A recent Court of Appeal case has implications for suppliers of motor finance as information given to the supplier by the customer can now be construed as the finance company having been given the information themselves, despite the terms of the agreement being expressly to the contrary
Background
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In CF Asset Finance Ltd v Okonji [2014], the claimant financed office equipment, supplied by Ishirosoft Limited, and hired to Mrs Okonji and Mr Shaw, who were solicitors under a hire agreement. A trading agreement between CF and the supplier, gave the supplier the authority to act as CF’s agent for the purpose of introducing customers and submitting proposals.
CF terminated the agreement for non-payment by the hirers, issued proceedings against them and obtained a judgment. The hirers then appealed.
The hirers claimed that no contract had ever come into existence between themselves and CF.
They alleged the supplier’s salesman had persuaded them to sign a blank version of the agreement, for the sole purpose of ascertaining whether they could obtain sufficient credit to enable the agreement to go ahead. The supplier’s salesman then delivered the equipment, despite the hirers confirming they would not accept the equipment, as they had not entered into any agreement to hire it and requested that the salesman remove it. The equipment was left with the hirers and the salesman said he would return in a few days to collect it.
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By GlobalDataThe hirers were not aware but the salesman had already submitted the signed, blank agreement as a proposal for finance to CF, and that the agreement was executed (and therefore accepted) by CF a few days later.
When the hirers received a copy of the executed agreement, they notified CF that the contract had been cancelled and alleged that the agreement was not binding as any offer contained in the signed blank agreement was revoked by them when the supplier’s salesman visited their premises to deliver the equipment. The hirers alleged that the supplier’s salesman was CF’s agent for the purposes of receiving their notice of revocation of their offer, and as such, there was no contract between the hirers and CF, as there was no offer capable of acceptance.
In response, CF argued that the supplier’s salesman was not its agent for the purpose of receiving notice of the revocation of the offer, relying on the express contractual term to that effect within the agreement and therefore, there had been no communication of the revocation of the offer to CF, before it was accepted by CF.
The court’s decision
The court decided that the terms of the trading agreement between CF and the supplier created a limited agency between them for the purposes of introducing customers and submitting proposals. On that basis, it was necessarily implicit in the agency, that the supplier’s salesman had at least ostensible authority to receive and communicate to CF, any decision by the hirer not to proceed, before the proposal was accepted by CF.
CF therefore had been given notice of the hirer’s intention not to proceed and there was no offer capable of acceptance by CF.
Comment
Following this decision and that of BSS Group Plc v Makers (UK) Ltd (t/a Allied Services) [2011], motor finance companies are now faced with a situation when information is given to the supplier by the customer, it could be construed as the finance company having been given that information themselves, despite the terms of the agreement being expressly to the contrary, when in fact or in law there is an implied (at least) agency.
Motor finance companies must therefore take care to ensure that what is agreed within trading agreements and/or within agreements is not wider than intended, otherwise motor finance companies can expect more claims against them based on acts or omissions of suppliers, or what the supplier had said where the suppliers are acting, albeit on limited, agencies.
Joshua Howells is a solicitor with law firm Gateley.
