Smith v Land House Property Corporation [1884]

Smith v Land House Property Corporation [1884] 28 Ch D 7 revolved around the characterisation of a statement made by the claimant regarding the quality of a tenant in the context of selling a hotel.

Land House Property Corporation entered into a contract with Smith to sell a hotel. In the advertisement, Smith described the current tenant (Fleck) as a most desirable tenant. However, the reality was that Fleck was six months behind on his rent. Later, Fleck went bankrupt, leading Land House Property Corporation to refuse to complete the transaction. Smith sought specific performance of the contract.

The Court of Appeal held that Smith's claim for specific performance was denied as the contract was rescinded for misrepresentation. Bowen LJ emphasised the principle that statements of opinion can be considered statements of fact if the facts are not equally known to both parties. If the person expressing the opinion has superior knowledge of the facts, then the statement of opinion implies that there are underlying facts justifying that opinion. In such cases, a statement of opinion can contain an actionable statement of fact.

In the context of the case, Bowen LJ argued that what Smith knew about the relationship between himself and Fleck was not equally known to others. While Smith may express an opinion about the desirability of the tenant, the statement implies that Smith knows certain facts justifying that opinion. The guarantee that nothing has occurred in the relations between the landlord and the tenant that would make the tenant unsatisfactory is considered an assertion of fact.

The Court of Appeal held that the misrepresentation regarding the tenant's desirability amounted to an actionable statement of fact, leading to the rescission of the contract for misrepresentation. This decision reinforces the principle that statements of opinion can be treated as statements of fact when the party expressing the opinion possesses superior knowledge of the underlying facts.
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