Routledge v McKay is a leading English contract law decision from 1954 that deals with one of the most fundamental distinctions in contract law: the difference between a contractual term and a mere representation.
The case is frequently cited in lectures and textbooks because it explains, in a practical and realistic manner, when a statement made during negotiations becomes legally binding and when it does not. The Court of Appeal’s reasoning shows how courts look not only at what was said, but also at when it was said, how it was recorded, and whether the parties intended it to be binding.
This case remains important for students and practitioners because disputes often arise when one party relies on a statement made before the contract, only to later discover that the statement was inaccurate. Routledge v McKay clarifies that not every incorrect statement gives rise to contractual liability.
Background and Context of Routledge v McKay
Contract negotiations frequently involve descriptions, assurances, and explanations about goods or services. Some of these statements are crucial to the agreement, while others are incidental. The law distinguishes between a term, which forms part of the contract and can lead to contractual remedies if breached, and a representation, which is a pre-contractual statement that does not automatically become part of the contract.
Routledge v McKay arose in the context of a private sale of a motorcycle, where both parties were non-experts and relied on registration documents that later turned out to be inaccurate. The case illustrates how courts assess intention and reliance rather than simply the truth or falsity of a statement.
Facts of Routledge v McKay Case
In Routledge v McKay, the claimant acquired a Douglas motorcycle and sidecar through a part-exchange arrangement. Under the deal, the claimant exchanged another motorcycle and paid an additional sum of £30. When the claimant first inspected the motorcycle, the registration documents stated that the vehicle was a 1942 model. The defendant repeated this information during the initial negotiations.
Unknown to both parties at the time, the motorcycle was actually a 1936 model. A previous owner had modified the motorcycle and had wrongly registered it, leading to incorrect information appearing in the official documents. Importantly, neither the claimant nor the defendant was an expert in motorcycles, and both relied on the documentation available.
After the initial discussion, the claimant did not immediately complete the transaction. Instead, he went away to think about the deal.
Several days later, he returned and a written agreement was produced. This written agreement set out the terms of the exchange and concluded with the words that once the £30 was paid, the transaction was considered “closed”. The written agreement made no mention of the year of manufacture of the motorcycle.
Legal Issue
The central issue in Routledge v McKay was whether the statement regarding the motorcycle being a 1942 model amounted to a contractual term or was merely a representation made during negotiations. If it was a term, its falsity could give rise to a contractual remedy. If it was only a representation, it would not form part of the contract unless specific legal requirements were met.
The court also had to consider whether the incorrect statement could amount to misrepresentation and whether liability could arise from reliance on the registration documents.
Routledge v McKay Judgement
In Routledge v McKay, the Court of Appeal held that the statement about the year of the motorcycle was a representation and not a contractual term. The court found that the registration document was not prima facie evidence that the statement was intended to be contractually binding.
The court also held that there was no misrepresentation in the legal sense that would give rise to liability. The incorrect registration had been made by a previous owner, and neither the defendant nor any intervening owners were held liable for that error.
Reasoning of the Court in Routledge v McKay
The reasoning in Routledge v McKay focused on several key factors that courts commonly use to distinguish between a term and a representation.
First, the court emphasised the timing of the statement. The statement regarding the year of manufacture was made during negotiations, not at the moment of contracting. There was a clear lapse of time between the statement being made and the contract being concluded. This gap gave the claimant an opportunity to verify the accuracy of the statement independently.
Second, the court considered the written agreement. When parties reduce their agreement to writing, the written document is strong evidence of the terms they intended to be binding. In this case, the written agreement did not mention the year of manufacture at all. The absence of such a term suggested that the parties did not intend the statement to be contractually binding.
Third, the court took into account the closing wording of the agreement, which stated that once the £30 was paid, the transaction was closed. This language was interpreted as excluding any possible collateral warranty based on earlier statements.
Fourth, the court noted that neither party was an expert. The defendant was not in a better position than the claimant to know the true age of the motorcycle. Both relied on the registration documents, which later proved to be incorrect. This reduced the likelihood that the statement was intended to be a firm contractual promise.
Finally, the court observed that the registration document itself was not evidence that the parties intended to create a contractual term. Official documents may provide information, but that does not automatically mean the information becomes part of the contract.
Conclusion
In conclusion, Routledge v McKay remains a foundational authority on the distinction between contractual terms and representations in English contract law. The Court of Appeal’s careful analysis shows that intention, timing, documentation, and the conduct of the parties all play a crucial role in determining whether a statement is legally binding.
The case continues to be highly relevant for understanding how contracts are formed and how liability is assessed when pre-contractual statements turn out to be inaccurate.