Smith v. Hughes

Smith v. Hughes

(1871) LR 6 QB 597

(Mutual and Unilateral Mistake—Misrepresentation, Fraud—Condition, Warranty)

FACTS:

S (Smith) sued H (Hughes) for the price of oats sold and delivered, and for damages for not accepting the oats. S had offered to sell to H by sample a parcel of oats. According to H, S described the oats as ‘good old oats’ but S denied the word ‘old’ had been used.

ISSUE:

Whether jury was to found for H if the word ‘old’ was not used and they were of opinion that S believed H to believe or to be under the impression that he was contracting for old oats?

HELD:

The direction to jury to find for H if the word ‘old’ was not used and they were of opinion that S believed H to believe or to be under the impression that he was contracting for old oats, would not sufficiently bring to the mind of jury the distinction between agreeing to take the oats under the belief that they were old and agreeing to take the oats under the belief that S contracted that they were old.

Mere silence as to anything which the other party might by proper diligence have discovered, and which is open to his examination, isn’t fraudulent unless a special trust or confidence exists between the parties or be implied from the circumstances of the case. Passive acquiescence of seller in the self-deception of buyer didn’t entitle latter to avoid the contract. If the buyer has full opportunity of inspecting the products contracted for and thereupon form his judgment, and if he relies only on his own judgment, the rule caveat emptor applies.

Unless there be a warranty making a particular quality of product as a part of the bargain or there be any fraudulent misrepresentation on part of seller to that effect, buyer must take the good as he contracted for, even if that quality was absent in the product. Such a unilateral mistake on part of buyer unless induced by seller will not result in avoidance of the contract. If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he is assenting to the terms proposed by the other party, and that other party upon that belief enters into contract with him, then the man thus conducting himself will be equally bound by the contract. (Objective test to determine intention of the parties)

Law will, however, not allow one party to hold the other to a contract where that party knows that the other doesn’t intend to agree on the same terms—for eg: where A purports to accept B’s offer knowing that B doesn’t intend it in the sense that A claims to be entitled to interpret it.

Thus if in present case, S knew that H in dealing with him for old oats did so on the assumption that S was contracting for old oats, he was aware that H apprehended the contract in different sense to that which he meant, and he is thereby deprived of the right to insist that H should be bound by that bargain.

However, if it were not so and H was only unilaterally mistaken about the age of oats without any inducement of seller (even if S knew about that mistake), and not about S’s offer then contract was valid as there was consent as to the same thing in the same sense. In this case, applying the objective test–any reasonable person in the place of buyer would understand seller’s offer to sell oats good in quality and not old oats in the absence of any representation or active concealment. Any reasonable person in the person position of seller would have understood buyer’s acceptance to be that for good oats & not for old without any express or implied warranty sought.

Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)