Engen Ltd Malawi v Kachingwe t/a Michiru Station (260 of 2015) [2016] MWCommC 481 (15 February 2016);














                        D. Mlauzi, of counsel for the plaintiff

                        M. Ngoma (Miss), of counsel for the defendant

                        M. Chirundu, Court Clerk



The plaintiff took out an originating summons seeking the determination of the following questions;

  1. Whether the purported termination by the defendant of the Retail Dealer Agreement as expressed in her letter amounts to a breach of contract by the defendant.


  1. Whether termination of the Agreement as purported by the defendant in her letter contravenes the whole purpose and essence of express terms in commercial agreements and is commercially unviable, unreasonable and unsustainable to the plaintiff and therefore unlawful.


  1. Whether or not the court should issue an order of specific performance ordering the defendant to perform the Agreement as specifically stipulated therein until the Agreement expires or alternatively make an order for damages against the defendant for breach of contract if the defendant terminates the Agreement as purported in her letter.


The defendant vehemently opposes the originating summons and has filed an affidavit in opposition. By way of counterclaim she seeks the following declaratory orders from the court:

  1. That the contract signed between the parties is unconscionable and an order discharging her therefrom and allowing her to terminate it on giving the plaintiff reasonable notice.


  1. That the restriction clauses in the Agreement are unreasonable for failing to provide a clause allowing the defendant to terminate it and that on its totality the Agreement is unreasonable and unfair and that the defendant should be discharged therefrom.


The plaintiff is an importer, distributor and marketer of petroleum products in Malawi. Previously it was trading as Chevron Malawi Limited. The defendant is the owner of premises located in Lunzu within Blantyre District where she operates a filling station under the style Michiru Service Station. By a written agreement signed on 30 May, 2011, (hereinafter “the Agreement”) the plaintiff appointed the defendant to market and sell the plaintiff’s products at her premises. It was agreed that the defendant would only sell petroleum products supplied by the plaintiff. It was also agreed that the Agreement would subsist for a period of 10 years. It was further agreed that only the plaintiff could terminate the Agreement by giving notice in writing if the defendant committed any acts of breach specified in clause 16 or breached any other clause of the Agreement. As it is, it meant that it was agreed that the defendant would not have the liberty to terminate the Agreement. However, on 11 August, 2015, four years into the Agreement, the defendant wrote the plaintiff giving 90 days’ notice of termination of the Agreement. The plaintiff refused to accept the termination arguing the absence of liberty to terminate on her part. The parties met to discuss the notice but failed to agree. The defendant was adamant that she would terminate the Agreement on the expiry of the notice. The plaintiff then took out the present proceedings seeking the determination of the aforesaid questions.


The defendant says that the Agreement is unconscionable and against the principles of contract as well as against her constitutional rights to own property and engage in economic activities. She says despite the fact that she spent her own money to acquire and to renovate the premises, and also to set up the business, she has no rights or privileges under the Agreement. It (the Agreement) only obligates her to operate the business at no profit and at the absolute mercy and discretion of the plaintiff. On the other hand, the Agreement makes it easy for the plaintiff to terminate it if at any point in time things turn out to be against the plaintiff’s business interests, or indeed, for any other reason the plaintiff may think of and on notice period that the plaintiff may deem fit. The defendant further says that on or around 30 May, 2011 she was made to sign the Agreement which was drafted by the plaintiff without her input and that she was not given ample time to carefully read it and/or consult on it. As a result the Agreement favors the plaintiff to her detriment. It is unconscionable and exploitative. She constructed the premises on her own without any assistance from the plaintiff and yet the business as currently operated is only benefiting the plaintiff and not the defendant.    


The defendant says she does not want to do business with the plaintiff anymore for various reasons including poor communication systems or ways. Apparently the plaintiff believes in verbal communications and on short notices which makes it difficult for the defendant to operate efficiently, making unilateral decisions which negatively affect the defendant’s business, failing to render financial assistance to her in times when she was desperate for funds for servicing her bank loan, oppressive and unfavorable restrictions and requirements on delivery of products which cause delays in supply of products resulting in the defendant staying without fuel for a number of days which seriously disadvantages her against her competitors, failing to embrace modern technological innovations in the industry in its operations such as the Fuel Card System thereby limiting the defendant’s customer base since these days most organizations including Government buy petroleum products through fuel cards.


