(Being an Appeal against the judgment and decree of the Hon. F. M. Mulama , RM, in Lamu Small Claims suit No. E016 of 2025 delivered on 15/10/2025)
1. The appellant herein brought suit against the Respondent vide a Statement of Claim dated 19 th August 2025 in which he sought judgment in the sum of Ksh.200,000/= on grounds of failing to honour an agreement dated 4 th October, 2020. The trial court dismissed the claim on the ground that the agreement was entered under duress and that the Respondent had no capacity to enter into the agreement.
2. The Appellant was aggrieved by the dismissal of the claim and lodged the instant based on the following grounds:
1. That the learned trial magistrate erred in law and fact in failing to appreciate and find the existence of an implied agency relationship between the parties.
2. That the learned trial magistrate erred in law and fact in holding that under the law of agency, liability can never attach to an agent.
3. That the learned trial magistrate erred in law and fact in failing to find that an agent who binds himself under a contract without the authority of the principal becomes personally liable for breach of that contract.
4. That the learned trial magistrate erred in law and fact by misapplying the law on privity of contract.
5. That the learned trial magistrate erred in law and fact in holding that the agreement dated 4 th October, 2020 between the parties was procured under duress and hence not enforceable under the law.
6. That the learned trial magistrate misapplied the law and disregarded the Appellant’s submissions and authorities.
3. The Appellant urges this court to set aside the judgment of the trial court and enter judgment in his favour as prayed in the Statement of Claim.
Appellant`s case
4. The case for the Appellant5 is that a brother to the Respondent called Abdalla Shariff Abubakar had divided his land into portions of 30 x 40 feet. He approached the Appellant to sell the plots for him at a commission, pursuant to which they entered into an agreement dated 27/6/2020, in which it was agreed that the appellant would sell each plot at Ksh.100,000/- and he would retain any extra amount in the transactions as his commission.
5. The said Abdallah Shariff was residing away from Lamu. He left it to his brother, the Respondent, to execute the sale agreements with the buyers on his behalf, receive the money and pay the Appellant`s commission.
6. It was the evidence of the Appellant that he sold 17 plots. That thereafter the Respondent failed to pay his commission. On the 4/10/2020 he sought the assistance of the police and the Respondent was arrested. They entered into a handwritten agreement in which the Respondent committed to pay him Ksh.300,000/=. He subsequently paid Ksh.100,000/- at an advocate`s office leaving a balance of Ksh. 200,000/-. The Respondent did not pay. The Appellant sued to recover the unpaid amount. During the hearing he produced the following documents as exhibits:
Brokerage agreement of 27/6/2020.
17 sale agreements with the buyers.
The handwritten agreement with the Respondent.
Receipt of payment of Ksh.100,000/=
Respondent`s case
7. The Respondent in his defence stated that he is a businessman. That his brother Abdallah Shariff Abubakar was selling his plots and he retained his services as a broker when selling the plots. That they were to use his office for this purpose since his brother resides away from Lamu. That his brother agreed with the appellant that the appellant would be entitled to a commission. That the appellant sold some plots without any problem. They however started to experience problems when some clients opted to pay in installments. The Appellant wanted to be paid his commission for each plot at once. They disagreed and his services were terminated. As of that time the appellant was owed commission of Ksh.200,000=. He paid him Kshs. 150,000/= in cash and the remaining balance of Ksh.50,000/- was to be paid by bis brother. He was later on arrested by the police and taken to the police station where he was forced to sign the subject handwritten agreement. He was escorted to his shop and asked to affix his stamp on the document. He denied that he owes the Appellant any money.
8. The appeal was disposed of by way of written submissions of the respective counsels for the parties.
Appellant’s Submissions
9. Counsel for the appellant identified four issues for determination issues: whether the trial court erred in finding that there was no privity of contract between the Appellant and the Respondent; whether the agreement entered into on 4/10/2020 was obtained under duress and hence vitiated and unenforceable; whether the learned magistrate erred in law and in fact in holding that under the law of agency, liability can never attach to an agent and whether the reliefs sought by the Appellant are appropriate.
