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GAZETTE
JULY-AUGUST
1979
has been a total failure of consideration. On the facts of
Lecky v. Walter
the second ground was held inapplic-
able. The plaintiff had bargained for bonds and had got
bonds, albeit worthless bonds!
In England the 1967 Act Section 1(b) gave effect to the
Law Reform Committee's denouncement of the rule by
providing that no matter what the subject matter of the
contract be, the fact that a contract has been executed
should not impede the right to rescind. The provisions of
Section41(b) obviously attempts also to sweep away the
rule but it is clear that the Irish courts are still in the
majority of cases saddled with the rule in
Seddons Case.
This is the result of an unfortunate piece of drafting, for
Section 41(b) only applies to contracts for the sale of
goods, hire purchase agreements and the supply of ser-
vices: see Section 40. Most of the cases which arise under
this rule will be outside those three situations. A contract
for shares, shares being a chose in action, is not a
contract for the sale of goods so the Act leaves
Lecky v.
Walter
unimpaired. On the facts of
Wilde v. Gibson,
the
contract there being a contract for the purchase of land
would also escape Section 41(b).
Damages for an innocent misrepresentation
The law student confronted with the problem of
coming to terms with the law relating to mis-
representation finds that he is invited to accept the
proposition that while the victim of an innocent mis-
representation may be entitled to rescind a contract in
equity, he cannot recover damages unless the mis-
representation is either a contractual term or actionable in
tort, either in deceit (see
Fen ton v. Schofield
100 ILTR
69) or under
Hedley Byrne
(approved and discussed by
Kenny J. in
Bank of Ireland v. Smith
[1966] I.R. The
non-fraudulent/non-contractual representation, or bare
representation as it is traditionally described is not to give
rise to a remedy in damages because of the decision of the
House of Lords in
Heilbut Symons & Co.
v.
Buckleton
[1913] AC. 30 in which an oral representation inducing a
contract was held not to sound in damages principally on
the ground that innocent misrepresentations are not
intended to have contractual effect: See
Treitel, The Law
of Contract
4th Edition at 97. This assumption has been
challenged by Denning M.R. as being "out of date" and
Kenny J. has stated that "the modern cases show a wel-
come tendency to treat a representation made in
connection with a sale as being a warranty unless the
person who made it can show that he was innocent of
fault in connection with it"
B. of I v. Smith (supra)
at
p. 659. In addition the
Hedley Byrne
development in tort
further indicates that the tactic of arguing a collateral
contract in order to avoid
Heilbut Symons & Co.
has
become less important.
The English 1967 Act section 2(1) removed all doubts
and uncertainties and considerably reduced the chances
of a court finding that a misrepresentation was not to
sound in damages. This section has been reproduced in
section 42( 1) of the Sale of Goods and Supply of Services
Act Bill which provides: "Where a person has entered
into a contract after a misrepresentation has been made to
him
by another party thereto
and as a result thereof he
has suffered loss, then, if the person making the
representation would be liable to damages in respect
thereof
had the misrepresentation
been
made
fraudulently,
that person
shall be so liable
notwith-
standing that the misrepresentation was not made
fraudulently,
unless
that he proves that he had reason-
able ground to believe and did believe up to the time the
contract was made that the facts represented were true/'
[author's italics].
Because the Irish legislation is so closely linked to the
English 1967 Act it may be instructive to examine how
this section has been viewed by the English courts. The
present writer intends to do so by examining three aspects
of the section.
(1) The scope of the section
The Misrepresentation Act 1967 has been found most
useful by the English judiciary in a few residual cases
where a remedy in damages was not previously available.
For example, in
Gosling v. Anderson,
The Times, February
6th 1972, the Court of Appeal awarded damages to the
purchaser of a flat who had been informed wrongly by the
defendant's agent that planning permission had been
granted to permit garages for each of the flats to be built
notwithstanding the fact that the agent honestly believed
this to be so. However, the most important effect the
1967 Act has had in England has been to virtually
eliminate the rule in
Bain v. Fothergill (\ SI A)
L.R. 7 H.L.
158 which, it may be recalled, limits the recoverability of
damages where, without fraud, a vendor cannot make out
title to land, to the expense incurred, if any, in searching
title. This rule, whilst understandable in the context of
18th and 19th century conveyancing practice has un-
fortunately been accepted as good law in Ireland although
modern judges attempt to distinguish the rule as in-
applicable whenever this is possible: see an interesting
note by O'Driscoll in Volume X (1975) Irish Jurist 203.
The 1967 Act has been held by Graham J. in
Watts v.
Spence
[1975] 2 All E.R. 528 to limit
Bain v. Fothergill
to cases where there was no misrepresentation, fraudulent
or innocent.
Unfortunately the rule in
Bain v. Fothergill
is un-
affected by the 1978 Irish Bill despite the fact that Section
42(1) and Section 2(1) of the 1967 English Act are
identical. Again, the difficulty stems from Section 40
which limits "contract" to mean contracts for the sale of
goods, hire purchase agreements and supply of services. A
contract for the sale of land cannot be either of these.
The fact that very real difficulties may arise in this con-
text turns upon the likelihood of an increase in the number
of actions in which a vendor has not been able to transfer
title and is sued by a disappointed purchaser. The Family
Home Protection Act 1976 Section 3 has recently been
held by the Supreme Court in
Somers v. Weir
to render a
purported contract by a husband to sell the matrimonial
home void even if at the time of sale the wife is not in
occupation and the marriage has broken down. The
purchaser was unable to show she was a bona fide pur-
chaser without notice. Although the vendor was not sued
in that case any future action for damages brought
against the vendor of a matrimonial home will meet the
full force of
Bain v. Fothergill
unless deceit or fraud is
shown which may be difficult or if Section 3 is held to be
an impediment to making good title which because of its
statutory origin is outside
Bain v. Fothergill:
see Megarry
J's judgement in
Wroth v. Tyler
[ 1973] 1 All E.R. 897. It
is suggested that the best solution would be to amend the
proposed section 40 so as to bring
Bain
v.
Fothergill
within the scope of Section 42(1).
(2) The Measure of Damages under section 42(1)
It may be important to determine whether the cause of
action is founded in contract as against tort because the
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