Distinction Between Representations and Terms

Importance of the Distinction

Legal Consequences

Examination Application

• One of the most important distinctions in contract law.
• Courts must determine whether a statement made during negotiations became a contractual term or remained merely a representation.
• Classification determines available remedies.

Oscar Chess Ltd v Williams [1957] 1 WLR 370

Facts

• Williams sold a car to Oscar Chess.
• Registration book indicated that the car was a 1948 model.
• Williams honestly believed this information.
• Car was actually a 1939 model.
• Buyers claimed the statement was a contractual term.

Judgment

• Statement was a representation only.

Legal Principle

• Greater weight is given to statements made by the party possessing superior knowledge or expertise.
• Williams was a private seller with no specialist knowledge.
• Buyers were experienced motor dealers.

Application

• Important authority showing that relative expertise influences classification.
• Statement less likely to be a term where made by a non-expert.

Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623

Facts

• Dealer sold a car stating it had travelled only 20 000 miles since replacement engine and gearbox.
• Statement proved inaccurate.
• Buyer relied on the statement.

Judgment

• Statement was a contractual term.

Legal Principle

• Statements made by a party possessing special skill or expertise are more likely to be contractual terms.

Application

• Direct contrast with Oscar Chess.
• Frequently examined together.

Heilbut Symons & Co v Buckleton [1913] AC 30

Facts

• Investor asked about a company’s status.
• Seller stated the company was a rubber company.
• Statement was inaccurate.
• Investor claimed statement was a contractual term.

Judgment

• Statement was a representation.

Legal Principle

• Mere importance of a statement to the recipient does not automatically make it a term.
• Courts require evidence that the maker intended contractual responsibility.

Application

• Important House of Lords authority on intention.

Bannerman v White (1861) 10 CBNS 844

Facts

• Buyer asked whether hops had been treated with sulphur.
• Seller stated they had not.
• Buyer expressly stated he would not purchase if sulphur had been used.
• Statement proved false.

Judgment

• Statement was a contractual term.

Legal Principle

• Where a party clearly indicates that a statement is fundamental to the transaction, it is likely to become a term.

Application

• Leading authority on importance attached to a statement.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Factors Used by Courts to Distinguish Terms and Representations

Importance of the Statement

Bannerman v White (1861)

Principle

• Greater importance attached to a statement increases the likelihood that it will become a contractual term.

Application

• If the recipient makes clear that the statement is crucial, courts are likely to treat it as a term.

Relative Expertise of the Parties

Oscar Chess Ltd v Williams [1957]

Principle

• Statement by non-expert less likely to be a term.

Application

• Seller relied on information contained in registration document.

Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965]

Principle

• Statement by expert more likely to be a term.

Application

• Dealer expected to possess specialist knowledge.

Timing of the Statement

Routledge v McKay [1954] 1 WLR 615

Facts

• Motorcycle sold.
• Seller made statement about year of manufacture.
• Contract concluded several days later.
• Statement not included in written agreement.

Judgment

• Statement was a representation.

Legal Principle

• The longer the gap between statement and contract, the less likely it is to be a contractual term.

Application

• Important authority on timing.

Reduction into Writing

Routledge v McKay [1954]

Principle

• Failure to include an important statement in a later written contract suggests it was not intended to be a contractual term.

Application

• Frequently cited in problem questions.

Birch v Paramount Estates Ltd [1956] 1 WLR 831

Facts

• Builder assured purchaser that house would be as good as the show house.
• Statement omitted from written contract.

Judgment

• Statement treated as contractual.

Legal Principle

• Omission from writing is relevant but not conclusive.

Application

• Courts examine all surrounding circumstances.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Statements Becoming Terms

Schawel v Reade [1913] 2 IR 81

Facts

• Buyer intended to inspect a horse.
• Seller stated:
  • “You need not look for anything, the horse is perfectly sound.”
• Buyer relied on statement.
• Horse proved unsound.

Judgment

• Statement was a contractual term.

Legal Principle

• Where a statement induces the other party not to investigate further, it is likely to be a term.

Application

• Important authority on reliance.

Couchman v Hill [1947] KB 554

Facts

• Auction catalogue stated no warranty given.
• Seller verbally assured buyer that a heifer was in calf.
• Buyer relied upon the assurance.
• Heifer was not in calf.

Judgment

• Statement constituted a contractual term.

Legal Principle

• Oral assurances may override general written disclaimers where clearly intended as contractual promises.

Application

• Important authority on reliance and intention.

Statements Remaining Representations

Heilbut Symons & Co v Buckleton [1913]

Principle

• Not every important statement becomes a term.
• Courts require evidence of contractual intention.

Application

• Leading authority supporting representation classification.

Oscar Chess Ltd v Williams [1957]

Principle

• Honest statement by a non-expert may remain a representation.

Application

• Frequently cited in examination essays.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Importance of Classification

If the Statement Is a Contractual Term

Poussard v Spiers (1876) 1 QBD 410

Facts

• Singer contracted to perform in an opera.
• Failed to appear for opening performances.

Judgment

• Breach entitled the other party to terminate.

Legal Principle

• Breach of contractual terms may give rise to contractual remedies.

Application

• Demonstrates significance of contractual classification.

Bettini v Gye (1876) 1 QBD 183

Facts

• Singer failed to attend rehearsals.
• Appeared for performances.

Judgment

• Damages available but contract remained in force.

Legal Principle

• Consequences depend upon nature of contractual term breached.

Application

• Highlights importance of identifying contractual obligations.

If the Statement Is Only a Representation

Derry v Peek (1889) 14 App Cas 337

Facts

• False statement made regarding company powers.

Judgment

• Fraud required for deceit.

Legal Principle

• False representations are governed by misrepresentation law rather than contract law.

Application

• Illustrates different remedies.

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465

Facts

• Negligent statement caused economic loss.

Judgment

• Liability possible in negligence.

Legal Principle

• False representations may lead to remedies outside contract.

Application

• Demonstrates significance of classification.

Statutory Position

Misrepresentation Act 1967

Section 2(1)

Provision

• Allows damages for negligent misrepresentation unless representor proves reasonable grounds for belief.

Application

• Applies where statement is classified as a representation rather than a contractual term.

Misrepresentation Act 1967

Section 2(2)

Provision

• Court may award damages instead of rescission.

Application

• Important remedy where statement is merely a representation.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Essential Examination Authorities

Essential Statutory Provisions

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course