Heilbut, Symons & Co v Buckleton [1912]

Court: House of Lords

Facts: In 1910, Heilbut, Symons & Co (D) underwrote shares of the Filisola Rubber and Produce Estates, Limited, a company purportedly involved in the rubber trade. Buckleton (C) purchased a substantial number of these shares based on a statement by Heilbut’s manager that they were "bringing out a rubber company." The company, however, did not possess significant rubber assets, leading to poor share performance. Buckleton sought damages for breach of warranty and misrepresentation.

Issue: Whether Buckleton could claim damages for breach of warranty or misrepresentation when the misrepresentation was not fraudulent.

Held: The House of Lords held that Buckleton could not claim damages because the misrepresentation was not fraudulent. Lord Moulton identified two conditions under which damages could be awarded: (1) if the misrepresentation was fraudulent or (2) if there was a collateral contract due to an intention to be bound by the representation. In this case, no collateral contract was found.

Key Judicial Statements: Lord Moulton: The fact that a seller makes a statement that a buyer is unaware of does not automatically make the statement a term of the contract. Determining whether a statement is a term of the contract depends on the parties' intention, which must be inferred from all the evidence. At common law, liability for damages arises only from fraudulent misrepresentation, not from innocent misrepresentation.

💡 Leveluplaw: underscores that for a misrepresentation to be actionable in contract law, it must either be fraudulent or form part of a collateral contract with a clear intention to be bound. This case highlights the principle that mere misrepresentations, without proof of fraud or intent to create contractual liability, do not lead to damages. This principle remains relevant in distinguishing between representations and contractual terms, although modern cases and statutes have evolved to address issues like negligent misrepresentation more comprehensively.