'(Being an appeal from the Judgment and Decree of Hon. R. L. Musiega (Mr)(S.R.M) dated 5th June 2023 at Magistrates Court at Nairobi, Milimani Commercial Courts)
1. Nanchang Investment Company Ltd, the respondent herein, engaged the appellant, Akshar Team Security Ltd to provide security services at the respondent’s hotel premises sometime on 18th March 2014. The appellant pleaded in its plaint dated 2nd July 2018 that the relationship had begun earlier in 2012. The appellant pleaded that clause (f) of the contract stipulated the “service” charge and stated when the monies owed for service were due and the consequences for delayed remittance as 5% surcharge.
2. The appellant claimed that in breach of the contract, the respondent failed to settle various invoices for services rendered, particularized in the plaint as follows:
a. Invoice No. 22673 for KShs 81,200/= dated 1/9/2014.
b. Invoice No. 22891 for KShs 81,200/= dated 1/10/2014.
c. Invoice No. 23123 for KShs 81,200/= dated 1/11/2014.
d. failure to pay surcharge fees as a result of the breach.
3. The appellant sued the respondent for payment of the unpaid invoices, which according to the plaint, amounted to KShs 236,490/= together with the surcharge amounting to KShs 1,511,641.28 for the period 1/12/2014 to 1/4/2018 together with interest at court rates and costs of the suit.
4. A simple arithmetic of the sums allegedly due for the three months’ invoices would be KShs 81,200 x 3 = KShs 243,600/=. I note that in a letter dated 8th July 2016, the appellant offered to compensate the respondent KShs 10,000/= ex-gratia for loss of MDF boards at the respondent’s premises on 6th November 2014, and offset the same from the outstanding amount, thereby reducing it to KShs 233,600/=. This takes it closer to the amount of KShs 236,490/= claimed in the suit.
5. In its statement of defence dated 16th August 2021, the respondent denied the appellant’s claim. It averred that it was not privy to the alleged contract as the same had unfavourable terms. Instead, it opted for an implied agreement with the appellant whereby payment was mutually agreed to be as per work done and upon presentation of an invoice on the same. It was the respondent’s position that all due invoices presented to it were acknowledged and settled in full. The respondent put the appellant to strict proof of its claim.
6. At the hearing, the appellant called one witness, PW 1 Catherine Muriithi, head of administration. She adopted as her evidence in chief her undated witness statement filed in court on 9th July 2018. She also produced the documents as per her list filed in court alongside the witness statement. According to PW 1, the parties had a service contract dated 18th March 2014 and it was signed by both parties. She said the contract was sent through a letter dated 18th March 2014 but the respondents did not return it. However, the respondents agreed to the contract. The contract was terminated on 20th November 2014 by the respondent through an e-mail due to an alleged theft at the respondent’s premises.
7. PW 1 said that by this time, there was an outstanding balance of KShs 236,490.60 due from the respondent to the appellant for unpaid services for September, October, and November 2014. Despite demand, reminders, and the respondent’s promises to pay, it had failed to do so. At one point, the respondent conceded that the balance was KShs 135,333/=. The parties then had a mutual agreement that the respondent pays KShs 176,554/=. However, the respondent again disputed this amount and indicated that it was willing to pay KShs 101,466/= but it never did.
8. PW 1 said that in the contract, the penalty for failing to settle any invoice on time was 5% monthly until payment in full. The surcharge was therefore KShs 1,511,641.28 making the total outstanding amount KShs 1,748,131/=.
9. In cross-examination, PW 1 insisted that the contract was signed by both parties.
10. On its part, the respondent called one witness, DW 1, Hilary Siele. He also relied on his witness statement dated 13th August 2021 as evidence in chief. He said he was a manager with the respondent between 2012 and 2015. He produced two documents as exhibits: the company’s certificate of incorporation and its internal statement of account showing the respondent’s payments.
11. DW 1 reiterated the respondent’s averments in the pleadings and stated that the contract between the parties was on implied terms since the express terms in writing were found to be onerous to the respondent. The payments were for work done and the appellant would present an invoice, which the respondent always acknowledged by seal or stamp and payment was made by cheque or petty cash voucher.
12. He testified further that the relationship between the parties was severed in 2014 when an incident of theft involving the appellant’s guards occurred at the respondent’s premises, whereby i-pads, MDF boards and construction iron metals worth KShs 1,200,000/= were stolen. The theft was captured on the respondent’s CCTV. The parties opted to settle the issue amicably instead of involving security agencies. DW 1 said that the appellant only settled a fraction of the amount worth of the stolen items.
