Judgment of Ste. years in operation, Mr. Justice Stephen took the same view in a considered judgment (1), reviewing at some length the leading authorities in equity on the topic of "making representations good." The general principles are defined as follows: "It seems to me that every representation false when phen, J. in made or falsified by the event must operate in one of three Alder- ways if it is to produce any legal consequences. First, it Maddison. may be a term in a contract, in which case its falsity will, son . according to circumstances, either render the contract voidable, or render the person making the representation liable either to damages or to a decree that he or his representatives shall give effect to the representation. Secondly, it may operate as an estoppel preventing the person making the representation from denying its truth as against persons whose conduct has been influenced by it. Thirdly, it may amount to a criminal offence. The common case of a warranty is an instance of a representation forming part of a contract. Pickard v. Sears (m) and many other well-known cases are instances of representations amounting to an estoppel. A false pretence by which money is obtained is an instance of a representation amounting to a crime." There are also representations which, though neither part of a contract nor amounting to crimes, may be actionable as wrongs (n). We shall have to recur to these hereafter. Doctrine The particular case before Mr. Justice Stephen was one of "making reof a promise to make a provision by will. Promises of presenta- this kind, and promises on the faith of which marriages have been contracted, have been the chief but not the only occasions of those judicial statements which appear to tions good." (1) Alderson v. Maddison, 5 Ex. D. 293 revd. in C. A. 7 Q. B. D. 174, without discussing this question, on the ground that there was no part performance sufficient to take the case out of the Statute of Frauds. The House of Lords affirmed the decision of the Court of Appeal, Maddison v. Alderson, 8 App. Ca. 467, on the same ground: on the general question the opinion of Stephen, J. seems to be confirmed. (m) 6 A. & E. 469. (n) Pasley v. Freeman, 3 T. R. 51; and in 2 Sm. L. C. ascribe some kind of peculiar force to representations which are not exactly contracts. There are likewise cases of "representations" accompanying undoubted contracts; and here the questions occur whether the state of facts regarded by equity judges as showing a representation which the party was bound to make good might not equally well in every case-or would not in all probability, by minds trained in the more analytical methods of common-law procedure-have been treated as establishing a collateral promise or warranty, and also whether the judges who used this language really meant anything different. This is not directly connected with the question of the avoidance of contracts for misrepresentation; nor is that question discussed by Mr. Justice Stephen. But if it can be maintained that in the one class of cases the socalled "representation " which has to be "made good" is a promise in the strict sense, as an element in a true contract, or is nothing, there will evidently be much less difficulty in treating the other class, with which we are here immediately concerned, on similar principles. A fresh examination of the authorities on the subject of "making representations good" has accordingly been undertaken, and has led the writer to the conviction that, notwithstanding the difficulties presented by the form in which many statements of more or less authority have been made, the view propounded by Mr. Justice Stephen is the correct one. A review of the cases, the insertion of which in this place would delay us too long in proceeding to the main subject, will be found in the Appendix (0). sentation, On the whole then we shall say that a representation which Repreinduces a contract, and is not true in fact, but which is not not frausuch as to create a liability ex delicto, can affect the validity dulent, affecting or operation of the contract only in the following cases: contract, 1. If it is itself a term in the contract; that is, if the party making it has promised, as part of his promises con (0) Note N. must be 1. Part of the promise. 2. Condition. Warranty distinguished. 3. Material within rules as to special kinds of contracts. Contracts specially treated. stituting the contract undertaken by him, that it shall be found true. Here, if it proves untrue, the contract is not avoided, but broken: and the other party may be, according to the nature of the case and circumstances, discharged, or may have a claim for damages. 2. If the contract is made conditional on its truth; that is, if the parties mean to contract only on the footing of its being true. Here the statement is said to be a condition. We have already become acquainted with some instances of such conditions under the heads of Impossibility and Mistake. From both these cases must be distinguished that of a distinct collateral agreement that a representation shall be true, so that its untruth, if so it prove, shall in no case avoid the contract, but shall be matter for compensation. Such an agreement is called a warranty (p). 