Corporation v Skibs A/S Avanti

Legal Case Summary

Corporation v Skibs A/S Avanti, The Siboen and the Sibotre [1976] 1 Lloyd’s Rep 293

Contract – Fraudulent Statement – Misrepresentation – Duress

Facts

The Defendant owned two tankers that were charted to the Plaintiff for three years. The Plaintiff’s financial situation began to deteriorate, so they approached the Defendant requesting that the rates for the charter were reduced as the company had suffered massive losses and were dependent on their parent company to keep them afloat, which was untrue. Several other innocently untrue statements were made about the Plaintiffs finances. The Defendant agreed to reduce the hire rate. The market then improved which led the Defendant to discover that the Plaintiff was making profits from the rental, so they proposed the hire rate returned to the originally agreed rate or that all charter hires be cancelled. The Defendant withdrew the vessels and the Plaintiff claimed damages on the ground that the vessels had been wrongfully withdrawn. The Defendant claimed they were entitled to the rescission due to the innocent misrepresentation and duress and underpayment of the hire.

Issues

Whether the Plaintiff’s misrepresentation amounted to duress.

Held

Judgment was granted to the Defendant in part. Damages and remedies were provided for the losses incurred on both sides. The Plaintiff was found to have acted fraudulently in their misrepresentation which induced the Defendants in discounting the hire fee for the charter. The Plaintiff could not rely on frustration of the vessels being chartered as a reserve as there was no evidence of this. Although the Defendant was under pressure when the Plaintiff requested a reduced hire fee, this did not amount to duress. They were awarded damages with conditions attached. The Plaintiff was not entitled to the Defendant’s profits for their misrepresentation but could claim for the wrongful withdraw of the vessels.