a) Within 14 days after passing the resolution give notice of resolution in gazette in
newspapers with wide circulation
b) Resolution registered with registrar and copy sent to official receivers in 7 days from
date of passing resolutions.
c) Default fine.
Consequences
S.60(1) of the Insolvency Act provides for the ceasation to carry on business
S.61 of the Insolvency Act provides for the transfer/alterations any transfer unless with consent of
liquidator any alteration in status of members after commencement of voluntary liquidation is void.
S.62 of Insolvency Act; company’s power to appoint and fix remuneration of liquidators.
1) Shareholder by special resolution or directors or any person authorized by memorandum
and articles of association may appoint liquidator(s) for purposes of liquidating the affairs
and distributing assets of company and fix remuneration to be paid.
2) On appointment of liquidator-powers of directors shall lease except where in a general
meeting or sanctioned liquidator sanctions such powers to continue.
Section 63 Insolvency Act; the company has powers to fill vacancy of liquidator if it falls vacant.
Section 64 Insolvency Act powers of a liquidator to accept shares or other interests as
consideration for sale of property of company.
Section 65 Duty of liquidation to call creditors meeting in case of insolvency.
Section 66 Duty of liquidator to call a general meeting every end of year/subject to S. 68 of the
Insolvency Act.
Section 67 FINAL MEETING AND DISSOCIATION
Section 68 of the Insolvency Act where a liquidator calls a meeting under S. 65, Section 66 and 67
shall NOT apply, Sections 76 and 77 shall apply to the liquidation of the company as if the
liquidation was creditor’s voluntary liquidation and a requirement of creditor meeting in the 1 st year
in dispensed with under section 76 unless meeting under S.65 is held more than 3 months before
end of that year.
CREDITORS’ VOLUNTARY LIQUIDATION.
S.69 Insolvency Act , meeting of creditors
1) Company shall;
 a) Cause a meeting of creditors same day as of a meeting upon which a resolution for
liquidation is to be proposed or on the following day.
b) Send notices to creditors for the creditors meeting and notices of meeting for the
proposed resolution for liquidation.
2) Notice in gazette and local newspapers of wide circulation.
3) Directors shall:
a) Appoint one of them to preside over the meeting
b) Present full statement of company’s affairs and list of creditor and estimate claims.
S.70 Insolvency Act, creditors and the company may nominate a liquidator;
S.71 Committee of Inspection
1) Creditors may appoint 5 person to be on committee of inspection
S.72 of Insolvency Act; proceeding of committee of inspection; committee to meet at least once a
month and act by majority;
S.73 (1) committee of inspection or creditor may fix numeration for a liquidator.
(2)On appointment of Liquidator, power of directors cease unless otherwise directed by
committee of inspection of creditors.
S.75 Power of liquidator to accept shares in creditor’s voluntary liquidation.
S.76 Duty of liquidation to call meetings of company and of creditors at the end of each year.
S.77 INSOLVENCY ACT FINAL MEETING & DISSOLUTION
As soon as a company is fully liquidated, liquidator shall;
a. Prepare account of liquidation
b. Call a general meeting of the company and a meeting of creditors to present the
account and explanation.
Failure to call a meeting is an offence#
A meeting under subsection (1) is by notice in the gazette and a newspaper with wide
circulation published 30 days before the meetings.
S.78 Members and creditors voluntary liquidation S.79 to S.86 apply to both members and
creditors voluntary liquidation.
S.79 distribution of property of company subject to provisions of this Act on preferential payments,
the assets of the company to be applied in satisfaction to liabilities simultaneously and equally
unless articles of association state otherwise.
S.80(1) Powers and duties of liquidator in liquidation .
Section 81(1) Court can; appoint a liquidator where there is none.
(3) Remove one on good cause shown
 S.82 Notice by liquidator of his appointment
Within 14 days after appointment, publish in gazette, deliver to registrar for registration, a notice
with a copy to official receiver in a prescribed form.
83 arrangements binding on creditor
1) Arrangement entered into is binding subject to right of appeal, if sanctioned by special
resolution or acceded by 3/4 of the total number and value of creditors.
2) Creditor or contributory within 3 weeks from completion of arrangement may appeal to
court vary/confirm the arrangement.
S.84 Power to apply to court to have questions determined/power exercised.
Liquidator, creditor, contributory may apply to court to determine question arising.
a) Court if satisfied may agree to the application.
b) Where court stays proceeding under this section, the company or prescribed person shall
immediately deliver an order to registrar for registration and another copy of the order be
sent to official receiver.
S.86 saving of rights of creditors or contributories, to apply to court for liquidation, creditors right
to apply to court for liquidation where there is voluntary liquidation is preserved.
LIQUIDATION SUBJECT TO SUPERVISION BY COURT
S.87 Where a company passes a resolution for voluntary liquidation, the court may make an
order, that liquidation continues subject to its supervision and with liberty for creditors,
contributories and other interested person to apply to court on terms court deems fit.
S.88 Effect of supervision by court, application taken to be a petitioner for liquidation by court.
S.89 Power of court to appoint and remove liquidator
S.90 Effect of supervision order;
a) Liquidator may subject to any restriction imposed by the court, exercised all his power.
b) If order for liquidation subject to supervision is made in respect of creditors voluntary
liquidation where a committee of inspection has been appointed, order shall be taken as an
order for liquidation by court
LIQUIDATION BY COURT.
S.91 Jurisdiction by High Court
S.92 Insolvency Act (1) subject to subsection (2) Court may appoint a liquidator on application of;
1) Company
2) Director
3) Shareholder
4) Creditor
 5) Contributory;or
6) Official Receiver.
(2)Court to make an order, if satisfied that company is unable to pay its debts within meaning of
S.3.
(3)On hearing liquidation petition, court may dismiss, adjourn, make interim order but shall not
refuse to make a winding up on the ground only that the assets of company have been
mortgaged to amount equal or in excess or company has no asset.
S.93 commencement of liquidation by court for liquidation of a petition by court.
1) Where before presentation, a resolution is passed for voluntary winding up, the
liquidation of company shall be deemed to have commenced, when resolution passed
unless there is proof of fraud or mistake
2) In all other cases liquidation by court commences at the presentation of petition for
liquidation.
S.94 provisional liquidator
1) Order made under S.92 shall appoint an official receiver or insolvency practitioner as a
provisional liquidator for purposes of provision of the assets owned and managed by
company.
2) Provisional liquidator, has power to sell or dispose of perishable good with diminishing
value.
S.95 Notice of liquidation provisional liquidator shall within 14 days after commencement of
liquidation;
a) Give public notice of the date of commencement of liquidation
b) Call a shareholders’ meeting.
S.96 (1) Liquidator shall within 5 working days after his appointment.
a) Give notice in gazette and a newspaper of wide circulation, date of commencement,
liquidator’s full names and physical office address and day time telephone number.
b) Deliver a copy of the notice to official receiver.
(2)Liquidator shall give notice of liquidation
a) On a very notice/order business /letter issued the word in liquidation.
b) When entering into any transaction.
S.97 Effect of Liquidation.
S.98 SPECIAL MANAGER OF COMPANY
1) Liquidator may appoint a special manager
2) Liquidator appoints a manager where it is necessary to have another person to
manage.
S.99 Fundamental duties of liquidator are;
 (1) Take reasonable and expeditious manner all necessary steps
S.100 General duties of liquidator
S.101 General powers of liquidator
S.102 Liquidator's Preliminary report
S.103 Liquidators’ interim report
S.104 Liquidator’s Final Report
S.105 Power to obtain documents
S.106 Power to examine and obtain information

7.4.5.3 Statutes
1. Companies Act No. 1 of 2012, as amended in 2022.
2. The Insolvency Act No. 14/2011, as amended in 2022.
3. The Mortgage Act, Act No. 7 of 2009.

7.4.5.4 Rules/Regulations
1. The Insolvency Regulations SI No. 36 of 2013.
2. The Insolvency Fees Regulations SI No. 26 of 2013.
3. The Insolvency Practitioners Regulations S.I No. 55 of 2017.
4. The Insolvency (Investigation and Prosecution) Regulations S.I No. 4 of 2018

7.4.5.5 Cases

a) Inability to pay debts

1. Deox Tibeingana v. Vijay Reddy (Misc. Cause No. 286 of 2019).

2. Alice Okiror & Michael Okiror v. Global Capital Save 2004 Limited & Ben Kavuya
H.C.C.S No 149 of 2010.
3. Re Mastermind Tobacco Uganda Ltd, Companies Cause No. 18 of 2002.
4. Nirmal Singh v. Ram Singh [1961] EA 168.
5. Re Janmohamed Lodha [1961] EA 175.
6. R. Vunubhai Chanubhai Amin [1962] EA 65.
7. National & Grindlays Bank Ltd v. Sheriff & Anor [1972] EA 413.
8. Windsor Refrigerator Co. Ltd. v. Branch Nominees [1961] Ch. 375.
9. Bamford v. Bamford [1969] 1 All ER 969.
10. Multi Holdings Ltd. & Anor. v. The Uganda Commercial Bank [1971] HCB 44.
11. Harris v. Beauchamp Bros [1894] 1 QB 801.
12. Portman Building Society v. Gallwey [1955] 1 WLR 96.
13. Re Muddu Awulira Enterprises Limited, Company Cause NO. 14 of 2004.
14. Newhart Ltd. v. Co-op Commercial Bank [1978] 2 All ER.
15. Reid v. Explosives Co. (1887) 19 QBD 264.
16. Mann and Anor v. Goldstein and Anor [1968] 1 ALL E.R. 769.
17. Re: Global Tours and Travels Ltd [2001] 1 EA 195.
18. Tweeds Garages Ltd [1962] 1 All ER 121.
19. Tanganyika Produce Agency Ltd. [1957] EA.
 20. Re Sheela Supermarket Ltd. [2004] EA 264.
21. Engineering Co Ltd v. Kenya Commercial Bank Ltd [1986–1989] EA 554.
22. Rai and others v. Rai and others [2002] 2 EA 537.
23. Douglas D. Watson, Kenya Cold Storage (Foods) Ltd v. Kenya Commercial Bank,
Kenya Commercial Court Civil Case No. 1278 of 1999
24. Lochab Brothers v. Kenya Furfural Co. Ltd. & Others (1983) JELR 105033 (CA).
25. John Verjee & Anor v. Simon Kalenzi & Others [1997-205] UCLR 83.
26. Re Vanubhai Chanubhai Amin [1962] E.A 65
27. Agilo Limited v. William Henry [2010] EWHC 2717 (Ch).
28. Octagon Assets Limited v. Remblance [2009] EWCA Civ 581 [2011] 1 W.L.R (D) 212
29. Ibankumar v. United Trust Bank Ltd [2012] EWHC 845
30. In the matter of Pro-Pride Uganda Ltd, Company Cause No. 40 of 2016.
31. Re Hawk Insurance (2001) EWA Civ 241.
32. Re Old Mutual Plc (2018) EWHC 873 (Ch).
33. Re SAB Miller (2016) EWHC 2153 (Ch).
34. Re BTR Plc (1999) BCLC 675.
35. ASIC v Plymin (2003) 46 ACSR 126.
36. Bestway Global Holdings Inc. (FSD 208 of 2021 – unreported).
37. BNY Corporate Trustee Services ltd v. Eurosail (2013) UKSC 28

b) Receivership
1. Sudhir Ruparelia & Anor v. Crane Bank Limited [In liquidation] Misc. Appln. No. 320 of
2019.
2. Crane Bank [In receivership] v. Sudhir Ruparelia & Anor C.A.C.A No. 252 of 2019.
3. Stephen Lubega v. Barclays Bank (U) Ltd. [1992] III KALR 30.
4. Nanubhai Bopalal Roivedi v. The Official Receiver [1960] EA 422.
5. Moss S.S. v. Whinney [1912] AC 254.

c) Individual Insolvency
1. In the matter of Maria K. Muteesi Bankruptcy Petition No. 5 of 2011.
2. In Re Teddy Seezi Cheeye Bankrupt petition no.1/95 reported- {1996} iv KALR 116-
3. Re Mohammed Amer Abdel Kaher Mohammed Abdel Magid Nagy, Bankruptcy
Petition No. 8/2002
4. Re A debtor (No. 1 of 1987) [1989] 1 W.L.R 271.

d) Administration
1. Uganda Telecom Ltd (In Administration) v. Bernard Mweteise & Asaph Ndaula &
Others C.A. Civil Application No. 183 of 2019.
2. Re Sunshine Agro Products Limited (In Administration) Miscellaneous Application 344
of 2019, Arising from Company Cause No. 25 Of 2018.
3. Re Lehman Brothers International Europe (in administration) [2018] EWHC 1980.

e) Corporate Insolvency
1. African Textile Mill Ltd. (In Liquidation) v. Co-operative Bank Ltd (In- Liquidation) HCT-
CC-CA- 20 of 2005.
2. Emerald Hotel Ltd & 3 others v. Barclays Bank of Uganda Ltd & 4 Others H.C.C.S No.
0170 of 2008.
3. Hoima Ginners Limited (No. 2) [1962] E.A 439.

e) Liquidators Powers
 1. Rachhodbhai Shivabhai Patel & Anor. v. Henry Wambuga & Anor C.V.A No. 057 of 2010.
2. Chanan Singh v. Official Receiver [1965] EA 65.

