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JD Cleverly Ltd & Cwmbran Motors Ltd v Family Finance Ltd (2010)


A county court judge had erred in finding that motor dealers had concluded several contracts of sale with a finance company. The parties' conduct could not properly be regarded as manifesting an intention to create a legal relationship in the form of a contract of sale.


(1) It was not clear what behaviour of C's the judge had regarded as displacing the requirement in cl.2.1. The mere sending of the invoice could not amount to a waiver of the requirement, for the act of sending the invoice conveyed with it the representations contained therein, not a representation that they would not be relied upon (see para.26 of judgment). (2) The invoice did not, as it was written, contain an offer to sell. It spelled out definitively the manner in which a contract for the sale and purchase of a vehicle was to come into force, a process in which the sending of an invoice played no part. Unless the sending of the invoice could be regarded as conveying a message different from what was written therein, F required something more than the words stated between the parties in order to spell out the conclusion of a contract. The burden was on F to demonstrate that the parties manifested an intention to create a legal relationship; it could only do so if it could demonstrate that the implication of a contract was a necessary conclusion because there was no other explanation for the parties' conduct (paras 29-32),Modahl v British Athletic Federation Ltd (No2) (2001) EWCA Civ 1447, (2002) 1 WLR 1192 and Baird Textile Holdings Ltd v Marks & Spencer Plc (2001) EWCA Civ 274, (2002) 1 All ER (Comm) 737 applied. (3) Although the invoice was addressed to F and the amount was said to be "due from" F, in circumstances where the sending of the invoice was not preceded by any discussion or contact between C and F, such considerations could not displace the clear language of the invoice, which presupposed that a contract of sale would be concluded by signature of a completed purchase order form unequivocally identifying the purchaser. The sending of an invoice to F in the circumstances which occurred was consistent with an arrangement whereby F was, for whatever reason, to discharge the existing or future indebtedness of G, without bringing into existence a contractual relationship between itself and C. F had fallen far short of discharging the burden which was upon it to demonstrate that the conduct between it and C was consistent only with the creation between them of a contract pursuant to which the vehicle would be sold by C to F (paras 33-38), Iveco Finance Ltd v Man Truck & Bus UK Ltd (2003) EWCA Civ 1613considered.

Appeal allowed


The appellant motor dealers (C) appealed against a decision of a county court judge that they had contracted to sell 12 vehicles to the respondent finance company (F). The background to the case was a large-scale fraud operated by an intermediary motor trader (G). The transactions had involved C, F, G and 12 individuals who sought to purchase cars from G. The individuals paid G in full; G then sent purchase orders to C in respect of the vehicles. C delivered the vehicles to the purchasers. G then advised C to invoice F for the vehicles. F had been approached by G with a request to provide hire purchase facilities in respect of the transactions. F paid C in full by cheque shortly after it received the invoices. The core allegation in each action was that by causing an invoice to be raised, addressed and sent to F, and by thereafter receiving payment in respect thereof, C had contracted to sell the relevant vehicle to F; accordingly C, by releasing possession of the vehicle or by reason of their course of dealing, enabled the end purchasers to acquire title to the vehicles to the prejudice of F. The judge held that the sending of the relevant invoice followed by the sending of the cheque in response thereto constituted a contract for the sale of the vehicle to which the invoice related. The invoices sent by C to F contained "Terms and Conditions for the Sale of New and Used Vehicles", cl.2.1 of which stated that a contract would only come into force once a purchase order had been signed by one of C's sales executives. However, the judge held that the requirement for a signed purchase order could be displaced by the behaviour of C.

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21 Dec 2010

Court of Appeal
Arden LJ, Pitchford LJ, Tomlinson LJ

LTL 21/12/2010 : [2010] EWCA Civ 1477

Dominic Chambers QC

Practice areas
Commercial Disputes