Financings Ltd v Stimson
Court of Appeal
Citations:  1 WLR 1184;  3 All ER 386;  CLY 1407.
The parties entered into a hire-purchase agreement for a car. The claimant, a finance company, gave the dealer authority to draw up the agreement on its behalf. That agreement stated that it would only be binding on the claimant once the claimant had signed and accepted it.
Two days later, before the claimant signed the agreement, the defendant informed the dealer that he no longer wanted to go through with the agreement. The night before the claimant signed the agreement, the car was stolen from the dealer. By the time the car was found, it had been damaged.
The claimant sued the defendant for the price of the car, minus a deduction for the value of the damage. The defendant then argued that he was not obliged to pay, because he had revoked his offer before the claimant signed the agreement.
- Had the parties formed a completed contract?
The Court of Appeal held in favour of the defendant. The dealer acted as the claimant’s agent. In that capacity, he had ostensible authority to accept the defendant’s revocation of the offer. Since the claimant had to sign the contract to accept the offer, and they had not done so before the offer was revoked. Therefore, there was no contract.
Additionally, the Court held that the offer was conditional on the car being in the condition it was when the offer was made. As such, even if the offer had not already been revoked, it was no longer capable of being accepted once the car was damaged.
This Case is Authority For…
Where an offer is conditional on a particular fact, then it cannot be accepted unless that fact holds.
Lord Denning noted that the factual circumstances determine whether parties are in an agency relationship. Stating that the contract is not one of agency does not preclude the courts from holding that it is.
Pearson LJ dissented on the first ground. He did not think that it was apparent from the facts that the dealer had ostensible authority to receive a revocation on the claimant’s behalf. He agreed that the offer was conditional, however.