BetterLawNotes-5 (2)

CONTRACT LAW

A purported ‘acceptance’ may not be effective to create a contract where the corresponding offer was made subject to the fulfilment of a condition, and that condition has not been fulfilled or waived.

Financings Ltd v Stimson [1962] 1 WLR 1184

Stimson saw a car he liked at a dealership. He signed a hire purchase form which stated that the finance company would only be bound upon their acceptance by signature. Two days later, on 18th March, Stimson paid the first instalment and drove the car away. On 20th March, Stimson, being dissatisfied with the vehicle, returned it to the dealer, saying he no longer wanted the car and that he would forfeit the instalment he had paid. On the night of 24th March, the car was stolen from the dealers. It was recovered in a seriously damaged state. On 25th March, the finance company signed the hire purchase agreement. The finance company sought damages from Stimson for breach of the hire purchase agreement. The Court of Appeal dismissed the finance company’s claim on the ground that there was no contract between the parties.

One ground for the Court of Appeal’s decision in Financings Ltd v Stimson was that Stimson’s offer to buy the car was conditional on the car remaining in substantially the same condition as it was when the offer was made. Since the car had been seriously damaged, the finance company were unable to accept the offer because the condition had not been fulfilled.

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