Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965]

Court: Court of Appeal (England and Wales)

Facts: Dick Bentley Productions Ltd sought to purchase a thoroughly examined Bentley. Harold Smith (Motors) Ltd, acting as car dealers, identified a vehicle allegedly having covered only 20,000 miles since a replacement engine had been installed. Subsequently, it was revealed that the Bentley had, in fact, traveled 100,000 miles since the engine and gearbox replacement. Dick Bentley filed a lawsuit against Harold Smith for breach of warranty and secured a favourable judgment at the trial level.

Issue: Whether the statement regarding the mileage of the car constituted a mere representation or a term of the contract.

Held: The Court of Appeal determined that the statement regarding the number of miles covered constituted a term of the contract. This decision hinged on the premise that Harold Smith (Motors) Ltd, being car dealers, possessed superior knowledge compared to the claimant regarding the accuracy of the mileage statement. The court emphasised the significance of the parties' intention to incorporate a term into the contract.

Key Judicial Statements: Lord Denning MR: Whether a warranty (binding term of contract) is intended depends on the conduct of the parties and is inferred from the perspective of an intelligent bystander.

💡 Leveluplaw: underscores that for a representation to be incorporated as a term of the contract, even if the representor is ignorant of its accuracy, it must be in a position where they ought to have known the facts represented. This case highlights the principle that a representation made to induce a contract and actually relied upon can constitute a term of the contract if the representor had a reasonable basis for knowing the facts.