Docklands Solicitor

C, a company, agreed to enter into a lease with P, a provider of photocopiers. P proposed that upon entering into the lease C would receive “cashback” and “marketing support” payments to reduce its overall costs. C entered into a number of supply and service agreements with P over a period of 4 years. The last agreement included an additional provision for a full contract review and for C’s annual costs to be maintained.

A leasing agreement was arranged between C and F under which C paid quarterly rental for the machines. The amount of the cashback payable to C was included in the sum financed.

C cancelled the lease. It did not receive any cashback. C issued proceedings to recover its costs and the promised cashback, claiming that it had been induced to enter into the agreements on the basis of misrepresentations made by P.

The Court held that:

1. It was understood between the parties that C was only prepared to enter into a new lease if it received cashback payments to maintain its target costs.

2. Payment of the cashback was not dependant on C entering into a new lease.

3. P misled C by indicating that the cashback payments would substantially reduce C’s costs

4. P further misled C by suggesting that the cashback payments were a saving to C and would be paid out of P’s profits.

5. The reality was that C in fact borrowed the amount of the cashback and marketing support from F at a substantial rate of interest, thus increasing rather than decreasing its costs.

6. C would not have entered into the agreements if it had been aware of the true situation.

7. The references by P to cashback and marketing support were dishonest and deliberate misrepresentations.

Labels: cashback, finance, lease, Misrepresentation