High Court upholds verbal contract, rejects appeal over unpaid commission

The High Court in Siaya has dismissed an appeal by two container dealers challenging a magistrate's order to pay their agent transport costs and sales commissions.

Justice David Kemei ruled that a long-standing verbal agreement between a transporter and container owner was valid, even though nothing was put in writing. 

The dispute began in May 2022, when the first appellant, Matthew Mwaura Kanyita, allegedly instructed Okeyo to transport four containers from Mombasa to Kisumu and sell them.

Okeyo said he had worked with Kanyita since 2019 under an oral arrangement that gave him Sh30,000 commission per container sold, plus transport costs of Sh100,000 per container.

Zacheus Ochieng Otieno, the second appellant, agreed to buy the containers but failed to pay in full. One container was eventually sold to a woman named Josephine Menga. Okeyo claimed he was never paid his commission or transport costs, totalling Sh520,000.

The appellants denied any binding agreement, arguing the claimed contract lacked certainty over key terms such as commission rates and payment timelines. 

Their counsel submitted that “a contract whose terms are uncertain is unenforceable” and that the trial court had wrongly shifted the burden of proof.

The respondent’s counsel posed whether an oral contract became void when it was not reduced to writing.

Justice Kemei noted that both parties had conducted business in the same way for years.

“I am satisfied that the oral agreement between them, which existed for a long period, must be believed by the court as that was their way of doing business,” the judge ruled.

The court also rejected the argument that all contracts must be in writing. The judge confirmed that oral agreements supported by credible evidence are enforceable under Kenyan law.

Evidence showed the first appellant had admitted on cross-examination that he hired the respondent to transport the four containers, though no written agreement existed. 

The second appellant also did not dispute that he had purchased containers through a third party arranged by the respondent.

The court found the appellants had acted in bad faith. 

“The appellants schemed and went behind the respondent’s back to resell the containers to other buyers in a bid to deprive his deserved transport costs and commission,” the judge stated.

The court observed that the first appellant had even instigated a criminal case against Okeyo, leading to his arrest and imprisonment.

The High Court upheld the trial magistrate’s orders, including a permanent injunction preventing the removal of a container detained at Bondo police station, pending resolution of the outstanding payments.

The appeal was dismissed with costs to the respondent.