Uganda

Agency contract in Uganda è governed by the Law of Contract (Part X), where è is defined as the agreement whereby a person (agent), in the absence of any bond whatsoever, s'undertakes to habitually promote and conclude purchases and/or sales, as well as; all other business transactions in the name and on behalf of a principal merchant (principal).

The law does not provide any special formalities for the validity of the agency contract, in fact the entire relationship is devolved to the contractual autonomy of the parties. It follows that the agency contract in Uganda may’be drafted in English or other language. In light of the inherent characteristics of the contract type, such as pliability and avoidance of formalisms, the agency contract in Uganda represents the most widespread and widely used instrument for commercial purposes.

Unless the parties agree otherwise, the national law specifies the obligations and duties to which they are subject for the duration of the contractual relationship. In the event of termination of the agency contract itself, Ugandan law requires the predetermination by the parties of a reasonable notice period identified in relation to the duration of the contractual relationship. Failure to comply with the aforementioned notice period shall entitle the agent to fair compensation, as well as compensation for any damages suffered, if properly proven.

Generally speaking, the agency contract is terminated for serious breach of contract by the agent, or at the agent’s request. In addition, extinguishing causes may include other circumstances not attributable to the principal, particularly brought about by the agent’s age or illness.

The agency contract is terminated by the agent.

Uganda has ratified the 1958 New York Convention on International Arbitration, with the result that, within the contractual text, it is possible to include a clause providing for the jurisdiction of an arbitral tribunal to hear and decide any disputes that may arise.

In addition, Uganda is governed by the so-called Arbitration and Conciliation Act of 2000, which is a detailed regulation of arbitration that allows, therefore, the parties to insert within domestic and international contracts an arbitration clause, or to avail themselves of it in the form of a separate and supplementary agreement to the contract concluded between the parties. It should be noted that under the above rule, the arbitration agreement must be in writing ad substantiam. The choice of law applicable to the contract may fall on either Ugandan or English law at the discretion of the parties.

Ugandan law does not provide specific regulations for the distribution contract. It will still be possible to refer to the law of contract; however, since it is an atypical case, it will be necessary for the parties in the formation of the agreement to specify as much as possible the contractual aspects and terms, as is the case in other common law jurisdictions.

This type of contract è widely used in Uganda, where, in order to enter into the franchise contract, reference can be made not only to the contract law but also to the investment code and common law acts. The sector in which most franchise contracts are entered into è is the telecommunications sector. Also on the rise appears to be the renewable energy sector, which is increasingly adopting this model. In Ugandan practice, any contract that transfers a technology or expertise can include a franchise agreement; however, in order for the contract to take effect, it must be registered with the Investment Authority.

Necessary requirements and standard clauses of the franchise agreement

According to the regulations governing investments, in order for a franchise contract to produce legal effects between the parties, it must contain the following requirements, including some mandatory clauses, which are indicated as examples only:

• Starting date of the agreement;
.
• Name of the parties;
• Assignment of rights;
• Confidentiality agreement;
• Royalties expected at the time of payment;
• Intellectual property rights;
• Clause governing dispute resolution;
.
• Date of termination of the contract;
.

From a tax perspective, a “foreign franchisor” is subject to taxation as a nonresident entity. This is by virtue of the rule that an agreement entered into with a non-resident entity on Ugandan soil cannot be treated as a domestic franchise. In this view, the foreign franchisor è a taxpayer subject to a 15 percent withholding tax on profits, with the consequence that from a tax point of view, it is more convenient for a foreign economic operator è to maintain the nonresident status, rather than adopt the resident status. This is because in recent years the state has gradually eliminated the tax incentives previously provided for domestic resident business operators. In fact, currently a domestic franchise è is subject to withholding tax at the rate of 30 percent, a circumstance that makes this form of contract economically unbalanced.

In 2013, Uganda’s National Bureau of Standards (UNBS) published the final version of the draft standards on the regulation of labeling to be placed on pre-packaged products. The published standards outline the requirements that the label on pre-packaged products must contain, namely:

• The'identityà of the product;
• The name and place of business of the manufacturer, packer, distributor, importer or person in charge of retail sales;
• The net quantity of the product.

In cases where the product wrapping is not transparent, the label must be clearly visible in order to enable the product to be easily identified.

In addition, only products found to comply with the standards can be marked with the UNBS certificate of approval. The UNBS certification can only be used by holders of an appropriate license issued by the UNBS for the purpose of certifying products with the specific mark. The presence of this mark on a product or in relation to a given product guarantees that the goods marked by it è comply with the requirements of industry standards and that the same è has been subjected to appropriate controls before being placed on the market.

The country boasts a rich ecosystem, a circumstance that enables it to rank among the largest exporters of agri-food products. In fact, on the world export market scene Uganda achieves a primary role for coffee’export. Moreover, the widespread presence of the cotton plant, with desirable help (political, economic and business management and organization) could, in the very short term, result in the expansion of the textile manufacturing sector.

Recently, there has also been a sharp increase in the service sector brought about by the rapid growth of telecommunications, financial services, trade and tourism.

This growth has been a strong draw for investors, especially foreigners, and has been well supported by the extensive privatization program promoted by the current government. Uganda ’was one of the first African countries in which the phenomenon of liberalization became widespread, affecting in particular the telecommunications sector, where several private companies now operate.

The Ugandan legal system denotes strong British influences stemming from British colonial rule. In particular, corporate and commercial laws are shaped by the English-dominated common law system and custom, which, however, only applies where it does not conflict with state law. In addition, in the area of commercial law, the importance of the ’”Uganda Commercial Law Reports” is noted, which consists of an annual collection of the most relevant pronouncements of the Commercial Section of the Supreme Court of Uganda, the first edition of which was published in 1996.

Business relationships with foreign entities are mainly established on the archetypes of agency and distribution contracts.