13. DW 1 said further that after that incident, the appellant started claiming that the respondent was in arrears and asked for a set-off. Due to those issues, the appellant stopped providing services to the respondent.
14. DW 1 testified further that the respondent settled its accounts with the appellant before DW 1 left sometime in 2015. He said that external auditors had been hired to consider the respondent’s accounts, after which they gave it a clean bill of health.
15. After listening to the parties, the learned trial magistrate thought that where parties to an agreement intend not to be bound until their agreement is reduced into writing and signed, neither party is bound until the writing is executed. He therefore found that the contract dated 18th March 2014 could not be said to be binding upon the parties and so could not be enforced. He, however found that the appellant nonetheless offered its services to the respondent and the respondent had admitted as much. He was satisfied that the appellant had proved that the respondent owed the appellant KShs 236,000/= and allowed the claim on that prayer together with interest from the date of filing suit. He however, declined the claim for surcharge since there was no executed contract produced in court to show that the parties agreed to it.
16. The appellant was dissatisfied with the dismissal of the claim for the surcharge and filed the present appeal through the memorandum dated 10th July 2023 raising the following grounds:
a. the learned magistrate erred in law by denying the plaintiff’s the prayer for surcharge despite the fact that the appellant substantiated the same.
b. the learned magistrate erred in fact by denying the appellant’s prayer for surcharge despite the fact that the plaintiff established its facts to the claim.
c. the learned magistrate erred in law by failing to consider section 3 of the Law of Contract Act to the effect that there existed a contract between the plaintiff and the defendant.
d. the learned magistrate erred in law and fact by presuming that there was no contract in force between the parties despite the fact that the defendant admitted owing the plaintiff for services rendered and even proposed a payment plan.
e. the learned magistrate erred in law by failing to consider authorities from the High Court and the Court of Appeal on the respondent’s responsibility to prove a claim of non-existence of a contractual relationship with the aid of relevant legislation and precedents.
17. The appeal was canvassed by way of written submissions filed by learned counsels for both parties. The submissions are considered in the analysis that follows.
18. The appellant raised the following issues for determination:
a. Whether the learned Magistrate erred in holding that the absence of a formally executed contract precluded enforcement of the surcharge clause, notwithstanding evidence of implied agreement and admissions by conduct.
b. Whether the learned Magistrate misapplied the principle that a contract may be formed by conduct and part performance, as recognised in common law and by Section 3(3), Law of Contract Act.
c. Whether the learned Magistrate overlooked Section 120, Evidence Act, which enshrines the doctrine of estoppel by conduct.
d. Whether the surcharge claim was properly substantiated by documentary and oral evidence.
e. Whether the Appellant is entitled to the surcharge, costs, and all ancillary reliefs.
19. Learned counsel for the appellant submits that it is a well-established principle that a contract may be constituted by the conduct of parties and part performance. He cited the case of Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, where Lord Blackburn stated:
“If the conduct of the parties is such that a reasonable person would regard an agreement as having been reached, then it is binding notwithstanding the absence of formal acceptance.”
20. Learned counsel submits that on 18th March 2014, the appellant dispatched the Guard Service Contract with a cover letter indicating its terms, including the 5% surcharge clause. The terms would apply if the respondent failed to respond after a period of time indicated in the letter. Learned counsel submits that the respondent’s silence, acceptance of services, and partial payments until November 2014 constitute implied acceptance and part performance under Section 3(3),the Law of Contract Act.
21. Learned counsel submits further that the respondent’s conduct induced the appellant to act to its detriment. He cited the case of Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, where Lord Denning held:
“A promise intended to be binding, intended to be acted upon, and in fact acted upon, is binding so far as its terms properly apply.”
22. Learned counsel submits that section 120 of the Evidence Act (Cap. 80) Laws of Kenya, codifies this doctrine, precluding a party from denying any representation of fact that another has relied upon to their detriment. Clause (f) of the contract expressly provided for a 5% monthly surcharge on overdue amounts. Therefore, the respondent, having accepted the surcharge term in the contract and benefited from the appellant’s services, it is estopped from repudiating it.
23. Learned counsel submits that the trial court’s award of the principal sum owed while declining the surcharge is inconsistent with the parties’ unequivocal agreement. Learned counsel cited the case of Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, where Lord Pearson stated:
“The court does not make a contract for the parties. It merely interprets and enforces that which they have agreed.”
