Tessis, a chartered accountant, advertised sale by tender of the stock of a furniture business which had gone bankrupt. Sodd submitted a tender after examining the stock and was told by Tessis that the retail value was double the wholesale cost, which they relied upon in submitting the tender. The contract contained a clause that there was no warranty or condition as to the quality or condition of the stock. The stock turned out to be significantly overvalued and Sodd sued. Tessis claimed no relationship that gives rise to duty of care existed and the exemption clause exempted him regardless. He also claimed no legitimate reliance interest as he did not hold himself out as having special knowledge. Sodd was successful at trial which Tessis appealed.
- Is the respondent entitled to damages?
Appeal dismissed with costs.
Lacourcière, writing for a unanimous court, held that Tessis was liable both in contract and in tort. He held that the relationship of Tessis to Sodd as an accountant was sufficient to create a special relationship: he had a professional responsibility and therefore a duty of care. The valuation was thus a negligent misrepresentation intended to be acted upon and creates liability in contract and in tort. Further, he held that the representation as to the value of the goods was a warranty.
Regarding the exemption claus, Lacourcière says that the exemption clause does not include negligent misrepresentation. Because it is not included specifically, the clause will be interpreted contra proferentem against the person who drafted the agreement.
- Professional responsibility may create a duty of care.
- There is concurrent liability in contract and tort for pre-contractual misrepresentation.