The Court of Appeal has confirmed that Uganda Breweries Limited (UBL) wrongfully ended its distributorship arrangement with Seroy Airport Hotel Ltd. It has ordered the brewery to pay the firm more than Shs1.59 billion covering damages, interest and costs.
Justices Cheborion Barishaki, Esta Nambayo and Musa Ssekaana delivered the unanimous ruling in Civil Appeal No. 001 of 2017, which stemmed from a 2016 High Court Commercial Division judgment.
The disagreement began after UBL named Seroy Airport Hotel as its distributor for the Najjanankumbi area in March 2013. While the first arrangement was meant to last three months, the two sides kept trading for a further five months until UBL ended the relationship on 20 November 2013.
Seroy took UBL to court, claiming the termination was illegal because it occurred without reasonable notice.
UBL countered that no formal distributorship contract had been signed and that Seroy had not achieved the expected sales and stock targets.
The Court of Appeal dismissed UBL’s claim that no binding contract existed. It ruled that the parties’ ongoing dealings after June 2013 had formed a contractual relationship through their conduct.
The court also pointed to UBL’s own termination letter, headed “Notice of Revocation of Appointment and Termination of Distribution Agreement,” noting that the language itself confirmed a distribution agreement was in place.
The judges held that UBL had violated the Contracts Act by ending the agency immediately without providing Seroy reasonable notice.
Section 139 of the Contracts Act, the judgment noted, obliges a party ending or renouncing an agency to give reasonable notice and to compensate the other side for resulting losses.
The court therefore confirmed that UBL’s termination on 20 November 2013 was unlawful.
The Court of Appeal also confirmed the High Court’s award of Shs345 million as damages in place of notice.
Although Seroy had not submitted audited accounts, the managing director’s evidence on monthly turnover remained unchallenged, and the trial judge had already reduced the amounts claimed substantially.
The appellate court further upheld the Shs19.4 million award for salaries paid to an operations manager, accountant and security guard after the termination.
It found that UBL had delayed collecting its stock and completing the promised reconciliation until June 2014, making it reasonably expected that Seroy would keep staff to protect and account for UBL’s property.
The court ruled that UBL was not entitled to call on Seroy’s bank guarantee before reconciling the accounts.
It granted Shs20 million in general damages for the unjustified call on the guarantee.
The judges also criticised UBL for demanding that Seroy make further investments—such as buying land and vehicles and obtaining a bank guarantee—before suddenly ending the relationship.
An extra Shs10 million was awarded for what the court called unexpected and capricious behaviour.
In addition, the court granted Shs63 million in special damages for the use of Seroy’s premises to store UBL’s goods for roughly nine months after the termination.
Interest was also ordered on Shs197.816 million that the court found had been wrongly withheld from Seroy.
This sum will carry interest at 10% per year from 20 November 2013 until full payment.
In its final orders, the Court of Appeal awarded Seroy Airport Hotel Shs1 million in nominal damages, Shs30 million in general damages under further heads, Shs1.5 billion in general damages and Shs63 million in special damages.
Interest was ordered on the Shs197.816 million at 10% per annum, and on the general damages at 6% per annum from the date of judgment until payment is completed.UBL was also directed to pay the costs of the appeal and the lower court proceedings.
The Court therefore dismissed UBL’s appeal and allowed Seroy Airport Hotel’s cross-appeal, confirming the High Court judgment as modified by the appellate court.
The ruling was delivered on 26 August 2026 by the three-member bench of Justices Cheborion Barishaki, Esta Nambayo and Musa Ssekaana.
