Financings Ltd v Stimson

An offer to acquire goods on hire purchase may be conditional upon the goods remaining in substantially the same condition and retaining substantially the same value until acceptance. Material deterioration before acceptance leaves the offer incapable of acceptance.

A proposed hirer revokes an offer by clearly communicating an intention not to proceed. No technical language is required. On the facts, communication to a dealer who had ostensible authority to receive it constituted communication to the finance company.

A proposed hirer signed a hire-purchase form for a motor car. The form provided that the agreement would bind the finance company only when signed on its behalf. The dealer delivered the car before that signature, but the proposed hirer returned it after becoming dissatisfied and said that he did not wish to proceed.

Before the finance company purported to accept the offer, the car was stolen from the dealer's premises and substantially damaged. The company claimed damages under the alleged hire-purchase agreement or, alternatively, upon a bailment said to incorporate its terms.

The county court rejected the claim. The central issues were whether the offer had been effectively revoked and whether the intervening damage prevented its acceptance.

1. Disposition. The appeal was dismissed unanimously, with no order as to its costs. No hire-purchase agreement had been concluded.
2. Revocation: majority reasoning. Lord Denning MR and Donovan LJ held that the dealer had ostensible authority to receive the revocation for the finance company. The dealer held and transmitted the forms, received the deposit, dealt with insurance, conveyed the company's willingness to proceed and delivered the car. A realistic appraisal therefore showed that the dealer acted as the company's agent for several purposes, including receipt of the returned car and the proposed hirer's communication.
3. The proposed hirer did not need to employ the technical language of revocation. Returning the car and making clear that he no longer wished to proceed sufficed, although the parties mistakenly spoke as if an existing contract required rescission. The offer was consequently revoked before the finance company's signature.
4. Pearson LJ's disagreement. Pearson LJ considered that the dealer lacked actual or ostensible authority to receive a revocation as immediate notice to the finance company. In his view, the dealer could act as the proposed hirer's channel for transmitting the message, but receipt by the dealer did not itself constitute receipt by the company.
5. Conditional offer: unanimous reasoning. All three members of the court held that the offer was capable of acceptance only while the car remained in substantially the same condition, with substantially the same value, as when the offer was made. The signed acknowledgment that the proposed hirer had examined the car and found it in good condition, together with the transaction's financial figures, required that implication. The severe damage and substantial depreciation before acceptance meant that the condition failed. The purported acceptance therefore concluded no agreement.
6. Agency clauses and bailment. Lord Denning MR observed that a contractual assertion denying agency cannot bind a court where it contradicts the true relationship, although the present form contained no such clause. Donovan and Pearson LJJ regarded delivery before acceptance as creating only a provisional bailment in anticipation of the proposed agreement. It did not import all the terms of the uncompleted hire-purchase agreement. The alternative contractual bailment claim therefore failed.

1. Court of Appeal: Dismissed the finance company's appeal unanimously. The court held that no hire-purchase agreement had been concluded and made no order as to the costs of the appeal.
2. Willesden County Court: The county court rejected the finance company's claim. It found insufficient evidence that the dealer was authorised to receive the returned car, but held that material damage before acceptance prevented the offer from becoming a contract.