Facts
A bank representative gave Mr Pawani an inaccurate description of a proposed investment linked to Russian government debt. The written documents described the derivative product the bank actually offered. Pawani signed the documents and a risk disclosure statement on behalf of Peekay and instructed the bank to invest US$250,000 on the attached terms. Peekay suffered a loss following default. The trial judge held that the earlier description had induced the investment.
Issue
Did the earlier misrepresentation induce Peekay to enter the contract on the written terms? What effect did the signed risk disclosure have?
Decision
The Court of Appeal allowed the bank’s appeal. The true nature of the investment was apparent from the contractual documents. In the circumstances, Pawani’s decision to proceed on those terms without reading them properly did not establish that he had been induced by the earlier description. There had been no misrepresentation about the contents or effect of the documents themselves.
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The court also considered contractual estoppel as an alternative ground. The signed disclosure confirmed that Peekay had read and understood it. The judges considered that confirmation would preclude Peekay from asserting the contrary.
Reported citations: [2006] 2 Lloyd’s Rep 511, [2006] 1 CLC 582
Source: Full judgment
