Detailed Analysis Of International Supply Contracts Under UCTA

Air Transworld Limited v Bombardier Inc [2012] EWHC 243(Comm)

Bombardier, a Canadian company, sold one of its aircraft to Angoil, an Angolan company controlled by a Mr Mosquito. Immediately after the sale, the parties entered into an assignment under which the purchase agreement was assigned to Air Transworld, another corporate vehicle of Mr Mosquito. The purchase agreement was negotiated mostly in London by an English solicitor, Mr Meer and Ms Ribeiro, a Portuguese resident, on behalf of Mr Mosquito, and two representatives of Bombardier. There was some disagreement as to what exactly happened at the final meeting, but the Judge found that one of Bombardier's representatives initialled all the pages of the purchase agreement, but made it clear to Mr Meer that there was an approval process to be gone through in Canada before the purchase agreement could be signed by Bombardier. Mr Meer signed the purchase agreement and faxed it to Bombardier in Canada. The next day, the relevant approval processes within Bombardier occurred and a copy signed on behalf of Bombardier was sent back to Mr Meer. Immediately afterwards, Miss Ribeiro asked for an assignment of the contract to Air Transworld. Bombardier sent an assignment agreement with blanks for filling in by Mr Mosquito. The assignment was signed by Mr Meer on behalf of Angoil and Transworld in London and faxed to Bombardier in Canada. Mr Meer asked for a copy of the assignment to be faxed to Miss Robeiro in Lisbon when it had been executed by Bombardier. Later that day, Bombardier emailed Mr Meer a copy of the signed assignment agreement.

Some 14 months after delivery, the aircraft developed a serious fault with the main engine driven pump. Air Transworld purported to rescind the contract and claim a refund of the purchase price.

The case turned on a number of points arising out of the wording of the Aircraft Purchase Agreement. Article 4 contained the exclusion clauses (which were in capital letters) and governing law clause, including:

4.1 The warranty, obligations and liabilities of the seller and rights and remedies of the buyer set forth in the agreement are exclusive and are in lieu of and the buyer hereby waives and releases all other warranties, obligations, representations or liabilities, express or implied, arising by contract, in law, civil liability or in tort, or otherwise, including but not limited to (A) any implied warranty of merchantability or of fitness for a particular purpose, and (B) any other obligation or liability on the part of the seller to anyone of any nature whatsoever by reason of the design, manufacture, sale, repair, lease or use of the aircraft. 4.3 The parties...agree that the limited warranties and the limitation of liability provisions contained herein and the specification have been expressly agreed to in consideration of the purchase price and other provisions of this agreement. 4.4 This agreement shall be governed by and interpreted in accordance with the internal laws of England and Wales, excluding any conflicts of law provisions thereof. Paragraph 15 of Schedule A contained warranties that the aircraft would be free from defects. In the case of defects, Bombardier's sole obligation was limited to repair, replacement or rework of the defect. There were different time periods for the warranties according to the item affected.

The main legal issues to be decided were:

whether, on its construction, the exclusion clause operated to exclude the implied Sales of Goods Act condition of satisfactory quality; whether the purchase agreement and assignment were an "international supply contract" within the meaning of Section 26 of UCTA (in which case the relevant provisions of UCTA...