The plaintiff says that the purported termination of the Agreement by the defendant is against the express provisions of the Agreement which does not allow the defendant to terminate it in the manner purported or at all. The Agreement is scheduled to run until 30 April, 2021as such the purported termination is a clear breach thereof. Further, the plaintiff says that it has invested a lot of money in dispensing equipment, signage and other services installed at the defendant’s filling station, and has jointly with the defendant developed and marketed the plaintiff’s brand. It was for this substantial investment that the Agreement expressly provided that it would subsist for at least ten years as such the purported termination would render the investment commercially unreasonable, unviable and unsustainable. And that since the plaintiff’s investment is long term it would offend the whole purpose, nature and essence of the Agreement and the plaintiff’s market strategy if the defendant and others in similar circumstances were allowed to terminate the Agreement simply to serve their own convenience. The plaintiff is bound to suffer substantial loss, including loss of brand development, goodwill and market share if the defendant were allowed to terminate the Agreement as she is purporting to do.


I have heard counsel in submission and there are also written argument before me for which I am very grateful. In this judgment I have not mentioned all the arguments that were advanced before me, still less all the references that were properly drawn to my attention. But it is my belief  and hope that I have expressly considered the main points, but, where I have not specifically dealt with submissions, that is not because I regard them as unworthy of consideration or have dismissed them out of hand. I have tried to weigh all the evidence and submissions, but also attempted to keep this judgment not unnecessarily long.


The law as I understand it is that where parties have reduced their agreement in writing they are bound by the terms as contained in the written agreement. Neither of them may adduce evidence to show that his or her intention has been misstated in the contract document. This is commonly called the “parol evidence rule”, see Maria Chinzala v Total Malawi Ltd Commercial Case Number 68 of 2011. And a party signing a document is taken to have read and agreed with its contents, L’Estrange v Graucob Ltd [1934] 2 KB 394. Of course, there are exceptions to this general rule. These include, where a party’s signature has been obtained through misrepresentation, whether fraudulently or otherwise, Curtis v Chemical Cleaning & Dyeing Co. [1951] 1 All E.R. 631, or where a person of full age and capacity executes or signs a document that is essentially, radically, fundamentally or very substantially different from the one they intended to execute or sign. In such a situation the plea of non est factum can be invoked, Saunders v Anglia Building Society [1971] A.C. 1004, Commercial Bank of Malawi v Phiri 11 MLR 4 and Lloyds Bank Plc v Waterhouse (1991) 10 Tr.L.R. 161. The law places the burden on the party seeking to disown his signature to prove that the document is not what he intended to sign. He must also show that he exercised care. And there is no burden on the opposite party to prove that he did not exercise care, Saunders v Anglia Building Society (supra).   


In the present case there is no doubt that the parties voluntarily entered into the Agreement. There is also consensus that the defendant signed the Agreement voluntarily. From the law as presented above, the defendant should be taken to have read and agreed with the terms of the Agreement and is therefore bound by the terms of the Agreement. The burden is on her to prove before the Court that her case falls within the exceptions to the general rule. She says that the Agreement was drafted by the plaintiff and only given to her at the plaintiff’s offices when she had gone there to place an order for delivery of fuel. The plaintiff disputes this and says that she did not sign the Agreement on the same day it was given to her which means that she had time to go through it and or even consult on it.

Paragraph 9 of the defendant’s affidavit in opposition is very revealing. In it the defendant states:

“That sometime in May 2011 we were informed verbally by the Plaintiff herein who had now taken over operations from Chevron Limited that the initial contract entered into between Chevron Limited and my parents had expired. At the material time, the Plaintiff’s officer, Mr. Sam Ulaya requested me that I sign the retail dealer agreement. At that point, I was not given an opportunity to consult or sufficiently and adequately read the dealership agreement with so many clauses and pages. However, owing to the fact that my parents had worked with the Plaintiff’s predecessor in title I did not at that time have any reservations to sign the contract as I was of the firm belief that the agreement, like any other standard agreement duly made provision for the protection of my rights and interests. I was therefore unable to read it and consider it prior to these proceedings. Nevertheless, a copy of the agreement I obtained after the commencement of these proceedings is shown to me and exhibited as “BK2”.”  

