Birch v Paramount Estates (Liverpool) Ltd (1956) 167 EG 396
Terms in a contract; representation
The case of Birch v Paramount Estates Ltd (1956) illustrates how oral representations can sometimes be incorporated into a written contract, particularly when they are fundamental to the agreement.
Facts (Birch v Paramount Estates)
A couple purchased a new house from a developer. The developers promised that the house would be “as good as the show house”. Upon completion, the house did not meet this standard. The buyers sought to hold the developers accountable for the discrepancy.
Issue
The issue was whether the promise made by the developers, which was not included in the written contract, could still be considered a binding term of the contract.
Decision of the Court in Birch v Paramount Estates
The Court of Appeal held that the promise, despite being verbal and omitted from the written contract, was so central to the agreement that it constituted a term of the contract. Thus, the developers were liable for not meeting the promised standard.
Legal Principle
This case demonstrates that even when a contract is formalized in writing, important spoken representations made during negotiations can be treated as contractual terms if they were fundamental to the agreement and relied upon by the parties. This principle is crucial in protecting parties who rely on verbal assurances that significantly influence their decision to enter into a contract.
References:
- http://ndl.ethernet.edu.et/bitstream/123456789/13577/1/15.pdf
- https://www.lawteacher.net/cases/terms-cases.php
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