Smith v Land & House Property Corporation (1884) 28 Ch D 7

Material Facts:

The claimant contracted with the respondent to sell his hotel. The claimant had represented that the hotel is being let to a “most desirable tenant” for £400 over a 7.5-year term. When the respondent later discovered that the tenant had been unable to pay rent for some time, they refused to go through with the contract on grounds of misrepresentation.

Issues

1. Whether or not the statement on the desirability of the tenant constituted misrepresentation.

Holding:

1. The statement on the desirability of the tenant constituted misrepresentation.

Ratio Decidendi:

That since the claimant knew about the tenant’s bad financial situation yet choose to present him as a most desirable tenant, he could not be deemed to have stated an opinion since his knowledge of the financial situation of the tenant would prevent him from holding such an opinion.