Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd

A representation made during contractual dealings to induce entry into the contract, and which does induce entry, is prima facie intended as a warranty. Intention is assessed objectively from the parties’ words and conduct.

The inference may be rebutted where the representor was reasonably and innocently repeating information and it would be unreasonable to impose contractual responsibility. It is strengthened where the representor has special knowledge or access to the truth but states the fact without a reasonable foundation.

A motor dealer told a prospective buyer that a used Bentley had travelled only 20,000 miles since receiving a replacement engine and gearbox. The buyer relied on that statement and bought the car for £1,850 with a 12-month guarantee. The statement proved substantially inaccurate, and the car required extensive work.

The trial judge found that the mileage statement was a warranty, awarded the buyer the claim limit of £400 and rejected the dealer’s £60 counterclaim for replacing gudgeon pins. The dealer appealed against the characterisation of the statement, the rejection of its counterclaim and the assessment of damages.

1. Appeal dismissed unanimously. Lord Denning MR held that the mileage statement was a warranty. Danckwerts LJ agreed with his judgment, and Salmon LJ agreed that the trial judge had reached the correct conclusion.

2. Whether a statement was intended as a warranty depended objectively on the parties’ words, conduct and behaviour, rather than their undisclosed thoughts. A legally binding promise existed where an intelligent bystander would reasonably infer that result. A representation made during negotiations to induce the other party to contract, and which actually induced the contract, supplied prima facie grounds for that inference.

3. The representor could rebut the inference by showing reasonable innocence and circumstances in which it would be unreasonable to impose contractual responsibility. Oscar Chess Ltd v Williams was distinguishable because the seller there had reasonably repeated the contents of a log-book and was free from fault. Here, the dealer was in a position to ascertain the car’s history but stated the mileage without any reasonable foundation. The trial judge was therefore entitled to find a warranty despite also finding an absence of fraud.

4. The £60 counterclaim failed. Lord Denning MR reasoned that replacing the defective gudgeon pins was already required by the guarantee, so a promise to pay for that work lacked consideration. Alternatively, the buyer had a cross-claim for £60 damages for breach of the guarantee which could be set off. Salmon LJ expressed initial doubt on this issue but ultimately agreed that the finding should stand.

5. The damages award was not excessive. The proper comparison was between the car’s value had it complied with the warranty and its actual value. The evidence supported a difference of about £600. Giving credit for the £129 engine rebore still left loss exceeding the £400 claim limit.

1. Court of Appeal: The dealer’s appeal was dismissed unanimously with costs. The findings that the mileage statement was a warranty, that the £60 counterclaim failed and that damages of £400 were recoverable were upheld.

2. Trial court: The judge found that the mileage representation was a broken warranty and that damages exceeded £400. Judgment was entered for the buyer for the claim limit of £400, and the dealer’s £60 counterclaim was rejected.