A company dealing in processing and exporting agricultural produce has sued Equity Bank (Kenya) Ltd seeking to be paid US Dollars 207,907.56 (KES 26.9 million) as specific damages being the purchase price (of a consignment of cashew kernels) unpaid to it.
Nuts & More Processing (EA) EPZ Ltd says that its claim against the bank arises from the bank’s negligence and failure to properly and diligently carry out its (company’s) instructions in relation to documentary collection transaction.
According to the company, on or about July 2025, it entered into a transaction with a company incorporated in the United Arab Emirates for the sale and export of cashew kernel ww 240 at an agreed purchase price of USD 207,907.56.
Nuts & More Processing (EA) EPZ Ltd claims that the sale transaction was expressly agreed to be undertaken on Cash Against Documents (CAD) where the consignee would be entitled to obtain original commercial and shipping documents and facilitate clearance and release of the goods upon payment of the agreed purchase price.
“The plaintiff (company) avers that the CAD arrangement was a fundamental term and commercial safeguard of the transaction, to ensure that the plaintiff retained control over the goods and the documents representing the same until the purchase price had been paid in full,” part of the case documents state.
In its case filed at the High Court in Mombasa, the company says that it engaged the bank to act as its remitting bank to transmit the original commercial and shipping documents to a collecting bank subject to its (company) express CAD instructions.
“By accepting the plaintiffs and undertaking to process the documentary collection, the defendant (bank) assumed contractual, common-law duties and professional obligations to the plaintiff,” Nuts & More Processing (EA) EPZ Ltd says.
The company says that on or about August 29, 2025, it dispatched the consignment through WEC Lines Kenya Ltd from the port of Mombasa for shipment to Jebel Ali, United Arab Emirates.
It says that following the shipment of the consignment and reliance upon the bank’s expertise and undertaking to process the documentary collection in accordance with the agreed CAD terms, it (plaintiff) delivered to the defendant the original commercial and shipping documents relating to the consignment.
“The plaintiff avers that the original documents were delivered to the defendant with clear, express understanding and instructions that the same would be transmitted to the collecting bank and released to the consignee only against payment of the agreed purchase price (USD 207,907.56),” the company says.
The company further says that on or about September 16, 2025, the bank informed it that it had transmitted the original documentary collection documents to the UAE, and the documents were subsequently delivered on September 18, 2025.
Nuts & More Processing (EA) EPZ Ltd says it subsequently discovered to its prejudice that somewhere in the chain of transmission, the original documents had been released to a third party, stranger to it, who was neither the consignee nor the addressed person nominated by the collecting bank.
It says that the consignment had been cleared on September 23, 2025, notwithstanding that it had not received the purchase price or any part thereof.
The company says that the release of the original documents without securing payment of the purchase price defeated the commercial purpose of the CAD arrangement and deprived it of the principal security and leverage upon which the transaction was structured.
Nuts & More Processing (EA) EPZ Ltd says to date, it remains unclear and unexplained how, when and to whom the original documents were released, notwithstanding the documents had been entrusted to the bank for transmission and collection strictly in accordance with its (company’s) instructions.
It says that the defendant’s negligent failure to ensure that the documentary collection was handled in accordance with the agreed CAD terms constituted a material breach of contractual duties, bank-customer relationship and the common law duty to act in good faith.
“The plaintiff avers that the defendant’s negligent acts and omissions including its failure to properly execute its (plaintiff’s) instructions and ensure strict compliance with CAD terms were the direct and effective cause of its loss,” says the company.
Nuts & More Processing (EA) EPZ Ltd says that the bank is liable to indemnify or compensate it for the loss directly resulting from its failure to properly execute its (company) mandate and to exercise reasonable skill, care and diligence in handling the documentary collection.
The company is also seeking a declaration that the bank breached its contractual duties, bank customer relationship, professional and common law duty to act in good faith in handling the transaction.
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