Servicios de Salud del Instituto Mexicano del Seguro Social para el Bienestar v Viva Enterprises Limited & Anor

An offer of contractual terms will not ordinarily amount to a representation about the offeror’s present ability or willingness to perform. Clear words are required before contractual delivery language can constitute an actionable representation of present fact. A general term making time of the essence yields to specific provisions which allow minor delivery variations and provide for refunds following significant disruption. A later written agreement may vary the original contract by prescribing an exclusive method of performance and discharge. Where rights and liabilities are transferred by a mandatory administrative act, the transfer is not an assignment requiring contractual consent.

The claimant sought recovery of approximately US$41.4 million paid to Viva Enterprises Limited for 1,000 ventilators during the COVID-19 pandemic. It alleged fraudulent misrepresentation, breach of contract, repudiatory breach, unjust enrichment and a dishonest scheme by which ventilators supplied under another contract were represented as supplied by Viva.

The defendants denied liability and challenged the claimant’s title to sue following the transfer of INSABI’s rights and liabilities to IMSS. The principal issues concerned the character of statements in the contractual invoice, the effect of the delivery timetable, the June 2020 correspondence, the alleged cover-up scheme and the legal effect of the Mexican transfer arrangements.

1. Misrepresentation. The Invoice formed part of the contractual arrangements. Read objectively with the VSA as a whole, statements such as 200 ventilators being immediately available and products being ready for dispatch described promised future performance, not present facts about stock, possession or control. The contractual provisions contemplating disruption, inability to supply and pro rata refunds further qualified any supposed assurance. No actionable express or implied representation was made. The claims in deceit and under s.2(1) of the Misrepresentation Act 1967 therefore failed. The claim against Robert Dangoor also failed because he acted for VEL and did not direct, procure or authorise the alleged representations in his personal capacity.

2. Contractual delivery obligations. Clause 42, stating that time was of the essence, did not make the delivery timetable a condition. It was a standard provision not linked to a specific obligation and yielded to the detailed delivery provisions, including minor variations and the refund mechanism. Nevertheless, delivery according to the schedule was a contractual term. VEL was in breach by failing to deliver within the permitted period, and its unilateral revised timetable was ineffective under the written-variation clause.

3. Termination and the June Agreement. INSABI’s 21 May communication objectively conveyed that it wanted a full refund, did not want further ventilators and regarded the relationship as ending. The June correspondence created a binding written variation, not a replacement supply contract. It reduced the contract size to 700 units, required repayment for 300 units, permitted delivery only of up to 500 HBK units by 3 July, and required cancellation and recovery of funds relating to the ACP and Excel contracts. It did not permit delivery from other suppliers or after the deadline. Only 50 HBK units were delivered, leaving a pro rata refund due for 650 units.

4. Alleged scheme. VEL and Encore did not establish a bona fide supply arrangement for 465 units. The Encore/VEL Agreement and related documents were created, backdated and forged as part of a scheme to present Encore’s deliveries under the Encore/INSABI Agreement as Viva’s performance. The tender of further ventilators did not alter the contractual position or oblige INSABI to accept them.

5. Transfer of rights. The Mexican Amendment Decree and Transfer Conditions mandated the execution of an Acuerdo transferring resources, rights and obligations. The Acuerdo was an administrative act, not a voluntary assignment. Its operation therefore did not engage clause 38 of the VSA. IMSS was the proper successor within clause 39 and had title to sue.

6. Relief. The contractual arrangements left the claimant entitled to a liquidated sum representing the price of 650 ventilators. The unjust enrichment claim and the defendants’ counterclaims failed. Final relief and consequential matters were reserved for a consequentials hearing.

First-instance judgment. No prior appellate decision is stated in the judgment.