Contracts, Termination, Repudiation and Rescission

[toomanycalls]

Re: Contracts, Termination, Repudiation and Rescission

Peter,

I had an invalid DN issued on the second late payment on a loan last year which the creditor has since terminated (or not as not allowed) and issued proceedings for.

[Amethyst]

Re: Contracts, Termination, Repudiation and Rescission

This I think is a cause of a lot of confusion for us mere mortals.

You say that a bad DN can not be used to terminate a contract (S87(1)(a)).

Yet you say that the OC must terminate in order to bring the matter to court.

We seem to be in a situation where the contract is open and closed at the same time. It is open because the DN was bad; it is closed so that the OC can go to court.

It is closed as far as the debtor is concerned (he received a TN); it is open as far as the law is concerned (no entitlement to terminate).

It is open as far as a new DN is concerned; but closed as far as the OC is concerned.

For those of us who do not operate professionally in this area, this makes no sense whatsoever.

The creditor issues a DN because you missed payments giving you chance to remedy, you don't realise the DN is faulty and neither do the creditor (or do but choose not to) you don't remedy (either as said on the DN or as the DN should be) so the agreement is said to be terminated, in both creditor and debtors view. However once the creditor take court action it becomes clear that the DN was faulty and the agreement is thus not terminated. Oops... The debtor should not suffer prejudice because of this and the creditor is unable to gain judgment (enforcement) because of it. So flip back in time like the DN never happened - the interveening period should be wiped, the agreement is as if it was never terminated (which it wasn't) and the creditor must give the debtor the opportunity to remedy (properly this time)...if the debtor still doesn't then they are free to properly terminate and take it to court (or get a stay lifted to continue at court and amend POC etc).


The contract is never closed because it was unable to be closed, both parties just thought it was. So the only fair way to deal with it imv is to return to the point where the DN is issued incorrectly and issue a correct DN then no one (well the creditor in terms of lost interest etc) is disadvantaged by it.

[diddydicky]

Re: Contracts, Termination, Repudiation and Rescission

Yes the currently accepted definition is that enforcement commences when an action is taken on the default noltice.

Peter

well according to what i have read- "enforcement" does not commence until the creditor attempts to get a judgement in court

the court has rules that the bringing of proceedings is NOT enforcement!
------------------------------- merged -------------------------------

I did read your earlier post.
I understood from it that in a loan agreement, i.e. for a vehicle if the car was repossesed on the basis of a faulty Dn then Tn there is an argument for theft
However we were all discussing a credit card agreement where it is money that changes hands not goods.
The fact remains that the Terminaton has occurred (like the punch on the nose in my analogy), you state the law allows this because the DN which the termination was based on was faulty.
I really have difficulty with this, it may be right & true, but I find it difficult.

You argue the action may have no legal standing because it follows another incorrect act, or two wrongs make another opportunity to make it right..

Surely you can see my dilema, you like me may not be able to explain it, there is no shame in that

there is NO argument for theft in such circumstances IMO..... if the creditor is acting in a commercial sense in re possessing a vehicle- there is clearly no intention to DISHONESTLY appropriate the property and one would be best advised in these matters to avoid the use of words such as fraud or theft

[diddydicky]

Re: Contracts, Termination, Repudiation and Rescission

PB says it is the debtor that has first repudiated if one or two payments are missed .....and isn't the creditor entitled to his money if you have missed a couple of payments

i say NO

credit cards- in particular are charged at astronomical rates and the business model allows for and incorporates occassional "defaults" on the part of the debtor and these are clearly "de minimus" events- if they were not de minimus then sects 87-89 would not exists for correcting them .

Again no one is aying that default notices and the protection they provide under the act is inefective, just that the repudiation arguent does not hold water.

Creditors dont usually issue defaults on just a couple of missed payments do they? I think the judge may question this irrespctive of the default.

As for the bit about creditors making profit,well yes they do, i do not think a deffence based on the creditor can afford it has a lot of chance.

Peter[/QUOTE]


I was not aware that in any case a creditor has used the argument

" i inadvertently terminated the agreement"- i realise now that i should not have done so and that the agreement endures- however- given that the consumer has accepted the termination which i erroneously advised him of- i wish to be pardoned and allowed to continue my action and the consumer- having been misled by me however is to be punished by having his acceptance of my misguided termination deemed to be a repudiation on his part

which is the case you refer to where was this argument put forward

.what i was referring to was prejudice - the creditor has not be prejudiced by the loss of several monthly payments from a particular debtor on the grounds that such events are "built in" to his business model (and it is the other credit card holders who actually pay the losses- if indeed the missed payments do eventually turn into losses rather than late payments

