[1962] 3 All ER 386
Court of Appeal
Stimson agreed to buy a car on hire purchase from a car dealer for £350. On 16 March 1961 he signed a hire purchase agreement form which was produced by the car dealer. A clause in the agreement read
"This agreement shall become binding on the owner [Financings] only upon acceptance by signature on behalf of the owner and the hiring shall be deemed to commence on such date of acceptance."
Financings did not sign the acceptance until 25 March 1961. Between Stimson signing the hire purchase agreement on 16 March and Financings' 'acceptance' on 25 March Simson had paid the first instalment of £70 on the car and had been allowed to take the car away. On 20 March Stimson returned the car because he was not satisfied with it. In order to settle the matter he offered to forfeit the £70 he had paid. The car dealer did not get in touch with Financings; nor did Stimson. On the night of 24/25 March the car dealer's premises were broken into and the car was stolen and was badly scratched and damaged. When it was recovered it was returned to Financings who sold it for £240. Financings claimed that Stimson was in breach of the hire purchase agreement. The issue before the court was whether a contract had ever come into existence between Stimson and Financings.
Lord Denning MR
... he crucial matter in the case is whether there was ever a binding agreement between the defendant and the plaintiffs. The document which the defendant signed on March 16 was only an offer. Before it was accepted, he returned the car to the dealer and made it clear that he did not want the car any more. Was that a revocation of the offer? To my mind, that was a clear revocation provided that it was made to a person having authority to receive it. But was the dealer a person authorised to receive the revocation? Was he the agent of the plaintiffs for the purpose?
... t seems to me that, in this transaction before us, as indeed in most of these hire-purchase transactions, the dealer is for many purposes the agent of the finance company... It seems to me that, if we take, as we should, a realistic view of the position, the dealer is in many respects and for many purposes the agent of the finance company. I am aware, of course, that the finance companies often put clauses into their forms in which they say that the dealer is not their agent. But these clauses are often not worth the paper they are written on. Nobody can make an assertion of that kind in an agreement so as to bind the courts if it is contrary to the facts of the case... In this case we are not troubled by any such clause, for there is none. And, on the facts, I am clearly of opinion that the dealer was ostensibly authorised to receive communications on behalf of the plaintiffs. Just as he was authorised to deliver the car to the defendant in the first place, so he was ostensibly authorised to receive it back when it was returned. Just as he was authorised to receive the offer for the plaintiffs, so, also, he was ostensibly authorised to receive the revocation: and to receive the communication that the defendant had no further use for it.
I am aware that the defendant did not in terms revoke the offer, for the simple reason that he thought the agreement was concluded. But he made it clear that he did not wish to proceed with the matter and that is all that was necessary. In my judgement, therefore, the offer was revoked on March 20 and there was, for this reason, no concluded contract. Even if I am wrong on that point, there is the second point to be considered which appealed to the county court judge. He said:
"When this offer was made, it was made on the basis that the car was in good condition, or at all events in the condition in which the defendant had seen it, but, before the offer was accepted (it was accepted on March 25), on the night of March 24/25 it suffered this extra damage which cost £44 to repair, having been scratched and dented by the thieves who stole it. Can a man accept an offer when the condition of the goods has deteriorated in a material respect since the date of the offer?"
It seems to me that, on the facts of this case, the offer made by the defendant was a conditional offer. It was conditional on the car remaining in substantially the same condition until the moment of acceptance. Take the case put by DONOVAN LJ, in the course of the argument: Suppose an offer is made to buy a Rolls-Royce car at a high price on one day and, before it is accepted, it suffers the next day severe damage. Can it be accepted and the offeror bound? My answer to that is: No, because the offer is conditional on the goods at the moment of acceptance remaining in substantially the same condition as at the time of the offer... [T]he offer is made on the understanding that, so long as it remains an offer, it is conditional on the goods being in substantially the same condition as at the time when the offer was made. I agree, therefore, with the county court judge in thinking that, in view of the damage which occurred to this car before the acceptance was given, the plaintiffs were not in a position to accept the offer, because the condition on which it was made had not been fulfilled. So on that ground also there was no contract.
The offer lapsed when the 'thing' happened ie when the car was damaged.