What I make out of this clause is that when given the Agreement the defendant chose not to read it or seek advice on it. She ‘believed’ that she would have no reservations on it because it must have been the same as the contract her parents, who ran the filling station before she took over, had entered into with the plaintiff’s predecessors, Chevron Limited. She ‘believed’ that the Agreement was a standard dealership contract and that it contained provisions safeguarding her rights and interests. However, the defendant has not demonstrated to the Court the basis of her ‘belief’. She has not told the Court whether or not she had seen and known the contract that her parents had signed with Chevron Limited. Further, she has not produced that contract before the Court in order for the Court to see for itself if it is different from the Agreement she signed. At the same time the defendant has not produced the standard dealership agreement whose wording she thought the Agreement had adopted. In the result there is no evidence before the Court proving that the Agreement is in any way different from the contract that her parents entered into with Chevron Limited or that it is different from the alleged standard dealership agreement. As things are, it is difficult for the Court to believe the defendant’s averments. The impression created is that she must have read the Agreement and agreed with its contents or if she did not read it then it means that she never really cared about the contents of the Agreement. She was prepared to accept anything that was put therein. If indeed she entertained such belief, which is very doubtful in the circumstances, then I find that such belief was unfounded.

The defendant has argued that her situation is similar to that of the defendant in Commercial Bank of Malawi v Phiri (supra) where the court found that the defence of non est factum was available to the defendant. Briefly, the facts of the case are that the defendant owned a farm where he grew tobacco. Over a period of years, the plaintiff advanced money to him to finance the operations of the farm, each time willingly extending the defendant’s overdraft facility. Shortly after one such extension, the defendant was arrested and put in prison. To avoid disruption of work on the farm, the plaintiff drew up an agreement without consulting the defendant, which granted all powers of management of the farm to the plaintiff’s subsidiary company, Commercial Bank of Malawi Farm Services Ltd (CBMFS) which was incorporated in October 1978. In August 1978, the defendant was taken from prison to the Southern Region Police Headquarters where he was required to sign the management agreement, which he did without reading it or knowing its contents. By the time the defendant came out of prison and resumed the management of the farm, CBMFS had overdrawn the account considerably. He refused to pay the amount overdrawn during his internment and the plaintiff took out an action seeking to recover the amount arguing that the amount was advanced at the defendant’s request or at least with his authority, as delegated to CBMFS by the management agreement. The defendant denied liability on the ground that he did not authorize CBMFS to run the farm and pleaded non est factum in respect of the management agreement. Giving judgment for the defendant Unyolo J (as he then was) said (at page 8):

“Referring to the present case, it is significant, in my judgment, that neither the plaintiff nor CBMFS consulted the defendant before the management agreement was drawn up. It is also significant that neither the plaintiff nor CBMFS sent a copy of the management agreement, or a draft thereof, to the defendant in advance, so as to give him ample time to read it and know what it was about. Indeed, it must be appreciated that the management agreement is couched in legal terms and is quite lengthy, some six foolscap pages. Further, it must be appreciated that the defendant signed the management agreement in a police station, having been brought directly from prison. Obviously, human nature being what it is, it cannot be said that the defendant was truly a free person in the circumstances. Indeed, I am disposed to believe the defendant’s testimony that he was simply requested to append his signature to the document and that he did so without reading it. With respect, I do not think that any negligence or carelessness can be attributed to the defendant for signing the management agreement in these circumstances. I am satisfied on the available evidence that the defendant would not have put his signature to the management agreement had he been made aware of its character and/or effect…I am satisfied that there are exceptional circumstances in this case, and that the defence of non est factum is available to the defendant.”

