|CITATION –  1 WLR 370
|DATE OF JUDGEMENT – 11th November 1956
|COURT – ROYAL COURTS OF JUSTICE
|APPELLANT – OSCAR CHESS LTD.
|RESPONDENT – W.V.R. WILLIAMS
|BENCH – Lord Justice Denning;Lord Justice Hodson;Lord Justice Morris
The instant case revolves around a hire-purchase contract owing to the sale of a second hand car, Morris, executed between the appellant and the respondent. The legal narrative started when the respondent’s mother purchased a second hand car, Morris on the pretext that it was a 1948 model car which was in reality a 1939 model. In furtherance of the same assumption the car was sold to the appellant by the respondent by means of a hire purchase contract. Emphatically both the parties were mistaken to assume a 1939 model car as a 1948 model car. However the appellant claims damages from the respondent for the loss incurred by him.
In the immediate case the respondent’s mother, Mrs. William purchased a second hand car Morris Index no. ECO 503 at £300 in 1954 on the
assumption that it was a 1948 model car from British Wagon Co. According to the registration book the car was first registered in 1948 . The respondent, W.V.R.Williams often used to offer lifts to his neighbor, Mr. Ladd, a motor salesman who worked in Oscar Chess Ltd.(herein, the appellants). Once the respondent told Mr.Ladd that he wanted to purchase a new Hillman Minx car for which he offered £650 and his original car Morris, in part exchange. The respondent described Morris as a 1948 model car (Ten horse power morris) and presented the registration book as a proof . On going through the book Mr.Ladd found that the first registration date was in the year 1948 and believed so on the basis of appearance of the car as he often had had lifts in it. Mr.Ladd accepted the offer and after going through the Glass Guide (a book that provides information as to the current price of a second hand car according to the manufacturing year) he offered an allowance of £290 for the second hand car. Accordingly, the respondent entered into a hire-purchase contract with Oscar Chess Ltd.(appellant) who agreed to pay the allowance as they were getting a hefty profit on the sale of new Hillman Minx. About eight months later, the appellants sent the chassis and engine no. of the Morris car to Morris Motors Ltd. and found that the second hand Morris was a 1939 model instead of 1948 , as represented by the respondent. Had this fact known to them earlier they would have offered only £175 i.e. price of model 1939 . It is to be noted that the respondent himself had purchased the car on the pretext that it was a 1948 model. Notably the ownership of the car had changed five times from the first date of registration i.e. 13th April 1948 till 1954 (year in which the respondents purchased the Morris) . On discovering the fact, the appellant seeks to claim damages of £115 (difference of model 1948 and model 1939) from the respondents on account of breach of contract.
1) Whether representation of the car as a 1948 model by the respondent was a material term of the contract/warranty or an innocent misrepresentation.
1.1) whether there was breach of contract.
1) The counsel for the appellant contended that the respondent’s representation of the car,Morris as a 1948 model, was an essential term of the contract/ warranty to the contract as based upon the same assumption Mr. Ladd had agreed to pay £290 for a second hand car, else he would have revoked the contract.
1) Per contra, the respondent submitted that the assumption that the car was a 1948 model was rudimentary pertaining to the circumstance(s) of the case as the assumption was based on the registration date specified in the registration book which was believed upon by both the parties. This clearly indicates that both the parties were mistaken, which is a considerable point.
LORD JUSTICE DENNING:
1. He affirmed that when a seller makes a statement with a firm opinion that he has an exact knowledge of it, to which the buyer is ignorant and wants the buyer to act upon the same. He warrants the statement and is accountable for it.(For further clarification the following cases were referred :
1)Couchman v. Hill,1947,King’s Bench;
2) Harling v. Eddy,1951, King’s Bench;
3)Birch v. Paramount Estates Ltd., 2nd October 1956, Royal Courts of Justice)
However , if a seller makes any statement which is not based upon his own knowledge but on an otherwise source that he simply passes on to the buyer. He cannot be held to warrant such a statement. (Referred case :Routledge v. McKay (1954,Weekly Law Reports)
In the instant case also the seller (respondent) believed that the car was a 1948 model on the basis of the registration book ,not based upon his own knowledge. Therefore, no warranty can be inferred from his statement and there is no contractual promise. Both the parties were equally mistaken and on that belief the buyer(appellant) paid an allowance of £290.
2. As a final word, Lord Justice Denning pointed out that the appellant, being experts, by virtue of being motor dealers could have atleast once verified the manufacturing date of the car immediately after the dealing but they did not attempt to do so instead discovered the fact after a considerable delay of 18 months. Hence they should not be allowed to claim damages against the innocent respondent who adduced the most crucial document as an evidence,i.e. the registration book.
LORD JUSTICE HODSON:
1. Lord Justice Hodson expressed that there was/were no evidence(s) ,supporting that the statement of the respondent that the car was a 1948 model, was a material term of the contract. Also, the respondent merely stated a fact of which he had no special knowledge. On this point the appellant was expected to verify the very fact.
2. On this point, the court cited a similar case : Routledge v. McKay, 1954,Weekly Law Reports and Heilbut Symons & Co v. Buckleton. 3. Therefore, there is no warranty in respondent’s statement.
LORD JUSTICE MORRIS (DISSENTING OPINION):
1) In his dissenting opinion, Lord Justice Morris asserted that the respondent’s Statement that the car was a 1948 model was not a mere misrepresentation but a warranted statement as he did not doubt it even for once and when it was proved that the car was 1939 model, he did not raise any objection.
2) Secondly, the styling of the car had not changed from 1939 to 1948, making it difficult for the appellant to prime facie conclude that the car could have been manufactured earlier than 1948.
3) The appellant’s agent (Mr. Ladd) aptly believed based upon the appearance of the car that it was a 1948 model and it was further corroborated by the registration book referred to him by the respondent. Had he knew the actual registration date, he wouldn’t have agreed to pay £290 and would have revoked the contract.
4) The learned judge further opined that the statement was not a mere representation but an essential term of the contract pertaining to which the transaction was effected.
1) The instant case was dealt with by the court in depth to arrive at a conclusion that whether the Statement of the respondent amounted to a warranty or not.
2) The court emphatically interpreted the expression ‘warranty’ . The word in its ordinary sense means a binding term/ promise.
3) If a person uses words like “I guarantee/ I assure” he can be said to make a binding promise/ warranty,else not.
4) In the context of the present case, the respondent was alleged to have warranted the statement that the “ Morris was a 1948 model ”. But the said statement was made by him pertaining to the registration date specified in the log-book and not on his own knowledge (which is not possible as he was not an expert to judge the matter).
5) Notably, the respondents too were mistaken as to the registration date received from the registration book.
6) Accordingly the contract cannot be said to be void ab initio instead it should be set aside on equitable principles.
To sum up, a representation amounts to an essential term of a contract only if the party making it intends it to be so, which can be made evident from the circumstances of the case. If a statement is made without such intention then it is only a matter of belief.
This article is written by Nandini Sharma, student of Shambhunath Institute of Law; intern at legal Vidhiya
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