24. Learned counsel submits further that the Court of Appeal in Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd [2017] eKLR confirmed that express contractual terms must be enforced unless vitiated by fraud, duress, or undue influence.
25. Learned counsel submits that the respondent, through stamped demand letters and correspondence dated 22nd February 2018, admitted liability for the principal debt. Learned counsel cited the case of 747 Freighter Conversion LLC v One Jet One Airways Kenya Ltd [2014] eKLR, where it was held that clear admissions negate the need for further trial on the admission.
26. Learned counsel submitted that the trial court’s reliance solely on non-execution, whilst recognising admissions of indebtedness and part performance, is untenable.
27. The respondent raised three preliminary issues in submissions. First, that the appeal was filed out of time without leave of the court, second, that the record of appeal was incomplete for failing to include the respondent’s submissions before the trial court, and third, that the appellant failed to file submissions on its appeal. All these are substantive issues and not mere procedural technicalities that can be wished away.
28. On the issue of failure to file submissions, I note that the appellant filed its submissions dated 23rd June 2025.
29. On the issue that the appellant’s appeal was filed out of time, without leave of the court, I note that the notice of appeal was filed on 7th June 2023 and therefore within the stipulated time the judgment having been delivered on 5th June 2023.
30. On the failure to include the respondent’s submissions before the trial court in the record of appeal, I have tried to trace the same in the trial court file but I do not find them, not even those for the appellant. It would appear that at some point the same were misplaced from the file. It is not easy to establish whether this was from the court registry or from the appellant. Without more insights on what happened, I do not wish to lay blame upon the appellant for the failure to include them in the record of appeal. I find no prejudice occasioned to either of the parties for the omission.
31. Turning to the substantive appeal, I find learned counsel for the respondent’s submission that the surcharge clause is incapable of being deciphered to be an afterthought, as that issue was never raised before the trial court by the respondent’s witness.
32. Learned counsel further submits that the surcharge clause cannot be introduced into an implied contract, as that would be inviting the court to rewrite the terms of the contract.
33. This being a first appeal, the duty of the court is to re-evaluate, re-analyze and re-consider the evidence and draw its own conclusions, bearing in mind that it did not see witnesses testifying and therefore give due allowance for that. See for example Selle & another vs. Associated Motor Boat Co. Ltd & others [1968] E.A at page 126, it was held as follows:
“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955), 22 E.A.C.A. 270)”.
34. See similar holding in Peters vs. Sunday Post Limited (1968) EA 123. (1956) E.A page 424.
35. It is apparent from the grounds of appeal and the submissions by learned counsel for the appellant that the appellant has taken the view that the trial court determined the suit based on lack of a contractual relationship between the parties. That was not the case. The trial court was satisfied that a contract for security services existed and the services were rendered. That was why it found that the prayer for non-payment of KShs 236,490/= was valid and had been proved and awarded the sum to the appellant.
36. However, the trial court found that the contract was not in writing. It is the appellant’s position as testified by PW 1, that it had a written agreement with the respondent, which was produced in court as Exh. 1.
37. The contract bears the rubber stamp, name and signature of Yogesh Pabar of the appellant, Akshar Team Security Ltd. The space for similar details for the client (respondent herein) is blank and the top page which should bear the client’s details, only has the respondent’s name, Nanchang Investment Company Ltd, with all other spaces for other details remaining blank. Even the date of commencement is blank.
38. PW 1 said that one Mr. Mat signed the contract on 24th April 2014 and that there were subsequent contracts which were signed. However, none of these were exhibited before the court. The contention that both parties signed the contract is therefore not correct.
39. However, the respondent’s witness testified that indeed the appellant and the respondent were in a contractual relationship. He said the respondent did not sign the contract because it found the terms onerous. He also said he was not part of the respondent’s team that signed the contract but the respondent paid the appellant on a monthly basis on invoices presented.
40. I have looked at the statements of accounts, from both parties and each indicates that, indeed, the respondent was paying the appellant for security services provided. The question is, upon what terms were the payments being made? The appellant’s position is that the payments were being made on the terms of the contract dated 18th March 2014 even as the respondent had not signed it. The respondent’s position is that the contract was being performed on implied terms. However, it has not stated from which source the implied terms were from; for instance, any law providing for such contractual arrangements or the practice within that trade or business.
