Factual and Procedural Background
This appeal concerns disputes arising from the attempted sale of a limited edition high performance vehicle, the Porsche 911 GT3 RS4. The Appellant, who owns two car garages including a classic car workshop, sought to purchase this vehicle from the Respondent, a Porsche dealership. After initial communications expressing interest, the Appellant paid a deposit and signed an order form which referenced terms and conditions but left price and specification details to be agreed later. The Respondent subsequently allocated the limited vehicle to a different customer, citing concerns that the Appellant intended to resell it for profit rather than keep it as a collector's item. The Appellant issued a claim alleging breach of contract, seeking specific performance or damages. The claim was heard in a County Court where the judge found no binding contract existed and dismissed the claim for damages. The Appellant appealed the decision.
Legal Issues Presented
- Whether the parties entered into a binding contract for the sale of the vehicle or merely an unenforceable agreement to agree due to unresolved price and specification terms.
- Whether there was a collateral contract overriding the terms of the signed standard-form sale contract, specifically guaranteeing the Appellant priority in allocation if the dealership received a vehicle.
- The appropriate measure of damages for non-delivery of goods in high demand when substitute goods are unavailable.
- Whether the Appellant acquired an equitable interest in the vehicle allocated to the dealership.
Arguments of the Parties
Appellant's Arguments
- The signed order form constituted a binding contract, as it expressly stated it contained contractual terms and included terms and conditions.
- The email sent by the Respondent after signing confirmed the agreement that the Appellant would receive the first allocated vehicle.
- The contract was valid under section 5(2) of the Sale of Goods Act 1979, as it concerned future goods subject to contingency.
- Price and specification could be determined by reasonableness or by law, per section 8(2) of the Sale of Goods Act 1979.
- There was a collateral contract guaranteeing the Appellant priority if a vehicle was allocated to the dealership.
- Damages for non-delivery should be assessed under section 51(2) of the Sale of Goods Act 1979, not limited to the breach date.
- The Appellant alternatively claimed an equitable interest in the vehicle.
Respondent's Arguments
- No contract existed because price, specification, and delivery date were not agreed, constituting only an agreement to agree.
- Clause 2(b) of the terms and conditions permitted the Respondent to fulfill orders out of sequence, negating any obligation to supply the vehicle first to the Appellant.
- The email dated after the contract was ineffective to vary the contract without consideration.
- No basis existed for an equitable interest in the vehicle for the Appellant.
- There was no evidence of loss or damage suffered by the Appellant, as price and specification were uncertain.
- The Appellant could have purchased the vehicle elsewhere in the Porsche dealer network.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Dhanani v. Crasnianski [[2011] EWHC 926 (Comm)] |
Distinguishing between an agreement to agree and a binding contract. |
The judge initially relied on this case to support the finding of no contract; the appellate court distinguished the facts and rejected the no-contract conclusion. |
| Bear Stearns Bank plc v. Forum Global Equity Ltd [2007] EWHC 1576 |
Contracts can be complete despite some terms being left to be fixed by reasonableness or law. |
Supported the Appellant's argument that price and specification could be fixed later, validating the contract. |
| Cudgen Rutile (No.2) Pty Ltd v. Chalk [1975] AC 520 |
Contracts may exist despite uncertainty in terms if a means to fix terms is provided. |
Applied to show that the contract was valid despite "Subject to Price + Spec" notation. |
| Wake v. Renault (UK) Ltd [1996] Trading LR 514 |
Collateral contracts can vary main contracts and be binding if supported by consideration. |
Used to support the existence of a collateral contract overriding clause 2(b) of the terms and conditions. |
| Couchman v. Hill [1947] KB 554 |
Collateral contracts can override exemption clauses. |
Supported the conclusion that the collateral contract was not negated by clause 18 of the terms and conditions. |
| Mendelssohn v. Normand Ltd [1970] 1 QB 177 |
Collateral contracts can override general contractual terms. |
Reinforced the principle that the collateral contract could prevail over the standard terms. |
| Charter v. Sullivan [1957] 2 QB 117 |
Definition of an available market for goods in the context of damages for non-delivery. |
Applied to conclude that no available market existed for the limited edition vehicle, affecting damages assessment. |
| Hadley v. Baxendale (1854) 9 Ex 341 |
Measure of damages for breach of contract based on loss naturally arising from breach. |
Applied to assess damages where no market existed, using the value of the lost chance to purchase. |
| Herrington v. British Railways Board [1972] AC 877 |
Adverse inferences may be drawn from a party withholding evidence under the adversarial system. |
Applied to infer facts due to Respondent’s failure to provide price information for the competing buyer. |
| County Personnel v. Pulver [1987] 1 WLR 916 |
Damages are generally assessed at the date of breach. |
Supported the judge’s approach to damages assessment date. |
| Re Wait [1927] 1 Ch 606 |
Equitable principles do not apply to sales of future goods; no equitable interest arises before sale completion. |
Supported rejection of the Appellant’s claim to an equitable interest in the vehicle. |
Court's Reasoning and Analysis
The court carefully analyzed the nature of the agreement between the parties, rejecting the initial trial judge’s conclusion that no contract existed. It held that under the Sale of Goods Act 1979, a contract can validly be made for future goods subject to contingencies, and price and specification may be fixed later by an agreed method or by law. The signed order form, despite its "Subject to Price + Spec" notation, constituted an agreement for sale rather than a mere agreement to agree. The terms and conditions provided mechanisms for specification and price finalization, consistent with statutory provisions.
The court further found that there was a collateral contract, evidenced by the post-signing email and oral assurances, guaranteeing the Appellant priority in allocation if the dealership received a vehicle. This collateral contract effectively varied the main contract’s clause permitting the dealership to fulfill orders out of sequence. The court relied on established authorities confirming collateral contracts can override general contractual terms and exemption clauses.
The Respondent’s failure to allocate the vehicle to the Appellant, selling it instead to another customer, amounted to breach of contract. The court rejected the claim for an equitable interest, citing established precedent that such interests do not arise in sales of future goods.
Regarding damages, the court noted the absence of a traditional market for the limited edition vehicle, so the standard measure of damages under section 51(3) of the Sale of Goods Act 1979 did not apply. Instead, the court applied the first limb of Hadley v. Baxendale to assess damages based on the value of the lost chance to purchase the vehicle. The contract price was taken as approximately £135,000 (basic price plus selected extras), and the value of the nearest equivalent vehicle was assessed at £170,000 based on available evidence. The difference, £35,000, represented the Appellant’s loss. The court declined to remit the case for further assessment due to delay and costs.
The court rejected the Appellant’s submission that damages should be assessed under the second limb of Hadley v. Baxendale, as there was no finding that the Appellant intended to purchase as an investment known to the Respondent.
Holding and Implications
The court ALLOWED THE APPEAL and awarded damages of £35,000 to the Appellant for breach of contract due to the Respondent’s failure to deliver the allocated vehicle.
The direct effect is that the Appellant receives compensation for the lost opportunity to purchase the limited edition vehicle. No new precedent was established, but the decision clarifies the application of the Sale of Goods Act 1979 to contracts involving future goods with contingent allocation, the enforceability of collateral contracts overriding standard terms, and the measure of damages where no market exists for specialized goods.