Titan Steel Wheels v RBS

Posted on 11/02/2010 · Posted in Financial Litigation

Classification of customers, giving of advice, exclusion of liability

The Claimant was Titan Steel Wheels Ltd, a manufacturer of steel wheels for vehicles. The Defendant was the Royal Bank of Scotland.

The Defendant provided the Claimant with two currency swap or derivative products in June and September 2007. The Claimant believed that products were unusual and complex, that the Defendant advised it to take the products despite them being unsuitable, and that the Defendant owed them a duty under FSA rules to treat them fairly (i.e. to not mislead them).

The Court suggested that a corporation is unlikely to be classified as a ‘private investor’ because trades are likely to be in the course of carrying on any business of any kind (on which see FSMA 2000). The corporation need not be an investment business to fall outside the scope of private investor, it is enough that trades are sustained, large scale and a necessary concomitant of the company’s trading.

Furthermore, the Court concluded that the terms of the contract show that the Claimant and Defendant had agreed to conduct their business on the understanding that the Defendant was not acting as an advisor and that no related duty of care would arise. Placing trust in an employee with expertise was not enough to give rise to extra legal duties. Most disclaimers were not true exclusion clauses, they simply defined the basis on which the relationship was proceeding, and so the Unfair Contractual Terms Act 1977 would not apply. In the alternative, if a duty was established, the terms of the contract would have the effect of excluding liability.

Link: Titan Steel Wheels v RBS [2010] EWHC 211 (Comm)

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