41. The respondent’s position therefore, is that it was not bound by the terms of the contract dated 18th March 2014 because it did not sign it. However, there is no clause in the contract providing that it would only become effective upon being signed by both parties.
42. It has been held in many authorities that the life of an unsigned contract is brought into existence by the events succeeding its making or drafting or being entered into, albeit without the execution. For instance, in Erick Barasa Makokha & 2 others v Neema Ya Mungu Investment Co Ltd [2021] KEHC 1623 (KLR)) the court considered the issue thus:
“What, then, is the effect in law of an unsigned contract? Is it enforceable? The life of an unsigned contract is brought into existence by the events succeeding its making or drafting or being entered into, albeit without the execution. The court in, Reveille Independent LLC vs. Anotech International (UK) Ltd [2016] EWCA Civ 443 (Elias, Underhill LJJ & Cranston J), said as follows, with respect to the effect of an unsigned agreement: “
… a draft agreement can have contractual force, although the parties do not comply with a requirement that to be binding it must be signed, if essentially all the terms have been agreed and their subsequent conduct indicates this, albeit a court will not reach this conclusion lightly.”
43. In the present matter, although the respondent had not signed the contract, the parties went ahead to carry out their relations based on the terms of the contract. For instance, the payments by the respondent to the appellant were made as per the terms of the contract, including the price per guard. When an issue arose that a theft had occurred at the respondent’s premises, allegedly by the appellant’s guards, the appellant, although on a without prejudice or admission of liability basis, paid the respondent KShs 10,000/= ex-gratia as per clause (e) of the contract. The respondent did not dispute any of these clauses, save the one for surcharge, which it only raised after the suit was filed. In that case, it cannot choose which clause of the contract to be bound by and which one not to.
44. Secondly, DW 1, the respondent’s witness, said in cross-examination that the respondent could not have benefited from the appellant’s security services without an agreement. He did not have any other agreement and none was shown to court other than the one dated 18th March 2014 produced by the appellant.
45. The learned trial magistrate was of the view that where parties to an agreement intend not to be bound until their agreement is reduced to writing and is executed and signed, neither party is bound until the same is in writing and signed. He therefore found that the contract dated 18th March 2014 could not be said to be binding for not being signed and could therefore not be enforced. That finding was erroneous because there is no evidence that the parties had expressed that they could only be bound by a contract signed by both parties.
46. DW 1’s evidence that the respondent had settled all the appellant’s claims by the time he left the company is not true because on 24th December 2014 when the appellant sent the respondent a final reminder to settle the outstanding balance of KShs 246,490.60, the respondent’s response endorsed on the appellant’s letter was that “as per our records the balance owed to A-Team is KShs 135,333/=” meaning that it acknowledged that it was indebted to the appellant. Then, as late as 28th June 2016, when the appellant wrote another demand letter for the outstanding amount, the respondent again endorsed on the letter that it was willing to pay KShs 101,466/=. That was a clear demonstration that although the amount in dispute was in contention, the fact of indebtedness was not.
47. I find that the indebtedness arose out of the contractual relationship between the parties which was based on the contract dated 18th March 2014. The conduct of the respondent after the appellant had forwarded the contract to it of continuing to consume the appellant’s services without any question, is a demonstration that it intended to be bound by the terms of that contract. The learned magistrate’s finding that there was no intention by the parties to to be bound by the terms of that contract was not correct. There was no evidence that at any one point the respondent raised with the appellant the issue of the contract terms and particularly the surcharge clause not being acceptable to it. If it had done that, it would have demonstrated that it had not accepted the contract terms and was therefore not in agreement with it and would not be bound by it. I therefore find that it was bound by those terms.
48. This court can only interpret the terms of the contract between the parties and not rewrite the same on behalf of the parties. Based on plain reading of the express wording set out in the contract executed by the appellant and sent to the respondent for execution, I am satisfied that the contract did become binding upon the parties acting on it without question.
49. Fore the foregoing reasons, I find that the learned trial magistrate reached an erroneous conclusion that the surcharge clause could not be enforced against the respondent. Consequently, I have to interfere with the decision of the trial court and set it aside. The same is substituted with a finding allowing the appellant’s entire claim before the magistrate’s court.
50. The appeal is allowed with costs to the appellant.
Orders accordingly.
Written, dated, signed and delivered on the virtual platform, Teams, this 10th day of September 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Wangila for the Appellant.
Musavakhwa (Ms) holding brief for Wacuka for the Respondent.
