Consumer Contract law and car lease broker

[Help Required]

Hello, my first post. Any help greatly appreciated.
I recently used a car leasing broker to order a vehicle for me and returned their signed order form but subsequently changed my mind and contacted them to cancel the order (after 18 days) immediately that the financing papers arrived by email.

The order form states that a cancellation fee of 3 initial payments is due to the broker if I cancel the order "once a credit line" has been established. I took this to mean once I have signed the finance agreement with whom they are acting a broker. On this point I could be wrong (not a lawyer!).

However one thing I thought I understood but which they are ignoring is:
1. The must inform me at the outset my cancellation rights and cooling off period and a form that I can use to cancel the order.

This is covered by legislation that replaced the 'distance selling' regulations so I have read on line. All dealings were via email only.
As they provided none of the information in (1) I figure I have an indefinite cooling off period and certainly more than the 14 days as mentioned in the Consumer Contracts law.

Any guidance on this and how I am interpreting the new Consumer Contracts law much appreciated - they were asking for over £2k , this went down to £1400 and their latest demand is around £600 or they go to court.
Thanks!

[R0b]

Re: Consumer Contract law and car lease broker

Hello,

I think we would need to see the order form but if you do not have it then that may be a problem. I would certainly request a copy of the order form with your signature on before you do anything, and it may be worth posting up on here so we can review it.

You are correct in that certain information must be provided but it all depends on the terms and conditions and what is meant by a "credit line" if the meaning is ambiguous then it will be construed against the person relying on it.

It also seems to me like it is a penalty clause, to charge £2,000 for a cancellation fee for someone who decided not to take out a finance agreement is very unfair and I don't think this would fly in light of the new Consumer Rights Act.

A copy of the order form would be helpful and you are well within your rights to ask for it, but I do agree, the line of credit would likely be construed as signing an agreement on the face of it.

[Help Required]

Re: Consumer Contract law and car lease broker

Hello,

I think we would need to see the order form but if you do not have it then that may be a problem. I would certainly request a copy of the order form with your signature on before you do anything, and it may be worth posting up on here so we can review it.

You are correct in that certain information must be provided but it all depends on the terms and conditions and what is meant by a "credit line" if the meaning is ambiguous then it will be construed against the person relying on it.

It also seems to me like it is a penalty clause, to charge £2,000 for a cancellation fee for someone who decided not to take out a finance agreement is very unfair and I don't think this would fly in light of the new Consumer Rights Act.

A copy of the order form would be helpful and you are well within your rights to ask for it, but I do agree, the line of credit would likely be construed as signing an agreement on the face of it.

Hi R0B and thank you for your reply.
I've tried to attach here the order form so you can see the language used. I'm not the first person to have issues with this broker it seems.
Let me know what you think.

[R0b]

Re: Consumer Contract law and car lease broker

Hello,

Initial thoughts are that the wording of "credit line" is not quite clear and ambiguous. Does it mean established by Plan or does it mean once accepted by your and signing of the finance agreement. Because it is amniguous, it will be construed against the party who relies on it.

The wording of the clause would be deemed unfair for the reason of charging the initial rental as the quotation order form does not appear to be the whole terms of the agreement and they must supply certain information as well as pre-contractual information, failure to do so is not compliant with the consumer credit act.

As you have said, there is no cancellation rights and information on the right to cancel. IT would be unfair to contract out a consumers right to cancel within 14 days and deemed to have accepted not only the order but the terms of the agreement without seeing them or signing for them. I cannot see a court upholding this in a court. As for the length of cancellation, If your cancel rights are not given straight away but are given ithin 12 months, then you have 14 days from the date of receiving it. For example, your order is 1 Jan 2016 and you do not get the information until 1 March, then you have until 15 March to cancel.

Similarly, if not provided within 12 months then its the following year you have the right to cancel. So you sign the agreement on 1 Jan 2015, your normal cancellation rights would be 15 Jan 2015 however in this case your cancellation rights will end of 14 Jan 2016.

If plan is not even the lender but the broker I cannot see how they can charge any fees for cancelling if you already have a right to cancel or walk away from the agreement if you are not happy with the terms. As I pointed out above, it is a essentially a penalty saying once you've signed the quotation, you must sign the leasing agreement whatever the terms are, or forfeit the initial rental term.

[Help Required]

Re: Consumer Contract law and car lease broker

Hello,

Initial thoughts are that the wording of "credit line" is not quite clear and ambiguous. Does it mean established by Plan or does it mean once accepted by your and signing of the finance agreement. Because it is amniguous, it will be construed against the party who relies on it.

The wording of the clause would be deemed unfair for the reason of charging the initial rental as the quotation order form does not appear to be the whole terms of the agreement and they must supply certain information as well as pre-contractual information, failure to do so is not compliant with the consumer credit act.

As you have said, there is no cancellation rights and information on the right to cancel. IT would be unfair to contract out a consumers right to cancel within 14 days and deemed to have accepted not only the order but the terms of the agreement without seeing them or signing for them. I cannot see a court upholding this in a court. As for the length of cancellation, If your cancel rights are not given straight away but are given ithin 12 months, then you have 14 days from the date of receiving it. For example, your order is 1 Jan 2016 and you do not get the information until 1 March, then you have until 15 March to cancel.

