In Summary
  • Bill sails through floor of the House only needing presidential assent to take effect.
  • It 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.

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.

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