ICT Africa Headline News

Unilateral Termination of Contract - Court Awards N20 Million Against MTN

12 June, 2014

Source: Vanguard

A Delta State High Court sitting in Warri, has awarded N20 million against MTN Nigeria Communications Limited in favour of Tatacoms Integrated Resources Limited for unilaterally terminating its contract.

The court also awarded N20,000 as cost in favour of the plaintiff.

Tatacoms Integrated, a retail outlet for MTN, and operator of MTN Connect Store, had dragged the company to court for terminating its contract.

MTN had, in its defence, said that Tatacoms failed to lodge money collected on its behalf into an agreed bank as at when due; did not properly manage the third party outlet and carried out unauthorised sim swap of a line belonging to the state governor, among others.

Tatacoms Integrated argued that what MTN did was to constitute a panel which investigated the allegations and never gave it an opportunity to respond to same, before going ahead to terminate the contract, which had made it to lose its monthly commission and other revenues.

Trial judge, Justice C. Achilefu, in her judgment, said: "On the issue of the defendant's displeasure on how the connect store was being operated, the claimant's averment that it was flood that destroyed most of the document, was not also investigated by MTN.

"I find as a fact that the defendant complained of certain breach of the agreement between defendant and the claimant, the claimant also proffered reasons for the breaches, remedied some of the breaches and the remedies proffered by the claimant were not investigated by the defendant and also the claimant was not given a fair trial by the key internal stakeholders. The key internal stakeholders on their own tried and decided the case of the claimant without his participation. It is my view that dispute arose between the claimant and the defendant, immediately the claimant alleged that the breach in lodgment of money was caused by Union Bank.

"On the issue of whether claimant is entitled to the relief claimed, the law is that the claimant must prove that it was the action of the defendant that led to the loss for which, he is seeking recompense. Failure to link the act of the defendant conclusively to the loss for which damages is being claimed can only lead to a dismissal of the claim for damages.

"The award of damages is purely within the precinct of the trial court. The power to award damages by the trial court is exercised in the circumstances of a judicious estimation of the loss to the victim once a breach of contract has been established.

"The defendant argued in his evidence before court that their contractors were being paid commission according to their performance. The commission the claimant also claimed he received monthly was not denied by the defendant. From the evidence of both the claimant and defendant, the defendant performed his part of the agreement until the defendant terminated the contract between the claimant and the defendant.

"In the case before me, considering the fact that the issue of unutilized transaction commission was not within the contemplation of the parties that the claimant as a result of the termination of the contract entered between the claimant and the defendant which resulted in the loss of commission that would have accrued to the claimant for the remaining period of the five years contract by the claimant is entitled to damages which is assessed at N20 million.

"In accordance with Order 35 Rule 7 of the High Court of Delta State (Civil Procedure) Rules 2009, I hereby order an interest at the rate of 10 percent per annum to be paid on the entire judgment debt commencing from the date of this judgment."

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