TRIDENT TURBOPROP (DUBLIN) LTD V FIRST FLIGHT COURIERS LTD

[2009] EWCA Civ 290, Court of Appeal (Civil Division), Lord Justice Waller, Lady Justice Arden and Lord Justice Moore-Bick, 2 April 2009

Lease of aircraft – Unfair contract terms – Whether possible to exclude liability for misrepresentation in international supply contracts – Whether international supply contract –Unfair Contract Terms Act 1977, section 26 –Misrepresentation Act 1967, section 3

In 2005 Trident entered into Aircraft Operating Lease Agreements in identical terms with First Flight in respect of two aircraft. The leases were signed by a representative of BAE, the manufacturer, on behalf of Trident. The aircraft were to be delivered at Southend but in the event one of them was delivered in Sweden. Trident alleged that First Flight had failed to pay rent under each of the two leases and that as a result it became entitled to terminate both contracts and recover possession of the aircraft. First Flight argued that there had been misrepresentations of a kind that would entitle it to rescind the leases. Trident sought summary judgment on the basis that whatever the facts of the alleged misrepresentations, the leases contained terms which prevented First Flight from relying on matters of that kind. Moreover, Trident contended that the leases fell outside the scope of the Act by virtue of section 26 of the Unfair Contract Terms Act 1977 which meant that they were not required to show that the terms were reasonable. This was the appeal of the judgment of Aikens J ([2008] EWHC 1686 (Comm)) wherein Aikens J gave summary judgment for Trident. The questions on appeal were: whether the limits imposed on Trident's right to rely on a clause excluding any remedy for misrepresentation were imposed by "this Act", that is, the Unfair Contract Terms Act itself, or by the Misrepresentation Act 1967; whether any liability for misrepresentation in this case was a liability arising "under a contract" within the meaning of section 26(1); and whether the leases fell within the scope of section 26(4)(a) so that they were international supply contracts. The Court of Appeal dismissed the appeal. The revised section 3 of the Misrepresentation Act must be treated as subject to UCTA, in particular section 26, so that it did not apply to international supply contracts. If the leases were excluded from the operation of UCTA, they necessarily satisfied the (non-existent) requirement of reasonableness and so were effective in accordance with their terms. The submission that liability for misrepresentation did not arise “under the contract” was rejected; although misrepresentation must necessarily take place before the making of the contract, it was clear that the intention of the legislator was that international supply contracts should be excluded from the ambit of UCTA by section 26 and that therefore the expression “liability arising under the contract” should be extended also to liability for damages for misrepresentation and to the right of the injured party to rescind the contract where possible. It would not seem to be in line with the intentions of the legislator if the parties could exclude liability for goods not fit for purpose under section 6(3), but not for misrepresentation. The Court of Appeal finally held that the aircraft leases indeed were international supply contracts within section 26(4)(a). The fact that the aircraft were to be flown rather than carried to India did not make any difference.