Chen-WIshart - Ch 5 - 5.1.1 & Ch 10 - 10.2; 10.3.1;10.3.2; 10.4
Representations and Terms
- ‘If an untrue statement induces a contract with the make of the statement, the remedies available depend on
whether the statement is a term inside the contract or a representation outside the contract’ Chen-wishart p
208)
What is a term?
- A term is a contractually binding promise
- Failure to keep the promise is a breach of contract
- The remedy will put the innocent party in the position they would have been in had the promise been kept
What is a representation?
- A representation is a statement
- It asserts something is true
- But is is not a promise that it is true
- If it is untrue there is no breach of contract but there may be a remedy if it is found to be an actionable
misrepresentation
- Any such remedy will put the innocent party back where they were before the misrepresentation was made
Example
- D sold to the CL, who were motor dealers, a second hand morris motor car for the £290 in part exchange for a
new car
- The car sold by D was shown in the registration book to have been first registered in 1947
- D, who honestly believed that the car was a 1948 model, described it as such to CL and showed CL the
registration book
- The car was in fact a 1939 model worth £175
- A statement “1948” car
- It asserts something is true - date first registered
- But is it a promise that it is true
Express Terms
Term or mere representation
- Oscar Chess Ltd v Williams
No personal knowledge
D did not intend to bind himself in contract
An innocent misrepresentation
Writing
Routledge v McKay
Oral Statement as to age of motorcycle
Contract made 7 days later
Contract made no reference to age
HELD; Misrepresentation but not a term
Gillespie Brothers & Co v Cheney, Eggar & Co
Written contract = presumption it contains all terms -
Rebuttal possible
Oscar Chess Ltd v Williams
, Writing is not decisive either way
‘Here we have a dealer, cmith, who was in a position to know, or at least to find out, the history of the car. He could get
it by writing to the makers. He did not do so. Indeed, it was done later. When the history of this car was examined, his
statement turned out to be quite wrong. He ought to have known better. There was no reasonable foundation for it’
- Lord Denning M.R. 628
Special Knowledge
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd
Reasonable to conclude that a statement made by someone with specialist knowledge is intended to be binding
Oscar Chess
Seller had no specialist knowledge - not reasonable to say they meant to bind themselves.
Specialist knowledge
Esso Petroleum v Mardon
A party with specialist knowledge at least promises that they have used care in making their statement
Case Facts;
Esso Petroleum V Mardon (1976) QB 801; Esso granted a tenancy of a new filling station to D. During negotiations they
told him that they estimated an annual throughput of petrol at 200,000 gallons a year by the third year. Due to the
physical characteristics and layout of the site, the figure after three years was still under 100,000. D lost all his money.
He entered into a new tenancy with Esso at a reduced rent plus a surcharge on petrol sold. The losses continued and D
was unable to pay cash for the petrol. Esso cut off his supplies and eventually he had to surrender possession. He
counterclaimed for breach of warranty, and for negligent misrepresentation.
Held; the statement as to potential throughput was a contractual warranty (PRomise), and the plaintiffs were liable for
damages for its breach.
‘... it was a forecast made by a party, esso, who had special knowledge and skill. It was the yardstick...by which they
measured the worth of a filling station. They knew these facts. They knew the traffic in the tow. They knew the
throughput of comparable stations. They had much experience and expertise at their disposal. They were in a much
better position than Mr Mardon to make a forecast. It seems to me that if such a person makes a forecast - intending
that the other should act on it and he does act on it - it can well be interpreted as a warranty (promise) that the forecast
is sound and reliable .. that they made it with reasonable care and skill’
- Lord Denning MR
Note; Misrepresentation Act 1967
Consumer rights act 2015
Pre contractual misrepresentations made by a trader to consumer become terms of the contract
Collateral Contracts
- SHanklinPier v Detel Products
- MAin contract Required Use of Detel PAint
- Side contract with Detel the consideration being the requirements in the main contract to use Detel Paint
The Meaning of Express Terms
- The courts will not rescue a party from a bad bargain, an unreasonable deal
- Freedom of contract is still a guiding principle
Arnold v Britton & Others
£90 Service Charge
Representations and Terms
- ‘If an untrue statement induces a contract with the make of the statement, the remedies available depend on
whether the statement is a term inside the contract or a representation outside the contract’ Chen-wishart p
208)
What is a term?
