Legal Principles and Key Points
- In the case of Esso v Mardon  QB 801, the local authority’s decision to relocate the pumps of the petrol station was not disclosed to the purchaser therefore constituting as a negligent misstatement.
- This contract law case was related to negligent representations.
Facts of the Case
- C represented a petol station to D as a station which fills 200,000 gallons annually. D questioned the figure since the local authority determined that the petrol pumps would be at the back of the site accessed by the side roads rather than the main road.
- D lost money since sales did not surpass the thoroughput of 85,000 gallons and could not repay C’s loan. The petrol station was rendered inefficient. C sued to reclaim the site where the petrol station was built.
- C claimed the figure of 200,000 gallons was simply a statement of opinion. The lower courts held otherwise since D relied on the representation as a statement of fact.
- Does the company owe the tenant a duty of care?
- Is there a special relationship between the parties?
- Has the duty of care been breached?
- Is the statement made a warranty or a condition?
Held by Court of Appeal
- Appeal allowed but cross appeal dismissed – Esso breached duty of care as the approximate figure of petrol sales constitutes as a collateral warranty that C breached.
Warranty or condition?
- This case heavily referred to Bisset v Wilkinson  AC 177 because of the similar question as to whether there is a warranty or a statement made. In this case however C has a great degree of expertise unlike D.
- It can also be inferred that predicting a future figure is not a false statement with damages involved.
- The given number was made by C with reasonable care. C then declared this to D.
- C is therefore liable for the consequences of this huge disparity in numbers.
- Someone who induces the other party into an agreement has a duty to use reasonable care to see if the representation is a misstatement or not.
- The Hedley Byrne & Co Ltd v Heller & Partners Ltd  AC 465 principle applied because the actual thoroughput was drastically different to the initial prediction. The negligent misrepresentation was directly foreseeable for a claim in damages.
- In other words, this error was fatal to D because they did not reach 200,000 gallons as expected. Therefore it was negligence and misrepresentation.
- “If he negligently gives unsound advice or misleading information or expresses an erroneous opinion, and thereby induces the other side into a contract with him, he is liable”.