Springwell v JP Morgan Chase [2010]

Springwell v JP Morgan Chase [2010]

Springwell v JP Morgan Chase [2010] EWCA Civ 1221 revolved around the effectiveness of "no representation" clauses in excluding liability for misrepresentations through the doctrine of contractual estoppel.

The case involved Springwell, an investment fund that had purchased Russian bonds issued by JP Morgan Chase. The contract documents contained clauses where Springwell agreed that no actionable representations were made by JP Morgan Chase.

The Court of Appeal held that JP Morgan Chase's statements did not amount to misrepresentation. However, in obiter, even if JP Morgan Chase was found guilty of misrepresentation, Springwell would be estopped from suing for misrepresentation due to the presence of the "no representation" clauses.

Aikens LJ, delivering the judgment, discussed the effect of "no representation" clauses. He emphasised that parties are free to agree to a state of affairs, even if it is not the case, and be contractually bound by those agreed-upon terms. The doctrine of contractual estoppel, as cited in Peekay v ANZ [2006], means that Springwell is estopped from asserting any actionable misrepresentations made by JP Morgan Chase. Aikens LJ clarified that there is no requirement of unconscionability for contractual estoppel to arise, and it is distinct from estoppel by convention, which is based on a non-contractual assumption that would be unconscionable to resile from.

The judgment also addressed whether "no representation" clauses are subject to Section 3 of the Misrepresentation Act 1967 (MA 1967). Aikens LJ concluded that such clauses asserting that no representation was made or relied upon might be an attempt to retrospectively alter the character and effect of the prior representations, and in substance, an attempt to exclude or restrict liability. Therefore, these clauses are subject to the reasonableness test under Section 3 of the MA 1967.

Aikens LJ further considered the reasonableness of excluding liability under Section 11 of the Unfair Contract Terms Act 1977 (UCTA 1977). It was found reasonable as Springwell was a sophisticated investor in emerging market investments, conscious of the associated risks.

It is worth noting that the definition of estoppel by convention involves replacing the original terms of a contract when parties are under a common mistake about its meaning or effect. The court's finding might differ if the claimant were not a sophisticated investment firm but a retail investor, potentially leading to a different assessment of reasonableness under UCTA 1977.
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