10. On whether there was no privity of contract between the Appellant and the Respondent, counsel submitted that the learned magistrate erred in mis constructing the circumstances of the Appellant’s claim and misapplying the law on privity of contract. That the trial court made a blanket application of the privity principle without appreciating that there are exceptions to the general rule and that in this there was a collateral agreement dated 4/10/2020 between the Appellant and the Respondent in respect of the subject matter.
11. Counsel relied on the case of Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & Another (2015) KECA 784 KLR where the Court held as follows;
“In its classical rendering, the doctrine of privity of contract postulates that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. Accordingly, a contract cannot be enforced either by or against a third party. In DUNLOP PNEUMATIC TYRE CO LTD v SELFRIDGE CO. LTD (1915) AC 847 Lod Haldane, LC rendered the principles thus:
“My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it.”
12. He further submitted that even though the Respondent was not a direct party to the Brokery Agreement between the Appellant and the Respondent’s brother, the hand written agreement dated 4/10/2020 was collateral and directly linked to the said Brokery Agreement in view of the respondent`s admission that he represented his brother in the sale of the plots and he was in charge of paying the appellant his commission. That the Respondent is precluded from hiding behind the doctrine of privity of contract in the circumstances of the case and that the trial court ought to have rejected that line of defence.
13. On whether the agreement dated 4/10/2020 was obtained under duress, counsel submitted that that line of reasoning was faulty and misguided as the mere presence of the police in an agreement does not connote duress. He contended that duress ought to have been specifically pleaded and sufficiently proved. That the mere involvement of police in settling the matter is not synonymous to duress in the absence of any evidence to prove it.
14. It was submitted that the appellant said that the respondent was never arrested while the respondent said that he was arrested and made to draw the agreement in the cell yet the document bore his office stamp. It was submitted that the respondent never reported the duress but thereafter on 1/4/2021 paid Ksh.100,000/= at Kai & Associates Advocates. It was submitted that the police officers only made the parties to reach an amicable settlement.
15. On the 3 rd issue of whether the court erred in holding that under the law of agency, liability can never attach to an agent, counsel submitted that an agency relationship can be inferred and/or implied from the conduct of the Respondent and his brother relating to the sale of the said land. That an implied agency arises from either conduct of the principal showing consent to be represented, the circumstances making it necessary to infer such consent and usual course of dealing between the parties.
16. His submission was that the general rule is that an agent of a disclosed principal cannot be held liable few exceptions being where fraud and misrepresentation are alleged, see National Social Security Fund Board of Trustees v Ankhan Holding Limited &2 others (2006) KEHC 32655 (KLR). It was submitted that as the respondent undertook to enter into an agreement under his own name and promised to settle the outstanding amount, he is personally liable because he is the one who made the promise and his action seems to lack authority of the principal. That he made the agreement so as to deceive the appellant by making false misrepresentation.
17. Counsel further submitted that the questions on whether the reliefs sought by the Appellant are appropriate must be answered in light of the errors highlighted in the lower court’s judgment, the Appellant’s equitable and contractual rights.
Respondent’s submissions
18. 19. Counsel for the Respondent on the other hand identified two issues for determination: whether the trial magistrate properly evaluated the evidence and whether the appeal presents substantive triable issues that warrant interference.
19. Counsel submitted that the trial court`s finding that no agency relationship existed between the Respondent and the alleged principal was not only justified but also consistent with the established legal principles requiring strict proof of agency. He relied on the case of Kenya Women Finance Trust v Benard Oyugi Jaoko & 2 others (2018) eKLR where the court held that;
“The case for recognizing a contract for the benefit of a third party is simple and straightforward. The autonomy of the will of the parties should be respected. The law of contract should give effect to the reasonable expectations of contracting parties. Principle certainly requires that a burden should not be imposed on a third party without his consent.”
20. He also submitted that the Brokerage Agreement dated 27 th June, 2020 was executed exclusively between the Appellant and a third party and cannot bind the Respondent. That the Appellant’s contention that an agency relationship existed remains unproven as no evidence of authority, either express, implied or ostensible was tendered before the trial court. Further that the Appellant failed to establish that the agreement of 4 th October, 2020 was validly entered into.
