Prime Sight Limited v Lavarello (Official Trustee) [2013] UK PC 22

Clause 1 of a deed of assignment recited that : "In consideration of the sum of £499,950 now paid by the Assignee to the Assignor (receipt and payment of which the Assignor hereby acknowledges), the Assignor as beneficial owner hereby assigns...". It was common ground that no payment had in fact been made and the question arose as to whether the assignor could claim the agreed purchase price in light of the "recital". It was not known why consideration was stated but not paid; one witness said that it was done for tax reasons.

The Privy Council held that the assignor was estopped by the terms of the deed from asserting that the purchase price had not been paid. If a recital in a deed amounted to a mutual agreement to treat it as true, and there were no vitiating factors such as illegality or misrepresentation, the contract should be enforced. There was nothing inherently contrary to public policy if parties agreed to contract on the basis that certain facts were to be treated or established for the purposes of their transaction, although they knew the facts to be otherwise. Here, there was no question of mistake or misrepresentation.


Be careful that recitals are accurate.

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