RESPONDENT

A. The Actions of R2Detour falls under the Contours of Misrepresentation

Misrepresentation straddles many legal boundaries. Within the Law of Contract, the rules
relating to misrepresentation cannot be viewed in isolation as they are a part of web of
rules which includes terms of a contract1 and as to mistake2 affecting the nature and extent
of contractual undertakings. Contrary to the Claimant’s arguments, [A] the actions and
statements thereof undertaken by the Claimant fall under the ambit of Statement of Facts.
[A.2] the Claimant has fraudulently misrepresented their claims as to completing all the
10 launches with utmost compliance to their goodwill in the market.

[A.1] The actions and statements thereof undertaken by the Claimant fall under the
ambit of Statement of Facts.

A representation means a statement of fact not a statement of intention or of opinion. A

representation, as we have seen, relates to some existing fact or some past event. Since it
contains no element of futurity it must be distinguished from a statement of intention. An
affirmation of the truth of a fact is different from a promise to do something in the future and
produces different legal consequences3.

This distinction is of practical importance. If a person alters his position on the faith of a
representation, the mere fact of its falsehood entitles him to certain remedies 4. If, on the other
hand, he sues upon what is in truth a promise, he must show that this promise forms part of a
valid contract. The distinction is well illustrated by Maddison v Alderson.5

1
Stoljar Mistake and Misrepresentation (1968); Spencer Bower, Turner and Handley The Law of Actionable
Misrepresentation (4th edn,2000); Greig 87 LQR 179.
2
[1964] AC 465, [1963] 2 All ER 575
3
Beattie v Lord Ebury (1872) 7 Ch App 777 at 804, per Mellish LJ.
4
Mackintosh Roman Law of Sale (1892) note D.
5
Maddison v Alderson ,(1883) 8 App Cas 467.
It has never been doubted, however, that an expression of opinion may in certain
circumstances constitute a representation of fact, as for instance where it is proved that the
opinion was not actually held, or that it was expressed upon a matter upon which the other
party was entirely ignorant6.

Thus, if it can be proved that the speaker did not hold the opinion or that a reasonable man
possessing his knowledge could not honestly have held it, or that he alone was able to know
the facts upon which the opinion must have been based7 there is a misrepresentation of fact
for which a remedy lies.

If the Statement of Facts form the terms of the contract, through which a party majorly enters
into the contract, or which persuades the party to enter into the contract, and turns out to be
untrue, then it forms a part of misrepresentation, and the party can claim damages. The
falsehood of the statements so constituted, makes the party making it liable for damages.

If what is really an opinion is stated as a fact—as for instance where company promoters,
desiring to magnify the future earning capacity of a product, publish the forecasts of experts
as if they were positive facts —there is a representation in the true sense of the term.
Somewhat akin to the distinction between opinion and fact is the general rule that simplex
commendatio non obligat8 which means  that mere recommendation or praise of an article by
the seller of it does not amount to a warranty of its qualities.

According to page 22 of the Moot proposition, R2 Detour had put forth many claims that
formed Statement of Facts. R2 Detour claimed that it is highly experienced, having
conducted 10 successful launches for picosatellites, and are well placed to cater to
ShuttleUp’s requirements. It had also claimed that ShuttleUp will benefit from its significant
network across the globe as seen in Exhibit C-2 , along with attached Exhibit C-3. As seen in
page 23, Between 2015 and 2017, whilst it is true that R2 Detour provided contacts to
ShuttleUp during the design and manufacturing phase of the project, these leads ultimately
were dead ends that resulted in ShuttleUp paying GBP 7,000,0000 of unbudgeted consultancy

6
Smith v Land and House Property Corpn (1884) 28 ChD 7 at 15, per Bowen LJ.
7
Brown v Raphael [1958] Ch 636, [1958] 2 All ER 79.
8
22.
fees to third-parties, who were not UK/US based and who did not have sufficient expertise of
picosatellites or the space industry as can be proven under Exhibit R-9.

As According to the law so prescribed, this is an existing fact with no futurity and forms a
statement of fact as R2 Detour he alone was able to know the facts upon which the opinion
must have been based there is a misrepresentation of fact for which a remedy lies and
ShuttleUp couldn’t possess the opinion as a reasonable entity. It was due to these statements
that the Respondent entered into the contract and hence it is a clear case of Statement of Facts
being manipulated, resulting in misrepresentation.

A.1.1 Are Statement of Parties terms of the contract?

