Heilbut Symons & Co v Buckleton
House of Lords
Citations:  AC 30.
The claimant asked the defendant (a firm of rubber merchants) whether they were bringing out a rubber company. The defendant replied that they were. The claimant asked about the prospects of the company. The defendant responded that they were bringing it out. The claimant thought that this was good enough for him. On the basis of this, the claimant bought 5000 shares in the new company from the defendant.
The shares later fell in value. The claimant sued the defendant for breach of warranty or fraudulent misrepresentation. He argued that the new company was not a rubber company, whereas the defendant had represented that it was. The jury held that there was no fraudulent misrepresentation. However, they went on to hold that the defendant had given a warranty which they had breached. The defendant appealed.
- Was the defendant contractually bound by their representation?
The House of Lords held in favour of the defendant. There was no proper evidence on which the jury could have found that the defendant made a warranty.
This Case is Authority For…
Whether a representation becomes a term of the contract (or forms a collateral contract) depends on whether the parties objectively intended it to be so. It cannot be presumed that a person intends to be contractually bound by every representation of fact.
What the parties intended is assessed by reference to all the facts of the case. Factors which were important in this case to the finding that the statement was a mere representation included:
- The fact that the classification of the company did not objectively appear important to the claimant;
- That the defendant’s response to the claimant’s question about the prospects of the company was merely expressing an opinion (‘a firm of their standing would not be bringing it out if they did not believe it to be all right’);
- The natural meaning of the words used did not express or imply any contractual warranty; and
- The fact that the claimant was the first to mis-label the company as a rubber company: the defendant merely failed to correct him and never adopted that label as their own.