Esso Petroleum Co Ltd v Mardon
A forecast by a party with special expertise can carry a warranty that it was made with reasonable care, and can give rise to liability for negligent misstatement.
Facts
In 1961 Esso was developing a new petrol station on a busy street in Southport. Its representative, who had about 40 years' experience in the trade, told Mr Mardon that the station would sell about 200,000 gallons of petrol a year. However, the local planning authority had required the station to be built facing a back street, with access only from that street, and Esso's representative had not revised the forecast to take account of this. Relying on the forecast, Mr Mardon took a tenancy of the station. Sales were only about 78,000 gallons a year, and despite Mr Mardon's best efforts he lost money. Esso sued for possession and unpaid sums, and Mr Mardon counterclaimed.
Legal principle
The Court of Appeal held that Esso was liable to Mr Mardon. Esso's forecast, made by a party with special knowledge and skill in estimating petrol throughput, contained a contractual warranty that it had been made with reasonable care and skill, which Esso had breached. Esso was also liable in tort for negligent misstatement under Hedley Byrne, because there was a special relationship between the parties. Mr Mardon recovered his capital losses and lost earnings. The events took place before the Misrepresentation Act 1967 came into force.
Related cases on misrepresentation
- Attwood v Small (1838) 6 Cl & F 232
- Bisset v Wilkinson [1927] AC 177
- Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525
- Derry v Peek (1889) 14 App Cas 337
- Dimmock v Hallett (1866) LR 2 Ch App 21
- Edgington v Fitzmaurice (1885) 29 Ch D 459
- Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
- Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978] QB 574
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