How a Single Day Cost Stanbic Bank Sh32.4 Million
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Stanbic Bank Kenya has lost a Court of Appeal battle that will now see it pay Sh32.4 million to Kenya Haulage Agency Limited, after a one-day error in a bid bond cost the logistics firm a tender from the Kenya Ports Authority (KPA).
In a judgment delivered on June 5, 2025, a three-judge bench comprising Justices Agnes Murgor, Pauline Nyamweya, and George Odunga found that the bank’s failure to issue a tender security valid for 120 days, opting instead for 119 days, was a critical misstep.
This deviation led to the disqualification of Kenya Haulage’s bid to supply KPA with 10 pneumatic rubber fenders in a 2011 tender.
The court determined that losing the tender was both predictable and directly caused by the bank’s error, especially since Stanbic was aware of the bond’s intended purpose and the consequences of not complying with the specified terms.
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The tender required a bid bond of Sh250,000 backed by a commercial bank and valid for 120 days. Kenya Haulage instructed CFC Stanbic (now Stanbic Bank Kenya) to issue the guarantee. The bank issued the bond, but its validity fell short by one day, prompting KPA to reject the bid on grounds of non-compliance.
Kenya Haulage, claiming it had already procured the goods for delivery, sued Stanbic Bank for $250,860 (Sh32.4 million) in lost profit. The company argued that the bank’s failure to meet the bond terms caused a direct financial loss.
Stanbic denied liability, stating it acted on instructions from Kenya Haulage’s director and had not been informed of the 120-day validity requirement. The lender further argued that even if the bond had complied, there was no certainty the company would have won the contract, and any claim of lost profit was speculative.
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In 2021, the High Court sided with Kenya Haulage. Justice Patrick Otieno found that the bank had received clear instructions and was liable for the resulting loss. He awarded the logistics firm special damages amounting to Sh32.4 million.
Stanbic appealed the decision, asserting that the trial judge had wrongly treated the matter as a breach of contract.
While the Court of Appeal agreed that the High Court had mischaracterised the cause of action, it still upheld the compensation, concluding that the result was the same even though the reasoning differed.
The appeal was dismissed entirely, and the bank was ordered to cover the costs of the case.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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