Carlos: Court assistant.
'
1. Nanchang Investment Company Ltd, the respondent herein, engaged the appellant, Akshar Team Security Ltd to provide security services at the respondent’s hotel premises sometime on 18th March 2014. The appellant pleaded in its plaint dated 2nd July 2018 that the relationship had begun earlier in 2012. The appellant pleaded that clause (f) of the contract stipulated the “service” charge and stated when the monies owed for service were due and the consequences for delayed remittance as 5% surcharge.
2. The appellant claimed that in breach of the contract, the respondent failed to settle various invoices for services rendered, particularized in the plaint as follows:
a. Invoice No. 22673 for KShs 81,200/= dated 1/9/2014.
b. Invoice No. 22891 for KShs 81,200/= dated 1/10/2014.
c. Invoice No. 23123 for KShs 81,200/= dated 1/11/2014.
d. failure to pay surcharge fees as a result of the breach.
3. The appellant sued the respondent for payment of the unpaid invoices, which according to the plaint, amounted to KShs 236,490/= together with the surcharge amounting to KShs 1,511,641.28 for the period 1/12/2014 to 1/4/2018 together with interest at court rates and costs of the suit.
4. A simple arithmetic of the sums allegedly due for the three months’ invoices would be KShs 81,200 x 3 = KShs 243,600/=. I note that in a letter dated 8th July 2016, the appellant offered to compensate the respondent KShs 10,000/= ex-gratia for loss of MDF boards at the respondent’s premises on 6th November 2014, and offset the same from the outstanding amount, thereby reducing it to KShs 233,600/=. This takes it closer to the amount of KShs 236,490/= claimed in the suit.
5. In its statement of defence dated 16th August 2021, the respondent denied the appellant’s claim. It averred that it was not privy to the alleged contract as the same had unfavourable terms. Instead, it opted for an implied agreement with the appellant whereby payment was mutually agreed to be as per work done and upon presentation of an invoice on the same. It was the respondent’s position that all due invoices presented to it were acknowledged and settled in full. The respondent put the appellant to strict proof of its claim.
6. At the hearing, the appellant called one witness, PW 1 Catherine Muriithi, head of administration. She adopted as her evidence in chief her undated witness statement filed in court on 9th July 2018. She also produced the documents as per her list filed in court alongside the witness statement. According to PW 1, the parties had a service contract dated 18th March 2014 and it was signed by both parties. She said the contract was sent through a letter dated 18th March 2014 but the respondents did not return it. However, the respondents agreed to the contract. The contract was terminated on 20th November 2014 by the respondent through an e-mail due to an alleged theft at the respondent’s premises.
7. PW 1 said that by this time, there was an outstanding balance of KShs 236,490.60 due from the respondent to the appellant for unpaid services for September, October, and November 2014. Despite demand, reminders, and the respondent’s promises to pay, it had failed to do so. At one point, the respondent conceded that the balance was KShs 135,333/=. The parties then had a mutual agreement that the respondent pays KShs 176,554/=. However, the respondent again disputed this amount and indicated that it was willing to pay KShs 101,466/= but it never did.
8. PW 1 said that in the contract, the penalty for failing to settle any invoice on time was 5% monthly until payment in full. The surcharge was therefore KShs 1,511,641.28 making the total outstanding amount KShs 1,748,131/=.
9. In cross-examination, PW 1 insisted that the contract was signed by both parties.
10. On its part, the respondent called one witness, DW 1, Hilary Siele. He also relied on his witness statement dated 13th August 2021 as evidence in chief. He said he was a manager with the respondent between 2012 and 2015. He produced two documents as exhibits: the company’s certificate of incorporation and its internal statement of account showing the respondent’s payments.
11. DW 1 reiterated the respondent’s averments in the pleadings and stated that the contract between the parties was on implied terms since the express terms in writing were found to be onerous to the respondent. The payments were for work done and the appellant would present an invoice, which the respondent always acknowledged by seal or stamp and payment was made by cheque or petty cash voucher.
12. He testified further that the relationship between the parties was severed in 2014 when an incident of theft involving the appellant’s guards occurred at the respondent’s premises, whereby i-pads, MDF boards and construction iron metals worth KShs 1,200,000/= were stolen. The theft was captured on the respondent’s CCTV. The parties opted to settle the issue amicably instead of involving security agencies. DW 1 said that the appellant only settled a fraction of the amount worth of the stolen items.