Text Books
1. Uganda Insolvency Handbook 2018 by Nelson Nerima

GENERAL REFERENCE LIST

Partnerships

Statutes

1. The Advocates Act, Cap 267.

2. The Business Names Registration Act, Cap 109.
3. The Contracts Act No.7 of 2010.
4. The Partnership Amendment Act, 2022.
5. The Partnerships Act, 2010.
 6. The Registration of Documents Act, Cap 81.
7. The Stamps Act, Cap 342 as amended.
8. The Trade Licensing (Amendment) Act, 2015.
9. The Trade Licensing Act, Cap 101.
10. Uganda Registration Services Bureau Act, Cap 210.
11. The Protocol on the Establishment of the East African Community Common Market and the
Annexes.

Rules/Regulations
1. The Advocates (Remuneration and Taxation of Costs) (Amendment) Regulations 2018.
2. The Advocates (Remuneration and Taxation of Costs) Regulations S.I 267-4.
3. The Advocates (Use of Generic Names by Law Firms) Regulations, SI 16 of 2006.
4. The Business Names Registration (Amendment) Rules S.I 53 of 2005.
5. The Business Names Registration Rules S.I 109-1.
6. The Registration of Documents (Fees) (Amendment) Rules S.I 55 of 2005.
7. The Registration of Documents Rules S.I 81-2.

Cases

1. Abubaker Walakira v. Abubaker Walusimbi H.C.C.S No. 579 of 2012.

2. All port Ports Freight Service v Julius Kamanyi & Anor. [1996] V KALR 21.
3. Asobasi v. Uganda Law Council & Anor, Miscellaneous Cause No.317 of 2017.
4. Ass v. Benham (1891) 2 Ch D 244.
5. Bentley v. Craven (1453) 18 Bears 75.
6. Bubare Company v. Meble Kente [1982] HCB 143.
7. Cyprian Inyangat v Andrew Bob Oligo, HC Misc. Appl. No. 280 of 2000.
8. Dawson v. White & Case, 88 N.Y 2d 666.
9. Dr. Okello N. David v. Komakech Steven, HCCS No. 30 of 2006.
10. Dubai Aluminum Co Ltd v Salaam (2003) 1 ALL ER 97; (2002) 3 WLR 1913.
11. Francis Sembuya v. Allports Services (U) Ltd, SCCA No. 6 of 1999.
12. Highly v Walker (1910) 26 TLR 685.
13. Hurst v. Brye & Ors. [2000] 2 All ER 193.
14. Kafero Mohamed v. Turyagenda [1980] HCB 122.
15. Katungi Tony v Attorney General Misc. cause No 266 of 2016.
16. Kendal v. Hamilton (1879) AC 504.
17. Law v. Law (1905) 1 Ch D 140.
18. Lord Millett, Bristol and West Building Society v. Mothew (1998) Ch D.1.
19. Mercantile Credit Co Ltd v. Garrod (1962) 3 ALL ER 1103.
20. Miah & Ors v. Khan Anor [2000] All ER 1647.
21. Miles v. Clark (1953) 1 ALL ER 779.
22. Nankya Faridah T/a Offenders Rehabilitation International v. Tinasah Investments
Limited M.A 648 of 2011.
23. National Drug Authority v. John Chris Bakiza T/A Kabyesiza and Co. Advocates HCCS
NO. 34 of 2008.
24. Okwera Donation Henry v. Abdalla Saleh [1982] HCB 123.
25. Omella Emorut v. Raymond Ojakol [1984] HCB 62.
26. Pocock v. Cater (1912) 1 Ch. D 663.
27. Reamton Ltd. v. Uganda Co-Operative Creameries and another [1996] 3 KALR 28.
28. Sonko V Patel 20 (EACA) 99.
29. Uganda Freight Forwarders Association and Another v. Attorney General and Anor,
Constitutional Petition No. 22 of 2009.
30. Wilson v. Commissioner of Taxes 161 F.2d 661 (7th Cir. 1947).
Corporate Practice

Statutes

1. The Anti Money Laundering Act 2013.

2. The Business Names Registration Act, Cap 109.
3. The Companies Act No. 1 of 2012.
4. Electronic Signatures Act No. 7 of 2011.
5. Electronic Transactions Act No. 8 of 2011.
6. The Investment Code Act Cap 92.
7. The Land Act Cap 227, as amended.
8. The Non-Governmental Organisations Act, 2016.
9. The Stamps (Amendment) Act No. 2 of 2002
10. The Stamps Act Cap 342.
11. The Trustees Incorporation Act, Cap 165.
12. The Uganda Registration Services Bureau Act, Cap 210.

Rules/Regulations
1. The Advocates Remuneration and Taxation of Costs Rules, 2018.
2. The Companies Act (Single Member) Regulations, 2016.

Cases

1. Dawson v. White & Case, 88 N.Y 2d 666.

2. Java Coffee & Tea Limited v. Uganda Registration Services Bureau, Café Javas Limited &
Mandela Auto Spares Limited Company Cause No. 16 of 2014.
3. Kakooza Lugunju Joseph v. Ethiopian Airlines Ltd. (1982) H.C.B 111.
4. Kelner v. Baxter [1866] LR 2 CP 174.
5. Kenya Seed Company Limited v. Nathaniel Kipkorir Tum & Eufrazio Juliao Goes HCCS No
180 of 2010 (unreported).
6. Kololo Curing Co. Ltd v. West Mengo Co-op Union Ltd (1981) HCB 60.
7. Mathew Rukikaire v. Incafex S.C.C.A No. 3 of 2015.
8. Ngaremntoni Estates Ltd. v. CIT [1969] 1 ALR Comm. 186.
9. Price v. Kelsall [1954] EA 752.
10. Salim Jamal & Others v. Uganda Oxygen Ltd &Ors, S.C.C.A No. 64 of 1995.
11. Salmon v. Salmon [1897] AC 22.
12. Ssenyonga Ali &Ors v. Kakooza Rajab Hussein &Ors (1992-93) H.C.B 93.
13. Twycross v. Grant (1877) 2 CPD 469.

Public Procurement and Disposal of Public Assets

Statutes

1. Public Procurement and Disposal of Public Assets Act 2003 as amended

2. The Contracts Act No.7 of 2010.
4. The Sale of Goods and Supply of Services Act, 2017.

Rules/Regulations
1. The Hire Purchase Regulations, Statutory Instrument No. 6 of 2012.

Cases
Procurement

1. Galleria in Africa Ltd v. Uganda Electricity Distribution Co. Ltd, Supreme Court of Uganda
Civil Appeal No. 08 of 2017.
2. Finishing Touches Ltd V. AG of Uganda Civil Suit No. 144 of 2010
3. Clear Chanel independent (U) Ltd Vs PPD Misc. Cause No. 156/2008
4. Edward Makubuya T/A M. Edward Engineering Works Vs Kampala
City Council Kawempe Division Civil Suit No. 59 Of 2003.
5. Arua Municipal Council Vs Arua United Transporter’s Sacco C.A No. 0025 of 2017.
6. Roko Construction Ltd Vs Public Procurement and Disposal of Public Assets Authority &
2 Ors HCCA No. 59 of 2017.
7. Vcon Construction (U) Ltd Vs Uganda Development Bank PPDA Appeals Tribunal
Application No. 22 of 2021
8. Gat Consults Ltd & Lee Construction Ltd (JV) Vs Public Procurement and Disposal of
Public Assets Authority(PPDA) & Anor Application No. 6 of 2021.
9. Abasania Hwolerane Association Ltd Vs. Jinja City Council PPDA Tribunal Application
No. 18/2021

Sale of Goods

1. Alex Olwor v. Registered Trustees of Arua Diocese (1995) IV KALR 133.

2. Assist (U) Limited v. Italian Asphalt & Haulage Limited & Anor H.C.C.S No.1291 of 1999.
3. Bishari v. Vitafoam Ltd. (1994) VI KALR 180.
4. Burnett v. Westminster bank Ltd [1966]1 QB 742.
5. Frederick J.K Zaabwe v. Orient Bank & Others S.C.C.A 4 of 2006.
6. Galleria in Africa Ltd v. Uganda Electricity Distribution Co. Ltd, High Court
Commercial Division Civil Suit No. 853 of 2007.
7. Hon. Mable Bakeine v. YUASA H.C.C.S No. 136 of 2014.
8. Jane Bwiriza v. John Nathan Osapil, SCCA No. 5 of 2002.
9. John Nagenda v. Sabena Belgian World Airlines (1992) 1 KALR.
10. Karsales (Harrow) Ltd. v. Wallis [1956] 2 All ER 866 (CA).
11. L’ Estrange v. Graucob [1934] 1 KB 394.
12. Manchester Liners v. Rea [1922] 2 AC 14
13. Mubaraka Batesaki v. Mubaraka Magala [2005] UGCA 5.
14. OK Zimbabwe Limited v. Msundire (Civil Appeal No. SC 111/12) [2015] ZWSC 23.
15. Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827 (HL).
16. Sugar Corporation of Uganda Ltd v. Lawsam Chemical (U) Ltd SCCA No. 5 of 2001.
17. Suisse Atlantique Societe d’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen
Centrale, [1967] 1 AC 361.
18. Thornton v Shoe Lane parking Thornton (2011) 74 M.L.R. 106.
19. Tsakiroglou & Co. Ltd. v. Noblee Thorl G.m.b.H., [1960] 2 Q.B. 348; [1962] AC 93.
Agency, Distributorship and Franchise

Statutes

1. The Contracts Act, 2010.

2. The Patents Act Cap, 216 as amended by Act 7 of 2022 and Act 15 of 2005.
3. The Sale of Goods and Supply of Services Act, 2017.
4. The Trade Secrets Protection Act, 2009.
5. Trade Marks Act, 2010.

