NOTES OF CASES
| Date | 01 July 1950 |
| Published date | 01 July 1950 |
| DOI | http://doi.org/10.1111/j.1468-2230.1950.tb00175.x |
NOTES
OF
CASES
CONTBACT-SALE
OF
GOODS-INNOCENT
MISBEPRESENTATIONB
AND
CONDITIONS
Tax
recent decision of the Court of Appeal in
Leaf
v.
Internationcll
GaUeries
[1960] 1
All
E.R.
698,
really requires the consideration
of
a
full-length article and this
it
will doubtless receive in du,t
course.
In
this note
it
is merely intended to draw attention
tc
some of
its
implications, not all of which are considered in the
unreserved
judgments
of
the court.
The problem of when a party to
a
contract loses
his
equitable
right to rescind
on
the ground of innocent misrepresentation has
long
been
one of the most disputable questions in the law of
contract.
In
connection with sales of goods
or
ehoses in action
(Seddon
V.
North
Eastern Salt
Co.
[1905]
1
Ch.
826)
or
of land
(+gel
V.
Jay
[1911]
1
K.B.
060)
it has been answered by saying
tbat rescission is no longer possible once the contract has been
executed by the passing of the property in the goods
or
land. But
these decisions have been much criticised (for the latest attack
on
them,
see
Solle
v.
Butcher
[M49]
2
All
E.R.
1107)
and it is
quite clear that they do not apply to all types of contract.
For
example, the Partnership Act,
1890,
8.
41,
implies
a
that an executed
partnership contract may be rescinded for misrepresentation, and
it
is well established that rescission is possible in the case of executed
contracts for the subscription of shares. In these latter cases the
test of the loss of right to resciiid seems to be whether the party
misled has done anything to show an intention to affirm the
contract.
It
must
also,
of course, be possible for the court sub-
stantially to restore the parties to their previous positions, but,
since the decision of the House of Lords in
Spence
v.
Crawford
[l98D]
8
All
E.R.
271,
the requirement
of
restitutio
in
integrum
Beems
to
mean little more than that the court must be able to
do
substantial justice as between the parties.
It
has been suggested that the wider
‘
affirmation
’
test only
applies
to
contracts in which there is a fiduciary relationship
between the parties and that in other cases the ‘executed con-
tract
’
test of
Seddon
v.
North
Eastern
Salt
Co.
and
Angel
v.
Jay
prevails. Obviously the existence of
a
fiduciary relationship
strengthens the position
of
the innocent party as he will be able
to rescind
for
non-disclosure as well as misrepresentation. But
it is difficult to see why the fiduciary relationship should make any
difference if there has in fact been a positive misrepresentation.
1
See
55
L.Q.R.
90
(an article read
to
the
court
by
the
plaintiff’s
counsel).
a
And see
Netobigging
v.
Adam
(1886)
34
Ch.D.
582.
affd.
13
A.C.
308.
362
JULY
1950
NOTES
OF
CASES
863
The much criticised decisions in
Seddon
v.
North
Eastern Sali
Co.
and
AngeZ
v.
Jay
have one great advantage; they avoid any
question of placing the party misled by an innocent representa-
tion not incorporated into the contract in a stronger position than
if the representation had been incorporated as a condition of the
contract.
As
regards sale of goods, the Sale of Goods Act,
1898,
s.
11
(1)
(c)
expressly provides that the purchaser
loses
his
right
to rescind the contract for breach of a condition
if,
in
the case of
specific
goods,
property has passed or
if,
in
the case
of
unmer-
tained goods he has accepted them within the meaning of section
85.
Similarly,
it
appears that
in
sales of land the contract cannot
be avoided, for breach of a condition, after the conveyance.
If
these decisions are wrong the question arises whether
it
is possible
for the purchaser to ignore the breach of condition and proceed
instead
on
the ground of innocent miaepresentation. One has
heard of waiving a
tort
and
suing
in contract but this
seems
to
be
the converse case of waiving the breach of contract.s
Hitherto those judges who have criticised
Seddon's Case
and
Angel
v.
Jay
have not been required squarely
to
face this question.
In
Leaf
v.
Internticma1 Galleries,
however, counsel for the plaihtifl
had
the
courage
to
take these criticisms
to
their logical conclusion.
la
1944
Leaf had bought from the International Galleries an
oil
painting of Salisbury Cathedral represented as being by Constable,
a representation which was held to have been
a
term
of
the
contract.
In
1949
he tried
to
sell
it
but found
it
was not
a
Con-
stabIe. In these circumstances he claimed, not damages,
but
rescission. During the course of the action
his
counsel's courage
partially failed him and he sought
to
add an alternative
claim
for
damages for breach of warranty but he was not allowed
to
mend
at that stage. The county
court
judge dismissed the action
and
Leaf appealed.
The fvst judgment in the Court of Appeal was appropriately
delivered by Denning
L.J.,
the principal critic
of
Seddon's
Ccuc
and
Angel
v.
Jay.
He held, following his previous judgment
in
Solle
v.
Butcher
(supra),
that there was
no
question of the
contract
being void for mistake, since there was
no
mistake about the
subject-matter
of
the sale which was of
a
specific picture
d
Salisbury Cathedral.
It
was a term of the contract that the
picture was
by
Constable and this term was either
a
warranty or
a
condition.
On
the facts he held that
it
was a condition. But
Leaf
had lost his right to reject under the Sale of
Goods
Act,
1898,
s.
11
(1)
(c)
since, by retaining the picture for more than a reasonable
3
It
ha6
been
ssid
('
The Circuitem
',
quoted
in
Holdewortb,
H.E.L.,
Vol.
9,
pp.,
416-8)
th8t.
The
suggeeted
waiver
of
the
contlrct might
be
expected
to
impire
even
deeper
thought.
Though@ much
too
deep
for
tesrr
subdue the
wort
When
I
cMeumpnit
bring,
end
gf~&l*
waive
8
tort
'.
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