Howard Marine and Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978]

Howard Marine and Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978]

Howard Marine and Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978] QB 574 is a notable English contract law case that revolves around issues of misrepresentation and the application of the Misrepresentation Act 1967.

Ogden Ltd sought to hire barges for the purpose of dumping excavated clay at sea. Howard Marine Ltd, the barge owner, provided information about the barges' capacity, stating 1600 tonnes based on the Lloyd's Register. However, this information was incorrect, as the actual capacity was 1055 tonnes, a fact known to Howard Marine Ltd. The charterparties, governing the barge hire, stated that Ogden Ltd's acceptance of the barges indicated satisfaction in every way.

When the barges proved inadequate for the job, Ogden Ltd refused to pay the full price, leading Howard Marine Ltd to terminate the agreement and sue for outstanding payments. Ogden Ltd counterclaimed, citing breach of collateral warranty, breach of duty under Section 2(1) of the Misrepresentation Act 1967, and negligent misstatement under Hedley Byrne [1964].

The Court of Appeal, composed of Lord Denning MR, Bridge LJ, and Shaw LJ, concluded that there was no breach of warranty. However, a majority held Howard Marine Ltd liable for breach of duty under Section 2(1) of the Misrepresentation Act 1967. The court emphasised that Howard Marine Ltd had the burden of proving reasonable grounds to believe the misrepresented facts.

Bridge LJ, in his analysis of Section 2(1), highlighted that once a misrepresentation is proven, the burden shifts to the representor to establish reasonable grounds for believing the facts represented. He concluded that Howard Marine Ltd failed to meet this standard, as the eagerness to rely on the incorrect Lloyd's Register over accurate documents was not reasonable.

Moreover, the court considered the validity of the exclusion clause under Section 3 of the Misrepresentation Act 1967, which allows parties to contract out of liability for misrepresentation. Bridge LJ and Shaw LJ agreed that the exclusion clause had not been validly excluded because it did not pass the reasonableness test under Section 3. Lord Denning MR dissented, arguing that there were reasonable grounds to prefer the Lloyd's Register and that the exclusion clause was fair and reasonable, especially given the equal bargaining power of the commercial parties involved.

In essence, the Howard Marine case is significant for its examination of misrepresentation issues under the Misrepresentation Act 1967, including the test of reasonable grounds for belief and the reasonableness assessment of exclusion clauses.
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