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Breach of warranty claim against a party not named in the contract

Bell v Ivy Technology Limited [2020] EWCA Civ 1563

The Court of Appeal has dismissed an appeal brought by Paul Bell against the decision of Teare J permitting Ivy Technology to bring a breach of warranty claim against him despite the fact that he was not named as a party to the contract.

The claim arises out of a share purchase agreement under which Ivy Technology purchased the shares in an online gambling business.  The shares in the business were beneficially owned by Barry Martin and Paul Bell, but only Mr Martin was named as a party to the contract.

Ivy Technology alleges that it was the victim of a fraud and claims damages against Mr Martin and Mr Bell for unlawful means conspiracy and breach of warranty.  The breach of warranty claim is brought against Mr Bell on the basis that Mr Martin entered into the contract as Mr Bell’s agent, but Mr Bell argued that the terms of the contract were sufficiently clear to exclude the possibility of him being held liable under it.  Mr Bell also relied on the doctrines of contractual estoppel and election in order to defeat the claim against him.

Dismissing Mr Bell’s appeal, the Court of Appeal held that it could not rule out the possibility of Mr Bell being held liable under the contract at trial once there had been a factual investigation as to the reasons why he was not named as a contracting party.

The court held that the failure to name Mr Bell as a party to the contract “cried out for an explanation” given that all parties to the contract knew at the time of contracting that Mr Bell was one of the beneficial owners of the shares.

Edward Levey QC did not appear in the court below but was instructed by Roger Kennell of Malvern Law for Ivy Technology, the successful respondent, in the Court of Appeal. A copy of the Court of Appeal’s judgment is available here.