In my judgment this case can be distinguished from the present case. First and foremost, the defendant in this case was incarcerated in prison and was only brought out to sign the agreement. He signed it at a police formation, obviously under police surveillance and also with very limited time given to him. Clearly. He had no opportunity to read the agreement. In the present case the defendant had been dealing with the plaintiff and knew that there was need for a new contract since the old one made by her parents had expired. It is clear from the evidence before the Court that she is a well-informed woman and very literate and is not a stranger to commercial transactions. She had obtained a loan from the bank for the reconstruction of her filling station and no doubt the idea of agreements was not new to her. As per her own evidence she knew that the Agreement contained the terms and conditions that were to govern her business relationship with the plaintiff. She was a free person and could have had the time to read (assuming she did not read it) and understand its contents if she had wanted to do so. There is no evidence that she was pressured into signing it. There is no evidence that she was induced into signing the Agreement by any misrepresentation on the part of the plaintiff. She knew exactly what she was signing – the Agreement. The circumstances herein are therefore fundamentally different from those in the case of Commercial Bank of Malawi v Phiri (supra) which she seeks to rely on. The present case is similar to the Maria Chinzala case where a plea of non est factum was rejected because there was no evidence to prove that the plaintiff’s signature was induced by any misrepresentation on the part of the defendant. The plaintiff knew what she was signing – a Marketing Licence Agreement - and that was the document she had intended to sign. She was thus held to be bound by the terms of the agreement.

As earlier stated herein the evidence in the present case clearly shows that the defendant did not care much about what was contained in the Agreement. In my judgment that is evidence of negligence or indeed carelessness on her part. She cannot therefore avail herself of the defence of non est factum, Saunders v Anglia Building Society (supra) and Commercial Bank of Malawi v Phiri (supra). Further, the evidence shows that the document she intended to sign was the Agreement and that is the document that she actually signed. I do not therefore see how she can escape from its terms and conditions. In my judgment she is bound by the full terms and conditions of the Agreement.  

The defendant has also argued that the Agreement is unconscionable, unfair and restrictive and that the defendant should be discharged therefrom. It must be stated at this point that as a general principle of common law of contract, parties are free to agree on whatever terms they want to govern their contractual relationship, Suisse Atlantique Societe d’Armement Maritime SA v N.V. Rotterdamsche Kolen Centrale [1967] 1 A.C. 361 and Photo Production Ltd v Securicor Transport Ltd [1980] A.C. 827. And modern legal policy favors the furtherance of trade, as such, commercial men are accorded the utmost liberty of contracting, Homburg Houtimport B.V. v Agrosin Private Ltd (The Starsin) [2003] UKHL 12, [2003] 3 W.L.R. 711. As such the court will not add to the agreement which the parties have made by implying a term merely because it would be reasonable to do so, but only where it is necessary, Liverpool City Council v Irwin [1977] A.C. 239. It is also clear from the authorities that courts are unwilling to strike down contracts on the ground simply that one of the parties suffered from an inequality of bargaining power, National Westminister Bank Plc v Morgan [1985] A.C. 686. However, the courts are willing to set aside a contract where it is shown that the other party engaged in unconscionable conduct or an unconscientious use of power, Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1985] 1 All E.R. 303. In Boustany v Piggot (1995) 69 P. & C.R. 298 the Privy Council stated the following principles which were also adopted by the Court of Appeal in England in Irvani v Irvani [200]1 Lloyd’s Rep.412:

  1. There must be unconscionability in the sense that the objectionable terms have been imposed on the weaker party in a reprehensible manner;
  2. “unconscionability” refers not only to the unreasonable terms but to the behavior of the stronger party, which must be morally culpable or reprehensible;


  1. Unequal bargaining power or objectively unreasonable terms are no basis for interference in equality in the absence of unconscionable or extortionate abuse where, exceptionally and as a matter of common fairness, “it is unfair that the strong should be allowed to push the weak to the wall”;


  1. A contract will not be set aside as unconscionable in the absence of actual or constructive fraud or other unconscionable conduct; and


  1. The weaker party must show unconscionable conduct, in that the stronger party took unconscientious advantage of the weaker party’s disabling condition or circumstances.

Applying these principles to the present case I am unable to agree with the defendant that the Agreement is unconscionable. As already indicated, prior to the defendant the filling station was operated by her parents. They had done so for a long time. They dealt with the plaintiff’s predecessors, Chevron Limited. The defendant decided to reconstruct the filling station with a view of improving its capacity, ambiance and attraction to customers. Chevron Limited said they could not assist her in the project. She had to use her own resources. She therefore borrowed the sum of K45 million from the bank for the project. No evidence has been adduced to show that the defendant was under a duty to continue dealing with the plaintiff after the reconstruction of the filling station. In any event, even if she were so obliged, she was free to change to another fuel company when her parents’ contract with Chevron Limited expired. The fact that she chose to continue with the plaintiff implies that she was happy with them and the business relationship that existed between them. And the fact that she now thinks it is not the best deal on the market does not mean she is entitled to terminate the Agreement. In essence, that is what the law of contract seeks to guard against.

