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This case covers two main areas of law: firstly, the law relating to partnerships and, secondly, the law relating to contractual misrepresentation and unjust enrichment.

The facts in Valencia v Llupar

This case concerned the alleged entering-into of a partnership between Norberto Llupar (“the Claimant”) and Natalia Valencia (“the Defendant”) relating to a restaurant business started by the Defendant in London (and possibly a second restaurant). The Defendant allegedly stated to the Claimant that her businesses were doing very well (taking up to £1,000 a day) and that if he invested in the Claimant’s business then he would take a 40% share and be entitled to live above one of the restaurants. The Claimant therefore made four payments totalling £80,000 to the Defendant in May and June 2008.

However, a partnership agreement was never signed by either party and the Claimant later discovered that the Defendant’s business was not doing nearly as well as she stated and that the promised accommodation above the restaurant was not available. The Claimant therefore demanded the return of his money and stated his intention to end their business relationship in August 2008. He issued a claim form almost a year later in September 2009 for various claims of damages for misrepresentation, or for breach of contract (among other claims).

The law relating to partnership and contractual misrepresentation

Partnership

A partnership is a business relationship between two or more parties with a view to profit. A partnership agreement can be written or unwritten, express or implied. There are a number of different types of partnership agreement (including “general partnerships”, “limited liability partnerships” or “LLP’s”, “partnerships at will”, and “limited partnerships”. This post will focus on partnerships at will due to the decision that the Court of Appeal came to.

A partnership at will is a particular type of partnership. It generally applies where there is no written (and signed) partnership agreement and the express terms of the agreement are either not agreed upon or are unclear.

Contractual misrepresentation

Contractual misrepresentation occurs when one party makes an untrue statement of fact or law to another party which induces the other party to enter into a contract, causing the other party loss.

The Court of Appeal’s judgment in Valencia v Llupar

The Defendant appealed the High Court’s judgment on the two following grounds:

  1. That there had been no partnership between the parties; and
  2. That there had been misrepresentations made by the Defendant to the Claimant

The Court of Appeal rejected the Defendant’s appeal. It considered that the High Court judge was entitled to make its finding that there had been not been a partnership between the parties and that the Defendant had made representations of fact (which were untrue) to the Claimant. The fact that neither of the parties had signed the partnership agreement and that the parties had clearly not intended to enter into the agreement until agreement were reached on the terms were critical. Further, in coming to this decision the Court of Appeal relied heavily on the High Court’s assessment of the unreliability of the Defendant’s witness evidence as compared to the Claimant.

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