3. If it falls within the special rules laid down as to the effect of representations inducing or accompanying particular classes of contracts. The contracts which are thus exceptionally treated are the following. It will be observed that, as we have already said, the common mark which makes them for this purpose a special class is that the subject-matter of the contract, or a material part of it, is within the peculiar knowledge of one party, and the other has to rely, in the first instance at all events, on the correctness of the statements made by him. (A) Marine insurance. (B) Fire insurance. (C) Suretyship. (D) Sales of land. (E) Family settlements. (F) The contract of partnership, and thence, by analogy, war (p) The use of the terms " dition" contracts to take shares in companies and contracts of promoters (q). We proceed to follow out the topics now indicated in the order above given. And first we must say something of representations which amount to a condition or a warranty. Representations amounting to Warranty or Condition. and con The law on this subject is to be found chiefly in the Warranty decisions on the sale of goods; the principles however are dition. of general importance, and not without analogies, as we shall presently see, in other doctrines commonly treated as quite peculiar to equity. We therefore mention the leading points in this place, though very briefly. In the first place a buyer has a right to expect a merchantable article answering the description in the contract (r); but this is not on the ground of warranty, but because the seller does not fulfil the contract by giving him something different. "If a man offers to buy peas of another and he sends him beans, he does not perform his contract; but that is not a warranty; there is no warranty that he should sell him peas; the contract is to sell peas, and if he sends anything else in their stead it is a non-performance of it" (s). So that, even if it be a special term of the contract that the buyer shall not refuse to accept goods bought by sample on the score of the quality not being equal to sample, but shall take them with an allowance, he is not bound to (q) It is not easy to say whether this last extension would have been adopted by courts of common law before the Judicature Acts. Kennedy v. Panama, &c. Mail Co. L. R. 2 Q. B. 580, p. 427, above, seems against it but the question was not there fairly raised, nor is it now of any practical importance. (r) Jones v. Just, L. R. 3 Q. B. 197, 204. (8) Lord Abinger, C.B. in Chanter v. Hopkins, 4 M. & W. 399, 404; as sound an exposition of the law as can be," per Martin, B. Azémar v. Casella (Ex. Ch.), L. R. 2 C. P. 677, 679. There is a class of cases, however, in which it is commonly, and perhaps conveniently, said that there is a warranty that the goods shall be merchantable besides the condition that they shall answer the description: Mody v. Gregson, L. R. 4 Ex. 49. accept goods of a different kind (t). It is open to the parties to add to the ordinary description of the thing contracted for any other term they please, so as to make that an essential part of the contract: a term so added is a condition. If it be not fulfilled, the buyer is not bound to accept or keep the goods even if there has been a bargain and sale of specific goods (u). When specific goods have been sold with a warranty the buyer cannot reject them (x), but may obtain compensation by way of deduction from the price, or by a cross action (y). When there has been a sale with a warranty of goods not in existence or not ascertained, and the warranty is broken, the buyer may refuse to accept the goods, and this after keeping them, if necessary, for a time reasonably sufficient for trial or examination, provided he has not exercised further acts of ownership over them (s). This appears at first sight to put a warranty on the same footing as a condition where the sale is not of specific goods: but the true explanation is that given by Lord Abingerthat the tender of an article not corresponding to the warranty is not a performance of the contract. The warranty retains its peculiar effect in this, that if the buyer chooses to accept the goods, he has a distinct collateral right of action on the warranty; whereas if there is a condition but not a warranty the party may indeed insist on the condition, but if he accepts performance of the contract without it he may have no claim to compensation. Whether any term of a contract is in fact a condition or a (t) Azémar v. Casella, L. R. 2 C. P. 431, in Ex. Ch. 677. (u) Benjamin on Sale, 596 sqq. (x) Heyworth v. Hutchinson, L. R. 2 Q. B. 447, but as to the application of the rule in the particular case see Benjamin, pp. 896-8. (y) The reduction of the price can be only the actual loss of value: any further damages must be the subject of a counter-claim (under the old practice a separate action): Mondel v. Steel, 8 M. & W. 858, 871. (z) Heilbutt v. Hickson, L. R. 7 C. P. 438, 451; Indian Contract Act, s. 118. It is not the buyer's duty to send the goods back: it is enough for him to give a clear notice that they are not accepted, and then it is the seller's business to fetch them: Grimoldby v. Wells, L. R. 10 C. P. 391, 396. |