In a sharply worded section of the judgment, the court stated: ‘We are of the view that the loss of profits Haulage Agency would have made from the tender was recoverable, as CFC Stanbic Bank denied it the opportunity to proceed with the tender due to its negligent statement. This appeal is accordingly dismissed.’- Appellate judges Pauline Nyamweya, Agnes Murgor, and George Odunga
By TWV Business Desk
CFC Stanbic Bank has suffered a serious reputational and legal setback after the Court of Appeal found it negligent in handling a crucial bid bond that cost a Kenyan logistics firm a multi-million shilling tender. In a unanimous decision delivered on 5 June 2025, appellate judges Pauline Nyamweya, Agnes Murgor, and George Odunga upheld a High Court ruling that found the bank liable for failing to issue compliant tender security on behalf of its client, Haulage Agency Limited. The ruling not only confirmed the bank’s professional negligence but also opened the door for substantial damages to be awarded.
Haulage Agency Limited, which specialises in the importation, supply, and logistics of marine equipment and port infrastructure solutions, submitted a bid in mid-2011 to supply ten ribbed pneumatic rubber fenders to the Kenya Ports Authority (KPA). The tender required bidders to furnish a bid bond worth KSh 250,000, valid for 120 days from the tender’s closing date, which was 26 July 2011.
CFC Stanbic Bank, acting as the issuing bank, prepared and submitted the bond on the closing date. However, the bond carried an expiry date of 21 November 2011, one day short of the required 120-day validity. That discrepancy, though minor on the surface, proved fatal to Haulage Agency’s bid.
On 28 September 2011, KPA formally informed Haulage Agency that its tender submission had been rejected because the bid bond failed to comply with the stipulated 120-day validity. The document covered only 119 days.
Having already committed to importing the fenders on a CIF (Cost, Insurance, and Freight) basis for US$342,100 in anticipation of securing the tender, Haulage Agency claimed it was left with unsold inventory and a significant financial loss. The company sued CFC Stanbic for negligence, claiming special damages amounting to US$250,860, the profit it would have realised had the tender succeeded, as well as general damages.
CFC Stanbic Bank, in its defence, acknowledged the banker-client relationship but denied any wrongdoing. It contended that it had not received a crucial letter dated 12 July 2011 from Haulage Agency, which allegedly specified the exact terms required for the bid bond.
The Court of Appeal found this argument inadequate and unpersuasive. The bench took the view that the bank had an obligation to ensure that the financial instrument it issued met the tender requirements in full, particularly given its knowledge of the bond’s purpose and its potential consequences.
“We therefore find that the loss of the actual tender was not only foreseeable but also a proximate loss in the circumstances, given the Appellant’s actual knowledge regarding the purpose of the bank guarantee and the legal effect of that nonconformity,” the judges stated in their ruling. “It cannot therefore be argued that the loss of profits arising from the loss of the tender is too remote.”
In a sharply worded section of the judgment, the court added: “We are of the view that the loss of profits Haulage Agency would have made from the subject tender was recoverable, since CFC Stanbic Bank was responsible for denying it the opportunity to proceed with the tender as a result of its negligent statement. This appeal is accordingly dismissedMatter dismissed in its entirety.”
The ruling is being interpreted as a cautionary tale for financial institutions entrusted with sensitive instruments in public procurement processes. Legal experts say the judgment reinforces the duty of care that banks owe to their clients, particularly in situations where the risk of loss is not hypothetical but easily foreseeable.
“This decision could potentially reshape how banks approach the issuance of bid securities and other performance instruments,” says a commercial law advocate based in Nairobi. “It sets a clear precedent that even minor deviations from contract terms, if they lead to substantial loss, can result in heavy liability.”
Haulage Agency Limited, which has operated in the East African region for over a decade, welcomed the ruling as a long-awaited validation of its claim. CFC Stanbic Bank, part of the Standard Bank Group, has not issued an official response as of this writing. It remains unclear whether the bank will seek to escalate the matter to the Supreme Court or proceed to settle the awarded damages.
Either way, the judgment has cast a long shadow over the bank’s internal compliance systems and signalled a warning to the wider banking industry: in matters of public tender, there is no margin for error.