Cases
 1. Full Line Distributors Ltd v. Crown Beverages Ltd H.C. Com. Division Suit No. 141 of 2012

Employment

Statutes

1. The Contracts Act, 2010.

2. The Employment Act, No. 6 of 2006.
3. The Income Tax Act Cap 340, as amended.
4. The Labour Disputes (Arbitration and Settlement) Act No. 8 of 2006.
5. The Labour Unions Act 2006.
6. The National Social Security Fund Act Cap 222.
7. The Occupational Safety and Health Act No. 9 of 2006.
8. The Uganda Citizenship and Immigration Control (Amendment) Act, 2006.
9. The Uganda Citizenship and Immigration Control (Amendment) Act, No. 5 of 2009.
10. The Workers Compensation Act, Cap 225.
11. Uganda Citizenship and Immigration Control Act, Cap. 66.

Rules/Regulations

1. The Employment (Employment of Children) Regulations, S.I No. 17 of 2012.

2. The Employment (Sexual Harassment) Regulations, S.151 of 2012.
3. The Employment Act (recruitment of Ugandan Migrant workers) Regulations 2021.
4. The Employment Regulations, S.I 219-1.
5. The Uganda Citizenship and Immigration Control Regulations, S.I No. 16. of 2004.

Banking

Statutes

1. The Anti-Money Money Laundering (Amendment) Act, 2017.

2. The Anti-Money Money Laundering Act, 2013.
3. The Bank of Uganda Act, Cap 51.
4. The Collective Investment Schemes Act, 2003.
5. The Companies Act, 2012.
6. The Constitution of the Republic of Uganda, as amended.
7. The Cooperative Societies Act, Cap. 112.
8. Electronic Signatures Act No. 7 of 2011.
9. Electronic transactions Act No.8 of 2011.
10. The Financial Institutions Act No.2 of 2004, as amended by the Tier 4 Microfinance
Institutions and Money Lenders Act, 2016.
11. The Financial Institutions Act, 2004, as amended.
12. The Foreign Exchange Act, 2004.
13. The MicroFinance Deposit-Taking Institutions Act No. 5 of 2003, (as amended by the Tier
4 Microfinance Institutions and Money Lenders Act, 2016).
14. The National Payments Systems Act No.15 of 2020.
15. The Tier 4 Microfinance Institutions and Money Lenders Act, 2016.
16. The Uganda Communications Act, 2013.

Rules/Regulations

1. The Anti-Money Laundering Regulations, 2013.

2. The Bank of Uganda Mobile Money Guidelines 2013.
 3. The Building Societies Regulations, SI 108-1.
4. The Collective Investment Schemes (Conduct of Business and Miscellaneous Provisions)
Regulations, 2007.
5. The Cooperative Societies Regulations, S.I, 112-1.
6. The Financial Institutions (Anti Money-Laundering) Regulations, 2010.
7. The Financial Institutions (Capital Adequacy Requirements) Regulations No.21 of 2018.
8. The Financial Institutions (Consolidated Supervision) Regulations, 2010.
9. The Financial Institutions (Corporate Governance) Regulations, 2005.
10. The Financial Institutions (Credit Reference) Regulations, 2005.
11. The Financial Institutions (Foreign Exchange Business Amendment) Rules 2013.
12. The Financial Institutions (Foreign Exchange Business) Rules, 2010.
13. The Financial Institutions (Insider Lending Limits) Regulations, 2005.
14. The Financial Institutions (Licensing Regulations) 2005.
15. The Financial Institutions (Liquidity) Regulations, 2005.
16. The Financial Institutions (Ownership Control) Regulations, 2005.
17. The Financial Institutions (Protected Deposit) Instrument, SI 67 of 2019.
18. The Financial Institutions (Revision of Minimum Capital Requirements) Instrument, 2010.
19. The Foreign Exchange (Forex Bureaus and Money Remittance) Regulations, 2006.
20. Foreign Exchange (Forex Bureaus and Money Remittance) Regulations, 2006, S.I No. 10
of 2006.
21. The MicroFinance Deposit-Taking Institutions (Capital Adequacy) Regulations, SI No. 63
of 2004.
22. The MicroFinance Deposit-Taking Institutions (Licensing) Regulations, SI No. 61 of 2004.
23. National Payments Systems (Agents) Regulation 2021 S.I, 19.
24. National Payments Systems (Sandbox) Regulation 2021 S.I, 20.
25. National Payments Systems Regulations S.I, 18 of 2021.
26. The Tier 4 Microfinance Institutions and Money Lenders (Non-Deposit Taking
Microfinance Institutions) Regulations No.10 of 2018.

Cases

1. Aida Atiko v. Centenary Bank Ltd Civil Suit No. 0754 of 2020.
2. Bidco (U) Limited v. Western Distributors Ltd. H.C.C.S No. 271 of 2008.
3. Brown Shipley & Co. Ltd. v. Alicia Hosiery Ltd [1966] (Lloyds) Rep 665.
4. Chesiryot Enterprises Limited v. National Bank of Kenya 2012 eklr (Unreported.
5. Davidson v. Barclays Bank Ltd (1940) 1 All ER 316.
6. Ddembe Trading Enterprises v. Bidco (U) Limited H.C.M.A No. 28/2008.
7. Dynamic Consortium Limited v. DFCU Bank Limited H.C.C.S No. 848 of 2014.
8. Edward Owen Engineering v. Barclays Bank (1978) QB 15.
9. Fredrick J.K. Zaabwe v. Orient Bank & Others S.C.C.A 04/2006.
10. Gafabusa v. Bwesigye (1985) HCB 72.
11. Halesowen Presswork and Assemblies Ltd v. Westminster Bank Ltd, (1972) 1 All ER 641.
12. Hassanali Issa & Co. v. Jeraj Produce Store [1967] E.A 555.
13. Jacobs v. Batavia & General Plantations Ltd [1924] 1 Ch. 287.
14. Jacobs v. Batavia & General Plantations Ltd [1924] 1 Ch. 287.
15. James Lamont & Co. Limited v. Hyland Limited [1950] 1 K.B 585.
16. Joachimson v. Swiss Bank Corpn (1921) 3 KB 110.
17. Koecha v. Mohammed [2002]1 E.A 112.
18. L’Estrange v. Gracoub Ltd [1934] 2 KB 394.
19. MacKaka Hardware Ltdlan duty - London Joint Stock Bank Limited v. MacKaka Hardware
Ltdew & Arthur [1918] AC 777.
 20. Nkoloma v. NBC Holdings Corporation Ltd (2000) 1 EA 187.
21. Obed Tashobya v. DFCU Bank Limited HCT - 00 - CC - CS – 742 – 2004.
22. Progressive Group of Schools Limited v. Barclays Bank of Uganda Limited T/A Absa Bank
(U) Limited & Anor C.A.C.A No. 349 of 2020.
23. Ssembule Investments v. Uganda Baati H.C.M.A 664 of 2009.
24. Stanbic Bank v. Uganda Crocs Limited, SCCA no. 4 of 2004.
25. Taxation Commissioners vv Scottish and Australian Bank (1920) AC 683.
26. Tournier v. National Provincial and Union Bank of England [1924] 1 KB 461
27. Uganda Bankers Association v. Uganda Revenue Authority Msc Appn 28 of 2018.
28. United Dominions Trust Ltd v. Kirkwood (1966) 1 All ER 968.
29. Verschures Creameries Ltd v. Hull & Netherlands Steamship Co. Ltd (1921) 2 KB 608.
30. Wilson v United Counties Bank Ltd (1920) AC 102.

Corporate and Individual Insolvency

Statutes

1. Companies Act No. 1 of 2012, as amended in 2022.

2. The Insolvency Act No. 14 of 2011, as amended in 2022.
3. The Mortgage Act, Act No. 7 of 2009.

Rules/Regulations
1. The Insolvency (Investigation and Prosecution) Regulations S.I No. 4 of 2018.
2. The Insolvency Fees Regulations SI No. 26 of 2013.
3. The Insolvency Practitioners Regulations S.I Mo. 55 of 2017.
4. The Insolvency Regulations SI No. 36 of 2013.

Cases
1. African Textile Mill Ltd. (In Liquidation) v. Co-operative Bank Ltd (In- Liquidation) – HCT-CC-
CA- 20 of 2005.
2. Agilo Limited v. William Henry [2010] EWHC 2717 (Ch).
3. Alice Okiror & Michael Okiror v. Global Capital Save 2004 Limited & Ben Kavuya H.C.C.S
No 149 of 2010.
4. ASIC v. Plymin (2003) 46 ACSR 126.
5. Bamford v. Bamford [1969] 1 All ER 969.
6. Bestway Global Holdings Inc. FSD 208 of 2021 (unreported).
7. Chanan Singh v. Official Receiver [1965] EA 65.
8. Crane Bank [In receivership] v. Sudhir Ruparelia & Anor C.A.C.A No. 252 of 2019.
9. Deox Tibeingana v. Vijay Reddy (Misc. Cause No. 286 of 2019).
10. Douglas D. Watson, Kenya Cold Storage (Foods) Ltd v. Kenya Commercial Bank, Kenya
Commercial Court Civil Case No. 1278 of 1999
11. Emerald Hotel Ltd & 3 others v. Barclays Bank of Uganda Ltd & 4 Others H.C.C.S No.
0170 of 2008.
12. Engineering Co Ltd v. Kenya Commercial Bank Ltd [1986–1989] EA 554 (CAK).
13. Harris v. Beauchamp Bros [1894] 1 QB 801.
14. Hoima Ginners Limited (No. 2) [1962] E.A 439.
15. Ibankumar v. United Trust Bank Ltd [2012] EWHC 845.
16. In Re Teddy Seezi Cheeye Bankrupt petition no.1/95 reported [1996] iv KALR 116.
17. In the matter of Maria K. Muteesi Bankruptcy Petition No. 5 of 2011.
18. In the matter of Pro-Pride Uganda Ltd, Company Cause No. 40 of 2016.
19. John Verjee & Anor v. Simon Kalenzi & Others [1997-205] UCLR 83.
 20. Lochab Brothers v. Kenya Furniture l Co. Ltd. & Others.
21. Mann and Another v. Goldstein and Another [1968] 1 ALL E.R. 769.
22. Moss S.S. v. Whinney [1912] AC 254.
23. Multi Holdings Ltd. & Anor. v. The Uganda Commercial Bank [1971] HCB 44.
24. Nanubhai Bopalal Roivedi v. The Official Receiver {1960} EA 422.
25. National & Grindlays Bank Ltd v. Sheriff & Anor [1972] EA 413.
26. Newhart Ltd. v. Co-op Commercial Bank [1978] 2 All ER .
27. Nirmal Singh v. Ram Singh [1961] EA 168.
28. Octagon Assets Limited Vs. Remblance [2009] EWCA Civ 581 [2011] 1 W.L.R (D) 212.
29. Portman Building Society v. Gallwey [1955] 1 WLR 96.
30. R. Vunubhai Chanubhai Amin [1962] EA 65.
31. Rachhodbhai Shivabhai Patel & Anor. Vs. Henry Wambuga & Anor C.V.A No. 057 of
2010.
32. Rai and others v Rai and others [2002] 2 EA 537 (CAK).
33. Re A debtor (No. 1 of 1987) [1989] 1 W.L.R 271.
34. Re BTR Plc (1999) BCLC 675.
35. Re Hawk Insurance (2001) EWA Civ 241.
36. Re Janmohamed Lodha [1961] EA 175-
37. Re Lehman Brothers International Europe (in administration) [2018] EWHC 1980.
38. Re Mastermind Tobacco Uganda Ltd - Companies Cause No. 18 of 2002.
39. RE Mohammed Amer Abdel Kaher Mohammed Abdel Magid Nagy - Bankruptcy Petition
No. 8 of 2002.
40. Re Muddu Awulira Enterprises Limited – Company Cause NO. 14 OF 2004.
41. Re Old Mutual Plc (2018) EWHC 873 (Ch).
42. Re SAB Miller (2016) EWHC 2153 (Ch).
43. Re Sheela Supermarket Ltd. [2004] EA 264.
44. Re Sunshine Agro Products Limited (In Administration) Miscellaneous Application 344 Of
2019 – Arising from Company Cause No. 25 of 2018.
45. Re Vanubhai Chanubhai Amin [1962] E.A 65.
46. Re: Global Tours and Travels Ltd [2001] 1 EA 195.
47. Reid v. Explosives Co. (1887) 19 QBD 264.
48. Stephen Lubega v. Barclays Bank (U) Ltd. [1992] III KALR 30.
49. Sudhir Ruparelia & Anor v. Crane Bank Limited [In liquidation] Misc. Appln. No. 320 of
2019
50. Tanganyika Produce Agency Ltd. [1957] EA.
51. Tweeds Garages Ltd [1962] 1 All ER 121.
52. Uganda Telecom Ltd (In Administration) Versus Bernard Mweteise & Asaph Ndaula &
Others C.A. Civil Application No. 183 of 2019.
53. Windsor Refrigerator Co. Ltd. v. Branch Nominees [1961] Ch. 375.

