Facts, issues and decision of the court in Smith v Hughes: In commercial transactions, offers are made to buy or sell goods or products and these goods or products may have defects. Also, a buyer could intend to buy a good with a particular quality and thus, should look out for this quality before he buys the product.
As much as a seller will be bound by his representation of the state of a good, product or service and could be sued for misrepresentation where the representation turns out to be wrong, the principle of caveat emptor- ‘buyer beware’- also imputes on the buyer, the responsibility to inspect the product he intends to buy.
Where the buyer intends that a seller ensures or guarantees the existence of a particular quality, he ought to obtain a warranty for that quality, to entitle him to rescind the contract where that quality is not present.
In the case of Smith v Hughes the court determined whether a mutual mistake was made where a buyer inspected the goods he was to buy but the goods were not what he intended to buy.
Facts of Smith v Hughes (1871) LR 6 QB 597
This is a contract law case on Mistake.
In this case, Hughes, a horse trainer, after seeing a sample of oats brought by Smith, a farmer, ordered oats for his horse. When 16 quarters of the oats arrived(part of the quantity ordered), it turned out that he had identified the wrong oats and his horses could not eat the oats he ordered. The oats he had identified were new oats, called green oats, but the oats the horses could eat were old oats.
He refused to pay Smith, the supplier of the oat because to him, the mistake made in misidentifying the oats, was mutual.
Smith sued Hughes for damages for breach of the contract between them and for the amount for the oats delivered and the amount not delivered yet.
Issues Determined in Smith v Hughes (1871) LR 6 QB 597
Whether there was a mutual mistake of the parties, resulting in the defendant buying the wrong oats for his horses.
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Decision of the court in Smith v Hughes
The court held that Hughes was liable to pay for the oats supplied, as he had misidentified the oats on his own and thus, made a mistake on his own. He could not blame his mistake on Smith or allege mutual mistake.
The principle of law followed in this case is that, in a commercial transaction, where a buyer makes his own assessment of what he is about to buy and such product turns out to be defective or his assessment turns out to be wrong, he cannot claim for a refund or refuse to fulfill his part of his obligation on the contract.
The case was first tried at the County Court of Surrey and Epsom where a jury sat. It was found in favour of Hughes as the Jury, on the direction of the Judge, found that even though Hughes was mistaken as to the nature of the oats, and Mr. Smith had known it, Hughes could not have any liability to pay for the oats delivered.
Smith appealed to the Queen’s Bench Division of the High Court where the court ordered that a retrial of the case be done, as the Jury that sat on the case has been misdirected by the Judge.
It was held that it was not Smith’s duty to inform Hughes of the nature of the oat and that the principle of caveat emptor applied.
The defendant, Hughes, could not claim that the contract be rescinded by claiming that a mutual mistake had been made because it was evident that the mistake was unilateral.
Cockburn CJ stated that where a seller does not offer an express warranty or does anything from which a warranty can be implied, and where the buyer inspects the item he wants to buy, by himself and forms his own opinion of the item, the principle of caveat emptor will apply. He stated that a buyer is bound by a contract, where what was delivered to him corresponds with what he contracted to buy.
In the instant case, the seller had done nothing to contribute to the mistake of the nature of the oats.
He said that although the two months were not in agreement as to the age of the oats, they were in agreement as to the sale of that particular oats that was delivered to Hughes. He made an analogy with a horse which was bought with the buyer’s intention to buy a sound horse and the seller’s intention to sell the horse, even though it was not sound, with no representation given as to its soundness and no warranty given as well. According to him, such a transaction will not be void.
Blackburn J, given his decision stated that unless there is a warranty as to the existence of a particular quality, the buyer must take the item he has bought as it is, even without the quality that he desires. He also stated that the buyer will still be bound even if the seller knew that the buyer intended that a particular quality should exist in the item of purchase, unless there was fraud or deceit in the transaction. He stated that a mere omission on the part of the seller to set the buyer straight in his opinion, was not fraud or deceit.
As long as the mistake was not induced by the seller, the seller had no obligation to the buyer to inform him that he was buying under a mistake.
Blackburn J considered the circumstances surrounding the instant case, pointing out that in this case, a sample of the oats had been inspected by the buyer, Hughes, before he made an order. Agreeing with Cockburn CJ, he mentioned that where the bulk of the goods ordered represents the sample inspected, the buyer could not rescind the contract.
Blackburn J, considering the direction given to the Jury at the County Court of Surrey and Epsom, stated that there was a difference between buying the oats under the belief that it was old and buying the oats under the belief that the plaintiff contracted that it was old. Being the same thing as being a horse which the buyer believed to be sound and buying a horse which the seller had warrantied to be sound. He found that there was no evidence that the plaintiff had contracted that the oats were old.
Hannen J also agreed with this judgement and it was agreed that a retrial be conducted in the view of the misdirection of the Jury.
Conclusively, as much as there has to be consensus ad idem or the meeting of the mind in the forming of a contract, where there is a unilateral mistake as to a particular quality of a good or item and this quality had not been warrantied by the seller, the buyer cannot rescind the contract formed and will be liable to perform his part of the contract.
Edeh Samuel Chukwuemeka, ACMC, is a lawyer and a certified mediator/conciliator in Nigeria. He is also a developer with knowledge in various programming languages. Samuel is determined to leverage his skills in technology, SEO, and legal practice to revolutionize the legal profession worldwide by creating web and mobile applications that simplify legal research. Sam is also passionate about educating and providing valuable information to people.