- A term is a contractually binding promise
- Failure to keep the promise is a breach of contract
- The remedy will put the innocent party in the position they would have been in had the promise been kept
What is a representation?
- A representation is a statement
- It asserts something is true
- But is is not a promise that it is true
- If it is untrue there is no breach of contract but there may be a remedy if it is found to be an actionable
misrepresentation
- Any such remedy will put the innocent party back where they were before the misrepresentation was made
Example
- D sold to the CL, who were motor dealers, a second hand morris motor car for the £290 in part exchange for a
new car
- The car sold by D was shown in the registration book to have been first registered in 1947
- D, who honestly believed that the car was a 1948 model, described it as such to CL and showed CL the
registration book
- The car was in fact a 1939 model worth £175
- A statement “1948” car
- It asserts something is true - date first registered
- But is it a promise that it is true
Express Terms
Term or mere representation
- Oscar Chess Ltd v Williams
No personal knowledge
D did not intend to bind himself in contract
An innocent misrepresentation
Writing
Routledge v McKay
Oral Statement as to age of motorcycle
Contract made 7 days later
Contract made no reference to age
HELD; Misrepresentation but not a term
Gillespie Brothers & Co v Cheney, Eggar & Co
Written contract = presumption it contains all terms -
Rebuttal possible
Oscar Chess Ltd v Williams
, Writing is not decisive either way
‘Here we have a dealer, cmith, who was in a position to know, or at least to find out, the history of the car. He could get
it by writing to the makers. He did not do so. Indeed, it was done later. When the history of this car was examined, his
statement turned out to be quite wrong. He ought to have known better. There was no reasonable foundation for it’
- Lord Denning M.R. 628
Special Knowledge
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd
Reasonable to conclude that a statement made by someone with specialist knowledge is intended to be binding
Oscar Chess
Seller had no specialist knowledge - not reasonable to say they meant to bind themselves.
Specialist knowledge
Esso Petroleum v Mardon
A party with specialist knowledge at least promises that they have used care in making their statement
Case Facts;
Esso Petroleum V Mardon (1976) QB 801; Esso granted a tenancy of a new filling station to D. During negotiations they
told him that they estimated an annual throughput of petrol at 200,000 gallons a year by the third year. Due to the
physical characteristics and layout of the site, the figure after three years was still under 100,000. D lost all his money.
He entered into a new tenancy with Esso at a reduced rent plus a surcharge on petrol sold. The losses continued and D
was unable to pay cash for the petrol. Esso cut off his supplies and eventually he had to surrender possession. He
counterclaimed for breach of warranty, and for negligent misrepresentation.
Held; the statement as to potential throughput was a contractual warranty (PRomise), and the plaintiffs were liable for
damages for its breach.
‘... it was a forecast made by a party, esso, who had special knowledge and skill. It was the yardstick...by which they
measured the worth of a filling station. They knew these facts. They knew the traffic in the tow. They knew the
throughput of comparable stations. They had much experience and expertise at their disposal. They were in a much
better position than Mr Mardon to make a forecast. It seems to me that if such a person makes a forecast - intending
that the other should act on it and he does act on it - it can well be interpreted as a warranty (promise) that the forecast
is sound and reliable .. that they made it with reasonable care and skill’
- Lord Denning MR
Note; Misrepresentation Act 1967
Consumer rights act 2015
Pre contractual misrepresentations made by a trader to consumer become terms of the contract
Collateral Contracts
- SHanklinPier v Detel Products
- MAin contract Required Use of Detel PAint
- Side contract with Detel the consideration being the requirements in the main contract to use Detel Paint
The Meaning of Express Terms
- The courts will not rescue a party from a bad bargain, an unreasonable deal
- Freedom of contract is still a guiding principle
Arnold v Britton & Others
£90 Service Charge
