• In the case of Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] 1 WLR 2333, when rescission of contract may be granted at the time of hearing then therefore damages can be claimed in accordance with s 2(2) of the Misrepresentation Act 1967.
  • This contract law case involved rescission, damages and misrepresentation.

Facts of the Case

  • C had an agreement with D regarding the sale and purchase of an executive jet. This jet was faulty so C discontinued regular instalments on the lease agreement.
  • C claimed damages based on s 2(2) of the Misrepresentation Act 1967 and wanted to rescind the contract agreement against D.

Issues

  • Was there an innocent misrepresentation?
  • Should the action be dismissed or would another sanction suffice?

Held by High Court

  • Appeal dismissed – rescission and damages don’t apply and clause 23 is not explicitly reasonable. Action 679 is terminated.

Raymond Jack QC

Should the jurisidiction award damages?

  • Phrases from the writ in question of misrepresentation: “airworthy, reliable and without design or construction defects”. Before the writs were issued, C did not make a claim for rescission.
  • “The scheme of the section is thus in my view that section 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 section 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”.

Misrepresentation and reasonableness

  • Not enough evidence to show whether clause 23 constitutes as misrepresentation as per the reasonableness test of the Unfair Contract Terms Act 1977.
  • Previous courts tackled the similar question of whether reasonable grounds applies as shown in William Sindall Plc. v. Cambridgeshire County Council [1994] 1 WLR 1016 and Thomas Witter Ltd. v. T.B.P. Industries Ltd. [1996] 2 All E.R. 573.
  • “In short, the power to award damages is an alternative to an order for rescission or the upholding of a prior rescission by the representee if that has occurred”.

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