Introduction
Can a contract exist without ink on paper? The Court of Appeal has recently answered this question in the affirmative in Pride Inn Limited v Thatchmaanz Limited [2026] KECA 135 (KLR).
The case concerned the enforceability of an oral contract for certain works between the parties.
Brief Facts
Pride Inn Limited, a hotel operator, which guided by religious principles discouraged alcohol sales, faced declining revenues. In April 2014, Pride Inn entered an oral arrangement with Thatchmaanz Limited to supply and manage alcoholic beverage sales within its Nairobi hotels. Thatchmaanz was also to construct a bar at the Lantana Road Branch in Westlands.
Thatchmaanz performed the contract, investing capital, building the bar, staffing the premises, and supplying alcohol. Pride Inn, however, left invoices totalling Kshs. 2,104,770 unpaid save for a partial payment. Pride Inn later disowned the contract citing lack of authority and alleged regulatory illegality.
What Proves an Oral Contract?
The Court of Appeal affirmed that an oral contract is enforceable if it contains all the elements of a valid contract: offer, acceptance, consideration, capacity, and legality. The existence of an oral contract can be proved, often through receipts, emails, or witness testimony.
Pride Inn made an offer. Thatchmaanz accepted the offer not in words, but through the action of constructing a bar and commencing supply. Thatchmaanz invested resources and expertise while Pride Inn undertook to pay. The partial payment made by Pride Inn was compelling confirmation of the mutual obligations on both sides.
The court concluded, therefore, that though unwritten, the agreement was rendered certain through performance. Continuous supply, invoicing, staffing, and payment stripped the contract of any ambiguity.
On the lack of internal authority, the court held that negotiations took place in the presence of Pride Inn’s managing director and Chief Executive Officer. Pride Inn’s failure to call the managing director to deny authority disproved its claim.
The court also dismissed the defence of illegality (for lack of licences) holding that a party cannot rely on its own regulatory failures to escape contractual liability. Licensing obligations rested with Pride Inn, and transitional statutory provisions and county approvals further undermined the claim of illegality.
Conclusion
This decision sends a clear message: oral contracts are valid and enforceable. Where offer, acceptance, consideration, capacity, and legality are present, courts will enforce them. Businesses cannot enjoy the benefits of a deal and later disown it when the bill comes due because the agreement was not written down.
