The 350 kVA Generator and the Entire Agreement Clause
On 12 January 2024, Tiyamike Enterprises Ltd, a Blantyre bakery, agreed to buy a second-hand diesel generator from Zambezi Machinery Ltd for MWK 18,000,000. Before signing, the seller's agent said the generator was 'a 500 kVA unit, recently serviced, with only 1,200 running hours'. The written contract described it as '500 kVA generator, sold as seen and inspected'. Clause 12 stated: 'The purchaser acknowledges that no representation, warranty or statement outside this contract has been relied upon.' Tiyamike paid the full price and took delivery on 19 January. On 22 January the generator failed; an engineer found it was a 350 kVA unit with a cracked stator and at least 9,000 hours. The repair cost is MWK 6,500,000, and Tiyamike lost a MWK 4,000,000 contract because it could not bake. Tiyamike wants to cancel the contract and recover the price plus losses. Zambezi relies on clause 12 and 'sold as seen'.
1. Was the agent's statement about capacity and hours a contractual term or a representation? Explain the test.
Read the worked answer
Term vs representation. The test is not simply whether the statement was written down. The court asks: how important was the statement to the buyer; when was it made; did the maker have special knowledge; was the buyer invited to verify it; and was it later reduced to writing? A statement that is central to the identity of the thing sold may become a term.
Application. The '500 kVA' description appears in the written contract itself. That makes capacity a contractual term, not a mere representation. The 'recently serviced, 1,200 hours' statement was made by the seller's agent, who had specialist knowledge; Tiyamike, a bakery, did not. It was made immediately before signing and was important to the price. It is at least a representation, and arguably a term. The clause 12 'no representation' wording is an attempt to prevent reliance, but it does not automatically convert a false statement into a non-actionable one.
Conclusion. Capacity is a term. The service-hours statement is a representation and probably a term. That matters because breach of a term gives contractual damages, while misrepresentation gives rescission and damages in tort.
2. Can Zambezi rely on clause 12 and the 'sold as seen' words to defeat Tiyamike's claim?
Read the worked answer
Construction. Exclusion clauses are read contra proferentem: ambiguity is resolved against the party relying on them. A clause will not exclude liability for fraud or for a false statement that induced the contract unless the words clearly cover that situation. 'Sold as seen' normally addresses the physical condition of the goods at inspection; it does not license a false description of capacity or service history.
Application. Clause 12 is an entire-agreement and anti-reliance clause. It may prevent reliance on loose pre-contract chatter, but it cannot be used as a shield for deliberate or reckless falsehood. If the agent knew the generator was 350 kVA, the statement was fraudulent; a party cannot contract out of its own fraud. If the agent was merely careless, the clause still has to be interpreted narrowly and may not cover the specific description. The fact that Tiyamike did not have the generator independently tested may support a 'sold as seen' argument, but the buyer had a right to rely on the seller's expertise and the written capacity figure.
Conclusion. Zambezi cannot rely on clause 12 or 'sold as seen' to defeat the claim altogether. At most, those words may limit reliance on oral statements; they do not defeat the written 500 kVA term or a fraudulent misrepresentation.
3. What remedies are available: rescission, damages, or both? Identify the measure.
Read the worked answer
Rescission. Rescission is available for a misrepresentation that was material and induced the contract. It is an equitable remedy and can be lost if restitutio in integrum is impossible, if the buyer affirms, or if third-party rights intervene. Here Tiyamike has only used the generator briefly and can return it; rescission is prima facie possible. The buyer should not be forced to keep a generator that is materially different from what was promised.
Damages. Alternatively, for breach of the 500 kVA term, Tiyamike can claim the cost of putting it in the position it would have been in: the difference between the value of a 500 kVA generator and the 350 kVA unit supplied, plus consequential losses that were reasonably foreseeable. The repair cost of MWK 6.5 million and the lost bakery contract of MWK 4 million are recoverable only if proved and if the loss was within the parties' contemplation. For fraudulent misrepresentation, damages in deceit may cover all direct losses.
No double recovery. Tiyamike cannot recover the full price and also keep the generator; rescission requires return of the machine and repayment of the price. If it affirms and claims damages, it keeps the generator and recovers the value gap and proven consequential loss.
Conclusion. The stronger route is rescission plus repayment, with damages for proven consequential loss; alternatively, damages for breach. The court should make the remedy consistent and avoid double compensation.