Redgrave v Hurd
Court of Appeal
Citations: (1881) 20 Ch D 1.
The claimant was a solicitor. He published an advert looking for a partner who would buy their residence, priced at £1600. The defendant answered, and was told that the business brought in £300 a year.
The defendant sought further reassurance, at which point the claimant gave him some records from the business. These showed that the business earned just under £200 a year. When the defendant asked what accounted for missing £100, the claimant showed him papers which he said related to business not shown in the first set of records. In fact, these papers only related to a trivial amount of business which did not account for the additional £100. The defendant did not read those papers, and bought the residence.
The defendant later discovered that the business was worthless, and refused to complete the sale. The claimant sued for specific performance of the agreement. The defendant responded that the agreement should be rescinded for misrepresentation, or that the misrepresentation was grounds to refuse specific performance. The claimant alleged that the misrepresentation had no bearing on the contract because the defendant had not relied on it.
- Had the defendant relied on the claimant’s misrepresentation?
The Court of Appeal held in favour of the defendant. The claimant had made a material misrepresentation, so it was to be assumed that the defendant relied on it. The mere fact that the defendant had the means to discover the truth and failed to do so did not rebut this presumption. The defendant was therefore entitled to have the contract rescinded.
This Case is Authority For…
Where a party to a contract makes a misrepresentation which a reasonable person would rely on when deciding to contract, or which is intended to induce the contract, the courts will assume that the defendant relied on the misrepresentation. This is known as a ‘material’ representation.
To rebut this assumption, the party must show that the defendant actually knew of facts which made the statement untrue, or that his words or conduct made clear that he did not rely on the statement.
More generally, showing that a party had the means and opportunity to learn the truth, but failed to, does not prove that there was no reliance for the purposes of misrepresentation. This is true whether or not the misrepresentation is ‘material’. As Baggallay LJ put it:
‘The representation once made relieves the party from an investigation, even if the opportunity is afforded. I do not mean to say that there may not be certain circumstances of suspicion, which might put a person upon inquiry, and make it his duty to inquire, but under ordinary circumstances, the mere fact that he does not avail himself of the opportunity of testing the accuracy of the representation made to him will not enable the opposing party to succeed on that ground.’