Contract Law Seminar 4-misrepresentation (05/03/18)
Advise;
Ciloca (UK) Ltd in relation to the original contract with Domoko (UK)
• Facts;
o Economic duress towards Domoko
▪ Price agreed at £5 million
▪ Rose to £5.4 million
o Claims that it would help with oil leakage
▪ It is actually prone to leakage
o Claims it was certified as an “environmentally friendly product”
▪ They now only say they are environmentally friendly for water carrying
pipelines
o Delays
▪ Contract delayed by 5 months so price increase of $400,000
• Copper price didn’t actually rise
▪ Prolonged industrial action so missed some deadlines and milestones (set out
in contract)
• Price raised by a further £0.5 million
• Domoko Protested (Pao On v Yiu Long)
• Feel they had no choice but to agree
• Was it economic duress?
o Pao On v Lau Yiu Long
▪ Did they protest? Yes they “protest vigorously”
▪ Was there an alternative course open to them at the time of alleged duress?
▪ Were they independently advised? Had a legal teams advice on an earlier
decision so would be safe to assume the “legal team” advised on this issue
too
▪ After entering did they take steps to avoid it? Was the failure to keep up
payment a step to avoid?
o Newer test of pressure being illegitimate and constituting as a significant cause of
entering the contract (Dimskal Shipping Co. S.A v International Transport Workers
Federation)
▪ Illegitimate pressure
• Was made an “absolute condition” which would suggest they would
threaten to break the contract if not agreed (“a threat to break a
contract may amount to…economic duress.” North Ocean Shipping
Co v Hyundai Construction Co)
▪ Significant cause
• More illegitimate the lower this threshold is
• Satisfy the but for test
o Would agreement be made without the pressure? Probably
not in this case- was an increase of £0.5 million on top of an
increase of £400,000 from the original agreed price
• Can they claim against for the false statements?
o Were the statements of environmentally friendly and helping with oil leakage
contractual terms?
▪ “made it clear that in their opinion” re oil leakage
o Was the agreement not to sell to another company a contractual term?
▪ In writing
▪ Term can be expected- was following acceptance of the contract so in a
document a term would be expected in. It is also not an unusual term so
wouldn’t need prior warning to be a term
Advise;
Ciloca (UK) Ltd in relation to the original contract with Domoko (UK)
• Facts;
o Economic duress towards Domoko
▪ Price agreed at £5 million
▪ Rose to £5.4 million
o Claims that it would help with oil leakage
▪ It is actually prone to leakage
o Claims it was certified as an “environmentally friendly product”
▪ They now only say they are environmentally friendly for water carrying
pipelines
o Delays
▪ Contract delayed by 5 months so price increase of $400,000
• Copper price didn’t actually rise
▪ Prolonged industrial action so missed some deadlines and milestones (set out
in contract)
• Price raised by a further £0.5 million
• Domoko Protested (Pao On v Yiu Long)
• Feel they had no choice but to agree
• Was it economic duress?
o Pao On v Lau Yiu Long
▪ Did they protest? Yes they “protest vigorously”
▪ Was there an alternative course open to them at the time of alleged duress?
▪ Were they independently advised? Had a legal teams advice on an earlier
decision so would be safe to assume the “legal team” advised on this issue
too
▪ After entering did they take steps to avoid it? Was the failure to keep up
payment a step to avoid?
o Newer test of pressure being illegitimate and constituting as a significant cause of
entering the contract (Dimskal Shipping Co. S.A v International Transport Workers
Federation)
▪ Illegitimate pressure
• Was made an “absolute condition” which would suggest they would
threaten to break the contract if not agreed (“a threat to break a
contract may amount to…economic duress.” North Ocean Shipping
Co v Hyundai Construction Co)
▪ Significant cause
• More illegitimate the lower this threshold is
• Satisfy the but for test
o Would agreement be made without the pressure? Probably
not in this case- was an increase of £0.5 million on top of an
increase of £400,000 from the original agreed price
• Can they claim against for the false statements?
o Were the statements of environmentally friendly and helping with oil leakage
contractual terms?
▪ “made it clear that in their opinion” re oil leakage
o Was the agreement not to sell to another company a contractual term?
▪ In writing
▪ Term can be expected- was following acceptance of the contract so in a
document a term would be expected in. It is also not an unusual term so
wouldn’t need prior warning to be a term
