Oscar Chess Ltd v Williams [1956] EWCA Civ 5 (11 November 1956)

A motor dealer bought a Morris car described as a 1948 model based on the registration book, but it was actually a 1939 model. The Court of Appeal held the seller's statement was an innocent misrepresentation, not a contractual warranty, as neither party had special knowledge of the car's true age.

Facts

In May 1955, Mr Williams offered his Morris car in part exchange for a new Hillman Minx from Oscar Chess Ltd, motor dealers. Williams described the Morris as a 1948 model and produced the registration book which showed first registration in April 1948. The dealer’s representative, Mr Ladd, checked the registration book and allowed £290 for the car based on Glass’s Guide prices for 1948 models. Eight months later, the dealers discovered by checking with Morris Motors Ltd that the car was actually manufactured in 1939, not 1948. Someone had fraudulently altered the log-book years earlier. The dealers claimed £115, being the difference between the value of a 1948 and 1939 model.

Issues

The central issue was whether Mr Williams’s statement that the car was a 1948 model constituted a term of the contract (either a condition or warranty) or was merely an innocent misrepresentation for which no damages could be recovered.

Judgment

Lord Justice Denning

Denning LJ distinguished between a statement that forms a term of the contract and an innocent misrepresentation. He emphasised that the question is whether a warranty was intended, applying Chief Justice Holt’s test. Intention must be deduced from the conduct and words of the parties, not their subjective thoughts.

He noted that where a seller states a fact within his own knowledge, a warranty is easily inferred. However, where the seller makes clear he has no personal knowledge and is merely passing on information from elsewhere, no warranty should be implied. Williams had no personal knowledge of the year of manufacture and was relying entirely on the registration book, which the buyer also inspected.

Denning LJ concluded that an intelligent bystander would infer that Williams did not intend to bind himself to warrant the year of manufacture. The appeal was allowed.

Lord Justice Hodson

Hodson LJ agreed, finding no evidence that the statement amounted to a warranty. Williams was stating an opinion on a matter of which he had no special knowledge, and the buyer (an experienced motor salesman) might equally be expected to exercise his own judgment. He found the case on all fours with Routledge v McKay and allowed the appeal.

Lord Justice Morris (dissenting)

Morris LJ dissented, holding that the statement was a condition of the contract. He considered the statement about the car being a 1948 model was not a mere representation but was adopted as the foundation of the contract. The promise to pay £290 was the counterpart of a term that the car was a 1948 model. He found the learned County Court Judge had correctly applied the law and would have dismissed the appeal.

Implications

This case is a leading authority on the distinction between contractual terms (warranties/conditions) and mere representations. It establishes that not every statement made during negotiations becomes a term of the contract. Key factors include: whether the maker had special knowledge of the matter stated; whether the statement was verified by documentary evidence available to both parties; and whether an objective bystander would conclude the maker intended to guarantee the accuracy of the statement. The case demonstrates that where both parties rely on the same external source of information (here, the registration book), the statement is more likely to be a representation than a contractual term.

Verdict: Appeal allowed. The defendant's statement that the car was a 1948 model was held to be an innocent misrepresentation rather than a contractual term. The plaintiffs' claim for damages was dismissed, with costs awarded to the defendant in both the Court of Appeal and the court below.

Source: Oscar Chess Ltd v Williams [1956] EWCA Civ 5 (11 November 1956)