Analysis and determination
21. I have carefully considered the ground of appeal, the evidence adduced before the trial court and the parties’ submissions. This court is alive to the fact that it did not hear the witnesses testify nor did it observe their demeanor. The court is also alive to the fact that a first appeal is in a way a retrial and the court must therefore reconsider the evidence, evaluate it and draw its own conclusions. In Peter M. Kariuki -vs- Attorney General (2014) eKLR the court held inter alia as follows:
“We have also, as we are duty bound to do as a first appellate court to reconsider the evidence adduced before trial court and re-evaluate it to draw our own independent conclusions and to satisfy ourselves that the conclusions reached by the trial judge are consistent with the evidence.”
22. The issues for determination in the appeal are;
1. Whether the trial magistrate erred in holding that there was no privity of contract between the Appellant and the Respondent.
2. Whether there was principal/agency relationship between the Responent and Abdallah Shariff
3. Whether the agreement dated October 4, 2020 created enforceable contractual obligations against the Respondent.
Whether the trial magistrate erred in holding that there was no privity of contract between the Appellant and the Respondent.
23. The Appellant contends that the learned magistrate erred in misconstructing the circumstances of the Appellant’s claim and misapplying the law on privity of contract. That the trial court made a blanket application of the privity principle without appreciating that there are exceptions to the general rule and there was a collateral agreement dated 4/10/2020 between the Appellant and the Respondent in respect of the subject matter.
24. The Respondent on the other hand asserts that the Brokerage Agreement dated 27 th June, 2020 was executed exclusively between the Appellant and a third party and cannot bind the Respondent.
25. Under Section 2(1) of the Law of Contract Act (Cap 23) the general rule is that a stranger to a contract can neither sue nor be sued upon it, even if the contract was made expressly for their benefit.
26. The doctrine of privity mandates that a contract cannot confer rights or impose obligations on any person who is not a party to it ( Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd [1915] AC 847) . In the case of City Council of Nairobi v. Wilfred Kamau Githua t/a Githua Associates & Another [2016] eKLR , the Court of Appeal reiterated that:
"The doctrine of privity of contract is that, as a general rule, at common law a contract cannot confer rights or impose obligations on strangers to it; that is, persons who are not parties to it."
27. A look at the evidence presented before the trial court indicates that the primary Brokerage Agreement dated 27 th June 2020 was executed between the Appellant and the Respondent’s brother who is not a party in this suit. A contract cannot be enforced against a third party who did not execute it unless a recognized exception such as assignment, trust or agency is strictly pleaded and proved. The respondent not being a party to the agreement, the terms of the agreement could not be enforced against him.
Whether the trial court erred in holding that the Respondent could not be liable under the law of agency
28. The trial court in its judgment held that the position of the law is that in a relationship of a principal and agent, liability never attaches to the agent. The Appellant submitted that the trial court erred in holding that liability cannot attach to an agent.
29. The general law of agency is that an agent acting on behalf of a disclosed principal is not personally liable and therefore ordinarily cannot be sued on contracts entered into for the principal. However, an agent can still be sued personally in certain exceptional circumstances especially when the agent acts outside the authority of the principal, where there is statutory or constitutional liability and where the agent acts as a principal in fact, See City Council of Nairobi vs Wilfred Kamau Githua and others Civil Appeal No. 206 of 2008.
30. The above legal position was espoused by the court of Appeal in the case of Victor Mabachi & another v Nurtun Bates Limited [2013] KECA 204 (KLR) , w here the court held as follows:
It remains now to consider the second issue whether the enjoinment of the appellants in the suit in the High Court breached the principle of law that an agent cannot be sued where there is a disclosed principal. In Anthony Francis Wareheim t/a Wareheim& 2 Others vs. Kenya Post Office Savings Bank , Civil Application Nos. Nai 5 & 48 of 2002 , at page 10, this Court unanimously held as follows:
“It was also prima facie imperative that the court should have dismissed the respondent’s claim against the second and third appellants for they were impleaded as agents of a disclosed principal contrary to the clear principal of common law that where the principal is disclosed, the agent is not to be sued. Furthermore, the court having found on the evidence that the second and third appellants were principals in their own right and not agents of the first appellant in the transaction giving rise to the suit, it should have dismissed the suit against the first appellant who had been sued as the principal.”
The principle established in the above case still holds good. In the absence of factors vitiating the liability of the principal, we consider that the enjoinment of the appellants in the case is unwarranted.
