Heilbut, Symons & Co v Buckleton [1912]
Share
Heilbut, Symons & Co v Buckleton [1912] UKHL 2, a significant English contract law case, was decided by the House of Lords and revolves around the issues of misrepresentation and contractual terms. The case predates the introduction of damages for negligent misrepresentation under Hedley Byrne v Heller [1964] and is regarded today as having been wrongly decided in the context of negligent misrepresentation.
During the economic boom in the rubber trade in 1910, Heilbut, Symons & Co, acting as merchants, underwrote shares of a purported rubber business, the Filisola Rubber and Produce Estates, Limited, located in Mexico. Buckleton, the plaintiff, inquired about the shares, and in response to his questions, a manager at Heilbut confirmed that they were bringing out a rubber company. Relying on this representation, Buckleton purchased a substantial number of shares. However, the company's actual rubber assets fell far short of expectations, leading to poor share performance. Buckleton initiated legal proceedings, claiming a breach of warranty.
The trial court found that Heilbut had made a misrepresentation but not fraudulently. Despite this, the trial court held that there was a warranty in the statement regarding the rubber company. Nevertheless, Buckleton did not succeed in his claim at trial.
In its judgment, the House of Lords held that no damages could be awarded because the misrepresentation was not fraudulent. Lord Moulton identified two scenarios in which the action could succeed. Firstly, if the plaintiff could demonstrate fraudulent misrepresentation or its equivalent, characterised by reckless disregard for the truth. Secondly, if there was an intention (animus contrahendi) to be bound by a promise, a collateral contract might exist, holding Heilbut to their representation. However, Lord Moulton emphasised the rarity of such collateral contracts and, on the specific facts, none was found.
The significance of Heilbut, Symons & Co lies in upholding the principle that a person is not liable for damages due to an innocent misrepresentation, regardless of the method or form of the attack. Lord Moulton underscored the importance of maintaining this principle and emphasised that in the absence of evidence indicating an intention to create contractual liability for the accuracy of the statement, a representation remains just that—a representation and nothing more.
While the case would today likely be categorised as involving at least negligent misrepresentation, it retains relevance for the broader principle that representations become part of a contract when such an intention is evident. Subsequent cases, such as Oscar Chess Ltd v Williams [1957], have further clarified that the informational balance between a buyer and seller is pivotal in determining the true intentions, with a preference for the expectations of non-commercial parties who rely on representations.
During the economic boom in the rubber trade in 1910, Heilbut, Symons & Co, acting as merchants, underwrote shares of a purported rubber business, the Filisola Rubber and Produce Estates, Limited, located in Mexico. Buckleton, the plaintiff, inquired about the shares, and in response to his questions, a manager at Heilbut confirmed that they were bringing out a rubber company. Relying on this representation, Buckleton purchased a substantial number of shares. However, the company's actual rubber assets fell far short of expectations, leading to poor share performance. Buckleton initiated legal proceedings, claiming a breach of warranty.
The trial court found that Heilbut had made a misrepresentation but not fraudulently. Despite this, the trial court held that there was a warranty in the statement regarding the rubber company. Nevertheless, Buckleton did not succeed in his claim at trial.
In its judgment, the House of Lords held that no damages could be awarded because the misrepresentation was not fraudulent. Lord Moulton identified two scenarios in which the action could succeed. Firstly, if the plaintiff could demonstrate fraudulent misrepresentation or its equivalent, characterised by reckless disregard for the truth. Secondly, if there was an intention (animus contrahendi) to be bound by a promise, a collateral contract might exist, holding Heilbut to their representation. However, Lord Moulton emphasised the rarity of such collateral contracts and, on the specific facts, none was found.
The significance of Heilbut, Symons & Co lies in upholding the principle that a person is not liable for damages due to an innocent misrepresentation, regardless of the method or form of the attack. Lord Moulton underscored the importance of maintaining this principle and emphasised that in the absence of evidence indicating an intention to create contractual liability for the accuracy of the statement, a representation remains just that—a representation and nothing more.
While the case would today likely be categorised as involving at least negligent misrepresentation, it retains relevance for the broader principle that representations become part of a contract when such an intention is evident. Subsequent cases, such as Oscar Chess Ltd v Williams [1957], have further clarified that the informational balance between a buyer and seller is pivotal in determining the true intentions, with a preference for the expectations of non-commercial parties who rely on representations.
