Legal Principles and Key Points
- In the case of Bisset v Wilkinson  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 rescission of the contract formed between a purchaser and vendor.
Facts of the Case
- 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 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.
- Is there 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.
Should the contract be rescinded?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.
- “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.
- This case serves as a reminder that misinformation is not necessarily misrepresentation. In other words, the courts should be more flexible in contract claims when considering the external circumstances, intention during bargaining and the nature of the contract.