The High Court has upheld Kenya Power and Lightning Company’s (KPLC) decision to cancel a Sh410.6 million contract for the supply of electricity poles, ruling that the supplier failed to honour agreed delivery timelines. The court also dismissed Inter Tropical Timber Trading Ltd’s Sh284.9 million claim for breach of contract, finding that an expired agreement cannot be revived through subsequent correspondence, negotiations or continued engagement between the parties.
The dispute arose from a June 2012 agreement under which Inter Tropical was contracted to supply 29,500 treated electricity poles to KPLC over an 18-month period ending in February 2014. Deliveries were to be made to the utility’s depots in Ukunda, Malindi and Voi.
Inter Tropical filed suit after KPLC formally terminated the contract in January 2017, arguing that it had made substantial investments to fulfil the agreement. The company said it established wood treatment facilities in Mwea and Eldoret, purchased transport trucks, procured timber and recruited staff using bank loans backed by directors’ personal guarantees and matrimonial property.
The supplier claimed KPLC frustrated the contract by changing delivery locations, suspending deliveries and delaying purchase orders before eventually declaring the agreement expired. It sought Sh284.9 million in special damages, general damages, interest and legal costs, arguing that the utility’s actions caused significant financial losses and created a legitimate expectation that the contract would continue.
KPLC denied any wrongdoing, stating that the delivery point was moved to Nyeri in July 2013 with the supplier’s written consent because it was more convenient. The utility also argued that it repeatedly extended delivery deadlines after the supplier failed to meet its obligations, but the remaining poles were never supplied.
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In its judgment, the court found that KPLC acted within the law in terminating the agreement after the supplier repeatedly failed to meet extended deadlines. The judge held that each extension granted was subject to specific timelines and that the supplier remained in breach despite the additional time provided.
The court further ruled that the contract had effectively expired before the termination notice was issued in January 2017 because Inter Tropical had failed to deliver the remaining 12,865 poles by the final deadline of November 1, 2015. It also found that the relocation of delivery points was a valid contractual amendment since both parties had agreed to it in writing.
The judge concluded that the supplier, not Kenya Power, was responsible for the contract’s collapse due to its persistent failure to perform its obligations. The court also rejected claims for payment for poles that were never delivered, noting that the agreement only required payment after delivery. Additional claims for losses linked to idle machinery, storage costs, depreciation and employee expenses were dismissed after the court found they had not been adequately substantiated.