If a statement is a term of the contract because of which the party entered the contract, it
creates a legal obligation for whose breach an appropriate action lies at common law. If it is a
‘mere representation’, the position is more complicated9.

If a party has been induced to make a contract by a fraudulent misrepresentation, he may sue
in tort for deceit and may also treat the contract as voidable. But it was long believed to be a
principle of the common law that there should be ‘no damages for innocent
misrepresentation’ and that, in this context, ‘innocent’ meant any misrepresentation which
was not fraudulent10.

In 1963 in Hedley Byrne & Co Ltd v Heller & Partners Ltd11, the House of Lords held that in
some circumstances damages could be obtained for negligent misstatement. The precise
effect of this decision on the law of contract is not clear 12; but, by the Misrepresentation Act
1967, representees acquired a remedy which in most cases will be preferable to an action of
negligence. Section 2(1) of this Act in effect gives a right to damages to anyone induced to
enter a contract by a negligent misrepresentation, and casts upon the representor the burden
of disproving negligence13. But, where a statement is made neither fraudulently nor

9
35.
10
Lord Moulton in Heilbut Symons & Co v Buckleton [1913] AC 30 at 48..
11
[1964] AC 465, [1963] 2 All ER 575.
12
Robb v Green [1895] 2 QB 315; Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] Ch 169, [1946] 1 All ER
350.
negligently, the injured party can still obtain damages only by showing that it forms part of
his contract. Contractual cartography thus remains important.

The jury found that the seller’s statement14 was understood and intended by both parties to be
part of the contract, and their finding was unanimously confirmed by the Court of Common
Pleas and therefore held the seller liable for misrepresentation as the statement of facts so
concurred by the seller had been intended15. The defendants, who were developing an estate,
offered a house they were then building to the plaintiff, saying ‘it would be as good as the
show house’. The plaintiff later agreed to buy the house, and the written contract of sale
contained no reference to this representation. The house was not as good as the show house.
The Court of Appeal treated the defendants’ statement as part of the concluded contract and
allowed the plaintiff’s claim for damages16.

As mentioned in pages 22-23 , the respondents entered into the contract solely because R2
Detour claimed that that the services so designed by R2 Detour would fit the picosatellites of
the Respondent perfectly and give it a launching base at a low price. Not only that, they had
also mentioned to the Respondent that they had already provided 10 such successful services,
which formed the terms of the contract. Providing services that will perfectly fit the
picosatellites at a time bound manner was the basic premises on which the contract was based
but as seen through the Moot Proposition, there was a 5 years delay to that and the services
were incompatible to the Respondents’ goods. Hence it is bound to create a legal obligation
on R2 Detour.

A.1.2 R2 Detour, who had made the statement had special knowledge as
compared with Shuttle Up.

13
(1871) LR 7 Exch 7. Cf Stoljar ‘The Contractual Concept of Condition’ pp 506–11; Sealy ‘Companies: Winding
up on the Just and Equitable Ground’. Another example is Thompson v Asda-MFI Group plc [1988] Ch 241,
[1988] 2 All ER 722.
14
(1861) 10 CBNS 844.
15
[1954] 1 All ER 855, [1954] 1 WLR 615.
16
(1956) 167 Estates Gazette 396, cited in Oscar Chess Ltd v Williams [1957] 1 All ER 325.
If one of the parties, has special knowledge as compared to the other party while entering a
contract, regarding the services or goods provided the court may be more willing to infer an
intention to make the statement a term of the contract. Such was the position in Birch v
Paramount Estates Ltd and in Schawel v Reade 17; and such was at least a contributory factor
in the decision of the Court of Appeal in Harling v Eddy.18

The defendant’s guarantee was, in the language of the catalogue, ‘specially mentioned at the
time of offering’, but it did not ‘appear on the purchaser’s account’. But the defendant had
exclusive means of knowing the heifer’s condition, and the Court of Appeal allowed the
plaintiff to recover damages19.

The Claimant in the contract so formed, possessed special knowledge. Launch Services
involve such technicalities which only the Claimant was able to provide for. While entering
into the contract, it can be clearly deduced from the whole Moot Proposition that the
Claimant wielded special knowledge on launch services as they had already catered to such
launches and the Respondent’s Company was a start-up and possessed much less expertise as
compared to R2 Detour in this contract. Hence this forms a clear case of Misrepresentation,
and the Respondent is entitled for damages.

[A.2] the Claimant has fraudulently misrepresented their claims as to completing all the
10 launches with utmost compliance to their goodwill in the market.

