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Negligence and mistake, are two elements of contract law which conflict as between vendor and purchaser, particularly when the former is unreasonably applied to the buyer. In this very brief but notable case, the issue in hand turns upon the overpayment for a product at auction.
As was typical of the period, many agricultural products were imported for domestic use, as the temperate weather of foreign countries provided for larger tonnage and lower prices. On this occasion, the subject matter was Russian industrial grade hemp, which while grown widely across the UK, remained their largest export at the time, and was a much sought after commodity. Contrastingly, tow is a by-product of hemp, and is thus sold at a much lower price, often for use as upholstery stuffing and other secondary purposes.
When a dockside auctioneer put out large bales of both hemp and tow, the samples shown to potential bidders were easily confusable. To make matters worse, the two consignments were given similar lot names, therefore for those uninitiated, the possibility of bidding in error was high. On this occasion, the purchaser had recruited a manager to bid on his behalf, at which point he had placed similar bids on both items on the assumption that he was buying hemp. To his further detriment, the auction programmes failed to distinguish the lots, and so only those who had the foresight to inspect them beforehand were spared the embarrassment of overpaying for items of lower market value.
When the purchaser discovered his managers error, he sued the auctioneers for misrepresentation through the principle of ‘ad idem’ (which is parties not in agreement to the nature of a contract), who themselves counter-sued for negligence on the part of the manager. In the original trial, it was found that there could be no evidence of a contract as per the principle of disagreement, and that no grounds of negligence existed in the absence of any duty of care by the manager to examine the lots prior to bidding.
When brought before a deciding jury, it became apparent despite appreciation of a number of opposing facts, that the auctioneers had been recent victims of fraud, thus were simply looking to pass on the loss to another unsuspecting buyer. And so irrespective of any argument that the onus of inspection fell to the buyer’s representative, it was held that a contract could not be found to exist where no agreement had been settled between the vendor and the purchaser.
“The second and third findings of the jury shew that the parties were never ad idem as to the subject-matter of the proposed sale; there was therefore in fact no contract of bargain and sale.”
“It was natural for the person inspecting the “S.L.” goods and being shown hemp to suppose that the “S.L.” bales represented the commodity hemp.”
“[I]t was peculiarly the duty of the auctioneer to make it clear to the bidder either upon the face of his catalogue, or in some other way which lots were hemp and which lots were tow.”
“A buyer when he examines a sample does so for his own benefit and not in the discharge of any duty to the seller.”
“Such a contract cannot arise when the person seeking to enforce it has by his own negligence or by that of those for whom he is responsible caused, or contributed to cause, the mistake.”