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New Bill to change buyer, supplier agreements drastically

By Fred Aminga
Friday, December 13th, 2019


Contracts between suppliers and buyers must now contain minimum requirements, including terms of payment, payment date, interest payable, mechanism of dispute resolution, and conditions of contract termination or variation.

This follows President Uhuru Kenyatta signing into law the amended Competition and Insurance Bills which now empowers the Competition Authority of Kenya to review contracts and agreements between suppliers and buyers to determine cases of abuse of buyer power.

The Competition (Amendment) Bill, 2019 was submitted to the National Assembly during the reading of the 2019/2020 budget to separate the legal provisions on abuse of buyer from those on abuse of dominant power.

“The Act further empowers the Competition Authority of Kenya to require sectors which have a potential for abuse of buyer power to develop a binding code of practice,” read a PSCU statement.

The Competition (Amendment) Act, 2019 also has the object of addressing challenges of delayed payments afflicting the retail sector, and many others.

According to CAK, the amended Act tackles practices constituting abuse of buyer power which include delayed payment by a buyer without justifiable reasons in breach of contractual terms.

The authority says the new law will also tackle issues to do with unilateral termination of commercial agreements without notice; transfer of costs; and a buyer’s refusal to receive or return goods without justifiable reasons and in breach of contractual terms, among others.

“The Act provides that all buyers and suppliers develop and adhere to an industry code of practice. In instances where the code is breached by either party, the matter can be escalated to the Authority,” CAK said in a statement.

The Act also provides that all professional association who do not seek an exemption of their rules and regulations which are contrary to the Competition Act No.12 of 2010 will have committed an offence and will be liable, if convicted, to imprisonment for a maximum of 5 years or a maximum fine of Ksh10 million, or both.

As for the Insurance (Amendment) Act, 2019, it introduces provisions for the protection of policy holders where an insurer is in distress and the assets are put in statutory management.

The new law empowers the Insurance Regulatory Authority (IRA) to prescribe the manner of submission of various kinds of returns, and provides for a penalty for late submission, which shall be payable into the Policyholders' Compensation Fund.

It is also expected to strengthen the regulatory framework of the insurance industry particularly premium collections and payment of claims.

The amended insurance law introduces requirements for insurance companies to regularly submit premium levy returns and claims payment returns to IRA.