It is a well-settled principle under Kenyan law that a sole proprietorship lacks the legal capacity to sue or be sued in its own business name. This principle derives from the Registration of Business Names Act (Cap. 499, Laws of Kenya), which expressly provides for the registration of business names used by individuals or entities but does not confer upon such names independent legal personality. A business name is merely a trading style and not a legal entity separate from the proprietor.
As the courts have consistently held, only natural or juristic persons — including companies incorporated under the Companies Act, 2015 or other statutory bodies corporate — possess the requisite locus standi to institute or defend proceedings in their own name.
In Suleiman Murunga v Nilestar Holdings Limited & Another [2015] eKLR, the High Court affirmed that:
“A business name is not a legal person and cannot sue or be sued in its own name. It is merely a name under which the proprietor trades. The proper party in litigation must be the proprietor himself.”
Similarly, in Githambo General Contractors v Kay Construction CompanyLtd [2015] KEHC 5066 (KLR), the court held:
The only question for determination in this instance, therefore, is whether one can sue under a business name by which he trades rather than in his own name and whether a suit filed in the name of a business by which one trades is sustainable. This question was raised and answered in the case of Lakhmani Ramji versus Shivji Jessa & Sons (1965) E.A. 125. At page 128 of that decision the court (Rudd, J.) said:-
The legal position is quite clear. A sole proprietor of a business cannot sue in the name of that business if that name is not his own name. He should not even sue in his own name trading in the business name. He should sue in his own name simpliciter and then in the body of the plaint he can say that he carries on business in the name of whatever his business name happens to be and is the sole proprietor of that business. That is technically the correct procedure but nowadays rectification is allowed so easily that the matter is merely a technicality.
Nonetheless, the Small Claims Court Act, No. 2 of 2016, introduces procedural flexibility in recognition of the informal nature of some business entities that come before the court. The prescribed Replying Affidavit form annexed to the Statement of Claim allows a respondent to indicate the nature of their business — including sole proprietorship — thereby enabling the court to regularize the identity of the parties without necessarily dismissing proceedings on technical grounds.
Notably, that concept of the law is consistent with Order 1 rule 10 (1) of the Civil Procedure Rules, 2010 which provides that:-
10. (1) Where a suit has been instituted in the name of the wrong persons as plaintiff, or where it is doubtful whether it has been instituted in the name of the right plaintiff, the court may at any stage of the suit, if satisfied that the suit has been instituted through a bona fide mistake, and that it is necessary for the determination of the real matter in dispute to do so, order any other person to be substituted or added as plaintiff upon such terms as the court thinks fit.
Where applicable, the appropriate course of action is to file a response to the Statement of Claim, drawing the court’s attention to the fact that the named claimant (or respondent, as the case may be) is a business name representing a sole proprietorship. Accordingly, we shall submit that the proper party should be the individual proprietor named in accordance with the requirements of law, and that failure to do so renders the proceedings defective in form.
It is prudent to invite the court to either strike out the claim or direct that the pleadings be amended to reflect the proper parties.
Parting Shot: “A sole proprietorship has no legal personality of its own and cannot maintain an action in its business name. Legal proceedings must be instituted in the name of the proprietor.”
Disclaimer: This article is intended for general information purposes only and should not be construed as legal advice.
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