As I have already stated herein, there is no evidence that she was pressured or duped into signing the Agreement. There is no evidence that there was any form of misrepresentation about the Agreement from the plaintiff. She clearly knew what she was signing and what it contained. On the totality of the evidence before the Court, I do not see how one can say that the plaintiff acted in a manner that is morally culpable or reprehensive. I do not find anything that the plaintiff did in respect of the Agreement or the manner in which it was executed that “shock the conscience of the court” (as per Peter Millett QC sitting as a Deputy High Court Judge in Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1983] 1 W.L.R. 87, 94-85) or raises goose bumps on the court’s body, as it were. The defendant has not produced any evidence to show that there were any disabling conditions or circumstances which the plaintiff through unconscionable conduct, took unconscientious advantage of when coming up with the Agreement.in short, the defendant has failed to satisfy the principles outlined above which would compel the Court to set aside the Agreement.

The fact that the Agreement does not give the defendant the liberty to terminate the contract on notice in my view is not per se evidence of unconscionability on the part of the plaintiff. Is it not normal for a business person to seek to entrench his interests in a contract as one way of avoiding unnecessary disruption of business and the attendant losses? I am sure it is. And I think that is what the plaintiff tried to do here. They feared that the defendant might not run the full course of the Agreement and thus frustrating their business expectations and the returns on their investment in the defendant’s filling station. Thus, they decided not to give the defendant the liberty to terminate the contract. As things have turned out, the temptation is to think that probably the plaintiff was right in entertaining the fear that the defendant might want to terminate the Agreement at will and for no apparent reason but only to suit her convenience. The defendant says she wants to switch to Puma Malawi Limited because they are better and use technological innovations in their business. In my considered view, it is important that people must know and acknowledge that it is not always that you get the best deal on the market and that the fact that your deal is not the best on the market does not mean it is a bad deal. In any case the market is dynamic - what is best today may not be good tomorrow. Business acumen demands that you must pick lessons from your deals and be more alert and thorough next time. That is what the defendant should do. She must run the full course of the Agreement picking her lessons and undertake to be more vigilant in future.

In conclusion it is my judgment that on the facts of this case and the law, and on a balance of probabilities, which is the requisite standard in civil matters, the defendant’s counter claim cannot be sustained. It therefore fails in its entirety and it is dismissed.


On the other hand it is my judgment that, on a balance of probabilities, the plaintiff has proved its case. The plaintiff is therefore entitled to judgment in its favour. I would thus answer the questions in the originating summons as follows:


  1. The purported termination by the defendant of the Retail Dealer Agreement as expressed in her letter amounts to a breach of contract by the defendant.


  1. The purported termination of the Agreement by the defendant in her letter contravenes the whole purpose and essence of express terms in commercial agreements and is commercially unviable, unreasonable and unsustainable to the plaintiff and therefore unlawful.


I do not think it is proper and just to relieve the defendant of her obligations under the Agreement. The plaintiff wants to see the contract through to the end. I do not think it will be impossible for the parties to continue to do business. I have considered the defendant’s supplementary submissions regarding the remedy of specific performance. I do not agree that the continued business relationship between the parties will result in any unconscionable hardship to the defendant. It is clear from the evidence that the defendant is trying to be greedy. She thinks what she is getting from the contract is less than what she would get if she changed fuel suppliers. As I have already said that is not a reason good enough to justify relief from a contract. Again, as earlier said, there is no evidence showing that the plaintiff has acted fraudulently or that it has taken any unfair advantage of its superior bargaining power (if any) in as far as the Agreement is concerned. I do not therefore see why an order of specific performance cannot be granted. It is my considered view that on the facts of this case and the law as presented justice and business fairness demands that this Court grants the plaintiff’s prayer for an order of specific performance ordering the defendant to perform the Agreement as specifically stipulated therein until the Agreement expires, which I hereby do. The defendant will bear the costs of the proceedings.


Pronounced at Blantyre this 15th day of February, 2016.