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

Beg to differ Ame
I believe the interest would still run in the period from USDN to OKDN as would late payment fees etc because the contract endures & the interest & penalties are part of the contract
Hence why the figure of arrears on the OKDN & the USDN are different, the figure is what is required to rectify at the point of issue.
if I have understood correctly

lets use the scenarion in your post
Creditor issues on a faulty Dn, you engage a solicitor & maybe a barrister to defend you
The Dn is found to be wanting
The claimant discontinues
Re issues a Dn which you rectify
Is everything in the garden rosey?
No, you have paid out a large wad of cash to defend an action which could never proceed to enforcement. Is that abuse of process?
Or do you just claim it as costs. Let us also bear in mind the defendant may not have enough cash to employ solicitors to defend him & judgement may get granted
There is also the possibility of a default judgement on the back of a faulty Dn

I think the situation is a complete dogs dinner

No wonder it's confusing to mere mortals like me...

[diddydicky]

Re: Contracts, Termination, Repudiation and Rescission

Indeed, in some cases though, particularly Nationwide springs to mind, I have seen the cases stayed with liberty to pick up later once the situation has been rectified (ie agreement continued, dn issued and not remedied)

thereby would hang an entirely different dispute

the CCA makes it clear that the "purpose and intent" of s87/8/9 is to give the debtor an opportunity to remedy any alleged breach and that if he does so it is as if the breach had never occurred.

If the claimant has no cause of action because he did not comply with s87 and serve a valid DN then the claim has to be discontinued

the situation would then have to restore to the point at which the debtor was at prior to the service upon him of a valid DN....

in other words the creditor would not be able to serve a termination notice on him until such time as the debtor failed to comply with a valid DN

so is it suggested that the CCA has descended into such farce that a creditor can start proceedings on a false basis and then "hold them over" a consumer until such time as he gets his ducks in a row

come on- there is fantasy and then there is fairyland!

Surfaceagents X20's proposition that the CCA is not an act for the protection and betterment of financiers but an act for the protection of consumers- is slowly being turned upside down-

[diddydicky]

Re: Contracts, Termination, Repudiation and Rescission

The creditor issues a DN because you missed payments giving you chance to remedy, you don't realise the DN is faulty and neither do the creditor (or do but choose not to) you don't remedy (either as said on the DN or as the DN should be) so the agreement is said to be terminated, in both creditor and debtors view. However once the creditor take court action it becomes clear that the DN was faulty and the agreement is thus not terminated. Oops... The debtor should not suffer prejudice because of this and the creditor is unable to gain judgment (enforcement) because of it. So flip back in time like the DN never happened - the interveening period should be wiped, the agreement is as if it was never terminated (which it wasn't) and the creditor must give the debtor the opportunity to remedy (properly this time)...if the debtor still doesn't then they are free to properly terminate and take it to court (or get a stay lifted to continue at court and amend POC etc).


The contract is never closed because it was unable to be closed, both parties just thought it was. So the only fair way to deal with it imv is to return to the point where the DN is issued incorrectly and issue a correct DN then no one (well the creditor in terms of lost interest etc) is disadvantaged by it.

the argument is sound ...up to a point and is common sense but........

the point at which the creditor realised his "mistake" is likely to be a year down the road from the original DN= by which time the debtor CLEARLY has been severely prejudiced by the creditors bad references placed on the debtors CRA files- and as a result all manner of consequences could flow (his other existing creditors- on seeing the information may well impose restrictions on his accounts/borrowing)

he may have been refused further finance facilities because of it (one could argue that it would be a sound strategy for a consumer in such a situation to immediately make an application for credit to another creditor when the adverse appears on his credit files- in order to show prejudice by the creditors actions)

it is very likely (because some of us DO advocate pointing out the errors of the creditors actions by warning the creditor of his mistake but the creditor(as is usual) denies any suggestion that the DN or subsequent TN is invalid

(this in itself is sufficient IMO as per BOS v Robert mitchell to have an seriously adverse effect on costs for the creditor) AND may get a rebuke from the judge if the creditor continues the court action

the debtor- wrongly denied of the benefits of the agreement- now has to find alternative finance (and if indeed available- probably at much higher interest rates due to the adverse information).

he may also have to spend money on consulting solicitors or lawyers as to his position ( and which the creditor advised him to do in a leaflet contained with the faulty DN)

there are a myriad of circumstances in which the consumer is bound to be prejudiced by the creditors actions in such cases not least of which is the damage to his reputation caused by the creditors comments on his CRA files, which once done- cannot simply be rectified by removing the comments a year after the event

[gh2008]

Re: Contracts, Termination, Repudiation and Rescission

One case I know of where a simple mistake on the DN (making it invalid) ended up with a claim for £25k being struck out as having 'no reasonable chance of success' was Egg v M&M MandM vs Egg Loan (MandM **Won** with a strikeout of the claim )

One part of this that I have seen little argument over are the creditors rights to repayment at the various points in time.

