A distributor stops paying for delivered goods. A contractor leaves site before completion. A supplier delivers material that does not meet the specification. When one party does not perform its side of a bargain, the next question is practical: what can the other party recover, and what should it do first? This article explains the remedies available under Kenyan law and the evidence a claim depends on.
Quick answer
The main remedies are damages, termination of the contract, specific performance, an injunction and, in some cases, rescission. Damages are the usual remedy and are measured by compensation, not punishment. The remedy should follow the commercial objective, and the documents gathered early often decide how much loss can be proved.
Breach and termination
A breach occurs when a party fails to perform a contractual obligation, performs it late, or performs it defectively. It can also occur before performance is due, where a party makes it clear that it will not perform. Kenyan law starts from the terms the parties agreed. The first task is to read the contract and identify the obligation, the standard it sets and the consequence it attaches to failure.
Not every failure justifies ending the contract. The contract may define what counts as a material breach, provide a cure period, or require a notice before termination. Where it does not, the question is whether the breach goes to the root of the contract or deprives the innocent party of substantially the whole benefit expected. The firm’s contract practice reviews these questions before a termination decision is taken.
Termination ends future performance but does not erase rights already accrued. In practice, most termination disputes turn on the notice. A party that terminates without following the contractual machinery may itself be in breach. Before a termination letter is sent, check the notice clause, any cure period, the required recipient and the method of service, and keep proof of delivery.
Where the contract is ended for a repudiatory breach, the innocent party should state the ground clearly and preserve its claim for losses already suffered. Ending the contract and claiming damages are not inconsistent, but the wording of the termination letter matters.
Damages: the compensatory principle
Damages aim to place the claimant, so far as money can, in the position it would have occupied had the contract been performed. The claimant must prove the loss rather than assert it, and it must take reasonable steps to limit the loss instead of allowing it to grow. Losses that are too remote, or that could reasonably have been avoided, may be reduced or refused.
Lost profit, wasted expenditure, the cost of substitute performance and the cost of repair can all be recoverable where proved. A claim for loss of reputation or distress in a commercial contract is more difficult and usually needs a contractual basis. Interest and costs are decided by the court or tribunal, and the contract may contain a term on interest.
Specific performance and injunctions
Specific performance asks the court to order performance of the contract rather than payment of damages. It is discretionary and usually reserved for cases where money would not be adequate, such as a contract for a unique asset or for land. Courts are cautious about ordering a person to perform personal services.
An injunction can restrain a party from acting in breach of the contract, such as using confidential information, breaching a non-compete obligation or disposing of assets in breach of a negative covenant. Injunctions are often sought urgently, so the application should be supported by clear evidence of the breach and of the harm that would follow.
Agreed remedies: liquidated damages and deposits
Parties can agree in advance what a breach will cost. A genuine pre-estimate of loss may be enforced as liquidated damages. A provision that operates as a penalty, punishing rather than compensating, may not be enforced. Deposits, forfeiture and acceleration clauses raise similar questions, so drafting and commercial context both matter.
Where the contract fixes the remedy, the claimant may still need to show that the triggering event occurred. Clear definitions of delay, default and cure reduce the argument at that stage.
Defences and limits on recovery
The defendant may argue that there was no breach, that the contract was varied or waived, that the claimant caused or contributed to the loss, that the loss was not reasonably foreseeable, that the claim is out of time, or that the claimant failed to mitigate. Limitation periods apply to contract claims, so the date of the breach and the date of knowledge should be established early. The general framework for contract is set by the Law of Contract Act (Cap 23), and common law and equity principles apply through the Judicature Act (Cap 8); Kenya Law publishes both.
Insolvency is a practical limit as well as a legal one. Before substantial costs are incurred, check whether the other party can pay a judgment or award, because enforcement is a separate stage.
Choosing between a claim, negotiation and settlement
Litigation is one route among several. A demand letter supported by the documents, with a clear deadline and a realistic figure, resolves a significant number of commercial breaches before filing. Mediation or arbitration may be required by the contract before court proceedings. The article on contract clauses that prevent disputes explains the escalation terms to check, and the article on limitation periods for commercial claims explains why timing should be confirmed early.
Cost is a factor in the choice. Court proceedings carry filing fees, advocate’s fees under the applicable remuneration rules, and witness and expert costs. Arbitration carries tribunal, institutional and party costs. A settlement may recover less than the claim but avoid the cost, delay and uncertainty of a contested hearing. The firm’s commercial litigation practice advises on the route, and the contract practice advises on the underlying rights.
What evidence a claim needs
| Evidence | What it proves |
|---|---|
| The signed contract and any amendments | The obligations, the standard of performance and the remedy agreed |
| Invoices, delivery notes and payment records | Performance, amounts due and the state of the account |
| Correspondence, notices and emails | Breach, notice, waiver and the other party’s position |
| Specifications, inspection and expert reports | Whether performance was defective and the cost of remedy |
| Records of loss and mitigation steps | The quantum claimed and efforts to limit it |
When to take advice
- Termination is being considered or a notice has been received.
- The claim is substantial or the contract is cross-border.
- Urgent relief may be needed to preserve assets, evidence or confidential information.
- There is doubt about the other party’s ability to pay.
- The contract requires mediation or arbitration before court.
- The limitation position is unclear or time is passing.
Primary sources
- Law of Contract Act (Cap 23), Kenya Law, for the statutory framework of contract.
- Judicature Act (Cap 8), Kenya Law, for the application of common law and equity in Kenya.
- Judiciary of Kenya, for court structure and procedure.
This article is general information, not legal advice.