Esso Petroleum Co. Ltd. v. Mardon

Esso Petroleum Company Ltd. (Esso) (plaintiff), a leading British oil retailer, identified a potential site for a new gas station. Esso’s experts calculated that the site had a first-rate annual sales throughput potential of 200,000 gallons of gas. This prompted Esso to buy the site and begin building the station. After construction began, the local planning board imposed site restrictions that would force Esso to reorient the station. Reorientation would obscure the station’s gas pumps and make the station far less likely to attract customers. Nevertheless, Esso accepted the site restrictions and proceeded with construction. Esso offered to lease the newly built station and have it managed by Philip Lionel Mardon (defendant). Mardon thought the reoriented station’s annual throughput potential would be closer to 100,000 gallons, but Mardon accepted Esso’s expert reassurance that a 200,000-gallon-throughput calculation was correct. Mardon agreed to accept Esso’s offer and lease the station for a price based on the higher throughput. For the next four years, Mardon worked hard to make the station a success. For Mardon, this proved to be a wasted endeavor and financial disaster, because the badly sited station’s annual throughput never topped 78,000 gallons. Esso sued to retake the station’s possession. Mardon counterclaimed damages for breach of warranty and negligent misrepresentation. The trial court ruled for Esso on Mardon’s warranty claim and for Mardon on the negligence claim. Both parties appealed to the England and Wales Court of Appeal.