31. The sale of plots agreement in this case was signed between the Appellant and Abdallah Shariff Abubakar, a brother to the Respondent. The said owner of the land was not a resident of Lamu and it is the Respondent who was receiving the money on behalf the Appellant upon the appellant identifying buyers and he would enter into a sale agreement with the buyers on behalf of the owner of the land. The Respondent is the one who was paying the Appellant his commission. The Respondent said that he was being paid a commission for the work he was doing for the owner of the land.
32. There was no doubt from the evidence that there was a principal-agent relationship between the Abdallah Shariff and the Respondent. The principal was disclosed as the Appellant entered into an agreement with him to sell the plots. The Appellant knew that he was dealing with the Respondent as agent of Abdallah Shariff. That relationship has therefore been established. As an agent of a disclosed principal, the Respondent could only be held personally liable if he acted outside the authority of his principal such as engaging in fraud or misrepresentation. There was no pleading from the Appellant that the respondent had committed any act fraud or misrepresentation when dealing with him. In the absence of such evidence the Respondent could not under the law of agency be held personally liable for any money owing to the Appellant.
Whether the agreement dated 4 th October 2020 created enforceable contractual obligations
33. The Appellant argued that the respondent undertook to enter into an agreement under his own name and promised to settle the outstanding amount and therefore that he is personally liable because he is the one who made the promise. That his action seems to have lacked authority of the principal. That he made the agreement so as to deceive the appellant by making false misrepresentation. That the allegation of duress was not proved.
34. The Respondent on the other hand argued that the said agreement was made under duress when he was under the arrest of policemen. The trial court in its judgment found that the fact that the document was witnessed by policemen shows that the document was made under duress. Further that the respondent did not have capacity to enter into such an agreement.
35. It is clear from the evidence that the agreement of 4 th October 2020 was made after the respondent was arrested by the police. The agreement was itself witnessed by two police officers. It is easy for the respondent to argue that the document was made under police duress. However, his subsequent conduct dispels any argument that the agreement was made under duress.
36. It is evident that after the agreement was entered into on 4 th October 2020, the respondent went to the offices of Kai & Associates Advocates on the 1 st April 2021, which was six months after the agreement of 4 th October 2020, and made a payment of Ksh.100,000/=. The Respondent cannot argue that the said sum was paid under duress as the police were not there that time to exert pressure on him to make the payment. He had sufficient time to consult and get advice before paying the money. The fact that the Respondent made the payment six months later connotes that the payment was made voluntarily. It meant that the respondent in fact owed the appellant the sum of Ksh.300,00/= as captured in the agreement of 4 th October 2020. I therefore find that the agreement though made after the arrest of the respondent by the police, the same was not made under duress. As per the agreement, the Respondent owed the Appellant Ksh.300,000/=. He subsequently paid the sum of Ksh.100,000/= and remained with a balance of Ksh.200,000/=. The question is whether the money was owing personally from the respondent or on behalf of the principal.
37. The Respondent admitted that he was appointed an agent by Abdallah Shariff to enter into agreements with the buyers of the plots, receive the money on his behalf and pay the appellant his commission. He said that he was also being paid a commission for his services. The Appellant placed documents before the court showing that he sold 17 plots each at Ksh.150,000/=. His commission was Ksh.50,000/= per plot but he claimed the unpaid balance of Ksh.200,000/=.
38. In view of the fact that the Respondent was an agent of a known principal, Abdallah Shariff Abubakar, he did not owe personal liability in his dealings with the clients of the principal. Any liability incurred by him was incurred on behalf of the principal. The respondent was not a party to the brokerage agreement between the Appellant and Abdallah Shariff. The agreement did not state as to who was responsible for paying the Appellant`s commission and what would happen in case the commission was not paid. In my view, the appellant could only sue the principal, Abdallah Shariff for any unpaid commission and not the Respondent who was only an agent of the principal.
39. The upshot is that the Appellant did not prove that the sum of Ksh.200,000/= was owing from the Respondent and for that reason the judgment of the trial court is upheld. The appeal is therefore dismissed with costs to the Respondent.
