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Esso Petroleum v Mardon [1976] QB 801 (CA)

Facts:

E bought site for service station. Estimates 200 gallons a year. Thus M became tenant. Never got close to 200

Ratio:

If a person who has, or professes to have, special knowledge or skill makes a representation (be it advice, info, or opinion) with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct and the advice, info, or opinion is reliable.
**If he negligently gives unsound advice or misleading info, inducing the other side to enter into a contract, he is liable in damages

Analysis:

An innocent misrepresentation gives no rights to damages. (Heilbut)
**BUT – If a representation is made in the course of dealings for a contract for the purpose of inducing the other party to act upon it and he acts upon it by entering into the contract, that is prima facie ground for inferring that it was a warranty. (Dick Bentley).

Collateral Warranty (Contract issue)
*If the forecast turned out to be an unsound forecast such as no person of skill or experience should have made, there is a breach of warranty.
*A breach of a collateral warranty would be in contract (contract puts you forward, tort puts you back).

Negligent Misrepresentation (Tort issue)
*If the K contradicts the tort claim – that would be basis for saying the contract governs – but in the absence of it there is no reason for the liability in tort to be supplanted by the mere fact that there is a contract.
*Lloyds Bank – If one person, by a negligent misstatement, induces another to enter into a contract, he may be liable in damages.

M is only to be compensated for having been induced into entering a contract – whether it be called breach of warranty or negligent representation, its effect was not to warrant the throughput, but only to induce him to enter the contract.
**The damages in either case are measured by the loss he suffered – measured in tort
**In the dollar amount it doesn’t matter if it is under tort or contract

Holding:

E liable in damages for either breach of warranty or negligent misrepresentation

Comments:

As long at the K doesn’t exclude liability then there is no reason to take away the tort claim


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