APPENDIX 1
Annex – PPDA Standard Form Contract
Section 7: General Conditions of Contract for the
Procurement of Works
Table of Clauses
A. General .......................................................................................................................96
1. Definitions............................................................................................................ 96
2. Contract Documents............................................................................................. 98
3. Interpretation....................................................................................................... 98
4. Language.............................................................................................................. 99
5. Joint Venture, Consortium or Association............................................................ 99
6. Eligibility............................................................................................................... 99
7. Notices.................................................................................................................. 99
8. Governing Law.................................................................................................... 100
9. Scope of the Works............................................................................................. 100
10. Project Manager’s Decisions............................................................................... 100
11. Delegation.......................................................................................................... 100
12. Subcontracting.................................................................................................... 100
13. Other Contractors............................................................................................... 100
14. Contractor’s Personnel....................................................................................... 100
15. PDE’s and Contractor’s Risks............................................................................... 101
16. PDE’s Risks.......................................................................................................... 101
17. Contractor’s Risks............................................................................................... 101
18. Insurance............................................................................................................ 102
19. Site Investigation Reports................................................................................... 102
20. Queries About the Special Conditions of Contract............................................. 102
21. Contractor to Construct the Works..................................................................... 102
22. Works to be Completed by the Intended Completion Date................................ 102
23. Approval by the Project Manager....................................................................... 102
24. Safety and Safety Procedures............................................................................. 103
25. Discoveries......................................................................................................... 103
26. Possession of the Site......................................................................................... 103
27. Access to the Site................................................................................................ 103
28. Contractor’s Equipment...................................................................................... 103
29. Protection of the Environment........................................................................... 103
30. Prohibition of Harmful Child Labour................................................................... 104
31. Health and Safety............................................................................................... 104
32. Instructions, Inspection and Audits.................................................................... 104
33. Disputes.............................................................................................................. 104
34. Procedure for Settling Disputes.......................................................................... 105
35. Replacement of Adjudicator............................................................................... 105
B. Time Control ............................................................................................................. 105
36. Program.............................................................................................................. 105
37. Extension of the Intended Completion Date...................................................... 106
38. Acceleration........................................................................................................ 106
39. Delays Ordered by the Project Manager............................................................. 106
40. Management Meetings...................................................................................... 106
41. Early Warning..................................................................................................... 106
C. Quality Control .........................................................................................................107
42. Identifying Defects.............................................................................................. 107
43. Tests.................................................................................................................... 107
44. Correction of Defects.......................................................................................... 107
45. Uncorrected Defects........................................................................................... 107
D. Cost Control .............................................................................................................. 107
46. Bill of Quantities or Activity Schedule................................................................. 107
47. Changes in the Bill of Quantities or Activity Schedule........................................ 107
48. Variations............................................................................................................ 108
49. Payments for Variations...................................................................................... 108
50. Payment Certificates........................................................................................... 109
51. Issue of Interim Payment Certificates................................................................. 109
52. Payments............................................................................................................ 110
53. Compensation Events......................................................................................... 110
54. Tax....................................................................................................................... 111
55. Currencies........................................................................................................... 111
56. Price Adjustment................................................................................................ 112
57. Retention............................................................................................................ 113
58. Liquidated Damages........................................................................................... 113
59. Bonus.................................................................................................................. 113
60. Advance Payment............................................................................................... 113
61. Performance Security and ES Performance Security............................................ 114
62. Day works........................................................................................................... 114
63. Cost of Repairs.................................................................................................... 114
E. Finishing the Contract ............................................................................................ 114
64. Completion......................................................................................................... 114
65. Taking Over......................................................................................................... 115
66. Final Account...................................................................................................... 115
67. Operating and Maintenance Manuals................................................................ 115
68. Termination........................................................................................................ 115
69. Payment upon Termination................................................................................ 116
70. Release from Performance................................................................................. 116
 A. General

1. Definitions
1.1 The following words and expressions shall have the meanings hereby assigned to them:
(a) “Activity Schedule” means the priced and completed Activity Schedule, forming
part of the Bid, which provides a breakdown of the Contract Price by work elements
for a Lump Sum Contract.
(b) “Adjudicator” is the person appointed jointly by the Procuring and Disposing Entity
and the Contractor to resolve disputes in the first instance.
(c) “Admeasurement Contract” means a Contract under which the Works are executed
on the basis of agreed rates and prices in a Bill of Quantities and payment is made
for the quantity of work actually executed.
(d) “Bill of Quantities” means the priced and completed Bill of Quantities forming part
of the Bid, which provides the agreed rates and prices for payment for an
Admeasurement Contract.
(e) “Compensation Events” are those defined in Clause 44 hereunder.
(f) “Completion Date” is the date of completion of the Works as certified by the Project
Manager.
(g) “Contract” is the agreement between the Procuring and Disposing Entity and the
Contractor to execute, complete, and maintain the Works.
(h) “Contractor” is a person or corporate body whose Bid to carry out the Works has
been accepted by the Procuring and Disposing Entity and is named as such in the
Agreement, and means Provider as defined in the Public Procurement and Disposal
of Public Assets Act, 2003.
(i) “Contractor’s Bid” is the bid submitted to the Procuring and Disposing Entity by the
Contractor who signed the contract for the works .
(j) “Contract Price” is the price stated in the Agreement and thereafter as adjusted in
accordance with the provisions of the Contract.
(k) “Days” are working days; “months” are calendar months.
(l) “Dayworks” are varied work inputs subject to payment on a time basis for the
Contractor’s employees and Equipment, in addition to payments for associated
Materials and Plant.
(m) “Defect” is any part of the Works not completed in accordance with the Contract.
(n) “Defects Liability Certificate” is the certificate issued by the Project Manager upon
correction of defects by the Contractor.
(o) “Defects Liability Period” is the period calculated from the Completion Date,
during which the Contractor must rectify defects.
(p) “Drawings” include calculations and other information provided or approved by the
Project Manager for the execution of the Contract.
(q) “Procuring and Disposing Entity” is the party named in the Agreement, who
employs the Contractor to carry out the Works and means Procuring and Disposing
 Entity as defined in the Public Procurement and Disposal of Public Assets Act,
2003.
(r) “Equipment” is the Contractor’s machinery and vehicles brought temporarily to
the Site to construct the Works.
(s) “written” or “in writing” means type-written, printed or electronically made,
and resulting in a permanent record
(t) “GCC” means the General Conditions of Contract.
(u) “Initial Contract Price” is the Contract Price listed in the Agreement.
(v) “Intended Completion Date” is the date on which it is intended that the Contractor
shall complete the Works.
(w) “Lump Sum Contract” means a Contract under which the Works are executed for
an all inclusive fixed total amount, as defined in the Activity Schedule.
(x) “Materials” are all supplies, including consumables, used by the Contractor for
incorporation in the Works.
(y) “Plant” is any integral part of the Works that shall have a mechanical, electrical,
chemical, or biological function.
(z) “Project Manager” is the person named in the SCC (or any other competent person
appointed by the Procuring and Disposing Entity and notified to the Contractor, to
act as a representative of the Contract Manager) who is responsible for supervising
the execution of the Works and administering the Contract. The
(za) “Contract Manager” is the person appointed by the Accounting Officer from the
user department or another Procuring and Disposing Entity to manage the contract.
(aa) “Provisional Sum” means a sum included in the Contract and so designated in the
Bill of Quantities or Activity Schedule for the provision of supplies, works or
services or for contingencies to be expended for the execution of the Works in
whole or part at the direction of the Project Manager.
(bb)“SCC” means the Special Conditions of Contract.
(cc) “Site” is the area defined as such in the SCC.
(dd)“Site Investigation Reports” are those that were included in the bidding documents
and are factual and interpretative reports about the surface and subsurface
conditions at the Site.
(ee) “Specification” means the Specification of the Works included in the Contract and
any modification or addition made or approved by the Project Manager.
(ff) “Start Date” is the latest date by when the Contractor shall commence execution of
the Works and is specified in the SCC.
(gg) A “Subcontractor” is a person or corporate body who has a Contract with the
Contractor to carry out a part of the work in the Contract, which includes work on
the Site.
(hh)“Temporary Works” are works designed, constructed, installed, and removed by the
Contractor that are needed for construction or installation of the Works.
Part 3: Section 7. General Conditions of Contract

(ii) “Variation” is an instruction given by the Project Manager which varies the Works.
(jj) “Works” are what the Contract requires the Contractor to construct, install, and turn
over to the PDE, as defined in the SCC.
(kk) “ESHS” means environmental, social (including sexual exploitation and abuse
(SEA) and gender based violence (GBV)), health and safety.

2. Contract Documents
2.1 The documents forming the Contract shall be interpreted in the following order of
priority:
(a) Agreement,
(b) Contractor’s Bid,
(c) Special Conditions of Contract,
(d) General Conditions of Contract,
(e) Scope of Works,
(f) Drawings,
(g) Bill of Quantities or Activity Schedule, as appropriate; and
(h) any other document listed in the SCC as forming part of the Contract.

2.2 Subject to the order of precedence set forth in Sub-Clause 2.1, all documents forming the
Contract (and all parts thereof) are intended to be correlative, complementary, and
mutually explanatory

3. Interpretation
3.1 If the context so requires it, singular means plural and vice versa
3.2 Contract
The Contract constitutes the whole agreement between the PDE and the Provider and
supersedes all communications, negotiations and agreements (written or oral) of parties
with respect thereto made prior to the date of Contract.
3.3 Amendment
No amendment or other variation of the Contract shall be valid unless it is in writing, is
dated, expressly refers to the Contract, and is signed by a duly authorised representative
of each party thereto.
3.4 Non-waiver
(a) Subject to GCC Sub-Clause 32.4(b) below, no relaxation, forbearance, delay, or
indulgence by either party in enforcing any of the terms and conditions of the
Contract or the granting of time by either party to the other shall prejudice, affect, or
restrict the rights of that party under the Contract, neither shall any waiver by either
party of any breach of Contract operate as waiver of any subsequent or continuing
breach of Contract.
(b) Any waiver of a party’s rights, powers, or remedies under the Contract must be in
writing, dated, and signed by an authorised representative of the party granting such
waiver, and must specify the right and the extent to which it is being waived.

3.5 Severability
If any provision or condition of the Contract is prohibited or rendered invalid or

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unenforceable, such prohibition, invalidity or unenforceability shall not affect the

validity or enforceability of any other provisions and conditions of the Contract
3.6 These General Conditions of Contract shall apply in their entirety, except where
alternative options are specified for different types of contract. Where alternative
options are specified:
(a) Option 1 shall apply to Admeasurement Contracts; and
(b) Option 2 shall apply to Lump Sum Contracts.
3.7 For purposes of interpreting these Conditions of Contract, the type of contract is as
specified in the SCC.
3.8 If sectional completion is specified in the SCC, references in the Conditions of Contract
to the Works, the Completion Date, and the Intended Completion Date apply to any
Section of the Works (other than references to the Completion Date and Intended
Completion Date for the whole of the Works).

