Kuwait Court of Cassation principle number 161

Summary: - Annulment of a contract for fraudulent misrepresentation. Available to a person whose consent resulted from devices directed at him with the intention of deceiving him and thereby inducing him to contract, if he proves that he would not have consented to the contract in the form in which he accepted it but for his deception by those devices. Lying when providing information concerning the reality of the contracting and its circumstances, or remaining silent about them, where this breaches a duty of truthfulness or disclosure imposed by law, agreement, the nature of the transaction, or the special trust which the circumstances entitle the deceived person to place in the person who deceived him. Considered a device constituting fraudulent misrepresentation. Condition: the subject matter of the obligation which the contract is to create must be possible in itself. Absence of this. Effect. Nullity of the contract. Articles 151, 152 and 167, Civil Code. - Fraudulent misrepresentation vitiating consent, like mistake and other defects of consent. Requirement. It must have induced the contracting party to consent to the contract such that he would not have consented without it, must be connected with the other contracting party in the manner specified by Articles 153 and 154, and the subject matter of the obligation must be possible. - The impossibility that prevents the formation of a contract is objective impossibility. Its meaning: impossibility of the subject matter of the obligation itself, rather than subjective impossibility relating to the debtor himself and his ability to perform the obligation. Rule: The provisions of Articles 151, 152 and 167 of the Civil Code state that annulment of a contract for fraudulent misrepresentation may be sought by a person whose consent resulted from devices directed at him with the intention of deceiving him and thereby inducing him to contract, if he proves that he would not have consented to the contract in the form in which he accepted it but for his deception by those devices; that lying when providing information concerning the facts and circumstances of contracting, or remaining silent about them, is deemed a device constituting fraudulent misrepresentation where it breaches a duty of truthfulness or disclosure imposed by law, agreement, the nature of the transaction, or the special trust which the circumstances entitle the deceived person to place in the person who deceived him; and that the subject matter of the obligation which the contract is to create must be possible in itself, otherwise the contract is void. Their import, as disclosed by the Explanatory Memorandum, is that, for fraudulent misrepresentation to have effect, it must have induced the contracting party to consent to the contract, such that he would not have consented without it. Fraudulent misrepresentation is in this respect like mistake and all other defects of consent. However, although fraudulent misrepresentation being the inducement to contract implies that consent was vitiated, that alone is not sufficient in itself to render the contract voidable. In addition, the fraudulent misrepresentation must be connected with the other contracting party in the manner specified by Articles 153 and 154 of the draft. Furthermore, the impossibility that prevents the formation of a contract is objective impossibility, namely impossibility of the subject matter of the obligation itself, or its impossibility as such, and not subjective impossibility relating to the debtor himself. If the subject matter of the obligation is possible in itself, the contract is formed, even if the debtor himself cannot perform it, provided that he then incurs liability for failure to perform the obligation in accordance with the general legal rules. The objective impossibility that results in the nullity of the contract is that existing at its conclusion. If the subject matter of the obligation was possible when the contract was concluded but became impossible at a later date, this does not affect the formation of the contract itself. It is established in the jurisprudence of this Court that the trial court has full authority to interpret the wording of contracts and disputed terms, ascertain the meaning of agreements and all other instruments, and investigate the common intention of their parties by whatever method it considers appropriate, since this constitutes an understanding of the facts of the action, which it undertakes independently and without review, provided that it bases its judgment on reasonable grounds having an established basis in the papers. It may assess whether a contracting party's mistake has been established or negated, infer the elements of fraudulent misrepresentation, and determine what establishes it and what does not. All this, and other defects of consent affecting contracts, are questions of fact in which the trial court independently assesses the evidence without review, whenever its assessment of those facts is based on material supporting it. It may likewise infer whether one of the contracting parties breached his obligations giving rise to contractual liability, provided that its inference is reasonable. That being so, and as it is apparent from the contract concluded between the appellant and the first respondent company dated 11/1/2009 that its first clause stipulated that the contract concluded between that company and the Free Trade Zone Administration was an integral part thereof, and clause No. 6/4 stipulated that the premises forming its subject matter could not be used for a purpose other than the agreed purpose—publicity and advertising—and that the respondent company was entitled to assign the site or sublet it wholly or partially for its designated purpose or in accordance with the activities permitted in the Free Trade Zone, and was also entitled to request amendment of the licences granted to it by adding different activities permitted in that zone; and as the challenged judgment upholding the first-instance judgment based its dismissal of the counterclaim brought by the appellant on its conclusions from the papers in the action, the expert report in which it had confidence, and the aforementioned provisions of the contract concluded between the appellant and the respondent company, namely that the former inspected the premises, verified their fitness for use, and undertook to obtain the licences necessary to conduct the activity, meaning that the appellant was aware of the fitness of the premises for conducting the activity contracted for; and as the expert report established that the Public Authority for Industry stated in its defence memorandum that the activity contracted for was permitted in the Free Trade Zone, and that the appellant did not submit anything demonstrating that he had requested a licence, whether from the respondent company or the administrative authorities, and conducted the activity on the premises and benefited from them without a licence, continuing to benefit from them until the date of administrative closure on 25/1/2011, indicating that the disputed premises could have been licensed, and consequently that there was no fraud or fraudulent misrepresentation by the respondent company upon conclusion of the contract; and as it consequently dismissed the appellant's request for nullity of the investment contract forming the basis of the action or repayment of the amount paid as rent for the period from 1/11/2009 until 1/2/2011, the security deposit, and the letting commission; and as this was a reasonable inference by the judgment, supported by the papers and sufficient to sustain it, the criticism directed against it on these grounds amounts to argument concerning the trial court's discretionary authority which may not be raised before this Court, and is therefore unfounded.