In the presence of:
Abdulmunim for Appellant
Mr. Soita for Respondent
Court Assistant – Ms Rahma
1. The appellant herein brought suit against the Respondent vide a Statement of Claim dated 19 th August 2025 in which he sought judgment in the sum of Ksh.200,000/= on grounds of failing to honour an agreement dated 4 th October, 2020. The trial court dismissed the claim on the ground that the agreement was entered under duress and that the Respondent had no capacity to enter into the agreement.
2. The Appellant was aggrieved by the dismissal of the claim and lodged the instant based on the following grounds:
1. That the learned trial magistrate erred in law and fact in failing to appreciate and find the existence of an implied agency relationship between the parties.
2. That the learned trial magistrate erred in law and fact in holding that under the law of agency, liability can never attach to an agent.
3. That the learned trial magistrate erred in law and fact in failing to find that an agent who binds himself under a contract without the authority of the principal becomes personally liable for breach of that contract.
4. That the learned trial magistrate erred in law and fact by misapplying the law on privity of contract.
5. That the learned trial magistrate erred in law and fact in holding that the agreement dated 4 th October, 2020 between the parties was procured under duress and hence not enforceable under the law.
6. That the learned trial magistrate misapplied the law and disregarded the Appellant’s submissions and authorities.
3. The Appellant urges this court to set aside the judgment of the trial court and enter judgment in his favour as prayed in the Statement of Claim.
Appellant`s case
4. The case for the Appellant5 is that a brother to the Respondent called Abdalla Shariff Abubakar had divided his land into portions of 30 x 40 feet. He approached the Appellant to sell the plots for him at a commission, pursuant to which they entered into an agreement dated 27/6/2020, in which it was agreed that the appellant would sell each plot at Ksh.100,000/- and he would retain any extra amount in the transactions as his commission.
5. The said Abdallah Shariff was residing away from Lamu. He left it to his brother, the Respondent, to execute the sale agreements with the buyers on his behalf, receive the money and pay the Appellant`s commission.
6. It was the evidence of the Appellant that he sold 17 plots. That thereafter the Respondent failed to pay his commission. On the 4/10/2020 he sought the assistance of the police and the Respondent was arrested. They entered into a handwritten agreement in which the Respondent committed to pay him Ksh.300,000/=. He subsequently paid Ksh.100,000/- at an advocate`s office leaving a balance of Ksh. 200,000/-. The Respondent did not pay. The Appellant sued to recover the unpaid amount. During the hearing he produced the following documents as exhibits:
Brokerage agreement of 27/6/2020.
17 sale agreements with the buyers.
The handwritten agreement with the Respondent.
Receipt of payment of Ksh.100,000/=
Respondent`s case
7. The Respondent in his defence stated that he is a businessman. That his brother Abdallah Shariff Abubakar was selling his plots and he retained his services as a broker when selling the plots. That they were to use his office for this purpose since his brother resides away from Lamu. That his brother agreed with the appellant that the appellant would be entitled to a commission. That the appellant sold some plots without any problem. They however started to experience problems when some clients opted to pay in installments. The Appellant wanted to be paid his commission for each plot at once. They disagreed and his services were terminated. As of that time the appellant was owed commission of Ksh.200,000=. He paid him Kshs. 150,000/= in cash and the remaining balance of Ksh.50,000/- was to be paid by bis brother. He was later on arrested by the police and taken to the police station where he was forced to sign the subject handwritten agreement. He was escorted to his shop and asked to affix his stamp on the document. He denied that he owes the Appellant any money.
8. The appeal was disposed of by way of written submissions of the respective counsels for the parties.
Appellant’s Submissions
9. Counsel for the appellant identified four issues for determination issues: whether the trial court erred in finding that there was no privity of contract between the Appellant and the Respondent; whether the agreement entered into on 4/10/2020 was obtained under duress and hence vitiated and unenforceable; whether the learned magistrate erred in law and in fact in holding that under the law of agency, liability can never attach to an agent and whether the reliefs sought by the Appellant are appropriate.
10. On whether there was no privity of contract between the Appellant and the Respondent, counsel submitted that the learned magistrate erred in mis constructing the circumstances of the Appellant’s claim and misapplying the law on privity of contract. That the trial court made a blanket application of the privity principle without appreciating that there are exceptions to the general rule and that in this there was a collateral agreement dated 4/10/2020 between the Appellant and the Respondent in respect of the subject matter.
