The Court of Appeal has held, in dismissing an appeal from summary judgment given in the Commercial Court, that lease agreements for aircraft can fall within the Unfair Contract Terms Act 1977's ("UCTA") exemption for 'international supply contracts', even if the contract does not specifically provide for the aircraft to be transported to another country.
The Appellant had entered into a contract in England to lease two cargo planes, from the Respondent, for use in its courier business in India. After a few months usage the Appellant ceased to use the planes, claiming that they were fault-ridden. Citing this as the reason, they halted rental payments to the Respondent who consequently issued proceedings for breach of contract and was subsequently awarded summary judgment.
The Appellant had originally claimed that they had been induced to enter into the contract by the Respondent's non-fraudulent misrepresentations. A sticking point in this argument had been that the contract contained a clause that declared that the Respondent had not made any representations about the aircraft. However, the Appellant sought to sidestep this clause by arguing that it fell foul of UCTA 1977 (for reasons not considered here) and they could therefore rely on the Respondent's misrepresentations.
The Respondent had counter-argued that UCTA 1977 did not apply as the contract was an international supply contract. Under section 26, UCTA 1977 does not apply to 'international supply contracts'. In the Commercial Court and Court of Appeal, the Appellant argued (amongst other things) that the contract was not an international supply contract as, although it subsequently flew the planes to India in order to use them (providing the international dimension), the contract did not provide for the planes to be transported to another country.
The Court of Appeal found, in favour of the Respondent, that the s.26 exemption from UCTA 1977 could apply to a case in which the fact that the goods were to be transported and used abroad was not part of the contract. Both parties had to be aware that this was the intention; and the transport of the goods was necessary to achieve the contract's commercial objectives. The contract was therefore to be considered an international supply contract and the Appellant was consequently unable to rely on the Respondent's misrepresentations.