A High Court ruling ordering LC Waikiki Retail to compensate Bolloré Transport & Logistics Kenya more than KSh15.5 million is poised to reshape how companies structure outsourcing and supply-chain contracts, highlighting legal risks tied to pre-contract negotiations and implementation phases.
- •The case stems from a 2020 procurement process in which LC Waikiki sought warehousing, distribution and customs-clearance services.
- •Bolloré was nominated as the retailer’s logistics partner in early 2021 and began preparing for operations by leasing warehouse space, purchasing equipment and hiring staff ahead of a planned go-live date in June that year.
- •The logistics firm told the court that LC Waikiki abruptly disengaged from the arrangement on the planned launch date after months of joint planning and system integration work, leaving it with unrecovered investment costs.
Justice Njoki Mwangi ruled that a binding commercial relationship arose between the two companies through their conduct, meetings and implementation planning even though a formal logistics agreement was never signed.
LC Waikiki had argued that the nomination was only part of a procurement process and that no binding contract existed because a formal agreement was never executed and system integration had not been completed.
In a decision that could reverberate across Kenya’s outsourcing market, the judge ruled that weekly meetings, implementation planning, agreed timelines and a fixed go-live date demonstrated an intention to create legal relations.
The court also found that LC Waikiki’s actions created a legitimate expectation the deal would proceed and that promissory estoppel, a legal doctrine that allows a party to seek damages on the basis of a promise even where no formal contract exists, applied because Bolloré incurred costs in reliance on the retailer’s representations.
Integration delays cited by the retailer were deemed insufficient grounds for abrupt termination, with the court noting there was no formal notice of default or termination before the relationship was ended. The court awarded Bolloré KSh 15.53 million plus interest from June 2021 and legal costs.
