The High Court has compelled Rivatex East Africa Ltd to complete a contract worth more than Sh100 million it signed with a Chinese firm, but was cancelled by the garment maker following the outbreak of the Covid-19 pandemic.
Justice Rueben Nyakundi allowed the petition as sought by King Investment Management Ltd, saying the contract with Rivatex EA Ltd for the supply of polyester and viscose fibres dated February 4, 2020, is valid and enforceable.
Rivatex cancelled the tender claiming that it could not be performed following the outbreak of the Covid-19 pandemic, which impacted negatively on its manufacturing operations and beyond its control.
Further, the company argued that it later discovered that the Chinese firm had quoted double the market prices and the company no longer existed, having been wound up in 2019.
Justice Nyakundi dismissed the defence, saying Rivatex ought to have done due diligence before awarding the contract to the supplier.
“I have considered the evidence tendered, the facts of the case and the testimony of the witnesses and I can only conclude that the defendant had no legal reasons to terminate the contract and therefore, the manner in which it was terminated was unlawful, irregular and in breach of the contract,” said the judge.
The judge said it was surprising for the garment maker to evaluate tender documents, and proceed to award the same to a legal entity but in the cause of implementation, do a search and conclude that it was awarded to a different firm.
“The argumentation about its identity is a strange addition by the defendant to run away from the terms of the contract,” the judge added.
The judge said before the cancellation of the contract, the parties acknowledged that legal steps had been taken by the Chinese company to implement a part of the bargain of sourcing for the materials.
The contract worth $803,660 was awarded to King Investment Management Ltd in January 2020 but was cancelled on March 26, 2020.
Lucy Zhang for the Chinese firm said Rivatex advertised for an open international for supply and delivery of polyester and viscose staple fibres on December 17, 2019.
She said the letter of notification provided that the contract was to be signed within 30 days of the date of notification before it was signed by both parties.
On February 28, Rivatex assured them that the contract would be executed.
Ms Zhang said the company procured all the raw materials and put in place all logistics as they waited for the letter of credit but were shocked to be informed of the cancellation and Rivatex re-advertising the tender.
Tecla Tum, Rivatex's legal officer, told the court that the contract was cancelled upon discovery that the Chinese firm’s prices were double the market prices.
