Kuwait Court of Cassation principle number 362

Summary: - Annulment of a contract for fraudulent misrepresentation. It may be sought by a person whose consent resulted from artifices directed at him with the intention of deceiving him and thereby inducing him to contract, if he proves that he would not have accepted the contract in the manner in which he accepted it but for his deception by those artifices. Lying when providing information about the facts and circumstances of contracting, or remaining silent about them, where this breaches a duty of truthfulness or frank disclosure imposed by law, agreement, the nature of the transaction, or the special trust that the circumstances of the case entitle the deceived person to place in the person who deceived him. This is considered an artifice constituting fraudulent misrepresentation. The condition: the subject matter of the obligation that the contract would create must be possible in itself. Failure of that condition. Its effect: nullity of the contract. Articles 151, 152, 167, Civil Code. - Fraudulent misrepresentation vitiating consent, like mistake and other defects of consent. Its requirement: it must have induced the contracting party to accept the contract, such that he would not have accepted it without it; it must be connected with the other contracting party in the manner specified by Articles 153, 154; and the subject matter of the obligation must be possible. - The impossibility preventing the formation of a contract is objective impossibility. Its nature: impossibility of the subject matter of the obligation itself, not subjective impossibility relating to the debtor himself and his ability to perform the obligation. Rule: The provisions of Articles 151, 152, 167 of the Civil Code that annulment of a contract for fraudulent misrepresentation may be sought by a person whose consent resulted from artifices directed at him with the intention of deceiving him and thereby inducing him to contract, if he proves that he would not have accepted the contract in the manner in which he accepted it but for his deception by those artifices; that lying when providing information about the facts and circumstances of contracting, or remaining silent about them, is deemed an artifice constituting fraudulent misrepresentation where this breaches a duty of truthfulness or frank disclosure imposed by law, agreement, the nature of the transaction, or the special trust that the circumstances of the case entitle the deceived person to place in the person who deceived him; and that the subject matter of the obligation that the contract would create must be possible in itself, otherwise the contract is void, mean, as explained in the Explanatory Memorandum, that for fraudulent misrepresentation to have effect it must have induced the contracting party to accept the contract, such that he would not have accepted it without it. Fraudulent misrepresentation is in this respect like mistake and all other defects of consent. However, although the fact that fraudulent misrepresentation induced the contracting indicates that consent was vitiated, this alone is not sufficient 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, 154 of the draft. Furthermore, the impossibility preventing 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 it is impossible for the debtor himself to perform it, provided that he then incurs liability for failure to fulfil the obligation in accordance with the general legal rules. Objective impossibility resulting 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 court of the merits has full authority to interpret the wording of contracts and disputed terms, ascertain the meaning of agreements and other instruments, and investigate the common intention of their parties by any method it considers appropriate, since this constitutes an understanding of the facts of the case, which it determines independently without review in that respect, so long as it bases its judgment on sound reasons having an established basis in the papers. It may assess whether a contracting party is proved to have fallen into mistake or not, 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 that the court of the merits independently determines by assessing the evidence, without review, provided its assessment of those facts rests on material supporting it. It may likewise infer whether or not one of the contracting parties breached his obligations giving rise to contractual liability, so long as its inference is sound. Accordingly, and since 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 any purpose other than the agreed purpose—publicity and advertising—and that the respondent company was entitled to assign the site or sublet it, in whole or in part, for the purpose for which it was prepared 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 since the challenged judgment, affirming the first-instance judgment, based its dismissal of the counterclaim brought by the appellant on what it concluded from the case papers, the expert report it found reliable, 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 since it was established from the expert report 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 showing that he had requested a licence, whether from the respondent company or the administrative authorities, and conducted the activity in the premises and benefited from them without a licence, continuing to benefit from them until the administrative closure on 25/1/2011, which indicates that the disputed premises could have been licensed and that there was therefore no fraud or fraudulent misrepresentation by the respondent company when concluding the contract; and it accordingly 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 since this was a sound inference by the judgment, supported by the papers and sufficient to sustain it, the criticism of it on these grounds becomes an argument concerning the discretionary authority of the court of the merits which may not be raised before this Court, and is therefore unfounded.