4. Language
4.1 The Contract as well as all correspondence and documents relating to the Contract
exchanged by the Provider and the PDE, shall be written in English. Supporting
documents and printed literature that are part of the Contract may be in another
language provided they are accompanied by an accurate translation of the relevant
passages in the language specified, in which case, for purposes of interpretation of the
Contract, this translation shall govern.
4.2 The Provider shall bear all costs of translation to the governing language and all risks of
the accuracy of such translation.

5. Joint Venture, Consortium or Association

Unless otherwise specified in the SCC, if the Provider is a JV, consortium, or
association, all of the parties shall be jointly and severally liable to the PDE for the
fulfilment of the provisions of the Contract and shall designate one party to act as a
leader with authority to bind the JV, consortium, or association. The composition or the
constitution of the JV, consortium, or association shall not be altered without the prior
consent of the PDE.

6. Eligibility
6.1 The provider and its subcontractors shall have the nationality of an eligible country. A
provider or subcontractor shall be deemed to have the nationality of a country if it is a
citizen or constituted, incorporated, or registered, and operates in conformity with the
provisions of the laws of that country.

7. Notices
7.1 Any notice given by one party to the other pursuant to the Contract shall be in writing to
the address specified in the SCC. The term “in writing” means communicated in written
form (e.g. by mail, e-mail, fax, including if specified in the BDS, distributed or received
through the electronic-procurement system used by the PDE) with proof of receipt.
7.2 A notice shall be effective when delivered or on the notice’s effective date, whichever is
later.

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8. Governing Law
The Contract shall be governed by and interpreted in accordance with the laws of
Uganda.

9. Scope of the Works

9.1 The works and related services to be provided shall be as specified in the SORs and
other provisions of the contract

10. Project Manager’s Decisions

10.1 Except where otherwise specifically stated, the Project Manager will decide contractual
matters between the PDE and the Contractor in the role representing the PDE.
10.2 The Project Manager will obtain the PDE’s approval for any of the decisions specified
in the SCC.

11. Delegation
11.1 The Project Manager may delegate any of his duties and responsibilities to other people,
except to the Adjudicator, after notifying the Contractor in writing, and may cancel any
delegation after notifying the Contractor.

12. Subcontracting
12.1 Unless otherwise specified in the SCC, the Contractor may subcontract with the
approval of the Project Manager, but may not assign the Contract without the approval
of the PDE in writing. Subcontracting shall not alter the Contractor’s obligations.
12.2 Any further conditions relating to subcontracting shall be as specified in the SCC.

13. Other Contractors

13.1 The Contractor shall cooperate and share the Site with other contractors, public
authorities, utilities, and the PDE between the dates given in the Schedule of Other
Contractors, if such Schedule is specified in the SCC. The Contractor shall also provide
facilities and services for them as described in the Schedule. The PDE may modify the
Schedule of Other Contractors, and shall notify the Contractor of any such modification.

14. Contractor’s Personnel

14.1 If the Schedule of Key Personnel is specified in the SCC, the Contractor shall employ
the key personnel named in the Schedule, or other personnel approved by the Project
Manager, to carry out the functions stated in the Schedule. The Project Manager will
approve any proposed replacement of key personnel only if their relevant qualifications
and abilities are substantially equal to or better than those of the personnel listed in the
Schedule.
14.2 The Project Manager may require the Contractor to remove (or cause to be removed) any
person employed on the Site or Works, including the Contractor’s Representative if
applicable, who:
(a) Persists in any misconduct or lack of care,
(b) Carries out duties incompetently or negligently,
(c) Fails to conform with any provisions of the Contract,

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(d) Persists in any conduct which is prejudicial to safety, health, or the protection of
the environment, or
(e) Based on reasonable evidence, is determined to have engaged in Fraud and
Corruption during the execution of the Works.
(f) Undertakes behaviour which breaches the Code of Conduct (ESHS) (e.g.
spreading communicable diseases, sexual harassment, gender based violence
(GBV), sexual exploitation or abuse, illicit activity or crime).”
14.3 The Contractor shall ensure that the person leaves the Site within seven days and has no
further connection with the work in the Contract. If appropriate, the Contractor shall
then appoint (or cause to be appointed) a suitable replacement person.

15. PDE’s and Contractor’s Risks

15.1 The Procuring and Disposing Entity carries the risks which the Contract states are
Procuring and Disposing Entity’s risks, and the Contractor carries the risks which the
Contract states are Contractor’s risks.

16. PDE’s Risks

16.1 From the Start Date until the Defects Correction Certificate has been issued, the
following are PDE’s risks:
(a) The risk of personal injury, death, or loss of or damage to property (excluding
the Works, Plant, Materials, and Equipment), which are due to:
(i) Use or occupation of the Site by the Works or for the purpose of the
Works, which is the unavoidable result of the Works; or
(ii) Negligence, breach of statutory duty, or interference with any legal right
by the PDE or by any person employed by or contracted to him except
the Contractor.
(b) The risk of damage to the Works, Plant, Materials, and Equipment to the extent
that it is due to a fault of the PDE or in the PDE’s design, or due to war or
radioactive contamination directly affecting the country where the Works are to
be executed.
16.2 From the Completion Date until the Defects Correction Certificate has been issued, the
risk of loss of or damage to the Works, Plant, and Materials is an Procuring and
Disposing Entity’s risk except loss or damage due to:
(a) A defect which existed on the Completion Date;
(b) An event occurring before the Completion Date, which was not itself an PDE’s
risk; or
(c) The activities of the Contractor on the Site after the Completion Date.

17. Contractor’s Risks

17.1 From the Starting Date until the Defects Correction Certificate has been issued, the risks
of personal injury, death, and loss of or damage to property (including, without
limitation, the Works, Plant, Materials, and Equipment) which are not the Procuring and
Disposing Entity’s risks are the Contractor’s risks.

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18. Insurance
18.1 The Contractor shall provide, in the joint names of the PDE and the Contractor, insurance
cover from the Start Date to the end of the Defects Liability Period, in the amounts and
deductibles stated in the SCC for the following events which are due to the Contractor’s
risks:
(a) Loss of or damage to the Works, Plant, and Materials;
(b) Loss of or damage to Equipment;
(c) Loss of or damage to property (except the Works, Plant, Materials, and
Equipment) in connection with the Contract; and
(d) personal injury or death.
18.2 Policies and certificates for insurance shall be delivered by the Contractor to the Project
Manager for the Project Manager’s approval before the Start Date. All such insurance
shall provide for compensation to be payable in the types and proportions of currencies
required to rectify the loss or damage incurred.
18.3 If the Contractor does not provide any of the policies and certificates required, the PDE
may effect the insurance which the Contractor should have provided and recover the
premiums the PDE has paid from payments otherwise due to the Contractor or, if no
payment is due, the payment of the premiums shall be a debt due.
18.4 Alterations to the terms of an insurance shall not be made without the approval of the
Project Manager.
18.5 Both parties shall comply with any conditions of the insurance policies.

19. Site Investigation Reports

19.1 The Contractor, in preparing the Bid, shall rely on any Site Investigation Reports
referred to in the SCC, supplemented by any information available to the Bidder.

20. Queries About the Special Conditions of Contract

20.1 The Project Manager will clarify queries on the SCC.

21. Contractor to Construct the Works

21.1 The Contractor shall construct and install the Works in accordance with the
Specifications and Drawings.

22. Works to be Completed by the Intended Completion Date

22.1 The Contractor may commence execution of the Works on the Start Date and shall carry
out the Works in accordance with the Program submitted by the Contractor, as updated
with the approval of the Project Manager, and complete them by the Intended
Completion Date specified in the SCC.

23. Approval by the Project Manager

23.1 All Drawings prepared by the Contractor for the execution of the temporary or
permanent Works, are subject to prior approval by the Project Manager before use.
23.2 The Contractor shall be responsible for design of Temporary Works and shall submit

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Specifications and Drawings showing the proposed Temporary Works to the Project
Manager. The Project Manager shall approve such Specification and Drawing if they
comply with the Specifications and Drawings in the Statement of Requirements.
23.4 The Project Manager’s approval shall not alter the Contractor’s responsibility for design
of the Temporary Works.
23.5 The Contractor shall obtain approval of third parties to the design of the Temporary
Works, where required.

24. Safety and Safety Procedures

24.1 The Contractor shall be responsible for the safety of all activities on the Site.
24.2 The Contractor shall ensure the safety procedures:
(a) comply with all applicable safety regulations,
(b) take care for the safety of all persons entitled to be on the Site,
(c) use reasonable efforts to keep the Site and Works clear of unnecessary
obstruction so as to avoid danger to these persons,
(d) provide fencing, lighting, guarding and watching of the Works until completion
and taking over, and
(e) provide any Temporary Works (including roadways, footways, guards and
fences) which may be necessary, because of the execution of the Works, for the
use and protection of the public and of owners and occupiers of adjacent land.

25. Discoveries
25.1 Anything of historical or other interest or of significant value unexpectedly discovered
on the site shall be the property of the PDE. The Contractor shall notify the Project
Manager of such discoveries and carry out the Project Manager’s instructions for dealing
with them.

26. Possession of the Site

26.1 The PDE shall give possession of all parts of the site to the Contractor. If possession of a
part is not given by the date stated in the SCC, the PDE will be deemed to have delayed
the start of the relevant activities, and this will be a Compensation Event.

27. Access to the Site

27.1 The Contractor shall allow the Project Manager and any person authorised by the Project
Manager access to the Site and to any place where work in connection with the Contract
is being carried out or is intended to be carried out.

28. Contractor’s Equipment

28.1 The Contractor shall be responsible for all Contractor’s Equipment. When brought on to
the Site, Contractor’s Equipment shall be deemed to be exclusively intended for the
execution of the Works. The Contractor shall not remove from the Site any major items
of Contractor’s Equipment without the consent of the Project Manager. However,
consent shall not be required for vehicles transporting Goods or Contractor’s Personnel
off Site.

29. Protection of the Environment

29.1 The Contractor shall take all reasonable steps to protect the environment (both on and off

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the Site) and to limit damage and nuisance to people and property resulting from
pollution, noise and other results of his operations. The Contractor shall ensure that
emissions, surface discharges and effluent from the Contractor’s activities shall not
exceed the values stated in the Specification or prescribed by applicable Laws.

30. Prohibition of Harmful Child Labour

30.1 The Contractor shall not employ children in a manner that is economically exploitative,
or is likely to be hazardous, or to interfere with, the child’s education, or to be harmful
to the child’s health or physical, mental, spiritual, moral, or social development.
Children below the age of 18 years shall not be employed in dangerous work.

31. Health and Safety

31.1 The Contractor shall at all times take all reasonable precautions to maintain the health
and safety of the Contractor’s Personnel. The Contractor shall appoint an accident
prevention officer at the Site, responsible for maintaining safety and protection against
accidents. The Contractor shall maintain records and make reports concerning health,
safety and welfare of persons, and damage to property, as the Project Manager may
reasonably require.
31.2 The Contractor shall conduct HIV-AIDS awareness programmes to reduce the risk of the
transfer of the HIV virus between and among the Contractor’s Personnel and the local
community, to promote early diagnosis and to assist affected individuals. The Contractor
shall throughout the contract: (i) conduct Information, Education and Communication
(IEC) campaigns, at least every six month, addressed to all the Site staff and labourers
(including all the Contractor's employees, all Subcontractors and any other Contractor’s
or PDE’s personnel employees, and all truck drivers and crew making deliveries to Site
for construction activities) and to the immediate local communities, concerning the
risks, dangers and impact, and appropriate avoidance behaviour with respect to Sexually
Transmitted Diseases (STD) - or Sexually Transmitted Infections (STI) in general and
HIV/AIDS.

