Oscar Chess Ltd v Williams [1957] 1 WLR 370

Facts

• Williams, a private seller, sold a used car to Oscar Chess Ltd, a motor dealership.
• Williams stated during the transaction that the car was a 1948 model, basing this on the registration book.
• The statement regarding the car’s model year was central to the agreed price.
• It was later revealed the car was actually a 1939 model, leading to a lower value than anticipated.
• Oscar Chess Ltd claimed breach of contract, asserting Williams’ statement about the year was a contractual term.
• Williams had no personal knowledge of the car’s actual manufacturing year and relied solely on the documentation.

Issues

1. Whether Williams’ statement about the car's model year constituted a binding contractual term or was a mere representation.
2. Whether a reasonable person would infer that Williams accepted contractual responsibility for the accuracy of the car’s year.
3. How differences in skill, knowledge, or access to information between parties impact whether a statement is a term or representation.

Decision

• The Court of Appeal held Williams' statement about the car’s year was not a contractual term but a representation.
• The court emphasized that intention to create contractual responsibility is essential for a statement to be a term.
• Given Williams’ lack of specialist knowledge and the fact that both parties were aware he relied on the registration book, a reasonable bystander would not regard the statement as a contractual term.
• The Court distinguished this case from others where a party possesses or should possess superior knowledge or information, such as a car dealer selling to a layperson.

Legal Principles

• Not every statement made during negotiations is a contractual term; intent to assume contractual liability is required.
• The classification of a statement as a term or representation is determined objectively by considering the conduct of the parties, the context, and their relative knowledge.
• Where a party is merely passing along external information and does not purport to guarantee its accuracy, the statement is likely a representation, not a term.
• The objective bystander test is used to assess whether an intelligent observer would conclude the statement was intended to be binding.
• Contrasts in experience and information—such as between a dealer and a private seller—influence whether a statement is a warranty or representation.

Conclusion

Oscar Chess Ltd v Williams clarified that whether a statement is a term or a representation depends on the objective intention of the parties, assessed by reference to context, knowledge, and the parties' respective experience, with the court finding no breach of contract where the seller did not intend to guarantee the accuracy of their statement.