11. Counsel relied on the case of Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & Another (2015) KECA 784 KLR where the Court held as follows;
“In its classical rendering, the doctrine of privity of contract postulates that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. Accordingly, a contract cannot be enforced either by or against a third party. In DUNLOP PNEUMATIC TYRE CO LTD v SELFRIDGE CO. LTD (1915) AC 847 Lod Haldane, LC rendered the principles thus:
“My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it.”
12. He further submitted that even though the Respondent was not a direct party to the Brokery Agreement between the Appellant and the Respondent’s brother, the hand written agreement dated 4/10/2020 was collateral and directly linked to the said Brokery Agreement in view of the respondent`s admission that he represented his brother in the sale of the plots and he was in charge of paying the appellant his commission. That the Respondent is precluded from hiding behind the doctrine of privity of contract in the circumstances of the case and that the trial court ought to have rejected that line of defence.
13. On whether the agreement dated 4/10/2020 was obtained under duress, counsel submitted that that line of reasoning was faulty and misguided as the mere presence of the police in an agreement does not connote duress. He contended that duress ought to have been specifically pleaded and sufficiently proved. That the mere involvement of police in settling the matter is not synonymous to duress in the absence of any evidence to prove it.
14. It was submitted that the appellant said that the respondent was never arrested while the respondent said that he was arrested and made to draw the agreement in the cell yet the document bore his office stamp. It was submitted that the respondent never reported the duress but thereafter on 1/4/2021 paid Ksh.100,000/= at Kai & Associates Advocates. It was submitted that the police officers only made the parties to reach an amicable settlement.
15. On the 3 rd issue of whether the court erred in holding that under the law of agency, liability can never attach to an agent, counsel submitted that an agency relationship can be inferred and/or implied from the conduct of the Respondent and his brother relating to the sale of the said land. That an implied agency arises from either conduct of the principal showing consent to be represented, the circumstances making it necessary to infer such consent and usual course of dealing between the parties.
16. His submission was that the general rule is that an agent of a disclosed principal cannot be held liable few exceptions being where fraud and misrepresentation are alleged, see National Social Security Fund Board of Trustees v Ankhan Holding Limited &2 others (2006) KEHC 32655 (KLR). It was submitted that as the respondent undertook to enter into an agreement under his own name and promised to settle the outstanding amount, he is personally liable because he is the one who made the promise and his action seems to lack authority of the principal. That he made the agreement so as to deceive the appellant by making false misrepresentation.
17. Counsel further submitted that the questions on whether the reliefs sought by the Appellant are appropriate must be answered in light of the errors highlighted in the lower court’s judgment, the Appellant’s equitable and contractual rights.
Respondent’s submissions
18. 19. Counsel for the Respondent on the other hand identified two issues for determination: whether the trial magistrate properly evaluated the evidence and whether the appeal presents substantive triable issues that warrant interference.
19. Counsel submitted that the trial court`s finding that no agency relationship existed between the Respondent and the alleged principal was not only justified but also consistent with the established legal principles requiring strict proof of agency. He relied on the case of Kenya Women Finance Trust v Benard Oyugi Jaoko & 2 others (2018) eKLR where the court held that;
“The case for recognizing a contract for the benefit of a third party is simple and straightforward. The autonomy of the will of the parties should be respected. The law of contract should give effect to the reasonable expectations of contracting parties. Principle certainly requires that a burden should not be imposed on a third party without his consent.”
20. He also submitted that the Brokerage Agreement dated 27 th June, 2020 was executed exclusively between the Appellant and a third party and cannot bind the Respondent. That the Appellant’s contention that an agency relationship existed remains unproven as no evidence of authority, either express, implied or ostensible was tendered before the trial court. Further that the Appellant failed to establish that the agreement of 4 th October, 2020 was validly entered into.
