Overstone v Shipway

Overstone Ltd v Shipway [1962] 1 WLR 117

Contract law – Sale of goods – Damages

Facts

A hirer of a vehicle paid no monthly rental fee as agreed by the parties, after having paid the deposit and taken delivery of the motor vehicle. The owners brought a claim to the county court for the payments that were owned by the hirer. During this process, the owner sold the car and raised another action claiming for the damages caused by the hirer terminating the agreement. The county court held that the owner had sold the car for lower than its true value, at a loss, which created the damage to this action and therefore the owners were not entitled to these damages. The owners appealed this decision and the hirer counter-claimed for an action in estoppel to prevent the sale of the vehicle.

Issue

Whilst the hirer of the vehicle had breached the contract between the parties by not paying the instalments as required, the court was required to decide whether the owner of the car could claim for damages despite the fact that they had increased their loss by selling the car during proceedings for less than its value.

Decision/Outcome

The court allowed the owners appeal. It was found that the right to damages were not expressly excluded by the agreed terms and that the damages were incurred not by the resale of the car at a loss but rather the hirer breaching their contract. However, the court did reduce the future instalments owed by the hirer on the basis that the owner had sold the car on for a loss.