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Zanzibar v British Aerospace (Lancaster House Ltd) [2000] 1 WLR 2333

Contract – Misrepresentation – Payments – Defects –Misrepresentation Act 1967 – Lease – Damages - Rescission

Facts

The complainants, the Government of Zanzibar, wanted to purchase an executive jet from the British Aerospace (Lancaster House Ltd). In order to do this, they entered into a lease agreement with a finance company, who subsequently bought the plane. However, the plane in question that was purchased was faulty and despite repairs, it continued to be defective. Due to this, the complainants stopping paying their instalments for the plane that they had agreed with the finance company. In response to this, the finance company took back the plane they owned and sold it on.

Issues

The complainants argued that representations of the plane said that it was without any defects, as well as being reliable and ready to use. They brought a claim against the defendants to rescind their contract under section 2(1) of the Misrepresentation Act 1967 or receive damages under section 2(2) of the Misrepresentation Act 1967. The issue in this case was whether the contract could be rescinded or if damages could be awarded.

Held

It was held that due to clause 23 in the sale agreement between the parties, the contract could not actually be rescinded. This had stated the buyer could not rely on representations made by the seller. In addition, the plane had already been sold. This also meant that damages could not be awarded, as this was a substitute for rescission, which was barred in this case.


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