Analysis and determination
21. I have carefully considered the ground of appeal, the evidence adduced before the trial court and the parties’ submissions. This court is alive to the fact that it did not hear the witnesses testify nor did it observe their demeanor. The court is also alive to the fact that a first appeal is in a way a retrial and the court must therefore reconsider the evidence, evaluate it and draw its own conclusions. In Peter M. Kariuki -vs- Attorney General (2014) eKLR the court held inter alia as follows:
“We have also, as we are duty bound to do as a first appellate court to reconsider the evidence adduced before trial court and re-evaluate it to draw our own independent conclusions and to satisfy ourselves that the conclusions reached by the trial judge are consistent with the evidence.”
22. The issues for determination in the appeal are;
1. Whether the trial magistrate erred in holding that there was no privity of contract between the Appellant and the Respondent.
2. Whether there was principal/agency relationship between the Responent and Abdallah Shariff
3. Whether the agreement dated October 4, 2020 created enforceable contractual obligations against the Respondent.
Whether the trial magistrate erred in holding that there was no privity of contract between the Appellant and the Respondent.
23. The Appellant contends that the learned magistrate erred in misconstructing the circumstances of the Appellant’s claim and misapplying the law on privity of contract. That the trial court made a blanket application of the privity principle without appreciating that there are exceptions to the general rule and there was a collateral agreement dated 4/10/2020 between the Appellant and the Respondent in respect of the subject matter.
24. The Respondent on the other hand asserts that the Brokerage Agreement dated 27 th June, 2020 was executed exclusively between the Appellant and a third party and cannot bind the Respondent.
25. Under Section 2(1) of the Law of Contract Act (Cap 23) the general rule is that a stranger to a contract can neither sue nor be sued upon it, even if the contract was made expressly for their benefit.
26. The doctrine of privity mandates that a contract cannot confer rights or impose obligations on any person who is not a party to it ( Dunlop Pneumatic Tyre Co Ltd v Selfridge Co Ltd [1915] AC 847) . In the case of City Council of Nairobi v. Wilfred Kamau Githua t/a Githua Associates & Another [2016] eKLR , the Court of Appeal reiterated that:
"The doctrine of privity of contract is that, as a general rule, at common law a contract cannot confer rights or impose obligations on strangers to it; that is, persons who are not parties to it."
27. A look at the evidence presented before the trial court indicates that the primary Brokerage Agreement dated 27 th June 2020 was executed between the Appellant and the Respondent’s brother who is not a party in this suit. A contract cannot be enforced against a third party who did not execute it unless a recognized exception such as assignment, trust or agency is strictly pleaded and proved. The respondent not being a party to the agreement, the terms of the agreement could not be enforced against him.
Whether the trial court erred in holding that the Respondent could not be liable under the law of agency
28. The trial court in its judgment held that the position of the law is that in a relationship of a principal and agent, liability never attaches to the agent. The Appellant submitted that the trial court erred in holding that liability cannot attach to an agent.
29. The general law of agency is that an agent acting on behalf of a disclosed principal is not personally liable and therefore ordinarily cannot be sued on contracts entered into for the principal. However, an agent can still be sued personally in certain exceptional circumstances especially when the agent acts outside the authority of the principal, where there is statutory or constitutional liability and where the agent acts as a principal in fact, See City Council of Nairobi vs Wilfred Kamau Githua and others Civil Appeal No. 206 of 2008.
30. The above legal position was espoused by the court of Appeal in the case of Victor Mabachi & another v Nurtun Bates Limited [2013] KECA 204 (KLR) , w here the court held as follows:
It remains now to consider the second issue whether the enjoinment of the appellants in the suit in the High Court breached the principle of law that an agent cannot be sued where there is a disclosed principal. In Anthony Francis Wareheim t/a Wareheim& 2 Others vs. Kenya Post Office Savings Bank , Civil Application Nos. Nai 5 & 48 of 2002 , at page 10, this Court unanimously held as follows:
“It was also prima facie imperative that the court should have dismissed the respondent’s claim against the second and third appellants for they were impleaded as agents of a disclosed principal contrary to the clear principal of common law that where the principal is disclosed, the agent is not to be sued. Furthermore, the court having found on the evidence that the second and third appellants were principals in their own right and not agents of the first appellant in the transaction giving rise to the suit, it should have dismissed the suit against the first appellant who had been sued as the principal.”
The principle established in the above case still holds good. In the absence of factors vitiating the liability of the principal, we consider that the enjoinment of the appellants in the case is unwarranted.