17
[1913] 2 IR 81. Cf Hopkins v Tanqueray (1854) 15 CB 130.
18
[1951] 2 KB 739, [1951] 2 All ER 212.
19
Heilbut Symons & Co v Buckleton [1913] AC 30 at 50.
‘Fraud’, in common parlance, is a somewhat comprehensive word that embraces a multitude
of delinquencies differing widely in turpitude, but the types of conduct that give rise to an
action of deceit at common law have been narrowed down to rigid limits. In the view of the
common law, ‘a charge of fraud is such a terrible thing to bring against a man that it cannot
be maintained in any court unless it is shown that he had a wicked mind’20.

Influenced by this consideration, the House of Lords has established in the leading case of
Derry v Peek that an absence of honest belief is essential to constitute fraud. If a representor
honestly believes his statement to be true, he cannot be liable in deceit, no matter how ill-
advised, stupid, credulous, or even negligent he may have been.

Lord Herschell, indeed, gave a more elaborate definition of fraud in Derry v Peek 21, saying
that it means a false statement ‘made (1) knowingly, or (2) without belief in its truth, or (3)
recklessly, careless whether it be true or false’, but, as the learned judge himself admitted, the
rule is accurately and comprehensively contained in the short formula that a fraudulent
misrepresentation is a false statement which, when made, the representor did not honestly
believe to be true. Fraud is dishonesty, and it is not necessarily dishonest, though it may be
negligent, to express a belief upon grounds that would not convince a reasonable man22.

Motive is irrelevant in an action of deceit. Once it has been proved that the plaintiff has acted
upon a false representation which the defendant did not believe to be true, liability ensues,
although the defendant may not have been actuated by any bad motive 23. The representor is
not liable, however, until the representee has acted on the representation and thereby suffered
loss.24(500 something page for all citations)

As mentioned in Page 22 of the Moot Proposition, R2 Detour had made claims that there
were 10 successful launches in its name. But 17 December 2014, Ms Korzenski circulated a
Space UK news article to Mr Patel, Dr Goh and Dr Vaidya regarding R2 Detour encountering
a “major delay” on its 10th launch due to “regulatory issues and concerns” arising from R2
20
60.
21
61
22
65
23
67
24
68
Detour’s current operations and prior launches. Tellingly, this fact was never disclosed to
ShuttleUp by R2 Detour as mentioned in Para 24 of Page 22 and on Exhibit R-5.

Not only that, R2 Detour had also claimed that they had a Goodwill in the market but as
clearly seen in Para 25 of Page 23, On 5 January 2015, after some further investigation on the
internet, Ms Korzenski uncovered that there was significant dissatisfaction among other
market players regarding R2 Detour’s capabilities, and that the reputation of R2 Detour had

been on a steady decline (rather than incline) since 2012 due to a separate failed launch. 23 It
would appear this reputation only worsened when the 10th launch of R2 Detour was delayed
in December 2014. The Claimant was fully aware of these facts but didn’t deem it necessary
to convey it to the Respondents, lest the Respondents would back out from the contract. In
English law, motive is irrelevant in action of deceit as mentioned above. There is a clear
aspect of fraudulent misrepresentation of the very pertinent facts and hence the Claimant is
deemed liable.

B. The element of Inducement highly vitiates the contractual obligations, which led
Shuttle Up to enter the contract.
A representation does not render a contract voidable unless it was intended to cause and has
in fact caused the representee to make the contract. It must have produced a
misunderstanding in his mind, and that misunderstanding must have been one of the reasons
which induced him to make the contract. A false statement, whether innocent or fraudulent,
does not per se give rise to a cause of action25.

It follows from this that a misrepresentation is legally harmless if the plaintiff: (a) never knew
of its existence (b) did not allow it to affect his judgement or (c) was aware of its untruth26.
Cranworth LJ in one of his judgements asked: Who can say that the untrue statement may
not have been precisely that which turned the scale in the mind of the party to whom it was
addressed?27

The courts, therefore, although denying relief to a plaintiff who entirely disregards the
misrepresentation, have consistently held that the misrepresentation need not be his sole
reason for making the contract. If it was clearly one inducing cause it is immaterial that it was
not the only inducing cause28.

In addition to having induced the representee to enter the contract, it is said that the
representation must be material29. The matter was very fully considered in the leading House
of Lords decision in Pan Atlantic Co Ltd v Pinetop Insurance Co Ltd30.

