When General Damages Might Be Awarded for Breach of Contract

It is a general rule that general damages are not recoverable for breach of contract. This proposition has been accepted by the Court of Appeal of Kenya in a long line of decisions, beginning with the East African Court of Appeal decision in Dharamshi v Karsan [1974] EA 41 and reaffirmed in Provincial Insurance Co East Africa Ltd v Nandwa LLR No. 867 (CAK) and Securicor Courier (K) Ltd v Benson David Onyango & another [2008] KECA 349 (KLR).

The rationale is that losses arising from breach of contract are usually quantifiable. They are not left at large. Where losses can be quantified, they cease to be general. Contractual damages aim to place the injured party in the position they would have been in had the contract been performed. They are compensatory and must be proven with particularity.

In Dharamshi v Karsan [1974] EA 41, Mustafa J.A expressed the view that general damages are not allowable in addition to quantified damages as such an award would amount to duplication. The Court of Appeal in Habib Zurich Finance (K) Limited v Muthoga & Another [2002] 1 EA 81 cited with approval the decision of the Court of Appeal for Eastern Africa in Dharamshi v Karsan where that court held:

“This case has been accepted by this court as an authority for the proposition that general damages cannot be awarded for breach of contract and that proposition makes sense because damages arising from a breach of a contract are usually quantifiable and are not at large. Where damages can be quantified they cease to be general.”

The Exception: Exceptional Conduct

Despite this general rule, the courts have carved out a narrow exception. General damages may be awarded for breach of contract where the defendant’s conduct is oppressive, high-handed, outrageous, insolent or vindictive. This elevates the claim beyond mere breach into conduct the court wishes to condemn.

The Court of Appeal in Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited [2016] KECA 56 (KLR) recognised this exception. The appellant conceded that while the general legal principle is that courts do not normally award damages for breach of contract, there are exceptions when conduct meets that threshold. However, the court found that the mere fact that the appellant wrote several letters to the respondent without remedial measure being undertaken immediately did not amount to oppressiveness, insolent or vindictive behaviour. The correspondence was responded to explaining what was being undertaken.

In Delilah Kerubo Otiso v Ramesh Chander Ndingra [2018] KECA 376 (KLR), the Court of Appeal affirmed the existence of the exception. The court held that the appellant’s conduct was oppressive, high-handed, outrageous, callous and underhanded. The appellant had received a deposit and other payments, requested the respondent to redeem a charge on the suit premises, and then engaged in a disappearing act, only to reappear to invoke section 7 of the Land Control Act and declare the transaction void. The court stated:

“In our view, the appellant’s conduct was oppressive, highhanded, outrageous, callous and underhanded, to say the least. We could go further and suggest that what he was engaged in, bordered a fraud. The appellant from the word go never had the slightest intention of honouring the agreement.”

The court distinguished Jogoo Kimakia Bus Services Ltd v Electrocom International Ltd [1992] KECA 48 (KLR), noting that in that case the breach did not amount to the exceptional conduct required to warrant general damages. The respondent in Jogoo Kimakia had made numerous visits to the site and telephone calls requesting payment, but had not quantified the loss. The Court of Appeal held that the loss suffered was capable of compensation by nominal damages and set aside the award of general damages, substituting an award of Kshs 25,000 as nominal damages.

The Evidentiary Burden

Pleading and proving exceptional conduct is a mandatory step. It cannot be an afterthought. In Capital Fish, the Court of Appeal stated that having conceded to the general proposition, it was incumbent upon the appellant to lead evidence so as to bring the respondent’s conduct into the exceptions. The fact that the respondent took no corrective action, only making incessant promises, was not itself evidence of high-handed, outrageous or insolent conduct.

In Fit-Tight FA-Steners Limited v Akiba Bank Limited [2026] KECA 139 (KLR), the Court of Appeal affirmed this position. The appellant sought damages for breach of contract but had not pleaded or established that the respondent’s conduct fell within the exceptions. The court noted:

“It was not clear whether Fit Tight sought General or Special Damages. If it was the latter, it failed to specifically plead as expected. If it was the former, then, it failed to plead and establish that the conduct of the Bank fell within the exceptions, for example that it was oppressive, insolent, highhanded, outrageous or vindictive. The need to plead this conduct is informed by the need to give the other party an opportunity of confronting that accusation during the hearing.”

The Distinction Between General and Special Damages

It is important to understand the distinction between general and special damages. General damages are awarded in respect of such damages as the law presumes to result from the infringement of a legal right or duty. Damages must be proved but the claimant may not be able to quantify exactly any particular items. Special damages are the precise amount of pecuniary loss which the claimant can prove to have followed from the particular facts set out in the pleadings. They must be specifically pleaded. (See Chitty on Contracts 26th edition paragraph 1772 and Jogoo Kimakia Bus Services Ltd v Electrocom International Ltd [1992] KECA 48 (KLR).)

Where a claimant quantifies what they consider to have been the loss suffered and particularises the same, there would be no basis upon which the court would go ahead to award a different, unrelated, unclaimed and unquantified sum merely because the court believed that the claimant had suffered serious damages. To do so would be to engage in sympathetic sentimentalism as opposed to proof-based judicial determination. (Kenya Tourist Development Corporation v Sundowner Lodge Limited [2018] KECA 312 (KLR).)

