An agent of Buckleton purchased shares from an agent of Heilbut, Symons & Co. on two occasions based on what the respondent's claim was a representation that the company was a "rubber company". The company turned out to be sour and Buckleton lost money on the transaction and brought an action for breach of warranty.
- Did the actions of the appellant constitute a representation?
Moulton, writing for the majority, says that strictly speaking the contracts in this case were not contracts of sale, as the defendant was only an agent of the rubber company and he was to undertake the necessary action to procure the shares for the plaintiff.
The court holds that in order to establish a cause of action in damages for misrepresentation the statement must have been fraudulent, or it must have been made recklessly. He clearly states that it is a principle of law that a person is not liable for damages resulting from an innocent misrepresentation. This case was an innocent misrepresentation; therefore the appeal must be allowed as no damages can stem from an innocent misrepresentation.
- Parties are not liable for damages arising from their own innocent misrepresentations.
- Damages are only awarded for fraudulent or reckless misrepresentations, or misrepresentations that refer to a material issue that fundamentally change the contract.
- Innocent representations are only referred to as warranties if they have clearly been intended to be warranties by the parties.