Attwood v Small
House of Lords
Citations: [1838] UKHL J60; (1838) VI Clark & Finnelly 232; 7 ER 684.
Facts
The claimant bought an estate from the defendant for £600,000. The estate consisted of a manor, various mines and associated properties associated with the mines. These properties, as well as the mines, generated profit for the landowner. The claimant examined the defendant’s accounts before contracting and took steps to verify that they were accurate. On the strength of this, they proceeded with the purchase. However, the accounts were actually inaccurate and greatly over-estimated the land’s profitability. The claimant sought to have the contract rescinded for misrepresentation.
Issue(s)
- Did misrepresentation apply in this case?
Decision
The House of Lords held in favour of the defendant. A contract can only be rescinded for misrepresentation if the claimant relied on the false statement. This claimant had not relied on the false statement – they relied on their own attempts to verify the accounts.
This Case is Authority For…
Where a claimant independently verifies whether the defendant’s statement is true, they have not relied on the statement. As such, any subsequent contract cannot be rescinded for misrepresentation.
Other
This case states that equity will only rescind a contract for fraudulent misrepresentations. This is no longer good law.
