Beer maker Heineken E.A and Heineken B.V will pay Maxam Ltd over Sh 1.7 billion to Maxam Ltd for breach of contract after losing an appeal they lodged at the appellate court.
The court of appeal upheld the decision by the high court that had ordered them to pay Maxam Ltd the money for breach of contract.
Judges Pauline Nyamweya,Ali-Aroni and John Mativo all unanimously held that the Notice of Termination dated January 27 2016 from Heineken E.A to Maxam Ltd was unlawful, irregular, unprocedural and therefore null and void.
“We affirm and uphold the award by the High Court to Maxam Ltd of
special damages for loss of business of Sh 1,799,978,868.00 to be paid by Heineken E.A and Heineken B.V, arising from their repudiatory
breach of the Kenya Distribution Agreement,” the court ruled.
In their case, Heineken had argued that the judge erred by ruling that Maxam Limited had a legitimate expectation that the agreement would not be terminated.
Heineken told court that Maxam Ltd was aware, at the time
of contracting, of the investment it would have to make to fulfil its part of the bargain of the contract and the commercial risks of its contractual
obligations, and having considered the risk and benefits, willingly entering into the Kenya Distribution Agreement notwithstanding the termination clause.
In their response, Maxam maintained that the termination notice was illegal, unprocedurally issued, invalid, null and void adding that the notice was issued on a “without prejudice” basis meaning therefore,
it had no legal implications as regards Clause 17 of the Kenyan
Distribution Agreement between Maxam Ltd and Heineken E.A.
