Smith v Hughes (1871) LR 6 QB 597

Facts of Smith v Hughes

Mr. Hughes, a horse trainer, entered into a contract with Mr. Smith, an oat supplier, to purchase a quantity of oats. The oats were selected based on a sample shown to Hughes. However, Hughes made a mistake in identifying the type of oats and, upon delivery, found that his horse refused to eat them. Claiming that the oats were not as he believed, Hughes refused to complete the purchase.

Issues Raised in Smith v Hughes

The issues raised in Smith v Hughes were:

• Whether a unilateral mistake made by the buyer could be grounds for rescission of the contract.
• Whether the principle of caveat emptor (buyer beware) applied in the context of the buyer’s mistaken belief about the quality of the goods.
• Whether fraud or deceit by the seller was required to void a contract in cases of mistake by the buyer.

Arguments

Hughes: Argued that the oats delivered were not as he believed and, therefore, the contract should be rescinded. Claimed that the seller had a duty to inform him of the mistake.

Smith: Contended that the objective interpretation of the contract was crucial, irrespective of the buyer’s subjective beliefs. Asserted that in a specific sale without express warranty, the buyer must accept the goods unless fraud or deceit is proven.

Judgment in Smith v Hughes

The court in Smith v Hughes presided over by Blackburn J, delivered a judgment emphasising the objective interpretation of parties’ conduct in contract formation. The court rejected the idea of a unilateral mistake being a ground for rescission. Blackburn J held that in a specific sale without express warranty, the buyer must accept the purchased item even if it lacks a particular quality, unless there is fraud or deceit by the seller.

The judgment in Smith v Hughes reinforced the principle of caveat emptor, stating that the buyer had the responsibility to inspect and form their own judgment when purchasing a specific item. The court concluded that the contract remained binding unless the seller had committed fraud or deceit, distinguishing between a buyer’s belief or motive and an essential condition of the contract.

Significance of Smith v Hughes

Smith v Hughes is a foundational case that established the principle of objective interpretation in contract law, particularly in commercial sales by sample. It reinforced the concept of caveat emptor and clarified the limited circumstances under which a contract could be voided due to the buyer’s mistake.