Lloyds Bank PLC v Waterhouse: CA 1993

The plaintiff bank claimed against the defendant under an ‘all monies’ guarantee, to which the defendant raised defences of misrepresentation, non est factum, and negligence or breach of duty by the bank.
Held: The court explored the inter-relationship between the doctrine and the law relating to misrepresentation. The defence of non est factum failed, principally because the defendant had failed to exercise proper care for his own protection. However by reason of misrepresentation or breach of duty the bank was not entitled to rely on the guarantee.
Woolf LJ discussed the plea ‘non est factum: ‘Normally the plea is raised by a defendant who is contending that he had been misled (usually because of fraud) by some person other than the plaintiff as to the nature of the document which he has signed. This is not the case here. The defendant contends that he was misled as to the nature of the document by the activities of the bank. In these circumstances, while I do not suggest that the defendant is not entitled to seek to rely on a plea of non est factum, I do not regard the defendant’s ability to rely on the plea as being the primary way in which to determine the merits of his defence to the bank’s claim. It has clearly been laid down that as a matter of principle the scope of the plea of non est factum should be confined by the courts within narrow limits . . .’ There are two reasons for confining the scope of the plea of non est factum. First, confusion and uncertainty would be caused if it was too easy for a person to deny responsibility for what is contained in a contract or deed which he has signed simply by asserting that he did not appreciate what he was signing. This reason is applicable also to other defences such as misrepresentation which can be raised as a defence to a contract in writing. Second, other innocent parties will rely upon the document. ‘This is not applicable in a case such as this and so if the ordinary rules which are applicable to non est factum have still to be surmounted by a defendant in the position of the present appellant, this could place an unnecessarily heavy burden upon him . . However instead of having differing standards or requirements in order to establish a plea of non est factum, I suggest that it is preferable to protect, when appropriate, the position of a defendant who has been misled by the activities of the plaintiff as to the nature of the document which he has signed on the grounds of misrepresentation and breach of the duty not to mislead another party to a written contract as to the nature of that contract.’


Woolf LJ, Purchas LJ


[1993] 2 FLR 97


England and Wales

Cited by:

CitedPeekay Intermark Ltd and Another v Australia and New Zealand Banking Group Ltd ComC 25-May-2005
The claimant alleged mis-selling of an emerging markets investment product. The defendant claimed that whilst there might have been a misrepresentation, by the time the contract was formed, correct information had been provided and incorporated in . .
Lists of cited by and citing cases may be incomplete.


Updated: 30 April 2022; Ref: scu.226118