• June 2016
    The words that bind

    In a recent Court of Appeal decision concerning the sale of a Limited Edition Porsche, 911 (Hughes -v- Pendragon), the dealer in question did not have the model in stock but signed an Agreement with the customer described as a “Vehicle Order Form” (“VOF”).   The price of the vehicle was not stated but was subject to the terms and conditions in the form.   The customer paid a £10,000 deposit.   In a separate email the dealer confirmed the order had been placed and that the customer would get the first vehicle which the dealer was allocated by Porsche.   The dealership subsequently received one of the vehicles but supplied it to another customer.  

    The customer sued the dealer but the Judge at first instance found there was no contract, only an “agreement to agree” because price, specification and delivery date had not been agreed.   He also found that the customer could not prove any loss as there was no indication of the price he would have been willing to pay.   The customer appealed and the Court of Appeal overturned the first instance decision.   They held that the terms and conditions in the “VOF” were consistent with an agreement to sell a vehicle.   Whilst the vehicle was not specified, it had been described, and there was a process for it being acquired and supplied.   Section 5 of the Sale of Goods Act 1979 * stated there could be an agreement to sell future goods including goods to be acquired by the seller after making of the contract.    There could be a contract for sale of goods even though the seller’s acquisition of those goods depended upon a contingency which might or might not happen, or the price was not fixed, provided the “VOF” stated how the price would be calculated.   It was decided also that the email constituted a collateral contract.  The dealer was in breach of contract and awarded the customer £35,000 damages.

    [* The 1979 Sale of Goods Act has been largely replaced by the Consumer Rights Act 2015, (discussed in my article in November 2015 and available on our website, but the legal principles in this case remain the same. The new Act gives consumers the right to reject goods within 30 days of delivery and have a full refund.]

    This article provides only a general summary and is not intended to be comprehensive.  Special legal advice should be taken in any individual situation.

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