High Court considers whether misrepresentation can be ‘spent’ in a deceit claim

OMV Petroleum SA v Glencore International AG [2015]

The defendant and claimant entered into a contract for the supply of crude oil. The arrangement of the contract was such that the agent of the claimant acted as principal.

The oil did not meet the specification in the contract, resulting in a claim of deceit and conspiracy against the defendant.

In finding that the claim for deceit was valid, the judge distinguished the facts of the case from those in Gross v Hillman. This case established that where a representation is made to a party, who enters into a contract due to reliance on that statement, that representation cannot then be relied upon by a third party because it is spent.

The case of Gross did not apply in this context, however, as the defendant was fully aware that the agent was acting for the claimant, and that any information provided to the agent would be passed on to and relied upon by the claimant. Therefore, the claimant could rely on these representations.

The case confirms that there is no established principle that a third party cannot rely on representations made by the parties of a contract.