The High Court has ordered Turkish fashion retail chain store LC Waikiki Retail KE Limited to pay a logistics firm Sh15.5 million for costs incurred in preparation to provide logistics services in a deal that was later terminated.
In its ruling, the court determined that a legally binding contract existed between LC Waikiki and Bolloré Transport & Logistics Kenya Limited despite the absence of a formal written agreement.
The judgment emphasised that the conduct of the two parties created enforceable contractual obligations, even though a final logistics services agreement was never signed.
Bolloré had filed suit against LC Waikiki, claiming it spent over Sh15.5 million on warehouse space, equipment, IT systems and labour after being nominated as the retailer’s logistics partner.
The logistics firm argued that LC Waikiki issued a Request for Quotation (RFQ) in July 2020, specifying volumes and storage ratios, and that Bolloré’s technical and commercial proposal was accepted.
A nomination letter dated January 28, 2021, confirmed the partnership, leading both firms to jointly plan for a June 15, 2021, launch date.
Contract by conduct
The court found that the evidence demonstrated more than mere pre-contractual negotiations.
“A contract may arise from the conduct of parties even where they contemplate the execution of a formal written agreement at a later stage,” the ruling stated, citing legal precedent that mutual commitment through conduct and correspondence can establish a binding agreement.
Bolloré’s witness testified that LC Waikiki repeatedly adjusted volumes and storage ratios during implementation planning but assured the logistics firm that these changes were temporary and would revert to the original figures.
Acting on these assurances, Bolloré made substantial investments, including securing additional warehouse space and equipment.
However, on the agreed launch date, LC Waikiki informed Bolloré that it would not proceed with the logistics services, citing integration challenges and operational issues.
Bolloré maintained that it had incurred significant losses in preparation for the contract and that LC Waikiki refused to compensate for these expenses.
LC Waikiki denied liability, arguing that the RFQ was merely an evaluation tool and not a binding contract, and that any engagement was contingent upon the execution of a formal agreement.
The retailer also claimed that Bolloré’s systems failed integration tests and that the logistics firm attempted to include unacceptable clauses in draft agreements.
Court rejects defence
The court dismissed these arguments, ruling that both parties had engaged in joint planning, meetings and implementation activities that demonstrated an intention to be legally bound.
“The defendant’s participation in weekly meetings, provision of implementation plans, engagement of its IT team, and setting of a go-live date objectively demonstrated an intention to be bound,” the judgment stated.
Additionally, the court found that LC Waikiki’s conduct created a legitimate expectation that the partnership would proceed, noting that the retailer never cautioned Bolloré against incurring preparatory costs or indicated that the nomination could be withdrawn without consequences.
The ruling also applied the doctrine of promissory estoppel, concluding that LC Waikiki’s assurances led Bolloré to act to its detriment, making it unjust for the retailer to deny liability after encouraging substantial expenditure.
Regarding damages, the court accepted Bolloré’s evidence, including invoices, receipts and payment records, which LC Waikiki did not dispute.
The court ruled that the expenses were “reasonably incurred in reliance on the defendant’s representations” and directly resulted from the terminated agreement.
It underlined the legal principle that binding contracts can be formed through conduct, even in the absence of a formal written agreement.