13. DW 1 said further that after that incident, the appellant started claiming that the respondent was in arrears and asked for a set-off. Due to those issues, the appellant stopped providing services to the respondent.
14. DW 1 testified further that the respondent settled its accounts with the appellant before DW 1 left sometime in 2015. He said that external auditors had been hired to consider the respondent’s accounts, after which they gave it a clean bill of health.
15. After listening to the parties, the learned trial magistrate thought that where parties to an agreement intend not to be bound until their agreement is reduced into writing and signed, neither party is bound until the writing is executed. He therefore found that the contract dated 18th March 2014 could not be said to be binding upon the parties and so could not be enforced. He, however found that the appellant nonetheless offered its services to the respondent and the respondent had admitted as much. He was satisfied that the appellant had proved that the respondent owed the appellant KShs 236,000/= and allowed the claim on that prayer together with interest from the date of filing suit. He however, declined the claim for surcharge since there was no executed contract produced in court to show that the parties agreed to it.
16. The appellant was dissatisfied with the dismissal of the claim for the surcharge and filed the present appeal through the memorandum dated 10th July 2023 raising the following grounds:
a. the learned magistrate erred in law by denying the plaintiff’s the prayer for surcharge despite the fact that the appellant substantiated the same.
b. the learned magistrate erred in fact by denying the appellant’s prayer for surcharge despite the fact that the plaintiff established its facts to the claim.
c. the learned magistrate erred in law by failing to consider section 3 of the Law of Contract Act to the effect that there existed a contract between the plaintiff and the defendant.
d. the learned magistrate erred in law and fact by presuming that there was no contract in force between the parties despite the fact that the defendant admitted owing the plaintiff for services rendered and even proposed a payment plan.
e. the learned magistrate erred in law by failing to consider authorities from the High Court and the Court of Appeal on the respondent’s responsibility to prove a claim of non-existence of a contractual relationship with the aid of relevant legislation and precedents.
17. The appeal was canvassed by way of written submissions filed by learned counsels for both parties. The submissions are considered in the analysis that follows.
18. The appellant raised the following issues for determination:
a. Whether the learned Magistrate erred in holding that the absence of a formally executed contract precluded enforcement of the surcharge clause, notwithstanding evidence of implied agreement and admissions by conduct.
b. Whether the learned Magistrate misapplied the principle that a contract may be formed by conduct and part performance, as recognised in common law and by Section 3(3), Law of Contract Act.
c. Whether the learned Magistrate overlooked Section 120, Evidence Act, which enshrines the doctrine of estoppel by conduct.
d. Whether the surcharge claim was properly substantiated by documentary and oral evidence.
e. Whether the Appellant is entitled to the surcharge, costs, and all ancillary reliefs.
19. Learned counsel for the appellant submits that it is a well-established principle that a contract may be constituted by the conduct of parties and part performance. He cited the case of Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, where Lord Blackburn stated:
“If the conduct of the parties is such that a reasonable person would regard an agreement as having been reached, then it is binding notwithstanding the absence of formal acceptance.”
20. Learned counsel submits that on 18th March 2014, the appellant dispatched the Guard Service Contract with a cover letter indicating its terms, including the 5% surcharge clause. The terms would apply if the respondent failed to respond after a period of time indicated in the letter. Learned counsel submits that the respondent’s silence, acceptance of services, and partial payments until November 2014 constitute implied acceptance and part performance under Section 3(3),the Law of Contract Act.
21. Learned counsel submits further that the respondent’s conduct induced the appellant to act to its detriment. He cited the case of Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, where Lord Denning held:
“A promise intended to be binding, intended to be acted upon, and in fact acted upon, is binding so far as its terms properly apply.”
22. Learned counsel submits that section 120 of the Evidence Act (Cap. 80) Laws of Kenya, codifies this doctrine, precluding a party from denying any representation of fact that another has relied upon to their detriment. Clause (f) of the contract expressly provided for a 5% monthly surcharge on overdue amounts. Therefore, the respondent, having accepted the surcharge term in the contract and benefited from the appellant’s services, it is estopped from repudiating it.
23. Learned counsel submits that the trial court’s award of the principal sum owed while declining the surcharge is inconsistent with the parties’ unequivocal agreement. Learned counsel cited the case of Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, where Lord Pearson stated:
“The court does not make a contract for the parties. It merely interprets and enforces that which they have agreed.”
