Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978] QB 574

Contract law – Misrepresentation – Negligence

Facts

The defendant, A, were civil engineering contractors who entered into negotiation with H for the hire of two ships to carry clay out to sea. During the negotiation, A, represented that the ships could carry 1600 tonnes, a representation which was based upon consultation of an erroneous register. The accurate capacity was significantly lower but A continued negotiations without checking this figure. The parties agreed on a charter-party which included a clause which stated that the hiring party had examined the ships and that they were fit for purpose. Six months later, A gained further information on the correct capacity and paid £20,000 for the hire but no more. H restricted the use of the barges and claimed for the remaining hire charge amount. A brought a counter-claim for damages.

Issue

The defendant claimed for breach of the collateral warranty in the representations between the parties before the agreement had been reached as well as in negligence under Hedley Byrne v Heller & Partners [1964] AC 465, on the basis of a special relationship between the parties and for breaching the Misrepresentation Act 1967, section 2.

Held

The court allowed the appeal in part. It was found that there was no collateral warranty agreed between the parties prior to the agreement of the parties. Moreover, the misrepresentation regarding the capacity of the ship was considered a minor matter. However, the court found H liable for a breach of duty under the Misrepresentation Act 1967. On this basis, the court was not required to consider the claim in tort law under Hedley Byrne v Heller & Partners [1964] AC 465.