Look both ways - even when crossing a one-way street
Do you look both ways when crossing a one-way street? You could argue that there is no need and you are entitled to assume that all traffic will abide by the arrows. If you are mown down by a vehicle travelling in the wrong direction, you might have time to reflect that you could have been spared, if only you had looked the other way. That little bit of extra care - although arguably unnecessary - could pay dividends in the long run.
The wisdom of looking both ways applies equally to business affairs. This was demonstrated by the recent case of Icon Capital (UK) v Michael Gerson (Leasing) (19.3.03). The case concerned equipment leasing and the benefit of a lease for four aerial safety platforms which the claimant's predecessor (Summit) had leased to Raymond Access (Raymond) in connection with works at Cardiff Arms Park. The defendant took the benefit of the lease under a finance agreement with Summit.
Any explanation of the intricacies of equipment leasing is likely to be as opaque as Humphrey Littleton's repeated attempts to explain the rules of the game 'One song to the tune of another' on Radio 4's I'm sorry I haven't a clue.
Suffice to say that it was anticipated that the equipment would be sold before the end of its useful life and the proceeds, together with the rental payments, would reimburse both Summit and the defendants for their initial investment and financing costs.
Although the defendant shipped about £1 million worth of business a month, it was a father and son concern with little administrative backup. Its arrangement with Summit set out a procedure by which deals would be struck: the defendant had absolute discretion to accept or reject an offer, but delivery by it to Summit of a cheque for the offer price was conclusive evidence of an agreement.
Originally Summit enquired about leasing eight cranes for Raymond. The defendant believed that Raymond was offering a deposit of £100,000. At trial, this was hotly contested by Summit, which knew full well that Raymond was in no position to raise the funds. As the judge pointed out, matters were not helped at the time by the use of confused terminology and the fact that parties seemed to engage in parallel monologues rather than a genuine dialogue.
The original enquiry came to nothing. Subsequently Summit submitted a revised proposal, by fax, for four access platforms, which included what was described as 'an equity investment' of 18.5 per cent to reflect Summit's increased level of residual risk.
This revised proposal irritated the defendant, which scribbled a note on the bottom in reply to the effect that it did not recognise the figures. It thought they had been considering eight cranes with a deposit.
It asked: 'What is this?' By return Summit explained that because of changes to the project, Raymond had changed its requirements and now proposed a deal in two tranches. The defendant replied, accepting the two tranches as per Summit's two faxes.
Shortly thereafter it paid the offer price and the deal was struck.
When Michael Gerson of the defendant was cross-examined at trial, he admitted he had looked at these faxes very cursorily.
He did not read the detail, but assumed it was the same deal as before, only in two tranches.
He accepted Summit's document clearly referred to its equity investment of 18.5 per cent but that he had not picked up on it at the time.
At trial the judge found that the defendant had clearly agreed to a deal which did not provide for any deposit to be paid by Raymond: in fact everything pointed the other way.
The judge accepted Gerson's frankness in accepting that perhaps he had been careless in only looking at some of the documents cursorily.
More than once in his evidence, Gerson had used the analogy of crossing a one-way street and only looking in one direction.
The judge found that, although he was an experienced businessman, Gerson had gone into the deal without looking at it properly at all and that Summit was entitled to the £100,000 claimed.