24. Learned counsel submits further that the Court of Appeal in Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd [2017] eKLR confirmed that express contractual terms must be enforced unless vitiated by fraud, duress, or undue influence.
25. Learned counsel submits that the respondent, through stamped demand letters and correspondence dated 22nd February 2018, admitted liability for the principal debt. Learned counsel cited the case of 747 Freighter Conversion LLC v One Jet One Airways Kenya Ltd [2014] eKLR, where it was held that clear admissions negate the need for further trial on the admission.
26. Learned counsel submitted that the trial court’s reliance solely on non-execution, whilst recognising admissions of indebtedness and part performance, is untenable.
27. The respondent raised three preliminary issues in submissions. First, that the appeal was filed out of time without leave of the court, second, that the record of appeal was incomplete for failing to include the respondent’s submissions before the trial court, and third, that the appellant failed to file submissions on its appeal. All these are substantive issues and not mere procedural technicalities that can be wished away.
28. On the issue of failure to file submissions, I note that the appellant filed its submissions dated 23rd June 2025.
29. On the issue that the appellant’s appeal was filed out of time, without leave of the court, I note that the notice of appeal was filed on 7th June 2023 and therefore within the stipulated time the judgment having been delivered on 5th June 2023.
30. On the failure to include the respondent’s submissions before the trial court in the record of appeal, I have tried to trace the same in the trial court file but I do not find them, not even those for the appellant. It would appear that at some point the same were misplaced from the file. It is not easy to establish whether this was from the court registry or from the appellant. Without more insights on what happened, I do not wish to lay blame upon the appellant for the failure to include them in the record of appeal. I find no prejudice occasioned to either of the parties for the omission.
31. Turning to the substantive appeal, I find learned counsel for the respondent’s submission that the surcharge clause is incapable of being deciphered to be an afterthought, as that issue was never raised before the trial court by the respondent’s witness.
32. Learned counsel further submits that the surcharge clause cannot be introduced into an implied contract, as that would be inviting the court to rewrite the terms of the contract.
33. This being a first appeal, the duty of the court is to re-evaluate, re-analyze and re-consider the evidence and draw its own conclusions, bearing in mind that it did not see witnesses testifying and therefore give due allowance for that. See for example Selle & another vs. Associated Motor Boat Co. Ltd & others [1968] E.A at page 126, it was held as follows:
“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955), 22 E.A.C.A. 270)”.
34. See similar holding in Peters vs. Sunday Post Limited (1968) EA 123. (1956) E.A page 424.
35. It is apparent from the grounds of appeal and the submissions by learned counsel for the appellant that the appellant has taken the view that the trial court determined the suit based on lack of a contractual relationship between the parties. That was not the case. The trial court was satisfied that a contract for security services existed and the services were rendered. That was why it found that the prayer for non-payment of KShs 236,490/= was valid and had been proved and awarded the sum to the appellant.
36. However, the trial court found that the contract was not in writing. It is the appellant’s position as testified by PW 1, that it had a written agreement with the respondent, which was produced in court as Exh. 1.
37. The contract bears the rubber stamp, name and signature of Yogesh Pabar of the appellant, Akshar Team Security Ltd. The space for similar details for the client (respondent herein) is blank and the top page which should bear the client’s details, only has the respondent’s name, Nanchang Investment Company Ltd, with all other spaces for other details remaining blank. Even the date of commencement is blank.
38. PW 1 said that one Mr. Mat signed the contract on 24th April 2014 and that there were subsequent contracts which were signed. However, none of these were exhibited before the court. The contention that both parties signed the contract is therefore not correct.
39. However, the respondent’s witness testified that indeed the appellant and the respondent were in a contractual relationship. He said the respondent did not sign the contract because it found the terms onerous. He also said he was not part of the respondent’s team that signed the contract but the respondent paid the appellant on a monthly basis on invoices presented.
40. I have looked at the statements of accounts, from both parties and each indicates that, indeed, the respondent was paying the appellant for security services provided. The question is, upon what terms were the payments being made? The appellant’s position is that the payments were being made on the terms of the contract dated 18th March 2014 even as the respondent had not signed it. The respondent’s position is that the contract was being performed on implied terms. However, it has not stated from which source the implied terms were from; for instance, any law providing for such contractual arrangements or the practice within that trade or business.
41. The respondent’s position therefore, is that it was not bound by the terms of the contract dated 18th March 2014 because it did not sign it. However, there is no clause in the contract providing that it would only become effective upon being signed by both parties.
