The plaintiff sued the defendant state organ for the balance of payment for construction services rendered in respect of a government-owned school premises. It contended that the defendant had failed to pay the agreed-upon amount timeously; his sum claim was therefore the unpaid balance plus compound interest. The defendant contended that the plaintiff had been paid in full – the principal amount plus simple interest for the period of delay. As the agreement was unwritten, the court had to establish its terms. The determination of the type of interest was integral as the parties had not considered this at the time of contracting.

That the defendant was in breach due to its prolonged delay in effecting payment was quickly established by the court. Considering the nature and purport of contractual damages, it established that compound interest was apposite. Examining the plaintiff’s exhibits of standard industry lending rates sourced from the Bank of Uganda, the court determined the correct rate of interest at 22% p.a. and ruled in favour of the plaintiff. It held further that the award of compound interest sufficiently compensated the plaintiff for its restitutionary and expectation interests, thereby obviating the need for general damages.