Esso Petroleum Co Ltd v Mardon [1976] QB 801

Esso invited Mardon to take a tenancy of a petrol station and supplied an estimated annual throughput of about 200,000 gallons. Planning requirements had changed the layout so that access and the pumps no longer operated as originally envisaged. The forecast was not adequately adjusted. Mardon relied on Esso's specialist assessment when entering the arrangement, but actual sales fell far short and he suffered losses. In the ensuing dispute, Esso argued that its forecast was merely opinion. Mardon alleged that the company had undertaken responsibility for preparing the estimate with reasonable care.

Did Esso’s specialist forecast carry contractual or tortious responsibility for reasonable care, and was that responsibility breached when the layout changed?

The Court of Appeal held Esso responsible for the inadequately prepared forecast. Esso had specialist knowledge and had presented its estimate as a basis on which Mardon could take the tenancy. The estimate had not been properly reconsidered following the change in the station's layout and access.

The assurance supported contractual responsibility to exercise reasonable care in preparing the forecast, and the circumstances also supported liability for negligent misstatement. Esso did not guarantee that a precise future sales figure would inevitably occur. The wrong lay in the care with which the professional estimate was produced and communicated. The damages inquiry therefore concerned the loss caused by entering the arrangement on that basis, rather than automatically awarding profits on 200,000 gallons.

A forecast given by a party with specialist expertise may carry responsibility for exercising reasonable care, even though it concerns future performance. Calling it an opinion does not necessarily prevent contractual or negligent-misstatement liability. A duty of care in forecasting differs from a guarantee that the predicted result will occur.

Esso v Mardon is the key contrast to Bisset's honestly expressed estimate between parties aware of its limitations. Expertise, access to information and the purpose for which the estimate is supplied can change the responsibility assumed. The case also connects contractual warranties with the Hedley Byrne approach to statements. For exams, distinguish the promise to exercise care from an absolute promise of commercial success, and then identify loss attributable to the negligent forecast rather than all disappointment in the venture.