Similarly, if not provided within 12 months then its the following year you have the right to cancel. So you sign the agreement on 1 Jan 2015, your normal cancellation rights would be 15 Jan 2015 however in this case your cancellation rights will end of 14 Jan 2016.

If plan is not even the lender but the broker I cannot see how they can charge any fees for cancelling if you already have a right to cancel or walk away from the agreement if you are not happy with the terms. As I pointed out above, it is a essentially a penalty saying once you've signed the quotation, you must sign the leasing agreement whatever the terms are, or forfeit the initial rental term.

Thank you again R0b. My interpretation of the order form is exactly as you have suggested - Once (if) I had signed the finance agreement the 'credit line' would be established and there would be no going back in terms of the cancellation fee as I would have assumed that the finance agreement binds the parties.

I will wait to see if they follow through with their threat of legal action. As a 'goodwill' / no bad feelings gesture I had offered (and it still stands) to make a £50 contribution to their charity of choice. They are still insisting that the cancellation fee is 'for their broker service' which is 'complete' in their opinion. Again it seems to rest on their view of 'establishing a line of credit' which is different to how I understood it. Also and as you say I received absolutely nothing from them in terms of my cancellation rights or lack of them yet the whole business was conducted via email. Thanks again.

[R0b]

Re: Consumer Contract law and car lease broker

Even if a line of credit can be established, the clause is not enforceable anyway because it is an agreement to agree, and it has already been established in the higher courts that you cannot have an agreement to agree.
What I mean by an agreement to agree is exactly what you have here.

In your case you (A) agree with the broker (B) to enter into an agreement with a third party (C) to the leasing of a vehicle. The terms are not complete, and they are not certain either. As above, the clause essentially contracts out your right to cancel at all form the point of signing the order form.

Although they could potentially argue it is enforceable because you have the price and payment terms and length of the term, there are still major terms which are not included, like interest rates, the date of the month when the payment is to be made, who pays fuel costs or do you get a rebate on a portion of those costs, who pays for servicing and maintenance etc. Those are just some things that I've plucked from the top of my head which may or may not apply but my point is that some of those terms may sway your decision in whether or not you want to accept the lease.

So whilst they could have an arguable case, I don't think it would be sufficient but hey I am no judge and this is purely my opinion as judges are sometimes a bit wild in their decisions especially in county courts.

[Help Required]

Re: Consumer Contract law and car lease broker

Also R0b, I thought you would find their last response useful too. It is here copied from their email and as you will see they are quite adamant!




1. You were fully entitled to cancel the finance agreements, without charge.
2. Our broker terms and conditions are not regulated by the consumer credit act, it is a service agreement and not a credit agreement.
3. Our service as a ‘broker’ involves sourcing the vehicle detailed on that order form, within a quoted time frame and then arranging a suitable funding package (lease in this case) based on the terms and prices quoted. We have provided you with that service in good faith and only did so because you signed and agreed our terms and conditions.
4. We have done a lot more than just send a few emails as you stated. A credit line has been established following various communications between them and us, a vehicle was ordered from a dealer following various conversations and emails between them and us, we sent you lease agreements from the funder (these could not be raised without a credit line approval) and had various communications with yourself via email and phone.
5. The actual amount of cancellation fee is also clearly stated on the order form that you signed. You have agreed to pay the quoted fee, in the event of cancelling.

[R0b]

Re: Consumer Contract law and car lease broker

My comments in red below but I think 2. is a killer blow to them if all else fails

Also R0b, I thought you would find their last response useful too. It is here copied from their email and as you will see they are quite adamant!




1. You were fully entitled to cancel the finance agreements, without charge.
That's right anytime prior to signing and 14 days if not signed on the premises after signing

2. Our broker terms and conditions are not regulated by the consumer credit act, it is a service agreement and not a credit agreement
Well, bit misleading really because all credit brokers are regulated by the FCA and they state this at the bottom of their Order Form. Credit Brokers are are prohibited from charging customers unless they comply with CONC 4.4. In addition, you could also argue that they are in fact regulated by the CCA as s.155 says that credit brokering fees are payable to a maximum of £5 where no agreement is entered into within 6 months - also pointed out in CONC 6.8

3. Our service as a ‘broker’ involves sourcing the vehicle detailed on that order form, within a quoted time frame and then arranging a suitable funding package (lease in this case) based on the terms and prices quoted. We have provided you with that service in good faith and only did so because you signed and agreed our terms and conditions.
I can't see anything on the agreement that says you must accept the first agreement that they source, well except where it says you agree to accept the terms imposed by the lender they have sourced. Shouldn't they source a range and give you the option to choose which one you would like to take out? what if you have had bad dealings with the creditor in the past and don't wish to deal with them? It would be reasonable for a broker to tell you who the lender is first before you accept.

4. We have done a lot more than just send a few emails as you stated. A credit line has been established following various communications between them and us, a vehicle was ordered from a dealer following various conversations and emails between them and us, we sent you lease agreements from the funder (these could not be raised without a credit line approval) and had various communications with yourself via email and phone.
this is irrelevant as per point 1. Were you notified when a credit line was established? Again, the wording of "credit line" is ambiguous and not clear in the Order Form.

5. The actual amount of cancellation fee is also clearly stated on the order form that you signed. You have agreed to pay the quoted fee, in the event of cancelling.
Doesn't always mean it is enforceable and in this case, a penalty or an agreement to agree, or limited to £5 as said in 1.