Contract Law

Heilbut, Symons, v. Buckleton p. 661 (cont’d from last day)
•    Rubber company case.
•    P not suing on the contract itself.  The contract is not a broken one.
•    The complaint is regarding what went on prior to entering into the contract.
•    At trial, P argued that “we are” is a representation; a statement of existing fact.
•    It has legal significance if it turns out to be a misrepresentation
•    At trial, suing in tort.
•    Jury (page 662) said that there was no fraudulant misrepresentation.
•    The P wanted damages.
•    for fraud misrep., 2 poss remedies:  Damages or remedy (leading to recision)
•    Here, recision was not an avail. remedy since the contract was already executed.
•    On appeal, the tactic changed:
•    argued that “we are” was a promise (as opposed to, at trial, a statement of fact).  It was an assertion about the future.
•    Must establish that “we are” is part of a contract collateral to the main contract.
•    The link is that the consideration for the smaller contract is the entering into of the main contract.
•    Unilateral contracts – “if…then” contracts.
•    entering into the contract to buy shares would be both the acceptance and the consideration of the unilateral (collateral) contract.
•    P is suing on the collateral contract, not the main one.
•    The damages for the breach would be the losses on the main contract.
•    ¶5 – acknowledges that this collateral situation is legally possible.
•    It just doesn’t make sense to make 2 contracts instead of the one.
•    The effect would be to increase the consideration of the main contract and the normal way to do so would be to simply add it to the main contract.
•    This sort of contract must be proved strictly, because they are counter-intuitive.
•    ¶6 – saying that there is an absense of evidence in this case of the existence of the collateral contract
•    innocent misrepresentation gives to right to damages
•    saying that if we allowed people to take pre-contractul utterances and to turn them into contract collateral, then we would be doing an end-run around tort law.
•    tort law won’t give damages for a non-fradulant misrepresentation.
•    This would, however, give people a recourse for non-fradulant misrep.
•    ¶8 – quotes Hold C.J.  “an affirmation at the time of the sale is a warranty, provided it appear on evidence to be so intended.”
•    animus comprehendi – concerns the intention to form a contract.
•    contract was argued on appeal because the tort route would not have worked.
Note 2 p665
•    still a leading case.  However, since the time of Heilbut Symons, there have been developments in tort law – development of 3rd class of misreprentation.
•    Hedley Byrne
•    since mid-60s
•    what was once a vast field of innocent mis rep, was divided.  Not innocent means innocent and non-negligent.
•    New class is ‘innocent, but negligent misrepresntation’
•    To prove innocent but neg. misrepresentation, get damages.
•    So today, do not have to prove fradulant misrepresentation – can prove negligent misrepresentation, which is usuall less onerous.

Dick Bentley Productions Ltd. v. Harold Smith Motors Ltd. (page 666)
•    Denning by now had already invented Promissory estoppel (40s), Fundamental breach (50s).
•    Now it is the 60s and Denning decides to take on Heilbut Symons
•    Car dealership.  Salesperson asserts something which ends up not being true – that the car was owned by a German Baron and was driven on 20k miles since its engine was replaced.
•    pre-contractual utterance (this term denotes neither ‘statement’ nor ‘promise’)
•    says, “If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice.”
•    His approach to get around the ‘problem’ of Heilbut Symons is to make it much easier for ppl to classify collateral contracts as such.
•    Gives a path around Heilbut Symons
•    Hedley Byrne wouldn’t be a way around here, since a salesperson wouldn’t be an expert.
•    Denning saying, “You always argue collateral contract.”
•    In effect, both of these contracts cases have been overtaken by the developments in tort law.
•    neither has been overturned.  They are valid, but practically obsolete.
•    Obviated by this cahnge in tort law.
•    Today, the contract route would not be likely to be taken at all.
Murray v. Sperry Rand Corp.  (page 673)
•    Contract to buy/sell a harvestor.  This contract is not in dispute.
•    It is about what legal significance can be given to the pre-contractual utterances.
•    Purchased on reliance of brochure printed by manufacturer and distributed by local salesman and representative of Canadian distributor.
•    Suing 1)  local dealer, 2)  Canadian distributor, and 3)  American manufacturer.
•    Find that the P was induced to purchase based on oral representations of local dealer/representative, and the brochure
•    ¶3 – local dealer.  P was induced to sign the contract by representations made by or on behalf of the local dealer.
•    ¶5 – collateral warranties – unilateral contract; collateral contract
•    “…the breach of which creates liability in damages…”
•    ¶11 – “a person may be liable for breach of a warranty, otwithstanding that he has no contractual relationship with the person to whom the warranty is given…”

Finish syllabus for next day.