Legal Developments In Construction Law - November 2018

  1. A pre-contract representation is not just for ...

    Pre-contract representations can be troublesome. And if a contract does not happen immediately, they can also have staying power. So if, before the contract is concluded, they are discovered to be wrong, or something changes to make them inaccurate, they need updating. A company director told a supplier of sunflower oil that the company had sufficient funds to pay for a shipment of the oil. The supplier contracted to sell the oil, but, after it had been delivered and then loaded on a ship, and title had passed to a third party, the company did not pay and went into administration and, subsequently, liquidation. The supplier sued the director and a former director of the purchaser in deceit.

    The Court of Appeal said that the representation that the purchaser had funds to pay for the oil was self-evidently a representation that the purchaser's present intention was to pay the amount due. It was a continuing representation with a continuing responsibility of the representor for its accuracy. A person who subsequently discovers the falsity of facts which they have innocently misrepresented may be liable in damages if they fail to disclose the inaccuracy of their earlier representation. The same continuing responsibility can be seen in the treatment of representations which are true when made, but which become false by the time the contract is entered into. The law can, in appropriate circumstances, impose a continuing responsibility on the maker of a pre-contractual representation, where there is an interval between the making of the representation and the conclusion of a contract in reliance on it.

    A mere statement of intention is not actionable but the Court noted that a statement of intention can contain within it various statements of fact, for instance if the person making the statement knows that they do not have the ability to put the intention into effect. It also noted that the correct measure of damages in the tort of deceit is an award which puts the claimant in the position they would have been in if the deceit had not been perpetrated. The Court upheld the first instance judge's decision, that the director who had made the representation was liable and that the seller's loss was to be measured by the market value of the sunf lower oil supplied, because the misrepresentations, on which the supplier relied, continued until it ceased to be able to stop the ship from leaving port.

    Inter Export LLC v Jonathan Townley and Yaroslavna Lasytsya [2018] EWCA Civ...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT