Home Business MPs spare guarantors of loans from painful auctioneer’s gavel

MPs spare guarantors of loans from painful auctioneer’s gavel

by kenya-tribune

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President Uhuru Kenyatta holds the key to enactment of a Bill that will compel creditors to seize assets of defaulting borrowers before touching a guarantor’s property after it sailed through Parliament on Wednesday.

The MPs approved the Law of Contract (Amendment) Bill, 2019 through third reading and now awaits presidential assent to become law.

The National Assembly voted to approve the Bill sponsored by Juja MP Francis Waititu without any amendment.

Leader of majority Aden Duale only corrected a typographical error on the proposed law before it was cleared for onward transmission to the President.

The Law of Contract (Amendment) Bill, 2019, proposes that in case of a default by the principal borrower, the creditor should first auction the assets of the former before raiding the property of guarantors.

The Bill amends Section 3 of the Law of Contract Act that lays rules for signing of such agreements. The aim of the amendment is to ensure that the assets of a guarantor are protected.


The law currently allows creditors to seize the property of the guarantor in case of default by the principal borrower.

The Bill comes amid increased cases of lenders taking over guarantors’ property when borrowers fail to settle their dues.

The Bill seeks to end the current case where creditors see guarantors as hanging fruits in their bid to collect bad loans.

The approval of the Bill through Parliament defied Attorney-General Kihara Kariuki’s directive to delay debate on the proposal.

In June, Mr Duale informed MPs that he had turned down Mr Kihara’s request that debate on the Law of Contract (Amendment) Bill, 2019 be deferred.

“I have received a letter from the AG saying that we wait for more instructions. I want to tell Attorney-General that the legislative work of this House cannot be stopped.

“If you have issues as a government, you need to bring amendments to this private members Bill and not ask this House to step down the Bill,” said Mr Duale while initiating debate on the Bill on behalf of the sponsor, Mr Waititu.

On Wednesday, MPs unanimously endorsed the Bill without debate when it came up for clause by clause scrutiny at the Committee of the whole stage. The Bill was then approved through its third reading.

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