The Distinction Between Nominal and General Damages

In Jogoo Kimakia Bus Services Ltd v Electrocom International Ltd [1992] KECA 48 (KLR), the Court of Appeal distinguished between nominal and general damages. The court cited Earl of Halsbury LC in Medina and the Mediana [1900] AC 113, 116 who defined nominal damages:

“Nominal damages is a technical phrase which means that you have negatived anything like real damages, but that you are affirming by your nominal damages that there is an infraction of a legal right which, though it gives you no right to any real damages at all, yet gives you a right to the verdict or judgment because your legal right has been infringed. But the term nominal damages does not mean small damages.”

The court held that where a breach of contract is proved but no quantifiable loss is established, nominal damages may be awarded. The court awarded Kshs 25,000 as nominal damages, having found that the respondents proved the breach but failed to prove the actual amount of loss flowing from the breach.

Conflicting High Court Decisions

There is conflict in High Court decisions on whether general damages are available for breach of contract. Some decisions have awarded general damages where the conduct of the defendant fell within the exceptional circumstances. Others have adhered strictly to the general rule. This has created uncertainty for practitioners.

This very issue has been considered by the Supreme Court of Kenya. In Sundowner Lodge Limited v Kenya Tourist Development Corporation (Application E039 of 2023) [2023] KESC 100 (KLR), the applicant sought certification of an intended appeal as involving a matter of general public importance. The applicant argued that the Court of Appeal’s decision that general damages are not payable for breach of contract had caused confusion in legal practice and resulted in conflicting decisions.

The Supreme Court held that the issue did not raise a matter of general public importance. The Court noted that the Court of Appeal decision merely affirmed the trite, well-established and settled principle of law that general damages cannot be awarded for breach of contract. The Court further observed that the appellate court acknowledged known exceptions to this rule, as delineated in Capital Fish Kenya Limited, and reaffirmed by its subsequent decisions including Delilah Kerubo Otiso v Ramesh Chander Ndingra [2018] KECA 376 (KLR).

The Supreme Court stated:

“Examining the judgments of the superior courts submitted by the applicant, it is manifest that the High Court appreciated the general rule that general damages are not normally awarded in breach of contract cases save for exceptional circumstances upon which it proceeded to award general damages to the respondent. Likewise, on appeal, the Court of Appeal acknowledged the general rule and was not persuaded that the authorities cited by the trial court supported the proposition that in cases of breach of contract there exists a large and wide-open discretion to a court to award any amount of damages, in addition to the quantified damages.”

The Current Position of the Law

The law is now settled. The Supreme Court in Sundowner Lodge Limited v Kenya Tourist Development Corporation affirmed that the Court of Appeal did not misinterpret its previous decisions that general damages are not awardable for breach of contract except in exceptional circumstances, which have to be justified. The Court concluded that this issue is well settled and the issue of contradictory previous decisions does not arise.

The Court of Appeal in Total (Kenya) Limited Formally Caltex Oil (Kenya) Limited v Janevams Limited [2015] KECA 822 (KLR) affirmed this position, stating:

“As a general rule, there can be no damages for breach of contract. This was the holding of this Court in Provincial Insurance Co East Africa Ltd v Nandwa LLR No. 867 (CAK). In Habib Zurich Finance (K) limited vs. Muthoga & Another. [2002] 1 EA 81 at page 88 cited with approval the decision of the Court of Appeal for Eastern Africa in the Case of Dharamshi vs. Karan (supra) where that court held as follows:

‘This case has been accepted by this court as an authority for the proposition that general damages cannot be awarded for breach of contract and that proposition makes sense because damages arising from a breach of a contract are usually quantifiable and are not at large. Where damages can be quantified they cease to be general.’”

However, the court also noted that where there has been some loss arising from such breach, then damages may be awarded so as to put the claimant in a good position as if there had been no such loss.

Strategic Implications for Practitioners

For the plaintiff’s practitioner, several lessons emerge from the case law.

**Clarity in Pleadings is a Must. **

Vague claims for “damages for breach of contract” or “simply damages” are insufficient. You must distinctly specify whether you are claiming special damages or grounding a claim for general damages in exceptional, egregious conduct. In Fit-Tight FA-Steners Limited, the appellant asserted it sought neither specific nor general damages but “simply damages.” This lack of clarity was fatal. The court held that the damages sought could be categorised into either special or general damages. The appellant did not prove special damages as required by law, and had failed to demonstrate that the respondent’s conduct fell under the exceptional circumstances.

**Pleading Exceptional Conduct is Mandatory. **

To succeed on general damages, you must plead and prove conduct that is oppressive, high-handed, outrageous, insolent or vindictive. This requires evidence. Correspondence expressing dissatisfaction is insufficient. In Capital Fish, the court found that the mere fact that the appellant wrote several letters to the respondent without remedial measure being undertaken immediately did not amount to oppressiveness, insolent or vindictive behaviour. The fact that the respondent took no corrective action, only making incessant promises, was not itself evidence of high-handed, outrageous or insolent conduct.