42. It has been held in many authorities that the life of an unsigned contract is brought into existence by the events succeeding its making or drafting or being entered into, albeit without the execution. For instance, in Erick Barasa Makokha & 2 others v Neema Ya Mungu Investment Co Ltd [2021] KEHC 1623 (KLR)) the court considered the issue thus:
“What, then, is the effect in law of an unsigned contract? Is it enforceable? The life of an unsigned contract is brought into existence by the events succeeding its making or drafting or being entered into, albeit without the execution. The court in, Reveille Independent LLC vs. Anotech International (UK) Ltd [2016] EWCA Civ 443 (Elias, Underhill LJJ & Cranston J), said as follows, with respect to the effect of an unsigned agreement: “
… a draft agreement can have contractual force, although the parties do not comply with a requirement that to be binding it must be signed, if essentially all the terms have been agreed and their subsequent conduct indicates this, albeit a court will not reach this conclusion lightly.”
43. In the present matter, although the respondent had not signed the contract, the parties went ahead to carry out their relations based on the terms of the contract. For instance, the payments by the respondent to the appellant were made as per the terms of the contract, including the price per guard. When an issue arose that a theft had occurred at the respondent’s premises, allegedly by the appellant’s guards, the appellant, although on a without prejudice or admission of liability basis, paid the respondent KShs 10,000/= ex-gratia as per clause (e) of the contract. The respondent did not dispute any of these clauses, save the one for surcharge, which it only raised after the suit was filed. In that case, it cannot choose which clause of the contract to be bound by and which one not to.
44. Secondly, DW 1, the respondent’s witness, said in cross-examination that the respondent could not have benefited from the appellant’s security services without an agreement. He did not have any other agreement and none was shown to court other than the one dated 18th March 2014 produced by the appellant.
45. The learned trial magistrate was of the view that where parties to an agreement intend not to be bound until their agreement is reduced to writing and is executed and signed, neither party is bound until the same is in writing and signed. He therefore found that the contract dated 18th March 2014 could not be said to be binding for not being signed and could therefore not be enforced. That finding was erroneous because there is no evidence that the parties had expressed that they could only be bound by a contract signed by both parties.
46. DW 1’s evidence that the respondent had settled all the appellant’s claims by the time he left the company is not true because on 24th December 2014 when the appellant sent the respondent a final reminder to settle the outstanding balance of KShs 246,490.60, the respondent’s response endorsed on the appellant’s letter was that “as per our records the balance owed to A-Team is KShs 135,333/=” meaning that it acknowledged that it was indebted to the appellant. Then, as late as 28th June 2016, when the appellant wrote another demand letter for the outstanding amount, the respondent again endorsed on the letter that it was willing to pay KShs 101,466/=. That was a clear demonstration that although the amount in dispute was in contention, the fact of indebtedness was not.
47. I find that the indebtedness arose out of the contractual relationship between the parties which was based on the contract dated 18th March 2014. The conduct of the respondent after the appellant had forwarded the contract to it of continuing to consume the appellant’s services without any question, is a demonstration that it intended to be bound by the terms of that contract. The learned magistrate’s finding that there was no intention by the parties to to be bound by the terms of that contract was not correct. There was no evidence that at any one point the respondent raised with the appellant the issue of the contract terms and particularly the surcharge clause not being acceptable to it. If it had done that, it would have demonstrated that it had not accepted the contract terms and was therefore not in agreement with it and would not be bound by it. I therefore find that it was bound by those terms.
48. This court can only interpret the terms of the contract between the parties and not rewrite the same on behalf of the parties. Based on plain reading of the express wording set out in the contract executed by the appellant and sent to the respondent for execution, I am satisfied that the contract did become binding upon the parties acting on it without question.
49. Fore the foregoing reasons, I find that the learned trial magistrate reached an erroneous conclusion that the surcharge clause could not be enforced against the respondent. Consequently, I have to interfere with the decision of the trial court and set it aside. The same is substituted with a finding allowing the appellant’s entire claim before the magistrate’s court.
50. The appeal is allowed with costs to the appellant.
Orders accordingly.
Written, dated, signed and delivered on the virtual platform, Teams, this 10th day of September 2025.
ANDAYI W. F.
JUDGE
In the presence of:
Wangila for the Appellant.
Musavakhwa (Ms) holding brief for Wacuka for the Respondent.
Carlos: Court assistant.
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