31. The sale of plots agreement in this case was signed between the Appellant and Abdallah Shariff Abubakar, a brother to the Respondent. The said owner of the land was not a resident of Lamu and it is the Respondent who was receiving the money on behalf the Appellant upon the appellant identifying buyers and he would enter into a sale agreement with the buyers on behalf of the owner of the land. The Respondent is the one who was paying the Appellant his commission. The Respondent said that he was being paid a commission for the work he was doing for the owner of the land.
32. There was no doubt from the evidence that there was a principal-agent relationship between the Abdallah Shariff and the Respondent. The principal was disclosed as the Appellant entered into an agreement with him to sell the plots. The Appellant knew that he was dealing with the Respondent as agent of Abdallah Shariff. That relationship has therefore been established. As an agent of a disclosed principal, the Respondent could only be held personally liable if he acted outside the authority of his principal such as engaging in fraud or misrepresentation. There was no pleading from the Appellant that the respondent had committed any act fraud or misrepresentation when dealing with him. In the absence of such evidence the Respondent could not under the law of agency be held personally liable for any money owing to the Appellant.
Whether the agreement dated 4 th October 2020 created enforceable contractual obligations
33. The Appellant argued that the respondent undertook to enter into an agreement under his own name and promised to settle the outstanding amount and therefore that he is personally liable because he is the one who made the promise. That his action seems to have lacked authority of the principal. That he made the agreement so as to deceive the appellant by making false misrepresentation. That the allegation of duress was not proved.
34. The Respondent on the other hand argued that the said agreement was made under duress when he was under the arrest of policemen. The trial court in its judgment found that the fact that the document was witnessed by policemen shows that the document was made under duress. Further that the respondent did not have capacity to enter into such an agreement.
35. It is clear from the evidence that the agreement of 4 th October 2020 was made after the respondent was arrested by the police. The agreement was itself witnessed by two police officers. It is easy for the respondent to argue that the document was made under police duress. However, his subsequent conduct dispels any argument that the agreement was made under duress.
36. It is evident that after the agreement was entered into on 4 th October 2020, the respondent went to the offices of Kai & Associates Advocates on the 1 st April 2021, which was six months after the agreement of 4 th October 2020, and made a payment of Ksh.100,000/=. The Respondent cannot argue that the said sum was paid under duress as the police were not there that time to exert pressure on him to make the payment. He had sufficient time to consult and get advice before paying the money. The fact that the Respondent made the payment six months later connotes that the payment was made voluntarily. It meant that the respondent in fact owed the appellant the sum of Ksh.300,00/= as captured in the agreement of 4 th October 2020. I therefore find that the agreement though made after the arrest of the respondent by the police, the same was not made under duress. As per the agreement, the Respondent owed the Appellant Ksh.300,000/=. He subsequently paid the sum of Ksh.100,000/= and remained with a balance of Ksh.200,000/=. The question is whether the money was owing personally from the respondent or on behalf of the principal.
37. The Respondent admitted that he was appointed an agent by Abdallah Shariff to enter into agreements with the buyers of the plots, receive the money on his behalf and pay the appellant his commission. He said that he was also being paid a commission for his services. The Appellant placed documents before the court showing that he sold 17 plots each at Ksh.150,000/=. His commission was Ksh.50,000/= per plot but he claimed the unpaid balance of Ksh.200,000/=.
38. In view of the fact that the Respondent was an agent of a known principal, Abdallah Shariff Abubakar, he did not owe personal liability in his dealings with the clients of the principal. Any liability incurred by him was incurred on behalf of the principal. The respondent was not a party to the brokerage agreement between the Appellant and Abdallah Shariff. The agreement did not state as to who was responsible for paying the Appellant`s commission and what would happen in case the commission was not paid. In my view, the appellant could only sue the principal, Abdallah Shariff for any unpaid commission and not the Respondent who was only an agent of the principal.
39. The upshot is that the Appellant did not prove that the sum of Ksh.200,000/= was owing from the Respondent and for that reason the judgment of the trial court is upheld. The appeal is therefore dismissed with costs to the Respondent.
In the presence of:
Abdulmunim for Appellant
Mr. Soita for Respondent
Court Assistant – Ms Rahma