Long v Lloyd [1958] EWCA Civ 3 (19 May 1958)

Mr Long purchased a lorry from Mr Lloyd after misrepresentations about its condition, including that it was in first-class condition and could achieve 40mph and 11 miles per gallon. After discovering defects, Long sought rescission. The Court held that even if rescission for innocent misrepresentation survived completion, Long had lost this right through acceptance by using the lorry and accepting partial payment for repairs.

Facts

The plaintiff, Mr Long, a haulage contractor, purchased a 1947 Dennis lorry from the defendant, Mr Lloyd, for £750 after seeing an advertisement describing it as being in ‘exceptional condition’. During negotiations, Lloyd made various representations: that the lorry was in ‘first-class condition’, capable of 40 miles per hour, and would achieve 11 miles to the gallon.

After a trial run on 22nd October 1956, Long purchased the lorry despite noticing some defects including a non-working speedometer and problems with the accelerator. On 24th October, Long used the lorry for business, discovering that the dynamo had ceased functioning, an oil seal was leaking, a wheel was cracked, and fuel consumption was approximately 8 gallons for 40 miles.

That evening, Long complained to Lloyd, who offered to pay half the cost of a reconstructed dynamo, which Long accepted. The next day, Long sent the lorry with his brother on a business trip to Middlesbrough, during which it broke down. Long then wrote seeking rescission of the contract.

Issues

Primary Issue

Whether the plaintiff was entitled to rescind an executed contract of sale on the ground of innocent misrepresentation.

Secondary Issue

Whether, assuming such a right existed, the plaintiff had lost the right to rescind through his subsequent conduct.

Judgment

The Court of Appeal dismissed the appeal. Lord Justice Pearce, delivering the judgment of the court, acknowledged the uncertainty in law regarding whether rescission for innocent misrepresentation was available after completion of a contract for sale of chattels. However, the court found it unnecessary to resolve this question because, even assuming such a right existed, the plaintiff had lost it through his conduct.

The court noted that after the trial run, Long drove the lorry a considerable distance home. The following day, he used it for business. Upon discovering defects, he telephoned Lloyd and accepted Lloyd’s offer to pay half the cost of the dynamo repair:

We find this difficult to reconcile with the continuance of any right of rescission which the plaintiff might have had down to that time.

Critically, the court held that when Long subsequently despatched the lorry on a business trip to Middlesbrough:

That step, at all events, appears to us to have amounted, in all the circumstances of the case, to a final acceptance of the lorry by the plaintiff for better or for worse, and to have conclusively extinguished any right of rescission remaining to the plaintiff after completion of the sale.

Implications

This case is significant for establishing that even if a right to rescind an executed contract for innocent misrepresentation exists, such right can be lost through conduct inconsistent with rejection. The acceptance of partial compensation for defects and continued use of goods for business purposes after knowledge of defects will constitute acceptance barring rescission. The case demonstrates the courts’ reluctance to unwind completed transactions where the buyer has affirmed the contract through conduct.

Verdict: Appeal dismissed with costs. The plaintiff’s claim for rescission was rejected as he had lost any right to rescind through acceptance of the lorry by continuing to use it for business and accepting the defendant’s offer to pay half the cost of repairs.

Source: Long v Lloyd [1958] EWCA Civ 3 (19 May 1958)