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

Mr Bentley purchased a Bentley car from a dealer who represented it had done only 20,000 miles since being fitted with a replacement engine and gearbox. This statement was false. The Court of Appeal held this was a warranty, not merely an innocent misrepresentation, because the dealer was in a position to know the facts and had no reasonable foundation for the statement.

Facts

Mr Charles Walter Bentley (Dick Bentley) was looking for a well-vetted Bentley car and had been dealing with Harold Smith (Motors) Ltd for some years. In January 1960, Mr Smith found a car and represented to Mr Bentley that it had been fitted with a replacement engine and gearbox and had done only 20,000 miles since that replacement. The speedometer showed 20,000 miles. Mr Bentley purchased the car for £1,850 with a 12-month guarantee covering parts and labour.

The car proved to be a considerable disappointment, requiring frequent repairs. After the 12-month guarantee period expired, gudgeon pins needed replacement at a cost of £60. During this work, it was discovered that the cylinder had been scored, requiring the engine to be re-bored at a cost of £130.

Investigation revealed the car had actually done nearly 100,000 miles since the replacement work was carried out in 1952. Mr Smith’s statement about 20,000 miles had no reasonable foundation and was described by the Judge as ‘an entire invention’.

Issues

Whether the representation constituted a warranty or merely an innocent misrepresentation

The central question was whether Mr Smith’s statement about the mileage amounted to a contractual warranty giving rise to damages, or whether it was merely an innocent misrepresentation.

Whether the counter-claim for £60 for gudgeon pins should succeed

The defendants counter-claimed for £60 for the gudgeon pin replacement work.

Whether the damages awarded were excessive

The defendants argued credit should have been given for the engine re-bore work.

Judgment

The Court of Appeal dismissed the appeal, upholding the trial judge’s finding that there was a warranty which had been breached.

Lord Denning MR explained the test for determining whether a representation amounts to a warranty:

“if a representation is 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, that is prima facie ground for inferring that it was intended as a warranty.”

Lord Denning distinguished this case from Oscar Chess Ltd v Williams, where the seller was an innocent private individual who had simply repeated information from a log-book. Here, Mr Smith was a dealer who was in a position to know or find out the history of the car by writing to the makers but failed to do so.

The trial judge had found:

“I have no hesitation that as a matter of law the statement was a warranty. Mr. Smith stated a fact that should be within his own knowledge. He had jumped to a conclusion and stated it as a fact. A fact that a buyer would act on.”

Lord Justice Salmon explained the warranty in these terms:

“If you will enter into a contract to buy this motor car from me for £1,850, I undertake that you will be getting a motor car which has done no more than 20,000 miles since it was fitted with a new engine and a new gearbox.”

Regarding the counter-claim, the Court held that since the gudgeon pins had actually broken down during the guarantee period (though not discovered until afterwards), they should have been replaced under the guarantee. Therefore, there was no consideration for the promise to pay £60, or alternatively, Mr Bentley could set off damages for breach of the guarantee.

On damages, the Court accepted the expert evidence that the car would have been worth £1,800 if compliant with the warranty, but was actually worth only £1,200, a diminution well exceeding the £400 claimed even after allowing for the re-bore.

Implications

This case is a leading authority on distinguishing warranties from mere representations. It establishes that where a statement is made to induce a contract and is acted upon, there is a prima facie inference of warranty. This inference can be rebutted if the maker can show innocent misrepresentation made without fault and that it would be unreasonable to be bound by it.

The case emphasises the significance of the relative positions of the parties: a dealer or expert who makes statements about matters within their knowledge or means of knowledge will more readily be held to have given a warranty than a private individual passing on information innocently believed to be true. The decision reinforced the principle that those in a position to verify facts bear responsibility for statements made to induce contracts.

Verdict: Appeal dismissed. The trial judge's decision was upheld: the representation about mileage was a warranty, which had been breached. The claimant was entitled to damages of £400, and the defendant's counter-claim for £60 failed.

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