Boris Ignachkov Explore Bisset v. Wilkinson (1927), a foundational case in contract law for law students studying the nuances of misrepresentation and the significance of opinions versus factual statements in contractual agreements.
Legal Principles and Key Points in Bisset v Wilkinson
- In the case of Bisset v Wilkinson [1927] A.C. 177, It was held to determine whether there is a statement of fact or statement of opinion, the court must consider the knowledge of the parties, the material facts and surrounding circumstances regarding the subject.
- This contract case concerned sales of land and misrepresentation.
- This case questions whether there is a rescission of the contract formed between a purchaser and vendor.
Facts of the Case Bisset v Wilkinson
- C wanted to reclaim 6 month’s worth of interest from D under a contract in 1919 regarding the sale and purchase of an estate.
- In previous courts, it was held that the buyer could terminate the contract since the statement on the land’s carrying capacity was a fraudulent representation.
- The purpose of the acres of land was for sheep-farming.
- C claimed the statement regarding the land’s carrying capacity of sheep was of opinion, not fact, and therefore misrepresented by D.
Issues in Bisset v Wilkinson
- Is there an action for rescission?
- Was the representation made true or false?
Held by Privy Council (New Zealand)
- Judgment reversed – on the facts, the statement made was merely of opinion only honestly held by the vendor.
Lord Merrivale
Should the contract be rescinded?
- D did not demonstrate that the farm could not manage 2,000 sheep. D is inexperienced when it comes to sheep-farming.
- “The decisive inquiries came to be: what meaning was actually conveyed to the party complaining; was he deceived, and, as the action was based on a charge of fraud, was the statement in question made fraudulently?”
- Lord Merrivale held one material fact of the case that both parties had not previously operated on a sheep farm on the parcel of land at the time of the dispute.
Misrepresentation
- “If a reasonable man with the appellant’s knowledge could not have come to the conclusion he stated, the description of that conclusion as an opinion would not necessarily protect him against rescission for misrepresentation.”
- Both parties lack complete knowledge of the facts. Defences such as laches should not be considered in these proceedings.
Significance of Bisset v. Wilkinson
Bisset v. Wilkinson (1927) is a landmark case in English contract law, particularly regarding the distinctions between representations of fact and expressions of opinion in contract negotiations. Its implications have influenced numerous subsequent rulings and the broader development of contract law:
- Edgington v. Fitzmaurice (1885): This earlier case differentiated between statements of intent (future-oriented) and factual assertions, establishing a foundation that Bisset built upon. Edgington clarified that misrepresentations must pertain to present or past facts to be actionable, a principle that Bisset echoed in determining the nature of statements made during contractual negotiations.
- Esso Petroleum Co Ltd v. Mardon (1976): Post-Bisset, Esso v. Mardon further developed the legal understanding of representations, particularly in the context of commercial expertise and forecasts. Mardon addressed the responsibilities of parties making statements based on their professional judgments, contrasting with Bisset where the statements were made by a party without specific expertise on the subject matter.
- Smith v. Land and House Property Corp (1884): Similar to Bisset, this case involved the nature of statements as facts or opinions, particularly in the context of a landlord describing a tenant as “most desirable.” The court’s findings in Smith influenced the approach taken in Bisset, reinforcing the importance of distinguishing between factual representations and mere opinions in contract law.
Bisset v. Wilkinson is instrumental in defining the boundaries of what constitutes a misrepresentation in contract law. It underscored the necessity for statements claimed as facts to be distinctly verifiable and not merely subjective opinions, particularly when such statements are pivotal to the decision-making processes of the parties involved in the contract.
Exam Questions and Answers
Below, you will find answers to the most commonly asked questions based on this case.
How has Bisset v. Wilkinson impacted the drafting of contractual clauses regarding the sale of commercial properties?
Bisset v. Wilkinson has significantly influenced the drafting of contractual clauses by emphasizing the need for clarity between factual statements and opinions. In commercial property sales, this distinction helps ensure that sellers accurately disclose material facts and avoid making subjective claims that could be construed as misrepresentative. For example, following the principles laid out in Bisset, it has become standard practice to include specific warranties and representations in property contracts that clearly define what a fact and what is an opinion, helping to prevent disputes about the nature of the information exchanged during negotiations is.
In what ways have later cases refined the distinction between fact and opinion as laid out in Bisset v. Wilkinson?
Later cases have further refined the distinction between fact and opinion established in Bisset v. Wilkinson by exploring the contexts in which opinions can be considered misleading facts. For instance, in Spice Girls Ltd v. Aprilia World Service BV (2000), it was held that certain representations, even if phrased as opinions, could be treated as facts if they are expected to be relied upon by the other party. This refinement helps ensure that parties in a contract are held accountable for statements that, although subjective, carry the weight of factual expectations in the specific commercial context.
Are there examples of judicial contexts outside of the UK where Bisset v. Wilkinson has been influential in defining misrepresentation?
Yes, Bisset v. Wilkinson has been influential in other common law jurisdictions, particularly in defining misrepresentation in contractual agreements. For example, in Canada and Australia, courts have cited Bisset in cases involving the sale of land and business assets to delineate between seller’s puffery (sales talk) and legally binding factual statements. Cases like Redican et al. v. Nesbitt (1924) SC 135 in Canada reflect Bisset’s principles, emphasizing the necessity for clear demarcation between factual misrepresentations and expressions of opinion in contract law, ensuring that the integrity of contractual agreements is maintained across different legal systems.
