CCA and UTCCR arguments

[Amethyst]

Re: CCA and UTCCR arguments

I think escalation is whacking up a price in a purchase/service contract before completion of the purchase/service.

Remember in the UTCCR

2. Scope of paragraphs 1(g), (j) and (l)

• (a) Paragraph 1(g) is without hindrance to terms by which a supplier of financial services reserves the right to terminate unilaterally a contract of indeterminate duration without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof immediately.
  
  (b) Paragraph 1(j) is without hindrance to terms under which a supplier of financial services reserves the right to alter the rate of interest payable by the consumer or due to the latter, or the amount of other charges for financial services without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof at the earliest opportunity and that the latter are free to dissolve the contract immediately.
  
  Paragraph 1(j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract.
  
  (c) Paragraphs 1(g), (j) and (l) do not apply to:
  • - transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the seller or supplier does not control; - contracts for the purchase or sale of foreign currency, traveller's cheques or international money orders denominated in foreign currency;
  
  (d) Paragraph 1(l) is without hindrance to price indexation clauses, where lawful, provided that the method by which prices vary is explicitly described.

(my underlining)

[EXC]

Re: CCA and UTCCR arguments

Banks contracts don't have a price escalation clause.

A price escalation clause requires no change to the terms & conditions. A price increase does.

[hicskis]

Re: CCA and UTCCR arguments

They have a clause that reserves the right to escallate (increase) the price.

[EXC]

Re: CCA and UTCCR arguments

They have a clause that reserves the right to escallate (increase) the price.

[hicskis]

Re: CCA and UTCCR arguments

BY EXC:

A price escalation clause provides that the seller can raise the stated contract price - due, for example, to the seller's costs increasing - without notification.

Any increase in bank charge pricing is notified in advance to enable the customer to withdraw from the contract.

Are you resting or banging your head there EXC?

Why were the banks able to escallate the price of the account if they did not reserve the right to do so. They have the right to increase their charges on notification, but the charges are part of the package of the contract as a whole, so if the banks operating costs were to increase then surely there must be a clause in the contract that permits a bank to increase or escallate the price of the account without notice.

Without a clause that permits an automatic escallation of the price, or an increase of the cost of an account when circumstances permit such as an increase in interest rates, or other costs that efect the running of the account - then the banks can only increase its charges, or the price of those charges with terms that allow that escallation or increase over time.

Either way the banks reserve the right to escallate their prices for the account package from time to time upon adequte notice to the customer.

However were the escallation in price of the account to be warranted as unfair, to the overall price of the contract in relation to the market, then one would assume that this price increase could be challenged as being unfair, and therefore as a consequence the price of the charges would re-enter the equation when previously barred.

[EXC]

Re: CCA and UTCCR arguments

In brief, no.

[hicskis]

Re: CCA and UTCCR arguments

Anyhows - we digressed - the ruling to which i referred said in general that "regulation 6(2) may be unlikely to shield terms as to price escalation or default provisions from scrutiny under the fairness requirement contained in regulation 5(1)." This would not preclude other terms being assessed in such manner.

[EXC]

Re: CCA and UTCCR arguments

This would not preclude other terms being assessed in such manner.

I think the Supreme Court might disagree. Hold on - they did!

[hicskis]

Re: CCA and UTCCR arguments

By EXC:
No challenge can be made that goes anywhere near the price. A fairness challenge would be aimed at the overall imbalance in the contract as a whole.

Fair enough - and this was what i was looking at - I was not looking at the price of charges but at the price of an account overall. But then if we can't go there......with price......then that rules that out - as i say - fair enough.

That leaves the manner the charges were levied.

Now in Director General of Fair Trading v First National Bank plc [2001] - a leading case in regards to Unfair Terms Lord Bingham said in his judgement that the concept of good faith under r 5(1) had an old (if hidden) English tradition, it was championed by Lord Mansfield and ‘looks to good standards of commercial morality and practice’ It is fair and open dealing, preventing unfair surprise and the absence of real choice. Despite that the clause was fair.

People knew or should have known what was in the contract - means there was no unfair surprise, and they had choice of whether they used the overdraft facilities or not.

I do not see how this can be won.

[Amethyst]

Re: CCA and UTCCR arguments

Might be helpful to peeps

Its that the new terms are misleading (OFTs contention) rather than old terms were misleading, but some bits may help.

86. Andrew Smith J rejected the OFT’s submission that the Banks’ terms that treat an
instruction that involves overdrawing as a request for an overdraft were misleading. He
held:
“75. Thus, apart from Nationwide, the Banks’ terms and
conditions are couched in terms of the customer making a
request of the Bank and the Bank responding to it, and in
some cases they refer to the Bank considering the request.
The OFT criticises this terminology as an artificial device
recently introduced which disguises the true nature of the
parties’ dealings when a customer gives his bank an
instruction which would, if paid, take the account into debit.
Similarly, the OFT suggests that the use of the term
‘overdraft’ to describe the debit balance created in these
circumstances has misleading connotations, and emphasises
the differences between the debit balance resulting from
such a payment and an overdraft facility that a bank and a
customer might agree should be available on an account.


76. Certainly, this terminology has been introduced by the
Banks into their documentation relatively recently.
However, I am unable to accept that the references to the
customer making a request for an overdraft when he gives a
Relevant Instruction are inappropriate or create a fiction.
On the contrary, they spell out what is, as a matter of legal
analysis, implicitly done when a customer gives a Relevant
Instruction. Of course, there are differences between any
resulting overdraft and a facility arranged by a specific
agreement between a customer and his bank. A facility for
an overdraft typically, and as provided by the Banks under
their current terms (to which I refer below), commits the
bank to allow the customer to overdraw on his account for
as long as the facility is in place and within its limits, and,
while of course it is possible for a facility to be confined to
use for a stipulated purpose, it does not typically cover only
a specific payment by the customer. If a fee is charged, it is
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generally for the facility itself, regardless of whether it is in
fact used by the customer to borrow or how much it is so
used. (None of the Banks charges a customer for requesting
a facility in advance if the request is refused.) However,
none of this means that it is misleading to use the
expression ‘overdraft’ to refer either to a facility or to
borrowing under a facility or to unarranged borrowing. To
my mind the expression is flexible enough naturally to
encompass all these usages.”

As Mr Sumption observed there has been no appeal against this finding.

[EXC]

Re: CCA and UTCCR arguments

I've always had a bit of a problem with Smith's 'implied' interpretation.

The banks repeatedly stated that they automatically 'deem' a payment request without sufficient funds as a an informal request for an overdraft but any genuine implication can only be made by customer.