Oscar Chess v Williams – Case Summary

Oscar Chess v Williams

Court of Appeal

Citations: [1957] EWCA Civ 5; [1957] 1 WLR 370; [1957] 1 All ER 325; (1957) 101 SJ 186; [1957] CLY 3208.

Facts

The defendant entered into a hire-purchase contract for a car with the claimant (a car dealer). As part of the contract, the defendant promised to trade in a Morris 10 saloon car. The claimant’s agent believed it was a 1948 Morris car, based on his personal knowledge of its appearance and the registration book (which listed its first registration date as 1948). He made a deduction of £290 from the purchase price to represent the value of a 1948 Morris car.

The claimant later discovered that the car was a 1939 Morris car, which was only worth £175. The defendant had not known this at the time of contracting. The claimant’s agent could have verified the make of the car at the time of the contract using the engine and chassis number, but failed to do so.

The claimant sued the defendant in for breach of the hire-purchase agreement, or of a collateral warranty. They argued that it was a term of either contract that the car was a 1948 Morris car. They sought the £115 difference in value between a 1948 Morris car and a 1939 Morris car.

Issue(s)
  1. Was the representation that the car was a 1948 Morris 10 saloon car a term of the hire-purchase contract?
  2. If not, was there a separate, collateral contract guaranteeing that the car was a 1948 Morris 10 saloon car?
Decision

The Court of Appeal held in favour of the contract. The representation that the car was a 1948 Morris 10 saloon car was not part of any contract. The defendant was merely stating his belief as to the make of the car, with no special expertise, based on the registration book. The statement was a mere innocent misrepresentation, which cannot ground a claim for damages.

This Case is Authority For…

A representation is a term of the contract if it objectively appears as if the parties intended it to be a term of the contract. The court will assess this from the perspective of a reasonable bystander. Factors which indicate that the parties intended the representation to be part of the contract include:

  • The party making the representation appears to have greater expertise or knowledge about the subject of the representation, while the other party does not;
  • The party making the representation assures the other party that they can rely on the statement (e.g. by using words like ‘I guarantee’).

Factors which indicate that the parties did not intend the representation to be a term of the contract include:

  • The party making the representation makes clear that they obtained their knowledge elsewhere and are just passing the information on;
  • The party making the representation phrases it as a belief and not a guarantee (e.g. by using words like ‘I think’).
Other

Morris LJ dissented in this case. He thought that the representation as to the make of the car described the subject matter of the contract. Accordingly, he thought it should be considered a fundamental part of that contract. He would have held that the representation was a term of the hire-purchase agreement.

This case also contains some obiter remarks on the defence of equitable mistake (as created in Solle v Butcher [1950] 1 KB 671). This defence no longer exists as a result of the Court of Appeal’s ruling in Great Peace Shipping Ltd v Tsavliris (International) Ltd [2002] EWCA Civ 1407.