H made a false representation to O that a boat could hold a certain capacity, based on the details of the boat in an official register, but which were entered incorrectly. O leased the boat under a contract with an exclusion clause. After several months O realised the inaccuracy of the representation as to capacity of the boat and refused to pay the full amount agreed for the lease. H sued O for the outstanding money, while O counterclaimed for damages. CA (majority) held that H’s misrepresentation fell within s.2(1) of the 1967 Act while the exclusion clause was unreasonable under the Unfair Contract Terms Act.
Bridge LJ (Majority): Under s.2(1), it is obvious that damages would have been forthcoming had the misrepresentation been fraudulent, since it aimed to induce O to sign the agreement and did induce O to act on it. Therefore unless H can show that its grounds for making the representation were reasonable, H will be liable for damages. On the facts there were no reasonable grounds.
McKendrick: despite the fact that Ds relied on a fairly reliable source of evidence, they failed to show reasonableness because they had the correct facts in their possession in documents for a fair amount of time. This shows the difficulty of overcoming the evidentiary burden placed on the misrepresentor. Therefore a claimant is better of using s.2(1) than negligence, as well as the fact that the former has a reduced remoteness restriction, and no proof of duty of care or breach is needed. The only problem is that it can only be invoked between contracting partie, unlike negligent misrepresentation claims. However a tort of negligence, aside from its application stretching beyond contract, is also not susceptible to contributory negligence defences i.e. it still has advantages. NB CW: The 1967 act, like the torts for negligence and fraud, uses the reliance measure for assessing damages