Pharmapac UK Ltd v Elev8 Global Ltd & Anor
[2023] EWHC 2449 (Comm)
Advanced Multi-Technology for Medical Industry & Ors v Uniserve Limited
4 July 2024
[2024] EWHC 1725 (Ch)
High Court
A company ordered tons of masks but didn't pay because they claimed the seller lied about how many were ready. The judge said the buyer was wrong, the seller gets paid for the masks the buyer refused to take, and the people helping make the deal aren't in trouble.
Key Facts
- •Hitex, a Jordanian medical supply manufacturer, contracted with Uniserve (an English logistics company) to supply 80 million masks during the COVID-19 pandemic.
- •Caramel and Mr. Popeck (Claimants 2 & 3) acted as intermediaries, arranging the contract and entitled to a commission.
- •Uniserve's defense was Hitex's failure to meet delivery obligations.
- •Uniserve counterclaimed against Hitex for misrepresentation and a payment of US$300,000.
- •Caramel and Mr. Popeck also claimed £19,250,000 under the commission contract.
- •Maxitrac and Dr. Stead (Third and Fourth Parties) were involved in arranging and managing the Supply Contract.
- •Uniserve initiated Part 20 proceedings against Maxitrac and Dr. Stead.
Legal Principles
Fraud must be specifically pleaded.
Trite law
Misrepresentation Act 1967, section 2(1): Liability for misrepresentation even without proof of fraud, unless reasonable grounds to believe the facts were true.
Misrepresentation Act 1967
Elements of a successful misrepresentation claim: Representation made, false, made knowingly or recklessly, intent for reliance, and inducement.
SK Shipping v Capital VLCC [2021] 2 Lloyd’s Rep 109 at [112]-[117]; CJ and LK Perks Partnership v Natwest Markets plc [2022] EWHC 726 (Comm) at [155]-[156] and Farol Holdings v Clydesdale Bank plc [2024] EWHC 593 (Ch) at [205]-[206]
A statement of opinion or prediction can still be a misrepresentation if untrue and made without belief in its truth or recklessly.
Edgington v Fitzmaurice (1885) 29 Ch D 459; Derry v Peek (1889) 14 App Cases 337
Duty to correct a representation that becomes untrue if reliance is known and the representor has positive knowledge of the untruth.
Spice Girls Ltd v Aprilia World Service BV [2002] EWCA Civ 15
Principal liable for fraud if an agent makes a false statement, the principal knows of the falsity, and deliberately abstains from intervention.
The Siboen and The Sibotre [1976] 1 Lloyds Re 293 at 320-321
Entire agreement clauses are generally upheld in commercial contracts.
Unfair Contract Terms Act 1977 (implied)
Time of the essence clauses make timely performance a condition of the contract, and failure is a repudiatory breach.
Supply Contract, Clause 5.1
Formal requirements for contract variation must be met; otherwise, the variation may not be binding.
Supply Contract, Clause 17.2
Actual authority can be express or implied from conduct; apparent authority arises when a principal holds out an agent as having authority.
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480; Hely-Hutchinson v Brayhead Ltd [1968] 1 Q.B. 549
Estoppel can prevent a party from denying a representation acted upon by another party.
Charles Rickards v Oppenheim [1950] 1 KB 616; City Bank of Sydney v McLaughlin 9 CLR 615 (1909)
Acceptance of a repudiatory breach requires clear and unequivocal communication or conduct.
Vitol SA v Norelf Ltd (The Santa Clara) , [1996] A.C. 800
Sale of Goods Act 1979, section 50: Damages for non-acceptance – estimated loss resulting from breach; prima facie market price difference.
Sale of Goods Act 1979
Duty to mitigate losses in breach of contract.
Implied in contract law
Outcomes
Uniserve's misrepresentation claim against Hitex dismissed.
Uniserve failed to establish that the misrepresentation was made by Hitex, that Hitex intended Uniserve to rely on it, and that Uniserve actually relied on it. The entire agreement clause in the Supply Contract further bars the claim.
Hitex's claim for payment for masks succeeded.
Uniserve wrongfully repudiated the contract by failing to collect the masks and subsequently communicating its intention not to perform. Hitex is entitled to damages for loss of bargain.
Caramel's claim for commission dismissed.
The Commission Contract only provides for commission on masks delivered to the UK; no implied terms to the contrary could be found. The contract terminated upon termination of the Supply Contract.
Claims against Maxitrac and Dr. Stead dismissed.
Dr. Stead acted within his authority in agreeing the Revised Schedule or at minimum Uniserve ratified his actions; Uniserve failed to demonstrate clear instructions to terminate the Supply Contract, and its loss stemmed from its premature termination without valid grounds.