By Infora Media
Kampala — Fresh details emerging from a High Court commercial dispute have cast doubt on arguments advanced by city lawyer Fred Muwema, after the court found his interpretation of a key contract clause inconsistent with established principles of contract law.
The case, involving Downtown Investments Ltd and M/S Muwema & Co. Advocates, centred on whether a lease provision constituted a binding “option to purchase” or merely created a framework for future negotiations.
Court records indicate that Mr Muwema relied on established Commonwealth legal authorities to argue that the clause created an enforceable equitable interest in the property. However, the court rejected this interpretation, citing lack of certainty on essential contractual terms.
At the centre of the dispute was a clause that fixed a purchase price of $2 million within the first 12 months of the lease, a window that expired in December 2015. Beyond that period, the agreement provided that the price would be “determined by the market,” without outlining a valuation method or dispute resolution mechanism.
Legal analysts note that under principles applied in Uganda through the Judicature Act, an enforceable option to purchase must contain clear and certain terms—particularly regarding price. In the absence of a defined valuation formula, the court found the clause too vague to support a binding sale agreement.
Instead, the court interpreted the provision as akin to a right of first refusal rather than a true option to purchase. This distinction meant that no enforceable interest could arise unless both parties subsequently agreed on essential terms.
In its findings, the court emphasised that any expectation of a sale after the expiry of the fixed-price window would require fresh negotiations. In this case, however, no such agreement was reached.
Presiding judge Justice Mutesi held that while the tenant may have expressed interest in purchasing the property, the failure to agree on price meant no vendor–purchaser relationship was ever established.
The ruling also dismissed reliance on precedents cited by the defence to justify a caveatable interest, noting that such protections only arise where a valid and enforceable option exists.
As a result, the court upheld the landlord’s claims, including rent arrears, mesne profits and eviction following termination of the tenancy.
Legal observers say the judgment reinforces a longstanding principle in commercial law—that courts will prioritise certainty in contractual terms over speculative or implied intentions.
The case is expected to serve as a reference point in future disputes involving option-to-purchase clauses, particularly where parties seek to rely on loosely defined provisions to assert ownership interests.