At what point in proceedings (in a non-payment, default, invalid DN, termination, claim scenario) does the creditor become entitled to the earlier repayment of the balance??
And how do they gain that entitlement?

BTW Is the Judgment that was handed down today available anywhere?

[Amethyst]

Re: Contracts, Termination, Repudiation and Rescission

Pretty much yes.

I do think that the faulty DN, if it caused the debtor to act differently than a valid DN would have. should be the point where everything should be flipped back to though and any interest/charges etc removed and the agreement continued as if nothing happened. That would be a sanction on the creditor as they would lose that period of interest etc as well as the right to enforce the agreement without a further non remedy.

Much like the lines of PPI refunds really, the refund puts the debtor back in the position they would have been in had the PPI not been sold to them...so the refund, interest for the bank having held their money erroneously and if it had a detrimental affect on other areas directly related compensation/damages etc for that.

I'm sure theres something in the CCA about not being entitled to charge interest etc due under the agreement during the period of default of supplying the copy agreement - and I think I am vaguely applying that over. I can have a look later to see which parts I am thinking of unless you know them off the top of your head.

I think that would be a better argument (fairness wise) to take forwards than complete write off of any remaining debt.

But as I have said previously thats just my view.

[Amethyst]

Re: Contracts, Termination, Repudiation and Rescission

the argument is sound ...up to a point and is common sense but........

the point at which the creditor realised his "mistake" is likely to be a year down the road from the original DN= by which time the debtor CLEARLY has been severely prejudiced by the creditors bad references placed on the debtors CRA files- and as a result all manner of consequences could flow (his other existing creditors- on seeing the information may well impose restrictions on his accounts/borrowing)

he may have been refused further finance facilities because of it (one could argue that it would be a sound strategy for a consumer in such a situation to immediately make an application for credit to another creditor when the adverse appears on his credit files- in order to show prejudice by the creditors actions)

it is very likely (because some of us DO advocate pointing out the errors of the creditors actions by warning the creditor of his mistake but the creditor(as is usual) denies any suggestion that the DN or subsequent TN is invalid

(this in itself is sufficient IMO as per BOS v Robert mitchell to have an seriously adverse effect on costs for the creditor) AND may get a rebuke from the judge if the creditor continues the court action

the debtor- wrongly denied of the benefits of the agreement- now has to find alternative finance (and if indeed available- probably at much higher interest rates due to the adverse information).

he may also have to spend money on consulting solicitors or lawyers as to his position ( and which the creditor advised him to do in a leaflet contained with the faulty DN)

there are a myriad of circumstances in which the consumer is bound to be prejudiced by the creditors actions in such cases not least of which is the damage to his reputation caused by the creditors comments on his CRA files, which once done- cannot simply be rectified by removing the comments a year after the event

Crossed posts again, but yes I agree with you...all directly related issues should be taken into account....if the debtor continued under the illusion the DN was valid and couldnt rectify under the terms they wrote in the invalid DN and thus ended up in ****e because of it, and had the DN been valid they would have remedied (and were able to) then compensation/damages etc would be arguable.

(again it's just my view on what would be fair)

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

Here it is

The judgment which was handed down in open Court today before HHJ Chambers QC

[Amethyst]

Re: Contracts, Termination, Repudiation and Rescission

Thank goodness for that :kiss:

[jumper999]

Re: Contracts, Termination, Repudiation and Rescission

Thank goodness for that :kiss:

You can say that again AME

[Amethyst]

Re: Contracts, Termination, Repudiation and Rescission

Nice comments towards the end.

First question, is it now case law that service by post DNs must include the postage time in the remedy date ? or am I reading far too much into that ?

Thus subsequent investigation contradicted a hitherto firmly held position of the Defendant that the notice had gone by a suitable post and was served in time. It was not. It was issued and sent by second class post on 3 October 2008 arriving (as was to be expected) on 9 October 2008 and was stated to expire on 21 October 2008. Given the date of delivery, the expiry date should have been 23 October 2008. The notice was bad.

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

Nice comments towards the end.

First question, is it now case law that service by post DNs must include the postage time in the remedy date ? or am I reading far too much into that ?

[/font]

lol yeah a few nice comments i thought,

But the importance of keeping the envelopes etc cannot be more clear following this case.

We were able to use the orange Royal Mail Barcode to show when that letter entered the royal mail system, the address sent to, etc. Without the envelope it may have been harder to win on