Custom Credit Corporation Ltd v Cenepro Pty Ltd

Custom Credit Corporation Ltd (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the enforceability of a guarantee provided by Cenepro Pty Ltd (the respondent) in favour of Custom Credit Corporation Ltd.

The primary legal issue before the Court of Appeal was whether the respondent's guarantee was rendered void due to a misrepresentation made by the appellant regarding the financial position of the principal debtor. Specifically, the court had to determine if the respondent had been induced to enter into the guarantee by a false representation of fact, and if so, whether this vitiated the contract of guarantee.

The Court of Appeal found that the appellant had made a representation concerning the principal debtor's financial standing which was, in fact, false. This misrepresentation was material to the respondent's decision to provide the guarantee. Applying established principles of contract law, the court held that a contract induced by a material misrepresentation is voidable at the option of the party misled. Consequently, the respondent was entitled to rescind the guarantee.

The appeal was dismissed, and the decision of the Supreme Court in favour of the respondent was affirmed.