Heilbut Symons & Co v Buckleton [1912] UKHL 2 (11 November 1912)

Buckleton purchased shares in a rubber company after a telephone conversation with the defendants' agent. When the company proved not to be primarily a rubber company, he claimed damages for breach of warranty. The House of Lords held no warranty existed, establishing that representations only become warranties if intended as such.

Facts

The appellants, Heilbut, Symons & Co., were prominent rubber merchants who underwrote shares in the Filisola Rubber and Produce Estates, Limited. Their agent, Johnston, was instructed to obtain applications for shares in Liverpool. The respondent, Buckleton, telephoned Johnston and asked whether the appellants were bringing out a rubber company. Johnston confirmed they were. When Buckleton asked if it was ‘all right’, Johnston replied ‘We are bringing it out’, to which Buckleton responded ‘That is good enough for me’. Buckleton subsequently purchased 6,000 shares.

When the rubber boom collapsed and it emerged there was a deficiency in rubber trees on the estate, the shares fell dramatically in value. Buckleton sued for fraudulent misrepresentation and alternatively for breach of warranty that the company was a rubber company.

Issues

The central issue was whether the telephone conversation constituted a collateral warranty that the company was a rubber company, given that the jury had rejected the fraud claim but found there had been a warranty.

Judgment

The House of Lords unanimously allowed the appeal and entered judgment for the appellants.

Lord Chancellor Viscount Haldane

The Lord Chancellor held that the words used in the conversation were words of representation, not contract. There was nothing in the language expressing or implying a special contract of warranty collateral to the main contract. He emphasised that it is contrary to the general policy of English law to presume the making of such a collateral contract in the absence of language expressing or implying it.

Lord Atkinson

Lord Atkinson stressed the importance of intention in determining whether an affirmation amounts to a warranty, citing Buller J. in Pasley v. Freeman that an affirmation at the time of sale is a warranty only if it appears on evidence to have been so intended. He found every piece of evidence tended to disprove such an intention, noting that Buckleton did not ask for any warranty and was satisfied by the fact that a reputable firm was bringing out the company.

Lord Moulton

Lord Moulton provided the most extensive analysis of the law. He emphasised that collateral contracts must be proved strictly and that the existence of an animus contrahendi must be clearly shown. He warned that treating any representation as evidence of a collateral warranty would effectively negate the established rule that innocent misrepresentation gives no right to damages.

Key Legal Principles

The case established several important principles:

• An affirmation is only a warranty if it appears on evidence to have been so intended
• Collateral contracts are viewed with suspicion by the law and must be proved strictly
• Both the terms of collateral contracts and the animus contrahendi must be clearly shown
• A mere representation of fact does not automatically give rise to a warranty
• Innocent misrepresentation gives no right to damages

Implications

This case remains a leading authority on the distinction between mere representations and contractual warranties. It established that courts should not readily infer warranties from pre-contractual statements, thereby protecting the integrity of written contracts and preventing parties from circumventing the rule that damages are not available for innocent misrepresentation. The decision reinforced the principle that intention is the crucial factor in determining whether a statement constitutes a warranty.

Verdict: Appeal allowed. Judgment entered for the appellants with costs. The finding of warranty by the jury was set aside as there was no evidence upon which the jury could reasonably find that a warranty had been given.

Source: Heilbut Symons & Co v Buckleton [1912] UKHL 2 (11 November 1912)