CONTRACT LECTURES
TRANSCRIPT LECTURE 7
MISREPRESENTATION PART 2 Total time = 59 mins 30 seconds
CLAIRE STRICKLAND
Track/slide 8 03.50
The case of Redgrave v Hurd 1881 shows that when a person has the opportunity to
discover the truth, for example, by inspecting the subject matter of the contract, but they do
not take advantage of this opportunity, they may nevertheless be able to show a
misrepresentation, even if they have been negligent.
In this case an elderly solicitor, Redgrave, advertised his desire to take on a partner who
would also agree to buy his house. In a meeting with the defendant, a man named Hurd,
Redgrave told him that the business took in around £300 a year. He showed him books to
back this up to the value of £200. He also showed him a pile of papers which he said
accounted for another £100 worth of business. (In fact these papers did not actually show
any such thing)
Hurd took a cursory glance at these papers and then agreed to and did buy the house. Had he
looked at the papers he would have found that there was no real extra business so that the
business only took in £200 a year.
When Hurd discovered this he refused to complete the sale and so Redgrave brought an
action for specific performance of the contract. Hurd counter claimed for rescission of the
contract for misrepresentation.
At first instance the trial judge found for Redgrave and ordered specific performance.
On appeal in the Court of Appeal, 4 Lords Justices of Appeal sat and 3 of them found for
Hurd and ordered rescission of the contract.
The leading judgment is that of Jessel MR.
He disagreed with the trial judge’s interpretation of things. The trial judge had said that
either Hurd did not rely on the statement about the extra £100 or that if he did rely on it then
his own negligence in looking at the papers only fleetingly lost him his cause of action.
Jessel MR said that this point about negligence was a totally wrong opinion not correct in
law.
He stated that:
‘If you tell a man “You may enter into a partnership with me, my business is bringing in
between £300 and £400 a year”, the man who makes that representation must know that it is
a material inducement to the other to enter into the partnership’.
He went on to say that if the statement was untrue then the representee would only lose his
right to rescind for misrepresentation if:
-
there is evidence to show that he knew that the facts were untrue
or he somehow has shown that he has not relied on the statement
otherwise, he keeps his right to rescind, the inference being that he DID RELY on the
statement. Thus, if the statement is MATERIAL and is UNTRUE he can rescind the
contract.