Long v Lloyd

Factual and Procedural Background

The Plaintiff, a haulage contractor based in The City of Sevenoaks, appealed against a judgment of Mr. Justice Glyn-Jones dismissing the Plaintiff's claim for rescission of a completed contract of sale on the ground of innocent misrepresentation. The dispute arose from the sale of a 1947 Dennis twelve/fourteen ton lorry by the Defendant, a haulage contractor located in Hampton Court. The Defendant advertised the vehicle as being in "exceptional condition" and made several representations regarding its condition and performance during negotiations and a trial run. The Plaintiff purchased the lorry but soon discovered multiple defects, including a faulty dynamo, oil leakage, excessive fuel consumption, a cracked wheel, and issues with acceleration and speed. The Plaintiff initially accused the Defendant of wilful misrepresentation but later withdrew the fraud allegation and sought rescission based on innocent misrepresentation. The trial judge found that the Defendant had honestly made untrue representations and that the vehicle had deteriorated, but dismissed the Plaintiff's claim for rescission. The Plaintiff appealed this decision.

Legal Issues Presented

1. Whether an executed contract for the sale of chattels can be rescinded on the ground of innocent misrepresentation after completion of the contract.
2. If such a right exists, whether the Plaintiff lost the right to rescind the contract by accepting the goods or by delay in exercising the right.

Arguments of the Parties

Appellant's Arguments

• The Plaintiff contended that rescission of the contract should be allowed due to innocent misrepresentation inducing the purchase of a defective vehicle.
• The Plaintiff relied on the view expressed by Lord Justice Denning in recent cases to argue that rescission is available even after execution of a contract, emphasizing the need for a reasonable time to test the condition of the lorry before acceptance.
• The Plaintiff argued that the short time between delivery and attempted rescission distinguished this case from precedents involving long delays, such as the five-year delay in the cited case concerning a painting.

Respondent's Arguments

• The Defendant maintained that any right to rescind on the ground of innocent misrepresentation was lost by the Plaintiff's acceptance of the lorry and conduct inconsistent with rescission.
• The Defendant emphasized that the Plaintiff had the opportunity to inspect the vehicle prior to purchase and had accepted the lorry by using it in business and sending it on a business trip after becoming aware of defects.
• The Defendant argued that allowing rescission after acceptance would undermine commercial certainty in business transactions.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Solle v Butcher (1950 1 K.B. 671)	Rescission may be available for innocent misrepresentation even after execution of a lease or contract.	The court reviewed Lord Justice Denning's view supporting rescission after execution but found it unnecessary to decide the principle definitively in this case.
Leaf v International Galleries (1950 2 K.B. 86)	Rescission for innocent misrepresentation may be barred by acceptance of goods or unreasonable delay in seeking rescission.	The court relied on this case to hold that the Plaintiff had lost any right to rescind by accepting the goods and by conduct inconsistent with rescission.
Seddon v North Eastern Salt Co Ltd (1 Ch. 326)	Traditionally held that rescission is not granted for innocent misrepresentation in executed contracts for chattels.	The court recognized this precedent but noted it had been challenged and did not preclude the court from considering rescission in this case.
Angel v Jay (1911, 1 K.B. 666)	Applied the principle that rescission is not available for innocent misrepresentation in executed leases.	The court referenced this case as part of the traditional view on rescission but did not fully accept it as authoritative.
Wilde v Gibson (1 H.L.C. 605)	Rescission of contracts for sale of land will not be granted after completion on grounds of innocent misrepresentation.	The court acknowledged this principle as well-established but distinguished it from sales of chattels.
Bell v Lever Bros Ltd	Discussed rescission and misrepresentation principles in contract law.	Used as part of the broader legal context on rescission and misrepresentation.

Court's Reasoning and Analysis

The court carefully analyzed the facts and legal principles surrounding rescission for innocent misrepresentation in executed contracts for the sale of chattels. It acknowledged the traditional authority that rescission is generally not available after completion, particularly in land transactions, but noted that the question remains open for chattels. The court considered Lord Justice Denning's progressive view that rescission could be available even after execution but emphasized that such a right may be lost by acceptance or delay.

Applying these principles to the facts, the court found that the Plaintiff had accepted the lorry before attempting rescission. Acceptance was evidenced by the Plaintiff's use of the vehicle in business, telephone communications with the Defendant regarding defects, acceptance of the Defendant's offer to share repair costs, and the dispatching of the lorry on a business trip after becoming aware of its condition. These actions demonstrated conduct inconsistent with a right to rescind. The court also noted that the Plaintiff had ample opportunity to inspect the vehicle and that the period between delivery and attempted rescission, though short, was sufficient for acceptance given the circumstances.

Consequently, even if a right to rescind for innocent misrepresentation existed after completion, it had been lost by the Plaintiff before the purported exercise of that right. The court therefore dismissed the appeal.

Holding and Implications

The court DISMISSED THE APPEAL, upholding the dismissal of the Plaintiff's claim for rescission on the ground of innocent misrepresentation.

The decision confirms that, while the availability of rescission for innocent misrepresentation in executed contracts for chattels remains an open question, any such right is extinguished by acceptance of the goods or conduct inconsistent with rescission. The ruling emphasizes the importance of timely action and acceptance criteria in commercial transactions, thereby reinforcing business certainty. No new legal precedent was established beyond the application of existing principles to the facts of this case.