Hichens v General Guarantee Corporation Ltd

Acceptance of a hire-purchase or lease-purchase agreement need not necessarily await the finance company’s formal signature. Ordinary contractual principles may establish oral acceptance before signature where the agreement does not expressly require written acceptance as the exclusive method. The court may infer acceptance from the surrounding circumstances, including prior approval of finance, payment of the deposit, preparation of the invoice and release of the vehicle. Where the agreement was concluded before the vehicle was disposed of, Hire Purchase Act 1964, section 27, may protect a private purchaser who acted in good faith and without notice of the agreement.

Mrs Rowley obtained a Toyota Supra on finance from General Guarantee Corporation Ltd. She signed a lease-purchase agreement on 22 February 1995, paid £15,000 and took delivery of the vehicle. The finance company signed the agreement and paid the balance to the dealer on 28 February.

On 22 February Mrs Rowley sold the vehicle through Mr Watts, who resold it to Anthony Hichens. Hichens was a private purchaser who acted in good faith and without notice of the finance agreement. The deputy High Court judge held that the agreement had been orally accepted on 22 February and that section 27 applied. General Guarantee appealed, arguing that the agreement and bailment arose only on formal signature.

1. Appeal dismissed. The deputy judge was entitled to find that General Guarantee orally accepted the lease-purchase agreement on 22 February 1995, before its formal signature.
2. Although the written agreement referred to acceptance by the owner and contained a signature box, it did not expressly stipulate that acceptance could occur only by written signature. Ordinary contractual principles therefore applied. The surrounding evidence supported an inference of acceptance: General Guarantee had approved Mrs Rowley’s application in general terms, she had signed the agreement and paid the deposit, the dealer’s invoice recorded the balance as due from General Guarantee, and the vehicle was released on that basis.
3. The commercial realities supported that conclusion. It would make little business sense for the dealer to release a vehicle after receiving only part of the price without assurance that the finance company would pay the balance.
4. Accordingly, ownership passed from the dealer to General Guarantee on 22 February. The dealer then bailed the vehicle to Mrs Rowley as agent for General Guarantee under the lease-purchase agreement.
5. The vehicle had therefore been agreed to be sold under a conditional sale agreement before it was disposed of. Hichens was a private purchaser acting in good faith and without notice. The statutory requirements of section 27 were satisfied, so he acquired good title.
6. Rix LJ added that sections 61(1)(a) and 65(1) of the Consumer Credit Act 1974 concern enforceability of an improperly executed regulated agreement. They do not prevent such an agreement from having been made.

Appeal dismissed with costs.

• Court of Appeal (Civil Division) — [2001] EWCA Civ 359: appeal dismissed with costs.
• Queen’s Bench Division — Deputy Judge Christopher Purchas QC held that Hichens had acquired title to the vehicle and awarded him £350 damages.