32. Instructions, Inspection and Audits

32.1 The Contractor shall carry out all instructions of the Project Manager which comply with
the applicable laws where the Site is located.
32.2 The Contractor shall at all reasonable times allow personnel from PDE to have full
access to all parts of the Site and to all places from which natural Materials are being
obtained, and during production, manufacture and construction (at the Site and
elsewhere), to examine, inspect, measure and test the materials and workmanship, and to
check the progress of manufacture of Plant and production and manufacture of
Materials.
32.3 The Contractor shall permit the Government of Uganda personnel to inspect the
Contractor’s accounts and records relating to the performance of the Contract and to
have them audited by auditors appointed by the Government, if so required by the
Government.

33. Disputes
33.1 If the Contractor believes that a decision taken by the Project Manager was either
outside the authority given to the Project Manager by the Contract or that the decision
was wrongly taken, the decision shall be referred to any Adjudicator appointed under the

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contract within 14 days of the notification of the Project Manager’s decision.

34. Procedure for Settling Disputes

34.1 Unless otherwise specified in the SCC, the procedure for disputes shall be as specified in
GCC 34.2 to 34.4.
34.2 Any Adjudicator appointed under the contract shall give a decision in writing within 28
days of receipt of a notification of a dispute, providing that he is in receipt of all the
information required to give a decision.
34.3 Any Adjudicator appointed under the contract shall be paid by the hour at the rate
specified in the SCC, together with reimbursable expenses of the types specified in the
SCC, and the cost shall be divided equally between the PDE and the Contractor,
whatever decision is reached by the Adjudicator. Either party may refer a decision of the
Adjudicator to an Arbitrator within 28 days of the Adjudicator’s written decision. If
neither party refers the dispute to arbitration within the above 28 days, the Adjudicator’s
decision will be final and binding.
34.4 Any arbitration shall be conducted in accordance with the Arbitration and Conciliation
Act 2000 or such other formal mechanism specified in the SCC, and in the place shown
in the SCC.

35. Replacement of Adjudicator

35.1 Should the Adjudicator resign or die, or should the PDE and the Contractor agree that
the Adjudicator is not functioning in accordance with the provisions of the Contract, a
new Adjudicator will be jointly appointed by the PDE and the Contractor. In case of
disagreement between the PDE and the Contractor, within 30 days, the Adjudicator shall
be designated by the Appointing Authority designated in the SCC at the request of either
party, within 14 days of receipt of such request.
B. Time Control

36. Program
36.1 Within the time stated in the SCC, the Contractor shall submit to the Project Manager
for approval a Program showing the general methods, arrangements, order, and timing
for all the activities in the Works.
36.2 An update of the Program shall be a program showing the actual progress achieved on
each activity and the effect of the progress achieved on the timing of the remaining
work, including any changes to the sequence of the activities.
36.3 The Contractor shall submit to the Project Manager for approval an updated Program at
intervals no longer than the period stated in the SCC. If the Contractor does not submit
an updated Program within this period, the Project Manager may withhold the amount
stated in the SCC from the next payment certificate and continue to withhold this
amount until the next payment after the date on which the overdue Program has been
submitted.
36.4 The Project Manager’s approval of the Program shall not alter the Contractor’s
obligations. The Contractor may revise the Program and submit it to the Project
Manager again at any time. A revised Program shall show the effect of Variations and
Compensation Events.

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37. Extension of the Intended Completion Date

37.1 The Project Manager shall extend the Intended Completion Date if a Compensation
Event occurs or a Variation is issued which makes it impossible for Completion to be
achieved by the Intended Completion Date without the Contractor taking steps to
accelerate the remaining work, which would cause the Contractor to incur additional
cost.
37.2 The Project Manager shall decide whether and by how much to extend the Intended
Completion Date within 21 days of the Contractor asking the Project Manager for a
decision upon the effect of a Compensation Event or Variation and submitting full
supporting information. If the Contractor has failed to give early warning of a delay or
has failed to cooperate in dealing with a delay, the delay by this failure shall not be
considered in assessing the new Intended Completion Date.

38. Acceleration
38.1 When the PDE wants the Contractor to finish before the Intended Completion Date, the
Project Manager will obtain priced proposals for achieving the necessary acceleration
from the Contractor. If the PDE accepts these proposals, the Intended Completion Date
will be adjusted accordingly and confirmed by both the PDE and the Contractor.
38.2 If the Contractor’s priced proposals for an acceleration are accepted by the PDE, they
are incorporated in the Contract Price and treated as a Variation.

39. Delays Ordered by the Project Manager

39.1 The Project Manager may instruct the Contractor to delay the start or progress of any
activity within the Works.

40. Management Meetings

40.1 Either the Project Manager or the Contractor may require the other to attend a
management meeting. The business of a management meeting shall be to review the
plans for remaining work and to deal with matters raised in accordance with the early
warning procedure detailed in GCC 41.
40.2 The Project Manager shall record the business of management meetings and provide
copies of the record to those attending the meeting and to the PDE. The responsibility of
the parties for actions to be taken shall be decided by the Project Manager either at the
management meeting or after the management meeting and stated in writing to all who
attended the meeting.

41. Early Warning

41.1 The Contractor shall warn the Project Manager at the earliest opportunity of specific
likely future events or circumstances that may adversely affect the quality of the work,
increase the Contract Price or delay the execution of the Works. The Project Manager
may require the Contractor to provide an estimate of the expected effect of the future
event or circumstance on the Contract Price and Completion Date. The estimate shall be
provided by the Contractor as soon as reasonably possible.
41.2 The Contractor shall cooperate with the Project Manager in making and considering
proposals for how the effect of such an event or circumstance can be avoided or reduced
by anyone involved in the work and in carrying out any resulting instruction of the

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Project Manager.
C. Quality Control

42. Identifying Defects

42.1 The Project Manager shall check the Contractor’s work and notify the Contractor of any
Defects that are found. Such checking shall not affect the Contractor’s responsibilities.
The Project Manager may instruct the Contractor to search for a Defect and to uncover
and test any work that the Project Manager considers may have a Defect.

43. Tests
43.1 If the Project Manager instructs the Contractor to carry out a test not specified in the
Specification to check whether any work has a Defect and the test shows that it does, the
Contractor shall pay for the test and any samples. If there is no Defect, the test shall be a
Compensation Event.

44. Correction of Defects

44.1 The Project Manager shall give notice to the Contractor of any Defects before the end of
the Defects Liability Period, specified in the SCC. The Defects Liability Period shall be
extended for as long as Defects remain to be corrected.
44.2 Every time notice of a Defect is given, the Contractor shall correct the notified Defect
within the length of time specified by the Project Manager’s notice.

45. Uncorrected Defects

45.1 If the Contractor has not corrected a Defect within the time specified in the Project
Manager’s notice, the Project Manager will assess the cost of having the Defect
corrected, and the Contractor will pay this amount.

D. Cost Control

46. Bill of Quantities or Activity Schedule

Option 1: Admeasurement Contracts - Bill of Quantities
46.1 The Bill of Quantities shall contain items for the construction, installation, testing, and
commissioning work to be done by the Contractor.
46.2 The Bill of Quantities is used to calculate the Contract Price. The Contractor is paid for
the quantity of the work done at the rate in the Bill of Quantities for each item.
Option 2: Lump Sum Contracts – Activity Schedule
46.3 The Contractor shall provide updated Activity Schedules within 14 days of being
instructed to by the Project Manager. The activities on the Activity Schedule shall be
coordinated with the activities on the Program.
46.4 The Contractor shall show delivery of Materials to the Site separately on the Activity
Schedule if payment for Materials on Site shall be made separately.

47. Changes in the Bill of Quantities or Activity Schedule

Option 1: Admeasurement Contracts – Changes in the Bill of Quantities

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47.1 If the final quantity of the work done differs from the quantity in the Bill of Quantities
for the particular item by more than 25 percent, provided the change exceeds one
percent (1%) of the Initial Contract Price, the Project Manager shall adjust the rate to
allow for the change.
47.2 The Project Manager shall not adjust rates from changes in quantities if thereby the
Initial Contract Price is exceeded by more than 15 percent, except with the prior
approval of the PDE.
47.3 If requested by the Project Manager, the Contractor shall provide the Project Manager
with a detailed cost breakdown of any rate in the Bill of Quantities.
Option 2: Lump Sum Contracts – Changes in the Activity Schedule
47.4 The Activity Schedule shall be amended by the Contractor to accommodate changes of
Program or method of working made at the Contractor’s own discretion. Prices in the
Activity Schedule shall not be altered when the Contractor makes such changes to the
Activity Schedule.

48. Variations
Option 1: Admeasurement Contracts – Variations
48.1 All Variations shall be included in updated Programs produced by the Contractor.
Option 2: Lump Sum Contracts – Variations
48.2 All Variations shall be included in updated Programs and Activity Schedules produced
by the Contractor.

49. Payments for Variations

Option 1: Admeasurement Contracts – Payment for Variations
49.1 The Contractor shall provide the Project Manager with a quotation for carrying out the
Variation when requested to do so by the Project Manager. The Project Manager shall
assess the quotation, which shall be given within seven days of the request or within any
longer period stated by the Project Manager and before the Variation is ordered.
49.2 If the work in the Variation corresponds with an item description in the Bill of
Quantities and if, in the opinion of the Project Manager, the quantity of work above the
limit stated in Sub-Clause 46.1 or the timing of its execution do not cause the cost per
unit of quantity to change, the rate in the Bill of Quantities shall be used to calculate the
value of the Variation. If the cost per unit of quantity changes, or if the nature or timing
of the work in the Variation does not correspond with items in the Bill of Quantities, the
quotation by the Contractor shall be in the form of new rates for the relevant items of
work.
49.3 If the Contractor’s quotation is unreasonable, the Project Manager may order the
Variation and make a change to the Contract Price, which shall be based on the Project
Manager’s own forecast of the effects of the Variation on the Contractor’s costs.
49.4 If the Project Manager decides that the urgency of varying the work would prevent a
quotation being given and considered without delaying the work, no quotation shall be
given and the Variation shall be treated as a Compensation Event.
49.5 The Contractor shall not be entitled to additional payment for costs that could have been
avoided by giving early warning.
Option 2: Lump Sum Contracts – Payment for Variations
49.6 The Contractor shall provide the Project Manager with a quotation for carrying out the

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Variation when requested to do so by the Project Manager. The Project Manager shall
assess the quotation, which shall be given within seven days of the request or within any
longer period stated by the Project Manager and before the Variation is ordered.
49.7 If the Contractor’s quotation is unreasonable, the Project Manager may order the
Variation and make a change to the Contract Price, which shall be based on the Project
Manager’s own forecast of the effects of the Variation on the Contractor’s costs.
49.8 If the Project Manager decides that the urgency of varying the work would prevent a
quotation being given and considered without delaying the work, no quotation shall be
given and the Variation shall be treated as a Compensation Event.
49.9 The Contractor shall not be entitled to additional payment for costs that could have been
avoided by giving early warning.

