The High Court Commercial Division in Kampala has delivered a decisive judgment ordering Bencher Investments & Trading Co. Ltd and its director, Eric Olobo, to pay Uganda Breweries Limited a staggering Shs5.19 billion, together with commercial interest and legal costs, in a protracted dispute over unpaid supplies.
In a detailed ruling delivered on March 17, 2026, Justice Stephen Mubiru found that the distributor had defaulted on a long-standing credit arrangement and failed to honour a subsequent debt restructuring agreement, leaving Uganda Breweries exposed to massive financial loss.
A decade-long business relationship turns sour
The case traces back to February 2010 when Uganda Breweries appointed Bencher Investments as an official distributor of its beverages in the northern districts of Lira, Pader, and Amolatar. Under the arrangement, the distributor regularly placed orders which were supplied on credit.
Over the years, the business relationship deepened, with Uganda Breweries extending significant credit facilities to support distribution. However, by December 2017, Bencher Investments had accumulated a debt of Shs5.19 billion.
In an attempt to salvage the relationship and recover the outstanding sum, both parties entered into a “Framework Agreement to Manage Distribution Debt” on December 15, 2017. The agreement laid out a structured repayment plan and was backed by a debenture over the company’s assets. Crucially, director Eric Olobo executed a personal guarantee, effectively committing himself to repay the debt if the company defaulted.
Despite these safeguards, Bencher Investments failed to meet its obligations. Uganda Breweries issued a demand notice in February 2020, but no payment was made, prompting the brewer to seek court intervention in 2021.
Defence collapses in court
In its defence, Bencher Investments attempted to disown the 2017 agreement, claiming that Olobo had acted without the knowledge or approval of other directors. The company alleged that he falsely presented himself as managing director, forged signatures, and unilaterally committed the firm to the debt restructuring plan.
The defence further accused Uganda Breweries of mismanaging the distributorship, including allegations that the brewer’s staff diverted products to South Sudan in violation of the agreement, thereby contributing to the losses.
However, these claims failed to stand up in court. The defendants did not actively pursue their defence during the hearing, allowing the case to proceed ex-parte. Justice Mubiru noted that the allegations were not supported by evidence and remained mere assertions.
Court affirms director’s authority
A central issue in the case was whether Olobo had authority to bind the company. The court found overwhelming evidence that he had long acted as the face of Bencher Investments in its dealings with Uganda Breweries.
Justice Mubiru ruled that even in the absence of formal board resolutions, a company can be bound by the actions of a director who is held out as having authority. The judge emphasized the doctrine of “ostensible authority,” which protects third parties who rely on the apparent authority of company officials.
The court concluded that Uganda Breweries had every reason to believe Olobo had the mandate to execute the 2017 agreement, noting that he had previously signed the original distributorship contract and managed the company’s day-to-day operations.
On the issue of alleged forgery, the judge was unequivocal: such claims require strict and convincing proof. In this case, none was provided. The court dismissed the allegations, affirming the validity of the agreement.
Debt proven beyond doubt
Uganda Breweries presented extensive documentary evidence, including invoices, delivery notes, dispatch records, and account reconciliation statements, all pointing to the outstanding debt.
The court found that these records clearly demonstrated that Bencher Investments had received goods on credit and failed to pay. With no evidence of repayment or challenge to the figures, the court held that the debt was fully proved.
Justice Mubiru underscored that once a creditor establishes the existence of a debt, the burden shifts to the debtor to prove payment—something the defendants failed to do.
Personal guarantee seals Olobo’s liability
The judgment also firmly enforced the personal guarantee signed by Olobo. The court ruled that as guarantor, he became immediately liable upon the company’s default.
Justice Mubiru explained that under the law, a creditor is entitled to pursue both the principal debtor and the guarantor simultaneously or separately. In this case, both Bencher Investments and Olobo were found jointly and severally liable, meaning Uganda Breweries can recover the full amount from either party.
Massive financial consequences
The court entered judgment in favour of Uganda Breweries and ordered:
- Payment of Shs5,193,418,449.64 as the outstanding debt
- Interest at a commercial rate of 20 percent per annum from August 31, 2021 until full payment
- Costs of the suit
The judge declined to award general damages, reasoning that the high commercial interest adequately compensates Uganda Breweries for the loss of use of its money over time.
Broader implications
The ruling sends a strong message to corporate entities and their directors about the risks of informal governance and the weight of personal guarantees in commercial transactions.
It reinforces the principle that companies cannot evade contractual obligations by later disputing internal authority, especially where third parties relied on established patterns of representation. It also highlights the courts’ strict approach to claims of forgery and the heavy burden required to prove them.
For lenders and suppliers, the decision underscores the importance—and enforceability—of securing debts through guarantees and formal agreements.
The judgment marks a significant victory for Uganda Breweries in one of the more substantial commercial recovery cases in recent years, while leaving Bencher Investments and its director facing a steep financial reckoning.
