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Rights of Operators By Our Legal Adviser
Page 91
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Who are "Sold a Pup"
EVERYONE knows that there are certain remedies open to the purchaser of a vehicle—or of anything else for that matter—if. it turns out afterwards that he has not got exactly what he bargained for. One obvious remedy open to him is to sue for damages, the measure of damage being taken as the difference between the value of the article bargained for and the value of the article actsially 'obtained.
But there are certain cases where the buyer may want not merely damages, but to,put the whole contract aside as if it had never existed. This is called in law the "right of rescission ". and a failure to appreciate when it may be exercised often results in dissatisfied buyers being stuck with their bad bargains.
Old Controversy Continues The case of Long v. Lloyd—decided by the Court of Appeal on May 19 and reported in The Commercial Motor on May 23—draws attention not only to this state of affairs, but also to a corner of the law which is strangely uncertain in principle. It is greatly to be regretted that the Court failed to clear up .a controversy which has been going on for many years.
The right to rescind a contract and, as a natural consequence, to put the respective parties to it back in the same positions they occupied before it was entered into— called in law " restitutio in integrum "—arises when there has been a material misrepresentation to the buyer by the seller. Misrepresentation may, of course, be either innocent or fraudulent, but sO far as the buyer Is concerned it is probably true to say that he does not care into which of these categories the seller's statements fall—all he knows is that he has not got what he was promised.
In Longv. Lloyd the plaintiff, who was a haulage contractor, read an advertisement for the sale of a 1947 Dennis 12-ton lorry, which was described as "in exceptional condition'," for £850. At an inspection of the lorry the seller had told him that it would do 11 m.p.g. of fuel and, after a trial run,fhat there was nothing wrong with it which had not been disclosed,
Vehicle BrokeDown
The-plaintiff thereupon closed the deal for £750. Two days later serious defects became apparent, including a much heavier fuel consumption. The seller then agreed to pay half the cost of a new dynamo, which was one of the things that had started to go wrong. A further two days later the vehicle broke down on a long journey and the plaintiff wrote demanding his money back.
Some three weeks later an expert examined the lorry on behalf of the plaintiff and discovered defects sufficiently serious to make it unroadworthy, but at the trial the judge expressly found that the representations made by the defendant seller were honest and innocent. Here, therefore, was a clear case of innocent misrepresentation; could the unfortunate buyer, who had been metaphorically "sold a pup," demand rescission of the contract and his money back?
There are three circumstances in which the right to rescission will be lost and a fourth which is in some doubt and deserves separate .treatment. The first ground to consider is where the buyer 'does any act which may be interpreted as an affirmation of the contract or which at least is inconsistent with an attitude of rejection of it and consistent only with recognizing the existence of a valid contract.
Thus, if the buyer re-sells or even attempts to do so, it can easily be seen that he should not be allowed afterwards to demand rescission. Delay in demanding rescission is not of itself conclusive against the buyer, but is merely evidence of an affirmation of the contract. "How long" is an impossible question to ansWer, for the facts of all cases differ, but one may content oneself by saying that any delay is unwise once the defects are—or should have been—discovered and, if unreasonable, will be conclusive.
No Right of Rescission The second circumstance when the right to rescission will be lost is where true "restitution "—which means a complete return to the status quo—is impossible. It is not hard to imagine cases where the buyer has so used or altered or consumed part of the thing sold that he can no longer return it in the same condition.If a contract is to be rescinded, it must be rescinded "in toto,': and as a judge once said: "If you are fraudulently induced to buy a cake, you may return it and get back the price, but you cannot both eat your cake and return your cake.'-'
Thirdly, an interest in the article sold acquired by an inhocent third party will prevent the buyer from claiming rescission of the contract. The most frequent example of these circumstances arises from fraud, but it is not every form of fraud to which this rule applies. In brief, it may be said to apply only where the contract involving fraud is 'voidable at the option of one party and is not wholly void.
Lastly must be considered the rule discussed in Long v. Lloyd. For many years it was considered that' where the misrepresentation was innocent, the buyer's right to rescind the contract ceased as soon as the contract was completed, and in several old cases this rule was applied. In more recent years there have been expressions of opinion by the judges indicating that this rule was unsound, but unfortunately the Court of Appeal has now refused to give a ruling once and for all.
Contract Complete
Its significance in the recent case—if the rule is well founded—was that the buyer had lost the right to rescind as soon as he paid the £750 and drove the lorry away. The contract was then complete. On the other hand, if the rule is bad law, he could still have rejected the lorry and demanded rescission of the contract when things began to go wrong some days later.
Unfortunately for the plaintiff—even if the Court had been prepared to say the rule was wrong—he had still brought into pay one of the other three sets of circumstances discussed above which would bar rescission. By accepting the seller's offer about the dynamo on the first occasion the lorry gave trouble and going on using it he was held to have finally accepted it and affirmed the contract. When it broke down again it was too late to reject The--moral is, of course, that if you think you have been sold a pup, whether fraudulently or not, demand rescission at the earliest possible moment. Any delay or indecision is probably fatal.