3

Source: p 14 Bottom - 15, JC Smith's The Law of Contract (2016) by Paul S. Davies.

  All these propositions are illustrated by Smith v Hughes9 [this footnote states: '(1871) LR 6 QB 597.). The claimant sued the defendant on a contract for the sale of a specific parcel of oats. The defendant said that he had contracted for old oats. However, the claimant provided oats which were new and useless to the defendant. The defendant consequently refused to pay the contract price. The verdict reached by a jury was in favour of the defendant. The case is somewhat unsatisfactory and difficult because there were unresolved questions of fact, so it is necessary to consider the case on three hypotheses.

(a) The word 'old' was used in the discussion leading to the oral contract of sale. If this was the case, then the jury's verdict was right because it was a contract for the sale of old oats. The seller could not perform it by delivering new oats.

(b) The word 'old' was not used but the seller knew that the buyer believed that the oats were in fact old. If that was the case, the verdict was wrong. So long as he did nothing to induce or encourage it,10 the law allowed the seller to take advantage of the buyer's mis take of fact. 'Ihe passive acquiescence of the seller in the self-deception of the buyer,' said Cockburn CJ, did not 'entitle the latter to avoid the contract'. The question was not 'what a man of scrupulous morality or nice honour would do under such circum- stances'. Ihis would be a practical application of the important principle of English law known by the Latin words caveat emptor—roughly translated as 'buyer beware' or 'let the buyer look out for himself'.

(c) The word 'old' was not used but the seller knew that the buyer believed that the seller was contracting that the oats were old. In that case, the verdict was right.

The difference between (b) and (c) is that in (c) the seller knows that the buyer is making a mistake as to the terms of the contract, not merely a mistake as to fact or motive. The seller cannot then enforce the contract in a sense different from that which he knew the buyer intended at the time of contracting.

I understand the difference between (b) and (c) per the last paragraph above, but how is (b) realistic? If a competent buyer needs some feature of a product, then why would a buyer fail to write this feature as a term in contract, much less declare or divulge it to the seller even once in their communication? In this case, why would Hughes keep private his need for old oats?

3

Buyers fail to specify their needs all the time!

Generally the more complex the contract the more this is a problem but it can arise in the most simple of transactions as well. Anyone who has not got what they expected but did not specify when ordering a coffee has experienced this.

As for what a judge/jury believes that turns on the evidence presented and the weight they assign it. Where the contract is written and unambiguous (Ha!) this is easy (and probably never reaches litigation): where it is ambiguous or an oral contract - who knows.

  • Thanks. Your answer resolves 1, but does it resolve 2-4 (or should I post these as 1 separate question)? – Greek - Area 51 Proposal Nov 14 '16 at 12:59
  • 2-4 are not answerable here - they rely on the particular circumstances, the evidence and the decision of the specific finder of fact (the judge/jury) – Dale M Nov 14 '16 at 19:20
1

I thought it is quite clear what this judgment said.

If we have a (verbal) contract that you are selling me X which has property Y, and you deliver X without the property Y, then you are in breach of contract.

If we have a (verbal) contract that you are selling me X, and I assume it has property Y, but you don't know I made that assumption, and you deliver X without the property Y, that's my problem.

If we have a (verbal) contract that you are selling me X, and I assume it has property Y, but it's not in the contract, but you know that I assume it is in the contract, and you deliver X without the property Y, then you are in breach of contract.

So the distinction between (2) and (3) has nothing to do with the state of mind of the buyer, but with the state of mind of the seller. If the seller knows that the buyer assumes Y was part of the contract, then he must supply Y (or tell the buyer that Y isn't part of the contract). If the seller doesn't know this, then the seller is fine.

  • Thanks, but my question is instead: how would you prove that the buyer knows that the sellers assumes Y in the contract? – Greek - Area 51 Proposal Nov 29 '16 at 14:47
  • Demonstrating that such an assumption is normal or standard, for example that espresso is made using very hot water and served warm - people do not typically request a particular warmth in coffee unless it would be somewhat unusual, like say an iced coffee. Or that a given make/model of car has particular features because they are standard, when the car was modified to change this. – Nij Dec 7 '16 at 9:47

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