Routledge v Mckay (Nugent Third Party, Ashgrove Fourth Party, Mawson Fifth Party)

An affirmation made during negotiations is a warranty only where the evidence establishes an intention to assume contractual responsibility. Otherwise it is an innocent representation and does not give rise to damages. This is especially so where the seller merely passes on information in a registration book for a second-hand vehicle.

If an alleged warranty was not part of the concluded bargain, it must be proved as a separate collateral contract. A preliminary statement made before any bargain existed cannot, without clear contractual intention, be collateral to the later sale.

A motor-cycle combination had passed through a chain of sales carrying a registration-book entry which wrongly indicated that it was a 1941 or 1942 model. In an exchange between Ashgrove, the fourth party, and Mawson, the fifth party, Mawson described it as a late 1941 or 1942 model and produced the book. The parties later signed a written memorandum recording the exchange and an equalising payment.

The County Court Judge held that Mawson had warranted the model year and that the written agreement did not exclude the warranty. Mawson appealed. The central issue was whether his statement as to the machine's age was a contractual warranty or merely an innocent representation.

1. Appeal allowed unanimously. The Master of the Rolls gave the principal judgment, with which Denning and Romer LJJ agreed. The order below was varied so that the fifth-party proceedings were dismissed.

2. On the preliminary stamp point, the Court held that an appellate court must have regard to Stamp Act 1891, section 14, despite the document having been admitted below. Exemption (3), liberally construed, covered the document, so section 14 had not been infringed.

3. Applying Heilbut, Symons & Co. v Buckleton, 1913 Appeal Cases 30, an affirmation is not a warranty merely because it is made in the course of negotiations. A warranty requires evidence of an intention to contract. A collateral contract is exceptional and requires strict proof of its terms and of the parties’ animus contrahendi.

4. Mawson’s statement, made in answer to a question before the exchange was agreed, was no more than a representation based on the registration book. There was no evidence that he intended to undertake contractual responsibility for its truth. The correction of the machine’s cubic capacity did not convert the separate statement about its year into a warranty.

5. The written memorandum was prima facie the record of the concluded transaction and tended to support that conclusion. The Court preferred, however, to decide the appeal on the more fundamental ground that there was no evidence capable of establishing an earlier warranty or collateral contract. Fraud had not been pleaded and was not determined.

• Court of Appeal: Allowed the fifth party’s appeal and varied the County Court order by dismissing the fifth-party proceedings.

• County Court: Held that the fifth party had warranted that the motor-cycle combination was a 1942 model, held that the written exchange agreement did not exclude that warranty, and awarded damages of £80.