Government of Zanzibar v British Aerospace (Lancaster House) Ltd

Last updated

Government of Zanzibar v British Aerospace (Lancaster House) Ltd
Turkmenistan British Aerospace BAe-125-1000B Zammit-1.jpg
Zanzibar wanted to purchase a BAe 125 1000.
CourtHigh Court
Citation(s)[2000] EWHC 221 (Comm), [2000] 1 WLR 2333
Keywords
Misrepresentation,

Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] EWHC 221 (Comm) is an English contract law case, concerning misrepresentation.

Contents

Facts

The Government of Zanzibar wanted to buy an executive jet from British Aerospace. They entered a contract with a finance company. That company bought the plane and leased it back to the Government. The plane was faulty. It was returned to British Aerospace. It was repaired but the faults continued. The Government stopped paying instalments on the lease agreement. The finance company took possession of the plane and sold it. The Government brought an action against British Aerospace to rescind the contract, or alternatively get damages under MA 1967 s 2(1) or s 2(2). It said representations were made that the plane was airworthy, reliable and without design or construction defects. British Aerospace claimed that counter restitution (i.e. putting the parties back in their original position, giving the jet back) had become impossible now that the finance company sold the jet on. This acted as a bar to rescission, and damages under s 2(2) were precluded if rescission was barred. As for s 2(1), clause 23 of the sale agreement, which said the buyer would not rely on the seller's representations, excluded liability.

Judgment

Judge Raymond Jack QC held that the Government had no right to rescission or damages. The contract could not have been rescinded because the plane had been sold. So counter restitution was impossible. It followed that s 2(2) damages were unavailable, because damages are dependent according to the provision's wording on the right to rescission. Damages are available only as a substitute for rescission when the court believes damages are more equitable as a solution. Judge Raymond Jack QC said,

The scheme of the section is thus in my view that s 2(1) gives a right to damages for non-fraudulent misrepresentation subject to the defence that the representor had reasonable grounds to believe his representation true, whereas s 2(2) gives the court power to award damages where this would be more equitable than making an order for rescission or upholding a previous rescission by act of party.

The second issue was that clause 23 excluded liability for misrepresentation under s 2(1). This depended on whether the clause passed the reasonableness test under s 3, in conjunction with the Unfair Contract Terms Act 1977 s 11 and Sch 2. Judge Raymond Jack QC held that there was insufficient evidence to show whether it passed or failed the reasonableness test, but that Zanzibar would not necessarily fail in showing the clause was unreasonable.

See also

Notes

    Related Research Articles

    At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at law, the loss must involve damage to property, or mental or physical injury; pure economic loss is rarely recognised for the award of damages.

    <span class="mw-page-title-main">Breach of contract</span> Type of civil wrong in contract law

    Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. Breach occurs when a party to a contract fails to fulfill its obligation(s), whether partially or wholly, as described in the contract, or communicates an intent to fail the obligation or otherwise appears not to be able to perform its obligation under the contract. Where there is breach of contract, the resulting damages have to be paid to the aggrieved party by the party breaching the contract.

    The law of restitution is the law of gains-based recovery, in which a court orders the defendant to give up their gains to the claimant. It should be contrasted with the law of compensation, the law of loss-based recovery, in which a court orders the defendant to pay the claimant for their loss.

    A legal remedy, also referred to as judicial relief or a judicial remedy, is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes another court order to impose its will in order to compensate for the harm of a wrongful act inflicted upon an individual.

    <span class="mw-page-title-main">Misrepresentation</span> Untrue statement in contract negotiations

    In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.

    <span class="mw-page-title-main">Rescission (contract law)</span> Remedy which allows a contractual party to cancel the contract

    In contract law, rescission is an equitable remedy which allows a contractual party to cancel the contract. Parties may rescind if they are the victims of a vitiating factor, such as misrepresentation, mistake, duress, or undue influence. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract.