In his exhaustive review of the law of misrepresentation and non-disclosure, Lord Mustill
said that the basic principles were the same and that in both misrepresentation and
nondisclosure a party who seeks to have a contract set aside must show both actual
inducement and materiality, namely that the subject matter of misrepresentation or
nondisclosure related to a matter which would have influenced the judgement of a reasonable
man.31

25
42
26
43
27
48
28
49
29
51
30
53
31
54
The Respondent was told by the Claimant in Exhibit C-3 so provided that various statements
that were later deemed to be untrue on research after the deal had been finalised. The
Respondent had entered the contract based on these claims, trusting them to be true. The very
basis under which they entered the contract was the claim of successful launches and
compatible services which had affected the judgment of the Respondent as they are a new
start up company and had believed the Claimant in good faith. Not only that , at the time of
making the contract, they were also unaware of the truth and hence all these conditions
satisfy all the three components of inducement, backed by the Moot Proposition, the exhibits
and the communications so mentioned. There is no iota of doubt that the Respondents were
induced and hence had entered into the contract.

[B.1] Absence of Uberrimae Fidei on the part of R2 Detour

In certain contracts where, from the very necessity of the case, one party alone possesses full
knowledge of all the material facts, the law requires him to show uberrima fides. He must
make full disclosure of all the material facts known to him, otherwise the contract may be
rescinded32.

It is impracticable to give an exact list of these contracts, nor can it be said that the extent of
the duty of disclosure is constant in each case. We will deal somewhat fully with the contract
of insurance and then more briefly with contracts for the purchase of shares and with family
arrangements.

The question in each case is whether the fact would have been material in influencing the
mind of a prudent party, not whether loss has resulted from the undisclosed fact. The duty of
disclosure thus imposed by law is confined to facts which the assured knows or ought to
know. ‘The duty’, said Fletcher-Moulton LJ, ‘is a duty to disclose, and you cannot disclose
what you do not know.’33
There is a clear absence of good faith on behalf of the Claimants. The Claimants state in their
notice that they had provided various contacts to Shuttle Up for consultation on launch
services for their picosatellites which is true. But the major fact that remains is that these

32
218
33
239
companies were based outside UK and not only that, they lacked expertise and were not well
adept as mentioned in the response of the Respondent because of which the company also
had to incur heavy costs. The claimant knew of this fact but still they didn’t deem it necessary
to inform the Respondent. Not only that they didn’t even disclose about the failures and the
market goodwill setback and majorly, the incompatibility of their services even when they
knew it. The mail as expressed in Exhibit C-7 shows that the Claimant sent a mail stating that
the services were incompatible after 5 whole years. This is a clear indication of lack of good
faith.

[B.1.2] The element of Constructive Fraud on the part of R2 Detour

In cases where the representor had no honest belief in the truth of his statement, equity has
long had a concurrent jurisdiction with the common law. The court to which a plaintiff would
resort before the Judicature Act would depend upon whether the remedy, he sought was on
the one hand the recovery of damages for deceit or on the other rescission and an account of
profits. Equity, however, in the exercise of its exclusive jurisdiction has from early days given
a more extended meaning to the word ‘fraud’ than has the common law and has developed a
doctrine of constructive fraud.

It is not unnatural that a principle of jurisdiction defined in such expansive terms should have
been gradually applied to a wide field of human activities and to what at first sight appear to
be a welter of unrelated items34; but one important example pertinent to the present discussion
is where, owing to the special relationship between the parties, a transaction may be voidable
in equity for non-disclosure. ‘Under certain circumstances a duty may arise to disclose a
material fact, and its non-disclosure may have the same effect as a representation of its
nonexistence.’35 Whenever the relation between the parties to a contract is of a confidential or
fiduciary nature, the person in whom the confidence is reposed and who thus possesses
influence over the other cannot hold that other to the contract unless he satisfies the court that
it is advantageous to the other party and that he has disclosed all material facts within his
knowledge.36

34
250
35
251
36
252
It is of no doubt that the Claimant had no honest belief of their claims as they are material
facts. It also isn’t that they were unwitting of the fact that their goodwill had reached a rock-
bottom and not only that, but their services were also incompatible to the Respondent’s
product. There was an existence of a relationship based on trust which the Respondent had on
the claimant. The claimant breached good faith and knowingly claimed the facts which were,
on later research deemed to be untrue, constituting the element of constructive fraud on
behalf of the Claimant.