No Contract, just receipts

During the 2020/2021 cashewnut season, my licensed warehouse was awarded a tender by a cooperative union to store raw cashewnuts. We received the nuts, issued warehouse receipts, and stored them without signing any formal contract with the union. Months later, the union claimed the nuts had shrunk and were unmarketable. They accused us of breach of contract and demanded compensation. Under pressure, I paid TZS 40 million, especially since criminal charges were being considered against some of my directors. I feel like I was treated unfairly. Was there even a binding contract if we never signed one? Please guide me.
KJ, Mtwara

Your concern is both valid and common in commercial practice. Many business relationships begin informally, based on trust and mutual understanding, but when disputes arise, the absence of a formal contract can lead to confusion and vulnerability.

Under the Law of Contract Act [Cap 345 R.E. 2023], a contract does not need to be in writing to be enforceable. What matters is whether there was an offer, acceptance, consideration, and intention to create legal relations. In your case, the cooperative union delivered goods to your warehouse, and you accepted them and issued warehouse receipts. These receipts are not mere acknowledgments they are legal instruments that establish a bailment relationship and define your duty to safely store the goods. By issuing those receipts, you assumed responsibility for the condition and safekeeping of the cashewnuts. This conduct creates a binding contract, even in the absence of a signed document. The doctrine of estoppel further prevents you from denying the existence of a contract after acting on it. Courts often rely on such conduct to infer contractual obligations. Consult your lawyer to assess for further guidance