High Court Dismisses Muwema’s Claim to Property, Cites Flawed Contract Interpretation

By Frank Kamuntu

Fresh details emerging from a High Court commercial dispute have cast doubt on the legal arguments advanced by city lawyer Fred Muwema, with court findings indicating that his interpretation of an “option to purchase” clause was inconsistent with established principles of contract law.

The matter, arising from a case between Downtown Investments Ltd and M/S Muwema & Co Advocates, centred on whether a lease provision granted a binding right to purchase property or merely created a framework for future negotiations.

Court records show that while Mr Muwema relied on longstanding Commonwealth authorities to argue that the clause created an enforceable equitable interest, the court found that such an interpretation could not stand in the absence of certainty on key contractual terms.

The disputed clause fixed a purchase price of $2 million only within the first 12 months of the lease, expiring in December 2015. Beyond that period, the price was to be “determined by the market,” without any defined valuation method or mechanism to resolve disagreements.

Legal analysts note that under principles adopted in Uganda through the Judicature Act, enforceable options must contain clear and certain terms, particularly on price. In this case, the absence of a valuation formula rendered the clause too vague to support a binding sale agreement.

The court instead interpreted the provision as closer to a right of first refusal rather than a true option to purchase, meaning no enforceable interest could arise unless both parties subsequently agreed on essential terms.

In its findings, the court also emphasised that any expectation of a sale after the fixed-price window would require fresh negotiations, which in this case did not materialise into a concluded contract.

Justice Mutesi held that while the plaintiff may have expressed interest in purchasing the property, failure to reach agreement on price meant no vendor–purchaser relationship was ever created.

The ruling further dismissed reliance on precedents cited by the defence to justify a caveatable interest, noting that such protections only arise where a valid and enforceable option exists.

As a result, the court upheld the landlord’s position, affirming claims for rent arrears, mesne profits, and eviction following termination of the tenancy.

Observers say the judgment reinforces a key principle in commercial law: that courts will prioritise certainty in contractual terms over speculative or implied intentions.

The case is likely to serve as a reference point in future disputes involving option clauses, particularly where parties attempt to rely on loosely defined provisions to assert ownership interests.