The court considered whether parties that are shareholders in a company are parties to a contract and can therefore be sued for breach. The court confirmed the general test for joinder of a party to a court suit is that the case will legally affect the interests of the person to be joined or it is shown that a potential defendant will not have a defence in another matter unless joined to the case. The court held that just because a party owns shares in a company does not make them a party to the contract as a company has separate legal personality. Further, because such a party cannot be party to a contract they cannot be sued for termination or breach.
The court also emphasised that where a company has not been incorporated in Uganda, it does not exist in law and hence cannot sue or be sued. In this case the court ruled that the company that was not incorporated could not be a party to the suit. Although, the rules permit minor amendments to pleadings, where the parties have been wrongly cited, such that it goes to the substance of who are the parties are, such an error cannot be amended, and a fresh suit will have to be instituted.
The court accordingly dismissed the civil suit.