JP Morgan Chase Bank v Springwell Navigation Corp
Non reliance and no advice clauses in the documents of a sophisticated investor were effective to create a contractual estoppel, preventing it from claiming that the bank had advised it.
Facts
Springwell, an investment company owned by a wealthy Greek shipping family, invested heavily in emerging market debt instruments, particularly Russian bonds, through Chase, and suffered large losses when Russia defaulted in 1998. It claimed that Chase had negligently advised it to invest in a high risk portfolio, which was unsuitable for its needs. The contractual documents stated that Chase was not acting as an adviser and that Springwell had not relied on any representations or advice from Chase.
Legal principle
The Court of Appeal dismissed Springwell's appeal. Aikens LJ said that there was no legal principle that a party could not agree that a certain state of affairs should form the basis of the contract, even if both parties knew it to be untrue, and that the parties could agree that they would not rely on any representations or that one party was not acting as an adviser. Such clauses give rise to a contractual estoppel, which prevents a party from asserting that the relationship was different. The clauses were not subject to the reasonableness test under the Unfair Contract Terms Act 1977, because they defined the relationship rather than excluding liability. Springwell was a sophisticated investor, and the clauses were effective.
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