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Misrepresentation and Fraud, Actions for

Misrepresentation

Silence With Regard to a Material Fact


Sham
Last updated: 06-Jul-2015

Per Diplock LJ in Snook v London and West Riding Investments Ltd [1967] 2 QB 786, at p.802:

As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a ’sham‘, it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the ’sham‘ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v Maclure and Stoneleigh Finance Ltd v Phillips), that for acts or documents to be a ’sham‘, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a 'shammer' affect the rights of a party whom he deceived. There is an express finding in this case that the defendants were not parties to the alleged ’sham‘. So this contention fails.


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