Esso Petroleum Co Ltd v Mardon
Encyclopedia
Esso Petroleum Co Ltd v Mardon [1976] EWCA Civ 4 is an English contract law
case, concerning misrepresentation
. It holds that the divide between a statement of opinion and fact becomes more factual if one holds himself out as having expert knowledge.
Petroleum Co Ltd. Esso told him they had estimated that the throughput of a petrol station in Eastbank Street, Southport
, would be 200,000 gallons a year. However the local council made a decision on planning permission so there would be no direct access from the main street. That meant fewer customers. But Esso still told Mr Mardon the estimated throughput was 200,000. Mr Mardon bought the petrol station and business did not go well. From 1964, Mr Mardon negotiated a lower rent with Esso. He still put money in but lost a lot. Esso then brought an action for possession against Mr Mardon. He counterclaimed for damages of Esso’s breach of warranty or negligence under Hedley Byrne.
Lawson J held there was no contractual warranty and tort misrepresentation damages were limited to losses before 1964. Mr Mardon appealed.
Lord Denning MR distinguished Bisset v Wilkinson
because each party was ‘equally able to form an opinion.’ The damages awarded were for the loss suffered, not the loss of a bargain. He went on and said, if there had been no warranty (which there was) there would still be negligent misrepresentation liability in tort. It was argued that when a contract resulted, there was no tort liability, relying on Clark v Kirby-Smith, when Plowman J said a negligent solicitor was not liable in tort, only contract, based on Sir Wilfrid Greene MR in Groom v Crocker. But these were old and the tort duty ‘is comparable to the duty of reasonable care which is owed by a master to his servant, or vice versa’.
There is a duty to negotiate with care,
Ormerod and Shaw LJJ concurred.
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
case, concerning misrepresentation
Misrepresentation in English law
Misrepresentation in English law is an area of English contract law, which allows a person to escape a contractual obligation or claim compensation for losses. If one person can show that she entered an agreement because of another person's false assurances, then the other person will be unable to...
. It holds that the divide between a statement of opinion and fact becomes more factual if one holds himself out as having expert knowledge.
Facts
Mr Mardon was buying a petrol station, franchised by EssoEsso
Esso is an international trade name for ExxonMobil and its related companies. Pronounced , it is derived from the initials of the pre-1911 Standard Oil, and as such became the focus of much litigation and regulatory restriction in the United States. In 1972, it was largely replaced in the U.S. by...
Petroleum Co Ltd. Esso told him they had estimated that the throughput of a petrol station in Eastbank Street, Southport
Southport
Southport is a seaside town in the Metropolitan Borough of Sefton in Merseyside, England. During the 2001 census Southport was recorded as having a population of 90,336, making it the eleventh most populous settlement in North West England...
, would be 200,000 gallons a year. However the local council made a decision on planning permission so there would be no direct access from the main street. That meant fewer customers. But Esso still told Mr Mardon the estimated throughput was 200,000. Mr Mardon bought the petrol station and business did not go well. From 1964, Mr Mardon negotiated a lower rent with Esso. He still put money in but lost a lot. Esso then brought an action for possession against Mr Mardon. He counterclaimed for damages of Esso’s breach of warranty or negligence under Hedley Byrne.
Lawson J held there was no contractual warranty and tort misrepresentation damages were limited to losses before 1964. Mr Mardon appealed.
Judgment
Lord Denning MR held there was a contractual warranty and damages were not limited.Lord Denning MR distinguished Bisset v Wilkinson
Bisset v Wilkinson
Bisset v Wilkinson [1927] AC 177 is a leading English contract law case on the subject of misrepresentation, establishing that a fairly given opinion cannot amount to a misrepresentation...
because each party was ‘equally able to form an opinion.’ The damages awarded were for the loss suffered, not the loss of a bargain. He went on and said, if there had been no warranty (which there was) there would still be negligent misrepresentation liability in tort. It was argued that when a contract resulted, there was no tort liability, relying on Clark v Kirby-Smith, when Plowman J said a negligent solicitor was not liable in tort, only contract, based on Sir Wilfrid Greene MR in Groom v Crocker. But these were old and the tort duty ‘is comparable to the duty of reasonable care which is owed by a master to his servant, or vice versa’.
There is a duty to negotiate with care,
Ormerod and Shaw LJJ concurred.
See also
- English contract lawEnglish contract lawEnglish contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
- Misrepresentation in English lawMisrepresentation in English lawMisrepresentation in English law is an area of English contract law, which allows a person to escape a contractual obligation or claim compensation for losses. If one person can show that she entered an agreement because of another person's false assurances, then the other person will be unable to...