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McInerny v Lloyds Bank Ltd - 1974

283 words (1 pages) Case Summary

6th Oct 2021 Case Summary Reference this In-house law team

Legal Case Summary

McInerny v Lloyds Bank Ltd [1974] 1 Lloyd’s Rep 246

Misrepresentation and the parties understanding of communications

Facts

The defendant bank made arrangements for one party’s (T) commercial credit to facilitate the purchase of companies belonging to another party (P). P was to take bills of exchange in instalments over six years to pay for the price of the purchase. The defendant sent a letter to T explaining the details of the transaction and sent a copy, by telex, of this letter to P. P read the letter and understood it to mean that the defendant had accepted T’s instructions in relation to the transaction. When this was not the case, P commenced an action against the defendant for breach of contract and/or negligent misrepresentation.

Issue

The issue in this circumstance was whether the telex sent to P was an enforceable representation as to the defendant’s position in the transaction.

Decision / Outcome

It was held, both at first instance and on appeal to the Court of Appeal, that the claim should be dismissed. Although the defendant should be responsible for statements made by it and although the letter sent to P and T was so badly drafted as to cause P to misunderstand its purpose, where a document is unclear, it should be given the meaning intended by the maker or the meaning that maker knows or ought to have known that the recipient would give it. On the facts here, the letter did not expressly state that the defendant had accepted T’s instructions and P should have taken it to be considered by his lawyer before relying on it.

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