Esso Petroleum Co Ltd v Mardon [1976]

Court: Court of Appeal (EWCA)

Facts: Mr. Mardon purchased a petrol station franchised by Esso Petroleum Co Ltd, relying on an estimate from Esso that projected a throughput of 200,000 gallons per year. This estimate did not consider a local council decision affecting the station's accessibility, leading to lower customer numbers. Mr. Mardon's business did not meet expectations, and he sought damages from Esso.

Held: The Court of Appeal held that Esso's estimate constituted a contractual warranty, given that it was provided by a party with special knowledge and skill. Lord Denning MR distinguished the case from Bisset v Wilkinson [1927], noting that Esso’s forecast was treated as a warranty due to their special knowledge. He also held that damages for negligent misrepresentation could be awarded in both contract and tort, emphasizing the duty to act with care in making representations intended to induce another party to contract.

Key Judicial Statement: Lord Denning MR stated, "A statement of opinion by a party with special knowledge can be treated as a warranty if it is made with the intention to induce the other party to act upon it."

💡LevelUpLaw: This case clarified that statements of opinion can be considered warranties if made by parties with expert knowledge, expanding the scope for damages in cases of negligent misrepresentation.