    <span class="mw-page-title-main">English contract law</span> Law of contracts in England and Wales

    English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.

    The English law of unjust enrichment is part of the English law of obligations, along with the law of contract, tort, and trusts. The law of unjust enrichment deals with circumstances in which one person is required to make restitution of a benefit acquired at the expense of another in circumstances which are unjust.

    <span class="mw-page-title-main">Contract</span> Legally binding document establishing rights and duties between parties

    A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more mutually agreeing parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or rescission. A binding agreement between actors in international law is known as a treaty.

    <i>Leaf v International Galleries</i> 1950n English contract law case

    Leaf v International Galleries [1950] 2 KB 86 is an English contract law case concerning misrepresentation, mistake and breach of contract, and the limits to the equitable remedy of rescission.

    The Home Equity Theft Prevention Act is a New York State law passed on July 26, 2006, to provide homeowners of residential property with information and disclosures in order to make informed decisions when approached by persons seeking a sale or transfer of the homeowner's property, particularly when homeowners are in default on their mortgage payments or the property is in foreclosure.

    <i>Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd</i>

    Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6 is an English contract law case on onerous clauses and the rule of common law that reasonable notice of them must be given to a contracting party in order that they be effective. It also addressed, but did not decide, the position of onerous clauses as disguised penalties.

    <i>Investors Compensation Scheme Ltd v West Bromwich Building Society</i>

    Investors Compensation Scheme Ltd. v West Bromwich Building Society[1997] UKHL 28 is a frequently-cited English contract law case which laid down that a contextual approach must be taken to the interpretation of contracts.

    <span class="mw-page-title-main">Misrepresentation Act 1967</span> United Kingdom legislation

    The Misrepresentation Act 1967 is a United Kingdom Act of Parliament of the United Kingdom which amended the common law principles of misrepresentation. Prior to the Act, the common law deemed that there were two categories of misrepresentation: fraudulent and innocent. The effect of the act is primarily to create a new category by dividing innocent misrepresentation into two separate categories: negligent and "wholly" innocent; and it goes on to state the remedies in respect of each of the three categories.

    Interpreting contracts in English law is an area of English contract law, which concerns how the courts decide what an agreement means. It is settled law that the process is based on the objective view of a reasonable person, given the context in which the contracting parties made their agreement. This approach marks a break with previous a more rigid modes of interpretation before the 1970s, where courts paid closer attention to the formal expression of the parties' intentions and took more of a literal view of what they had said.

    Thomas Witter Ltd v TBP Industries [1996] 2 All ER 573 is an English contract law case, concerning misrepresentation. Doubt has been cast in its decision as to availability of rescission by Floods of Queensferry Ltd v Shand Construction Ltd and Government of Zanzibar v British Aerospace Ltd.

    Cremdean Properties Ltd v Nash (1977) 244 EG 547 is an English contract law case, concerning misrepresentation and exclusion of liability under the Misrepresentation Act 1967 s 3.

    <i>St Albans City and DC v International Computers Ltd</i> 1996 English contract law case

    St Albans City and DC v International Computers Ltd [1996] EWCA Civ 1296 is an English contract law case, concerning unfair terms under the Unfair Contract Terms Act 1977. The parties were St Albans City and District Council and International Computers Limited.

    <span class="mw-page-title-main">South African contract law</span> Law about agreements between two or more parties

    South African contract law is "essentially a modernized version of the Roman-Dutch law of contract", and is rooted in canon and Roman laws. In the broadest definition, a contract is an agreement two or more parties enter into with the serious intention of creating a legal obligation. Contract law provides a legal framework within which persons can transact business and exchange resources, secure in the knowledge that the law will uphold their agreements and, if necessary, enforce them. The law of contract underpins private enterprise in South Africa and regulates it in the interest of fair dealing.

    First Tower Trustees Ltd v CDS Ltd [2018] EWCA Civ 1396 is an English contract law case, concerning.