Customer wins hefty compensation for car dealer’s breach of contract!

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The “innocent” party is put in the financial position that they would have been in had the contact been fulfilled.

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The Court of Appeal has awarded a customer £35,000 in compensation because a car dealer did not sell him the car he ordered!

The Customer (H) ordered a limited edition Porsche 911 and signed an order form, paying £10,000 deposit for a car to be priced at £135,000. He was told by the dealer that he was first in queue. The dealer however sold it to someone else instead.

In the first instance the court dismissed the Claim. However, on appeal the Court of Appeal overturned that judgment. 

Although the retail price was £135,000 the value had increased to such an extent that buyers were willing to pay £170,000. Even though there was no evidence that H was going to sell it, the court said that his “loss” was the difference between the £170,000 valuation now and the £135,000 that he contracted to buy the car for.

When a contract is broken, it is wrong to say that each party is put into their pre-contractual positions. The “innocent” party is put in the financial position that they would have been in had the contact been fulfilled and not broken. In this case H would have paid £135,000 for a product worth £170,000 and he was not in possession of a product worth that amount because of the straight-forward breach of contract by the selling garage. 

What is not known is for how much the garage sold the car to the “other” person for but we suggest that all car dealers bear this ruling going forward. If H had been put in his pre-contractual position he would no longer have been able to buy that car for £130,000 and the court felt that this was unfair.

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