**The Burden of Proof. **

The plaintiff bears the burden of proving the exceptional conduct. In Delilah Kerubo Otiso, the court found that the appellant’s conduct was oppressive, high-handed, outrageous, callous and underhanded. The appellant had received substantial payments, requested the respondent to redeem a charge on the suit premises, and then engaged in a disappearing act. The court was satisfied that this conduct crossed the threshold required to warrant an award of general damages.

Nominal Damages as a Fallback.

Even where a breach of contract is proved but no quantifiable loss is established, nominal damages may be awarded. In Jogoo Kimakia, the court awarded Kshs 25,000 as nominal damages. The plaintiff had proved the breach but failed to prove the actual amount of loss flowing from the breach. The court found that the respondents were innocent in the performance of their part of the contract but the appellants took them up the garden path and refused to pay.

Alternative Claims Should be Considered.

If a contract is unenforceable, consider alternative avenues like restitution for unjust enrichment or quantum meruit. These must be framed clearly and separately from contractual breach. In Fit-Tight, the appellant argued that the respondent was unjustly enriched by keeping the deposit money from August 2004 to September 2005, and that the appellant was entitled to interest on that amount at commercial rates. However, the court did not address this argument as the appellant had not properly pleaded or proved the claim.

How to defend a claim for General Damages

For the defendant’s practitioner, the starting point is to challenge the legal basis for any claim for general damages. The plaintiff must have pleaded and proved exceptional conduct. If they have not, the claim should fail.

If the plaintiff has pleaded exceptional conduct, challenge the sufficiency of the evidence. Mere assertions are insufficient. The conduct must be proven. In Capital Fish, the court found that the mere fact that the appellant wrote several letters to the respondent without remedial measure being undertaken immediately did not amount to oppressiveness, insolent or vindictive behaviour.

Even where the plaintiff has pleaded and proved exceptional conduct, the court’s discretion remains. The award must be reasonable and justified. The court will not award an amount that is disproportionate to the loss suffered. In Kenya Tourist Development Corporation, the Court of Appeal set aside an award of Kshs 30 million as general damages, finding that the trial judge had whimsically and capriciously imposed that figure, literally plucking it out of the air. The court held that the award had neither been pleaded nor proved, and there was no legal basis for it.

The Defendant’s Counter-Arguments. A defendant faced with a claim for general damages should consider the following counter-arguments:

First, challenge the plaintiff’s characterisation of the claim. Is it truly a claim for general damages, or is it a claim for special damages masquerading as a claim for general damages? If the plaintiff has quantified their loss, it is special damages, and the strict proof requirement applies.

Second, challenge the sufficiency of the evidence on exceptional conduct. Mere allegations are insufficient. The plaintiff must prove oppressive, high-handed, outrageous, insolent or vindictive conduct. Correspondence expressing dissatisfaction is insufficient.

Third, if exceptional conduct is proved, challenge the quantum of damages. The award must be reasonable and justified. The court must provide a basis for the award. In Kenya Tourist Development Corporation, the Court of Appeal set aside an award of Kshs 30 million because the trial judge had given neither explanation nor had a basis for the award.

Fourth, consider whether the plaintiff has mitigated their loss. The duty to mitigate arises immediately a plaintiff realises that an interest has been injured by a breach of contract. The plaintiff cannot claim as damages any sum which is due to their own neglect. In Safe Rentals Limited v Leisure Lodge Limited t/a Leisure Lodge Hotel Club Casino [2012] KECA 105 (KLR), the Court of Appeal reduced the plaintiff’s claim for special damages because the plaintiff had failed to mitigate its loss by not retaking possession of the safes for one year after the respondent had installed its own safes.

Fifth, consider whether the plaintiff has pleaded and proved special damages. If the plaintiff has claimed special damages but failed to prove them, the claim for general damages may fail. In Total (Kenya) Limited, the court set aside the award of special damages because the plaintiff had relied on proforma invoices which did not amount to specific proof. However, the court upheld the award of general damages as it found that the termination was not justifiable and was illegal.

Conclusion

Drafting a claim is not a mere technical exercise. A misstep in categorising damages can unravel a meritorious case. Think beyond the breach. Think about the legal basis of the agreement, the nature of the losses, and the conduct of the opposing party. Mastery lies in aligning these elements with the precise remedies the law permits.

The decision in Fit-Tight FA-Steners Limited reminds us that success in litigation seeking damages is not achieved by just proving that a wrong occurred. It requires correctly framing that wrong as a specific legal injury that merits a precise and recognised legal remedy.

The Supreme Court of Kenya has now affirmed that the position is settled. General damages are not recoverable for breach of contract except in exceptional circumstances. The exceptions are narrow and must be proved with evidence. Practitioners must approach claims for general damages with caution and ensure that all necessary elements are pleaded and proved.

Authored by Benson Odiwuor; Advocate of the High Court of Kenya

This article is a publication of the Litigation Practice Notes series, featured in The BOLD Newsletter. For questions, clarifications, or suggestions on this or related subjects, contact the author directly: insights@bensonodiwuor.com /info@bensonodiwuor.com