CHAPTER III.

THE CONTRACT MUST NOT BE MISLEADING.

SECTION 1.

WHAT THE CONTRACT SHOULD DISCLOSE.

A contract for the sale of land is not strictly a contract uberrimæ fidei (a), and in one case (b) KAY, J., referred to the doctrine of caveat emptor as applying to the sale of land. On the other hand, it is stated in Dart on Vendors and Purchasers (c), that the particulars should describe everything which it is material for the purchaser to know, "in order to judge of the nature or value of the property." A distinction must, it is submitted, be drawn between defects relating to the title to the property and defects in the property itself.

Defects of Title.-Unless the contrary is expressed, an agreement to sell land will include the whole of the vendor's interest therein, and such interest will be deemed to be an estate in fee simple free from incumbrances. It is the duty of the vendor, if he has a defect on his title, to disclose all that is necessary to protect himself, and not the duty of the purchaser to make inquiry before entering into a

(a) Brownlie v. Campbell (1880), 5 App. Cas., at p. 925. (b) Davenport v. Charsley (1886), 54 L. T. 372.

(c) 6th ed., p. 127.

contract, and this is so whether the sale be by public auction or private contract (d). The burden of making the disclosure is on the vendor. Thus, the vendor must disclose the existence of an easement affecting the property (e), or a covenant restricting its user and enjoyment (f). It is not sufficient for the contract to refer to covenants contained in previous conveyances, unless those covenants are read out at the auction or a reasonable opportunity afforded the purchaser of examining them before the sale (g). Again, it is the duty of the vendor to give notice of adverse claims which are not idle and frivolous (h), and the principle has been applied by JOYCE, J., to the non-disclosure of a party wall notice under the London Building Act, 1894, although a notice of this character does not strictly speaking affect the vendor's title (i). The court will not, however, refuse specific performance where the only blot on the title is a claim by some third party

(d) Re White and Smith's Contract, [1896] 1 Ch., at p. 637.

(e) Heywood v. Mallalieu (1883), 25 Ch. D. 357; Ashburner v. Sewell, [1891] 3 Ch. 405; Vowles v. Bristol Building Society (1900), 44 Sol. J. 592.

(f) Higgins and Hitchman's Contract (1882), 21 Ch. D. 95 ; Nottingham Patent Brick and Tile Co. v. Butler (1886), 16 Q. B. D. 778; Ebsworth and Tidy's Contract (1889), 42 Ch. D. 23; Re Cox and Neve's Contract, [1891] 2 Ch. 109.

(g) Dougherty v. Oates (1900), 45 Sol. J. 119; Childe v. Hodgson (1906), 54 W. R. 234. A vendor may produce a deed to the purchaser and say, "There is this deed affecting the property, look at it for yourself"; and if the purchaser is given a reasonable opportunity of so doing he will be bound.

(h) Re Harris and Rawling's Contract, W. N. (1894) 19. (i) Carlish v. Salt, [1906] 1 Ch. 335; but cf. Re Leyland and Taylor, [1900] 2 Ch. 625.

to rectify a deed if such third party take no steps to obtain rectification (k). Moreover, the maxim applies cujus est solum ejus est usque ad coelum et ad inferos. Consequently, if the vendor has no title to the mines under his property, or if a third party has a jus projiciendi over his property, this must be disclosed (1).

Defects in Subject-Matter.—A patent defect in the subject-matter of the contract which could be discovered by inspection, such, for instance, as the ruinous condition of freehold premises (m), or the existence of a public highway running through an estate (n) need not be pointed out by the vendor. With regard to the latent defects which cannot be discovered by any reasonable inspection, e.g., the existence of a nuisance in the neighbourhood or an underground culvert for water, it is suggested by WIGRAM, V.-C., that if the defect is known to the vendor it ought to be disclosed (o), and this view was also taken by JOYCE, J. in a recent case (p). On the other hand it is stated in Storey on Contracts, in

(k) George v. Thomas (1904), 52 W. R. 416; Delaney and Deegan, [1905] 1 I. R. 602.

(1) Whittington v. Corder (1852), 16 Jur. 1034; Laybourn v. Gridley, [1892] 2 Ch. 53; Bellamy v. Debenham, [1891] 1 Ch.

412.

(m) Grant v. Munt (1815), Coop. G. 177, aliter as to leaseholds when there is a covenant to repair.

(n) Oldfield v. Round (1800), 5 Ves. 508; Ashburner v. Sewell, [1891] 3 Ch., at p. 405.

(0) Lucas v. James (1849), 7 Hare, at p. 410.

(p) Carlish v. Salt, [1906] 1 Ch., at p. 341. The dictum of BRAMWELL, B., cited by the learned judge only applies to the

a passage which has been cited with approval by COCKBURN, C.J., and Lord O'HAGAN, that the vendor "is not ordinarily bound to disclose every defect of which he may be cognisant, although his silence may operate virtually to deceive the purchaser." It is submitted, that in the absence of fraud or of misrepresentation, express or implied (q), the maxim caveat emptor should apply, and it is clearly established that if the vendor is not aware of a latent defect at the date of the contract, the purchaser must take the estate with all its faults (r).

On the other hand, if there is any misdescription or misrepresentation by the vendor as to the defect, then, whether the defect is patent (s) or latent (t), and whether it is known to the vendor or not (u), the purchaser will be entitled either to compensation or rescission.

Vacant Possession.-If an estate be sold subject to a lease, this fact must be expressly stated in the particulars, otherwise the contract will be considered

maker of an article in contradistinction to the vendor of an article made by a third party. The other cases cited relate to defects of title and not of subject-matter.

(q) "The vendor ought to state that which, if it is not stated, makes that which he does state ambiguous or misleading" (In re Marsh and Earl Granville (1883), 24 Ch. D., at p. 11).

(r) In re Puckett and Smith's Contract, [1902] 2 Ch., at

p. 261.

(8) Grant v. Munt (1815), Coop. G. 173.

(1) Baker v. Moss (1902), 66 J. P. 360.

(u) In re Puckett and Smith's Contract, [1902] 2 Ch. 258; Vowles v. Bristol Building Society (1900), 44 Sol. J. 592.

to be for the sale of the property with vacant possession. Thus, where an estate, which was subject to leases for lives at a low rent, was described as "now or late in the occupation of Hugh Roberts," and the conditions provided that, on completion, the purchaser should be "let into the receipt of the rents and profits," making no mention of possession, it was nevertheless held that the purchaser could not be compelled to take the title without compensation (x).

Nature of Tenancies.-Moreover, when the property is described as subject to tenancies, if there is anything in the nature of the tenancies which affects the property sold, the vendor is bound to tell the purchaser and to let him know what it is which is being sold; and the vendor cannot afterwards say to the purchaser, "if you had gone to the tenant and inquired, you would have found out all about it." Thus, to describe a publichouse as "now in the occupation of A. B." is misleading if the property is, in fact, subject to a lease to a brewer for eight years (y). On the other hand, if the property is described as "let to A. B., a yearly tenant, at £130 per annum," and A. B. has previously given notice to quit, this would be misdescription, since the purchaser would be led to suppose that he was purchasing with the benefit of continuing tenancies at fixed rents, whereas he would in fact have to find tenants immediately after the completion of his

(x) Hughes v. Jones (1861), 3 De G. F. J. 307; Royal Bristol Permanent Building Society v. Bomash (1887), 35 Ch. D. 390. (y) Caballero v. Henty (1874), L. R. 9 Ch. 447.