Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] EWCA Civ 2 (03 March 1965)

A car dealer stated a car had only done 20,000 miles since a replacement engine. This was false. The court found this was a contractual warranty, not an innocent representation, because the dealer, as a specialist, was in a position of knowledge.

Facts

The claimant, Mr Dick Bentley (of Dick Bentley Productions Ltd), was a long-standing customer of the defendant car dealers, Harold Smith (Motors) Ltd. Mr Bentley informed Mr Smith that he was looking for a ‘well-vetted’ Bentley car. Mr Smith subsequently acquired a Bentley car and told Mr Bentley that the vehicle had only travelled 20,000 miles since having a replacement engine and gearbox fitted. Relying on this statement, Mr Bentley purchased the car for £1,850. The car proved unsatisfactory, and it later transpired that the actual mileage since the replacement was closer to 100,000 miles. The claimant sued for damages for breach of warranty. The County Court Judge found in favour of the claimant, awarding £400 in damages. The defendant appealed to the Court of Appeal.

Issues

The central legal issue was whether the defendant’s statement regarding the car’s mileage constituted a binding contractual term (a warranty) or was merely an innocent misrepresentation that induced the contract but did not form part of it. The court had to determine the correct legal test for differentiating between a term and a representation.

Judgment

The Court of Appeal unanimously dismissed the appeal, upholding the trial judge’s decision. The statement was held to be a term of the contract.

Lord Denning M.R.

Lord Denning delivered the leading judgment, refining the test for determining if a pre-contractual statement is a warranty. He moved away from a strict ‘intention’ test, proposing a more objective approach based on the parties’ conduct and relative positions.

But the test is whether a representation was made in the course of dealings for a contract for the very purpose of inducing the other party to act upon it, and actually inducing him to act upon it by entering into the contract. If that is so, as it is in this case, it is prima facie ground for inferring that the representation was intended as a warranty.

Lord Denning explained that this inference can be rebutted, but the burden of proof lies with the person who made the statement. They must show that the statement was an innocent misrepresentation.

But the maker of the representation can rebut this inference if he can show that it really was an innocent misrepresentation, in that he was in fact innocent of fault in making it, and that it would not be reasonable in the circumstances for him to be bound by it.

Applying this test, Lord Denning distinguished the case from Oscar Chess Ltd. v. Williams [1957] 1 W.L.R. 370. In Oscar Chess, the seller was a private individual with no specialist knowledge who relied on a forged logbook. In this case, the seller, Mr Smith, was a car dealer who was in a position to know the true history of the car, or at least to find it out. His failure to do so meant his statement could not be considered innocent.

Here the seller, Smith, was a motor-dealer. He was in a position to know, or at least to find out, the history of the car… He is not to be excused by saying that he honestly believed it. He was in a position to know better. He ought to have known better. The bottam, as my Lord has said, is that he should have known better.

Lord Justice Danckwerts

Lord Justice Danckwerts concurred, agreeing that the crucial distinguishing feature from Oscar Chess was the specialist knowledge of the representor. He stated that the dealer’s assertion about the mileage was a statement that was intended to be acted upon, and was acted upon, making it a warranty.

Lord Justice Salmon

Lord Justice Salmon also agreed, endorsing Lord Denning’s formulation of the test. He emphasised that the dealer made a representation of fact intended to induce the contract, and there were no grounds for him to say that he was innocent in making it. He concluded that it was clearly intended and understood as a warranty.

Implications

The decision in Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd is significant for contract law as it clarifies the distinction between a term and a representation. It establishes that where a representor has greater knowledge or skill relative to the representee (e.g., a specialist dealer versus a private buyer), their statements are more likely to be construed as binding contractual warranties. The case effectively places a heavier burden on expert sellers, as they must be able to prove they were not at fault when making a statement of fact that induces a contract. This provides greater protection to purchasers in such transactions and reinforces the principle of holding experts to their word.

Verdict: The appeal was dismissed.

Source: Dick Bentley Productions Ltd & Anor v Harold Smith (Motors) Ltd [1965] EWCA Civ 2 (03 March 1965)