50. Payment Certificates

50.1 The Contractor shall submit to the Project Manager statements of the estimated value of
the work executed less the cumulative amount certified previously. Unless otherwise
specified in the SCC, such statements shall be submitted monthly.
50.2 The Project Manager shall check the Contractor’s statement and certify the amount to be
paid to the Contractor.
50.3 The value of work executed shall be determined by the Project Manager.
50.4 The value of work executed shall comprise the value of:
(a) The quantities of the items in the Bill of Quantities completed for Admeasurement
Contracts; or
(b) Completed (fully or partially) activities in the Activity Schedule for Lump Sum
contract activities.
50.5 The value of work executed shall include the valuation of Variations and Compensation
Events.
50.6 The Project Manager may exclude any item certified in a previous certificate or reduce
the proportion of any item previously certified in any certificate in the light of later
information.

51. Issue of Interim Payment Certificates

51.1 No amount will be certified or paid until the PDE has received and approved the
Performance Security and, if applicable, the ES Performance Security. Thereafter, the
Project Manager shall, within 28 days after receiving a Statement and supporting
documents, deliver to the PDE and to the Contractor an Interim Payment Certificate
which shall state the amount which the Project Manager fairly determines to be due,
with all supporting particulars for any reduction or withholding made by the Project
Manager on the Statement if any.
An Interim Payment Certificate shall be withheld for any of the following reasons:
a) if anything supplied or work done by the Contractor is not in accordance with
the Contract, the cost of rectification or replacement may be withheld until
rectification or replacement has been completed;
b) if the Contractor was or is failing to perform any work in accordance with the
Contract, and had been so notified by the Project Manager, the value of this
work may be withheld until the it has been performed and/or
c) if the Contractor was, or is, failing to perform any ESHS obligations or work

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under the Contract, the value of this work or obligation, as determined by the
Engineer, may be withheld until the work or obligation has been performed,
and/or the cost of rectification or replacement, as determined by the Engineer,
may be withheld until rectification or replacement has been completed. Failure
to perform includes, but is not limited to the following:
(i) Failure to comply with any ESHS obligations or work described in the
Statements of Requirements which may include: working outside site
boundaries, excessive dust, failure to keep public roads in a safe usable
condition, damage to offsite vegetation, pollution of water courses from
oils or sedimentation, contamination of land e.g. from oils, human waste,
damage to archeology or cultural heritage features, air pollution as a result
of unauthorized and/or inefficient combustion;
(ii) Failure to regularly review Environmental and Social Management Plan
and/or update it in a timely manner to address emerging ESHS issues, or
anticipated risks or impacts;
(iii) Failure to implement the Environmental and Social Management Plan e.g.
failure to provide required training or sensitization;
(iv) Failing to have appropriate consents/permits prior to undertaking Works or
related activities;
(v) Failure to submit the relevant reports of the Environmental and Social
Management Plan, or failure to submit such reports in a timely manner;
(vi) Failure to implement remediation as instructed by the Engineer within the
specified timeframe (e.g. remediation addressing non-compliance/s).
51.2 If an amount certified is increased in a later certificate or as a result of an award by the
Adjudicator or an Arbitrator, the Contractor shall be paid interest upon the delayed
payment as set out in this clause. Interest shall be calculated from the date upon which
the increased amount would have been certified in the absence of dispute.
51.3 Unless otherwise stated, all payments and deductions will be paid or charged in the
proportions of currencies comprising the Contract Price.
51.4 Items of the Works for which no rate or price has been entered in will not be paid for by
the PDE and shall be deemed covered by other rates and prices in the Contract.

52. Payments
52.1 Payments shall be adjusted for deductions for advance payments and retention. The
Procuring and Disposing Entity shall pay the Contractor the amounts certified by the
Project Manager within 30 days of the date of each certificate. If the PDE makes a late
payment, the Contractor shall be paid interest on the late payment in the next payment.
Interest shall be calculated from the date by which the payment should have been made
up to the date when the late payment is made at the prevailing rate of interest for
commercial borrowing for each of the currencies in which payments are made.

53. Compensation Events

53.1 The following shall be Compensation Events:
(a) The PDE does not give access to a part of the Site by the Site Possession Date stated
in the SCC.
(b) The PDE modifies the Schedule of Other Contractors in a way that affects the work
of the Contractor under the Contract.
(c) The Project Manager orders a delay or does not issue Drawings, Specifications, or

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instructions required for execution of the Works on time.

(d) The Project Manager instructs the Contractor to uncover or to carry out additional
tests upon work, which is then found to have no Defects.
(e) The Project Manager unreasonably does not approve a subcontract to be let.
(f) Ground conditions are substantially more adverse than could reasonably have been
assumed before signing of the Agreement from the information issued to bidders
(including the Site Investigation Reports), from information available publicly and
from a visual inspection of the Site.
(g) The Project Manager gives an instruction for dealing with an unforeseen condition,
caused by the PDE, or additional work required for safety or other reasons.
(h) Other contractors, public authorities, utilities, or the PDE does not work within the
dates and other constraints stated in the Contract, and they cause delay or extra cost
to the Contractor.
(i) The advance payment is delayed.
(j) The effects on the Contractor of any of the PDE’s Risks.
(k) The Project Manager unreasonably delays issuing a Certificate of Completion.
(l) Other Compensation Events described in the SCC or determined by the Project
Manager shall apply.
53.2 If a Compensation Event would cause additional cost or would prevent the work being
completed before the Intended Completion Date, the Contract Price shall be increased
and/or the Intended Completion Date shall be extended. The Project Manager shall
decide whether and by how much the Contract Price shall be increased and whether and
by how much the Intended Completion Date shall be extended.
53.3 As soon as information demonstrating the effect of each Compensation Event upon the
Contractor’s forecast cost has been provided by the Contractor, it shall be assessed by
the Project Manager, and the Contract Price shall be adjusted accordingly. If the
Contractor’s forecast is deemed unreasonable, the Project Manager shall adjust the
Contract Price based on the Project Manager’s own forecast. The Project Manager will
assume that the Contractor will react competently and promptly to the event.
53.4 The Contractor shall not be entitled to compensation to the extent that the Procuring and
Disposing Entity’s interests are adversely affected by the Contractor’s not having given
early warning or not having cooperated with the Project Manager.

54. Tax
54.1 The Project Manager shall adjust the Contract Price if taxes, duties, and other levies are
changed between the date 28 days before the submission of bids for the Contract and the
date of the last Completion certificate. The adjustment shall be the change in the amount
of tax payable by the Contractor, provided such changes are not already reflected in the
Contract Price or are a result of Clause 56.

55. Currencies
55.1 Where payments are made in currencies other than Uganda Shillings, the exchange rates
used for calculating the amounts to be paid shall be the exchange rates stated in the
Contractor’s Bid.

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56. Price Adjustment

56.1 Prices payable to the Provider, as stated in the Contract, shall be subject to adjustment
during performance of the Contract to reflect changes in the cost of labour and
material components in accordance with the formula:
 L1 M1 
P  P0 a  b  c  P0
 
L0 M0 
in which:
ΔP = adjustment amount payable to the Provider.
P0 = Contract Price (base price).
a = fixed element representing profits and overheads included in the Contract
Price and generally in the range of five (5) to fifteen (15) percent.
b = estimated percentage of labour component in the Contract Price.
c = estimated percentage of material component in the Contract Price.
L0, L1 = labour indices applicable to the appropriate industry in the country of origin
on the base date and date for adjustment, respectively.
M0, M1 = material indices for the major raw material on the base date and date for
adjustment, respectively, in the country of origin.
The coefficients a, b, and c shall be specified by the procuring and disposing entity in
the bidding documents. The sum of the three coefficients should be one (1) in every
application of the formula.

The Bidder shall indicate the source of the indices and the base date indices in his bid.
Base date = thirty (30) days prior to the deadline for submission of the bids.
Date of adjustment = weeks prior to date of shipment (representing the mid-
point of the period of manufacture).
The above price adjustment formula shall be invoked by either party subject to the
following further conditions:
(a) Price adjustment will be applied only if the resulting increase or decrease is
more than percent of the Contract Price.
[Two (2) percent would be an acceptable percentage.]

(b) No price adjustment shall be allowed beyond the original delivery dates unless
specifically stated in the extension letter. As a rule, no price adjustment shall be
allowed for periods of delay for which the Provider is entirely responsible. The PDE
will however be entitled to any decrease in the prices of the supplies and services
subject to adjustment.
(c) The total adjustment under this clause shall be subject to a ceiling of plus or minus
percent of the Contract Price.
[Ten (10) percent would be an acceptable percentage.]

(d) If the currency in which the Contract Price P 0 is expressed is different from the
currency of origin of the labour and material indices, a correction factor will be
applied to avoid incorrect adjustments of the Contract Price. The correction
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factor

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 shall correspond to the ratio of exchange rates between the two currencies on the
base date and the date for adjustment as defined above.
56.2 No price adjustment shall be payable on the portion of the Contract Price paid to
the Provider as advance payment.
56.3 If the value of the index is changed after it has been used in a calculation, the calculation
shall be corrected and an adjustment made in the next payment certificate. The index
value shall be deemed to take account of all changes in cost due to fluctuations in costs.

57. Retention
57.1 If so stated in the SCC, the PDE shall retain from each payment due to the Contractor
the proportion stated in the SCC until Completion of the whole of the Works.
57.2 On completion of the whole of the Works, half the total amount retained shall be repaid
to the Contractor and half when the Defects Liability Period has passed and the Project
Manager has certified that all Defects notified by the Project Manager to the Contractor
before the end of this period have been corrected.
57.3 On completion of the whole Works, the Contractor may substitute retention money with
an “on demand” Bank guarantee.

58. Liquidated Damages

58.1 If so stated in the SCC, the Contractor shall pay liquidated damages to the PDE at the
rate per day stated in the SCC for each day that the Completion Date is later than the
Intended Completion Date. The total amount of liquidated damages shall not exceed the
amount defined in the SCC. PDE may deduct liquidated damages from payments due to
the Contractor. Payment of liquidated damages shall not affect the Contractor’s
liabilities.
58.2 If the Intended Completion Date is extended after liquidated damages have been paid,
the Project Manager shall correct any overpayment of liquidated damages by the
Contractor by adjusting the next payment certificate. The Contractor shall be paid
interest on the overpayment, calculated from the date of payment to the date of
repayment, at the rates specified in Sub-Clause 52.1.

59. Bonus
59.1 If so stated in the SCC, the Contractor shall be paid a Bonus calculated at the rate per
working day stated in the SCC for each day (less any days for which the Contractor is
paid for acceleration) that the Completion is earlier than the Intended Completion Date.
The Completion Date shall be certified in accordance with GCC 64.1.

60. Advance Payment

60.1 If so stated in the SCC, the PDE shall make advance payment to the Contractor of the
amounts stated in the SCC within the period stated in the SCC, against provision by the
Contractor of an on demand Bank Security in a form and by a bank acceptable to the
PDE in amounts and currencies equal to the advance payment. The Guarantee shall
remain effective until the advance payment has been repaid, but the amount of the
Guarantee shall be progressively reduced by the amounts repaid by the Contractor.
Interest will not be charged on the advance payment.
60.2 The Contractor is to use the advance payment only to pay for Equipment, Plant,
 Materials, and mobilisation expenses required specifically for execution of the Contract.
The Contractor shall demonstrate that advance payment has been used in this way by
supplying copies of invoices or other documents to the Project Manager.
60.3 The advance payment shall be repaid by deducting proportionate amounts from
payments otherwise due to the Contractor, as specified in the SCC, following the
schedule of completed percentages of the Works on a payment basis. No account shall
be taken of the advance payment or its repayment in assessing valuations of work done,
Variations, price adjustments, Compensation Events, Bonuses, or Liquidated Damages.

