English Law of Contract - Essay Example

Voidable Contract Contract is a written or spoken agreement between two parties enforceable by law. When the legal agreement is rejected by one partyand said to have any defect, then it is called a voidable contract. A contract can become voidable for many reasons such as a mistake, misrepresentation or fraud, undue influence, incapacity of any one of the contracting parties or breach of contract. The classic case of voidable contract due to claim in misrepresentation in contract negotiation is explained below: Government of Zanzibar v British Aerospace (Lancaster House) Ltd (2000): Misrepresentation Case: This English law case is a perfect example of misrepresentation in a contract.

Government of Zanzibar wanted to purchase an executive jet for the use of their president. In the year 1992, a contract was signed between the Government, British Aerospace and CIBC Finance PLC. CIBC was substituted for the Government of Zanzibar as the purchaser of aircraft from British Aerospace. A leasing agreement was signed between CIBC and the Government, whereby the government leased the aircraft from the finance company for ten years and was liable to pay rent in semiannual installments.

An agency agreement was signed between the Govt. and CIBC, whereby the Govt. was made the agent of CIBC. An agreement was signed between CIBC and British Aerospace, which contains provisions applicable if the Government defaulted on their payment to CIBC. After using the plane, it was found to be defective. The government returned it back to British Aerospace for repairing it. But even after repair, the fault continued. The government stopped lease payments. CIBC took possession of the plane and sold it, in order to recover the cost incurred.

Government of Zanzibar had initiated an action against British Aerospace accusing false representation of the airworthiness, reliability and defect free nature of the plane, as claimed by British Aerospace. They wanted to cancel the contract or alternatively, to get compensation of the damages, according to the English Misrepresentation Act, 1967. Subsequently, British Aerospace claimed that restoring the jet to its original position and return it back to the Government cannot be possible because it had already been sold.

(England and Wales High Court Decisions. 2000) Government of Zanzibar proposed that the contract signed between Government, British Aerospace had hidden misrepresentation of claims made by British Aerospace. Untrue statement about was made by British Aerospace. According to English Misrepresentation Act 1967, British Aerospace had disclosed half-truth, and thus the contract is voidable. The government claimed that the contract with British Aerospace is subjected to fraudulent misrepresentation (deceit).

In this case, the Government claimed that rescission must be made, and they appealed to rescind the contract and put them back to the pre-contractual position. It could be by returning plane to the Government in its original position or compensation for damages due to misrepresentation. (Weitzenboeck, 2012) Judgment of the case: It was not possible to rescind the contract as the plane had already been sold. Therefore counter restitution i.e., returning the plane to the Government in its original position, was impossible.

British aerospace had enough ground to prove that their representation is not fraudulent. Thus the innocent pary, i.e, the Government was not entitled to receive full compensation for damages. Damages in lieu of rescission usually assumed unavailable if right to cancel the contract has already been lost, As a result, the House of Lords made it clear that in accordance with section 2(2) of Misrepresentations Act 1967, a discretionary power can be administered by the court to award the Government a compensation for damages.

(legalmax. 2000)   References Legalmax. (2000).Government of Zanzibar v British Aerospace (Lancaster House) Limited. Web England and Wales High Court Decisions. (2000).England and Wales High Court (Commercial Court) Decisions. Web Weitzenboeck, Emily. (2012). English Law of Contract: Misrepresentation. Norwegian Research Center for Computers & Law. Web