Facts
- The case concerned a sale of hops between Bannerman (the buyer, a brewer) and White (the seller).
- Before contracting, Bannerman specifically asked White if the hops had been treated with sulphur, stating he would not buy if they had been.
- The seller assured Bannerman that the hops were not treated with sulphur.
- This assurance was of decisive importance to Bannerman's decision to contract.
- Contrary to White's statement, the hops had in fact been sulphur-treated and were unusable for brewing.
- Bannerman brought legal action, claiming the seller’s assurance was a contractual term whose breach entitled him to damages.
- The principal issue was whether the seller’s statement was a mere representation or formed part of the contract as a term.
Issues
- Whether the statement about sulphur treatment was a mere representation or a contractual term of the sale.
- Whether the communicated importance of the statement by Bannerman rendered it a condition of the contract.
- What legal consequences flowed from the distinction between representation and contract term in the context of these facts.
Decision
- The court found in favour of Bannerman.
- It held that White’s statement constituted a contractual term, not a mere representation.
- The key factor was Bannerman's express communication that he would not contract unless the hops were untreated.
- The seller's assurance, given this context, was reasonably understood as a binding promise and not a simple inducement.
- Breach of this assurance entitled Bannerman to damages.
Legal Principles
- A statement made during negotiations may be treated as a contractual term if the representee makes its importance explicit to the representor.
- The intention of the parties at the time of the statement, and the context in which it is made, are essential in distinguishing terms from representations.
- If a party stipulates that a contract depends on a fact and the other confirms it, that statement is likely a term of the contract.
- Misrepresentation entitles a party to rescind or seek damages but is not itself a breach of contract, whereas breach of a term is actionable as such.
- Cases such as Routledge v McKay and Schawel v Reade illustrate factors affecting whether statements become terms, including the timing and the parties' knowledge.
Conclusion
Bannerman v White clarified that pre-contractual statements may become contractual terms if their importance is clearly communicated during negotiations. This case remains a key authority on the distinction between representations and terms, emphasising that a statement’s status depends on the parties' intentions and the context. The judgment continues to guide courts in determining the binding nature of pre-contractual assurances in contractual disputes.