61. Performance Security and ES Performance Security

61.1 If so stated in the SCC, the Contractor shall, within twenty-one (21) calendar days of
signing the contract, provide a Performance Security and, if applicable, an
Environmental and Social, (ES) Performance Security for compliance with the
Contractor’s ESHS obligations for the due performance of the Contract. The
Performance Security and the ES Performance Security shall be in the amount specified
in the SCC and shall be denominated in the currency in which the Contract Price is
payable.
61.2 The proceeds of the Performance Security and, if applicable, the ES Performance
Security shall be payable to the PDE as compensation for any loss resulting from the
Contractor’s failure to complete its obligations under the Contract.
61.3 The Performance Security and, if applicable, the ES Performance Security shall be in the
form stipulated in Section 9 of the bidding document.
61.4 The Performance Security and, if applicable, the ES Performance Security to the PDE
shall be valid until a date 28 days from intended completion date stated in the SCC.
62. Day works
62.1 If applicable, the Day works rates in the Contractor’s Bid shall be used for small
additional amounts of work only when the Project Manager has given written
instructions in advance for additional work to be paid for in that way.
62.2 All work to be paid for as Day works shall be recorded by the Contractor on forms
approved by the Project Manager. Each completed form shall be verified and signed by
the Project Manager within two days of the work being done.
62.3 The Contractor shall be paid for Day works subject to obtaining signed Day works
forms.

63. Cost of Repairs

63.1 Loss or damage to the Works or Materials to be incorporated in the Works between the
Start Date and the end of the Defects Correction periods shall be remedied by the
Contractor at the Contractor’s cost if the loss or damage arises from the Contractor’s
acts or omissions.

E. Finishing the Contract

64. Completion
64.1 The Contractor shall request the Project Manager to issue a certificate of Completion of
the Works, and the Project Manager will do so upon deciding that the work is
completed.
65. Taking Over
65.1 The PDE shall take over the Site and the Works within seven days of the Project
Manager’s issuing a certificate of Completion.

66. Final Account

66.1 The Contractor shall supply the Project Manager with a detailed account of the total
amount that the Contractor considers payable under the Contract before the end of the
Defects Liability Period. The Project Manager shall issue a Defects Liability Certificate
and certify any final payment that is due to the Contractor within 56 days of receiving
the Contractor’s account if it is correct and complete. If it is not, the Project Manager
shall issue within 56 days a schedule that states the scope of the corrections or additions
that are necessary. If the Final Account is still unsatisfactory after it has been
resubmitted, the Project Manager shall decide on the amount payable to the Contractor
and issue a payment certificate.

67. Operating and Maintenance Manuals

67.1 If “as built” Drawings and/or operating and maintenance manuals are required, the
Contractor shall supply them by the dates stated in the SCC.
67.2 If the Contractor does not supply the Drawings and/or manuals by the dates stated in the
SCC, or they do not receive the Project Manager’s approval, the Project Manager shall
withhold the amount stated in the SCC from payments due to the Contractor.

68. Termination
68.1 The PDE or the Contractor may terminate the Contract if the other party causes a
fundamental breach of the Contract.
68.2 Fundamental breaches of Contract shall include, but shall not be limited to, the
following:
(a) the Contractor stops work for 28 days when no stoppage of work is shown on the
current Program and the stoppage has not been authorised by the Project Manager;
(b) the Project Manager instructs the Contractor to delay the progress of the Works, and
the instruction is not withdrawn within 28 days;
(c) the PDE or the Contractor is made bankrupt or goes into liquidation other than for a
reconstruction or amalgamation;
(d) a payment certified by the Project Manager is not paid by the PDE to the Contractor
within 84 days of the date of the Project Manager’s certificate;
(e) the Project Manager gives Notice that failure to correct a particular Defect is a
fundamental breach of Contract and the Contractor fails to correct it within a
reasonable period of time determined by the Project Manager;
(f) the Contractor does not maintain a Security, which is required; and
(g) the rate of progress of the Works at any time during the period of the Contract is
such that the completion of the Works will, as measured against the current
Program, be delayed by the number of days for which the maximum amount of
liquidated damages can be imposed.
(h) if the Contractor in the judgement of the PDE has engaged in corrupt, fraudulent,
 collusive or coercive practices in competing for or in the executing the contract.
For the purposes of this paragraph:
(a) “corrupt practice” means the offering, giving, receiving, or soliciting, directly or
indirectly, of anything of value, to influence the action of a public official in the
procurement process or in contract execution; and
(b) “fraudulent practice” is any act or omission, including a misrepresentation, that
knowingly or recklessly misleads, or attempts to mislead, a party to obtain a
financial or other benefit or to avoid an obligation;
(c) “collusive practice” is an arrangement between two or more parties designed to
achieve an improper purpose, including to influence improperly the actions of
another party;
(d) “coercive practice” is impairing or harming, or threatening to impair or harm,
directly or indirectly, any party or the property of the party to influence improperly
the actions of a party;
68.3 When either party to the Contract gives notice of a breach of Contract to the Project
Manager for a cause other than those listed under Sub-Clause 68.2 above, the Project
Manager shall decide whether the breach is fundamental or not.
68.4 Notwithstanding the above, the PDE may terminate the Contract for convenience.
68.5 If the Contract is terminated, the Contractor shall stop work immediately, make the Site
safe and secure, and leave the Site as soon as reasonably possible.

69. Payment upon Termination

69.1 If the Contract is terminated because of a fundamental breach of Contract by the
Contractor, the Project Manager shall issue a certificate for the value of the work done
and Materials ordered less advance payments received up to the date of the issue of the
certificate and less the percentage to apply to the value of the work not completed, as
indicated in the SCC. Additional Liquidated Damages shall not apply. If the total
amount due to the PDE exceeds any payment due to the Contractor, the difference shall
be a debt payable to the PDE.
69.2 If the Contract is terminated for the PDE’s convenience or because of a fundamental
breach of Contract by PDE, the Project Manager shall issue a certificate for the value of
the work done, Materials ordered, the reasonable cost of removal of Equipment,
repatriation of the Contractor’s personnel employed solely on the Works, and the
Contractor’s costs of protecting and securing the Works, and less advance payments
received up to the date of the certificate.

70. Release from Performance

70.1 If the Contract is frustrated by the outbreak of war or by any other event entirely outside
the control of either the PDE or the Contractor, the Project Manager shall certify that the
Contract has been frustrated. The Contractor shall make the Site safe and stop work as
quickly as possible after receiving this certificate and shall be paid for all work carried
out before receiving it and for any work carried out afterwards to which a commitment
was made.
Part 3: Section 8 Special Conditions of Contract

Section 8: Special Conditions of Contract

The following Special Conditions of Contract (SCC) shall supplement the General Conditions of
Contract (GCC). Whenever there is a conflict, the provisions herein shall prevail over those in
the GCC.
GCC Clause
Special Conditions
Reference
Procurement Reference No:
GCC 1.1(cc) The Site is located at and is defined in Drawings
Nos:
GCC 1.1(ee) The Start Date shall be: _
GCC 1.1(z) The Project Manager is:
GCC 2.1 The following documents also form part of the Contract:

GCC 3.7 This Contract is a Contract.

GCC 3.8 Sectional completion permitted.
GCC 7.1 For notices, the PDE’s address shall be:
Attention:
Street Address:
Floor/Room number:
Town/City:
P. O. Box:
Country:
Telephone:
Electronic mail address:

For notices, the Contractor’s address shall be:

Attention:
Street Address:
Floor/Room number:
Town/City:
P. O. Box:
Country:
Telephone:
Electronic mail address:

GCC 9.1 The Works consist of:

GCC 10.2 The PDE’s specific approval is required for:

GCC 12.1 GCC Clause 12.1 on sub-contracting is modified as follows:

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GCC Clause
Special Conditions
Reference

GCC 12.2 The following conditions shall apply to subcontracting:

GCC 13.1 The Schedule of Other Contractors part of the

Contract.
GCC 14.1 The Schedule of Key Personnel part of the Contract.
GCC 18.1 The minimum insurance covers shall be:
(a) The minimum cover for insurance of the Works, Plant and
Materials is:
(b) The maximum deductible for insurance of the Works, Plant and
Materials is:
(c) The minimum cover for insurance of Equipment is:

(d) The maximum deductible for insurance of Equipment is:

(e) The minimum cover for insurance of property is:

(f) The maximum deductible for insurance of property is:

(g) The minimum cover for personal injury or death insurance is:

(h) The maximum deductible for personal injury or death insurance

is
GCC 19.1 Site Investigation Report(s) part of the contract.
GCC 22.1 The Intended Completion Date for the whole of the Works shall be:

GCC 26.1 The Site Possession Date shall be:

GCC 34.1 The procedure for settling disputes shall be (If not
available indicate Not Applicable)
GCC 34.3 Fees and types of reimbursable expenses to be paid to the Adjudicator:
GCC 34.4 The arbitration shall be conducted in accordance with the Arbitration
and Conciliation Act 2000 of Uganda.
Arbitration shall take place at:

GCC 35.1 The Appointing Authority for the Adjudicator is:

GCC 36.1 The Contractor shall submit the Program for the Works within

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Part 3: Section 8 Special Conditions of Contract

GCC Clause
Special Conditions
Reference
days/weeks of contract signature.
GCC 36.3 The period between Program updates is days.
The amount to be withheld for late submission of an updated Program is:
GCC 44.1 The Defects Liability Period is days.
GCC 50.1 Statements of estimated value of works executed shall be on
a basis.
GCC 53.1(l) The following events shall also be Compensation Events:
GCC 56.1 The Contract subject to price adjustment in
accordance with Clause 56 of the General Conditions of Contract, and
the following information regarding coefficients
apply.
The coefficients for adjustment of prices are:
(a) For currency:
(i) percent nonadjustable element
(coefficient A).
(ii) percent adjustable element
(coefficient B).
(b) For currency:
(i) percent nonadjustable element
(coefficient A).
(ii) percent adjustable element (coefficient B).
GCC 56.1 The Index I for local currency will be:

The Index I for the specified international currency will be:

The Index I for currencies other than the local currency and the specified
international currency will be:

GCC 57.1 The proportion of payments retained is [insert

percent] percent.
GCC 58.1 The liquidated
damages for the whole of the Works are
per day.
The maximum amount of liquidated damages for the whole of the
Works is Percent of the final Contract Price.
GCC 59.1 The Bonus for the whole of the Works is per day.
The maximum amount of Bonus for the whole of the Works is
Percent of the final Contract Price.
GCC 60.1 The Advance Payment will be equivalent to and will
be paid in the same currencies and proportions as the Contract Price.
It will be paid to the Contractor within .

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 GCC Clause
Special Conditions
Reference
GCC 60.3 The Advance Payment will be repaid by deducting equal amounts from
payments due to the Contractor each month during the period starting
months after the Start Date and ending
months after the Start Date.
GCC 61.1 A Performance Security (Shall/Shall not) be
required.
A Performance Security shall be for (Insert
percentage) of the Contract Price.
An ES Performance Security _ (Shall/Shall not) be
required.
The ES Performance Security shall be for
(Insert percentage) of the Contract
Price:
GCC 61.3 The standard form of Performance Security acceptable to the PDE shall
be an Unconditional Bank Guarantee in the format presented in Section
9 of the Bidding Documents.
GCC 67.1 The date by which “as built” drawings are required is:
The date by which operating and maintenance manuals are required is:
GCC 67.2 The amount to be withheld for failing to produce “as built” drawings
and/or operating and maintenance manuals by the date required is
Uganda Shillings.
GCC 69.1 The percentage to apply to the value of the work not completed,
representing the PDE’s additional cost for completing the Works, is:
Part 3: Section 8 Special Conditions of Contract

PREPARED BY
CORPORATE AND COMMERCIAL PRACTICE TEAM 2023

PREPARED BY
CORPORATE AND COMMERCIAL PRACTICE TEAM 2023