Toyota Kenya loses Sh383m tender row with car leasing firm

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Toyota Kenya showroom. FILE PHOTO | NMG

Toyota Kenya has lost a Sh383 million claim against a vehicle leasing firm for alleged breach of contract and delay in payment of some 500 vehicles purchased between February 2014 and 2017.

Justice David Majanja agreed with Vehicle & Equipment Leasing Ltd (Vaell) saying there is no evidence the firm accepted the terms imposed by the carmaker.

Toyota was demanding the Sh383 million arising from interest for late payments for the vehicles acquired by Vaell.

The Japanese auto firm says Vaell was obligated to pay for the 500 vehicles within 30 days after invoices were issued and the failure to pay on time attracted 3 percent interest.

But Vaell dismissed the existence of the penalty for late payment, prompting the court suit.

“In the circumstances, I hold that the Plaintiff (Toyota Kenya) is not entitled to claim nor has it established the claim for interest on late payments from the Defendant,” the judge said.

Vaell bought vehicles from Toyota which were leased to the State, in a deal inked in 2014, mainly for use by police, as the government sought to cut the expenses of buying vehicles.

The deal saw Toyota sell a total of 1,200 vehicles, which were initially leased to the government under the National Police Service Lease Scheme.

Vaell and the car dealer later fell out over delayed payments. Toyota claims that an agreement signed attracted an interest of 3 percent for delayed payments. The company then moved to court accusing the leasing firm of breach of contract for failing to pay the interest.

The judge said by presenting an invoice with fresh terms as to time of payment and interest on late payment, Toyota was in effect making a fresh offer.

He said in order for the offer to be effective, there had to be a meeting of minds which is an essential component for the formation of an enforceable contract.

“In this case, I find that the Plaintiff, by issuing an invoice containing different and additional terms as to interest, unilaterally introduced terms which constituted a variation on the terms of the agreement.

Alice Munene, a retired employee with Toyota explained that upon delivery of the vehicles, a delivery note was signed by the leasing firm acknowledging receipt.

Editor's note: This story has been revised to reflect that the court suit was between Toyota Kenya and Vehicle & Equipment Leasing Ltd and not the government as earlier indicated.