Chess (Oscar) Ltd v Williams

A representation about goods is not contractual merely because it is important to the bargain or relied upon in fixing the price. The decisive question is whether, objectively, the parties intended the statement to be a binding promise rather than an innocent misrepresentation. That intention is inferred from the words, conduct and surrounding circumstances. Relevant considerations include comparative knowledge, the source of the information, whether the matter was within the seller’s control, and whether the statement was recorded in the contract. Where a buyer is too late to rescind for mistake, damages require proof of a warranty. On the facts, no warranty was proved.

A motor dealer accepted a used Morris car in part exchange, allowing a price calculated on the basis that it was a 1948 model. The seller honestly believed that description and produced a registration book showing first registration in 1948. The car was later found to have been manufactured in 1939, and the dealer claimed the difference in value as damages.

The County Court treated the description as a contractual condition and awarded £115. The defendant appealed. The central issue was whether the statement formed part of the contract as a binding term or was merely an innocent misrepresentation.

1. Disposition. Denning LJ and Hodson LJ allowed the appeal. Morris LJ dissented and would have upheld the award.
2. Nature of the claim. The majority held that the parties’ fundamental assumption that the car was a 1948 model did not itself make the statement a contractual term. A fundamental mistake might in suitable circumstances justify equitable relief, but the buyer was too late to set aside the transaction. The remaining claim therefore required proof of a binding warranty. The technical distinction between a condition and a warranty was immaterial because rejection of the car was no longer available.
3. Objective test. Applying the principle adopted in Heilbut Symons & Co v Buckleton 1913 Appeal Cases 30, the question was whether the statement was intended as a binding promise. Intention was to be inferred objectively from the totality of the evidence, including words, conduct and surrounding circumstances. If the facts were undisputed, the issue was one of law.
4. Application. The seller had acquired the car after several changes of ownership and was plainly relying on the registration book. The buyer’s representative was a motor dealer and had comparable or greater expertise. The majority inferred that the seller stated his honest belief rather than guaranteeing the year of manufacture. The buyer’s reliance on the registration book and the price calculation did not establish a warranty. The failure to check the chassis and engine numbers also supported leaving the loss where it fell.
5. Written evidence. A later written contract may be evidence for or against a warranty, but is not decisive. It must not be assumed that every representation made during negotiations is contractual. The majority treated Routledge v McKay 1954 1 Weekly Law Reports 615 as materially analogous.
6. Dissent. Morris LJ considered the unqualified statement, made during the transaction and forming the basis of the price, an integral contractual stipulation and condition. He distinguished Routledge and considered that the breach could be treated as a breach of warranty under the Sale of Goods Act 1893.
7. The appeal was allowed with costs in the Court of Appeal and below. Leave to appeal to the House of Lords was refused.

1. Court of Appeal. The majority allowed the defendant’s appeal, with costs in the Court of Appeal and below. Leave to appeal to the House of Lords was refused.
2. County Court. The judge held that the description of the car as a 1948 model was a contractual condition and awarded the plaintiff £115.