The High Court Commercial Division has ordered foam mattress manufacturer, Power Foam (U) Ltd, to pay over Shs74.3 million (US$20,075), to chemical supplier Trust Ventures (U) Ltd for unpaid supplies delivered nearly a decade ago.
In a judgment delivered by Justice Stephen Mubiru on Tuesday, the court found that Power Foam breached a supply agreement under which Trust Ventures supplied chemicals used in the manufacture of foam mattresses but was not fully paid for the deliveries.
The dispute stemmed from a business relationship that began in 2015, with Trust Ventures supplying polyether polyols and toluene diisocyanate, TDI, to Power Foam on credit.
According to court records, the supplier delivered chemicals worth US$30,060 in June 2016, in addition to an earlier outstanding debt of US$11,202, bringing the total amount owed to US$41,262. While Power Foam made payments totaling US$21,187, a balance of US$20,075 remained unpaid despite repeated demands.
Power Foam denied owing the money and argued that all supplies had been paid for. The company also disputed receiving some of the goods reflected in a June 4, 2016 invoice and contended that the arrangement was unenforceable because there was no formal written contract.
However, Justice Mubiru rejected the arguments, holding that a binding contract can be established through a combination of invoices, delivery notes, payment records and the conduct of the parties.
‘A legally binding contract can be inferred or pieced together from a collection of related commercial documents, provided that the necessary elements of a contract are present,’ the judge said.
The court noted that Power Foam had made partial payments toward the disputed invoice and later participated in reconciliation meetings that confirmed the outstanding debt.
‘By making a voluntary partial payment, the defendant validated the underlying transaction and acknowledged that the debt is owed,’ Justice Mubiru ruled.
The judge further held that the company could not deny receiving goods after making payments against the same invoice.
‘A debtor cannot blow hot and cold by treating a contract as valid enough to make a partial payment on it, and then claim it is entirely void when it is time to pay the remaining balance,’ he said.
The court found that the parties had operated under an oral agreement supported by delivery notes, invoices and payment records, with invoices becoming payable within one month after delivery.
Justice Mubiru held that Power Foam breached the agreement by failing to settle the outstanding balance despite repeatedly acknowledging the debt in emails and payment undertakings.
As a result, the court entered judgment in favour of Trust Venturs and awarded the company Shs74.3 million, US$20,075, together with interest at 10 per cent per annum from August 25, 2017 until payment in full.
The judge, however, declined to award special damages and general damages sought by the supplier. Trust Venturs had argued that Power Foam’s delayed payments forced it to incur penalties from its own supplier and interest on borrowed funds.
The court found that those losses were too remote because there was no evidence that Power Foam had been informed of the supplier’s financing arrangements or potential penalties at the time the contract was made. Justice Mubiru also dismissed the claim for general damages, holding that the award of interest sufficiently compensated Trust Venturs for being deprived of the use of its money.
Power Foam was further ordered to pay the costs of the suit.