Contracts, Termination, Repudiation and Rescission

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

If the Dn were faulty ie 3 days to pay the creditor could not remortgage within that period to raise the full balance

Therefore he gives up

If the law had been to give 14 days to repay, with a further 14 before action commenced then statue would reflect this

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Just to throw another ingredient into the mix..
Assuming a materially faulty DN is issued (no de minimis issues..lets say only 3 days to remedy for example), the debtor has no chance of raising the arrears in such a short timescale and the creditor subsequently terminates the account. The debtor is informed that the account is terminated, the full balance is demanded, the default is recorded at the CRA's and the creditor sends numerous letters threatening legal action, charging orders and bailiffs.

Doesn't CPUTR 2008 (sections 5 & 6) offer some protection here?
The creditor hasn't issued a compliant DN therefore has no right to send all the subsequent notices and information, which would seriously mislead the debtor as to their rights and the state of the account.

OK CPUTR transgressions don't render an agreement unenforceable, but wouldn't a complaint and the prospect of possible criminal sanctions deter the creditor from either taking this to court in the first place, or, reissuing another claim if the first failed on a DN issue.
Simply stating that the termination is not effective may be a legal issue, but the real issue of the treatment and effect on the debtor in the aftermath of the creditors *maladministration are real, will influence his decisions, and cannot be magically erased, especially if much time has passed in the interim.

*Exactly how hard is it to calculate the correct period to state on the Default Notice? Mistakes are not a typo, they are administrative errors with legal consequences, just as mis-stated interest or miscalculated balances, surely?

Just exploring all the options....:tinysmile_grin_t:

Shepherdess

I completely agree with this.

The 08 CPRs are there to "protect" consumers from being misled (Reg 5) and suffering from agression (Reg 7), so while the CPRs cannot be used by private individuals I would think they would "support" a S140 defence.

And yes, it is very simple to get a DN right. They are extremely basic notices. But why is it that creditors keep getting them wrong, when they must be aware of the potential consequences? Could it be that they do not really want the breach to be remedied, and prefer to cast adrift a wayward debtor and seek the balance in court?

I think Shepherdess's point about the reality of the situation is key; the contract may endure in a legal sense, but the reality is that the debtor has been comprehensively misled by the OC, to the extent that he believes he is being sued for the full amount and may prefer instead to enter into a very long repayment arrangement. How many former bank customers are now paying off balances on contracts that should not have been terminated, I wonder?

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

Where is the unfairness, where is the brow beating?

Well for me the unfairness is creditors charging me between 20 and 30% interest such that I can no longer pay enough to significantly reduce my indebtedness.

Especially where the BoE base rate has been 0.5% for nearly 2 years and the banks lend to one another at not much more.

[Shepherdess]

Re: Contracts, Termination, Repudiation and Rescission

Just to throw another ingredient into the mix..
Assuming a materially faulty DN is issued (no de minimis issues..lets say only 3 days to remedy for example), the debtor has no chance of raising the arrears in such a short timescale and the creditor subsequently terminates the account. The debtor is informed that the account is terminated, the full balance is demanded, the default is recorded at the CRA's and the creditor sends numerous letters threatening legal action, charging orders and bailiffs.

Doesn't CPUTR 2008 (sections 5 & 6) offer some protection here?
The creditor hasn't issued a compliant DN therefore has no right to send all the subsequent notices and information, which would seriously mislead the debtor as to their rights and the state of the account.

OK CPUTR transgressions don't render an agreement unenforceable, but wouldn't a complaint and the prospect of possible criminal sanctions deter the creditor from either taking this to court in the first place, or, reissuing another claim if the first failed on a DN issue.
Simply stating that the termination is not effective may be a legal issue, but the real issue of the treatment and effect on the debtor in the aftermath of the creditors *maladministration are real, will influence his decisions, and cannot be magically erased, especially if much time has passed in the interim.

*Exactly how hard is it to calculate the correct period to state on the Default Notice? Mistakes are not a typo, they are administrative errors with legal consequences, the same as mis-stated interest or miscalculated balances, surely?

Just exploring all the options....:tinysmile_grin_t:

Shepherdess

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Basa - there is still not really anything in PT's comments that is clearly stating that the agreement endures, apart from your bit in bold where he suggests that it does.

I would just say that the 'debt' can only be the arrears once it gets to court, and that is what must be paid (as per Woodchester).

We are at court, remember, not the long period of angry letter-writing beforehand; at court, the OC has stated that he terminated the agreement and that the mechanism was a faulty DN. He had no entitlement to do this. Therefore, if he now wants the balance, what does he do?

I have no idea if he would be able to get the time order needed to ensure that the DN could ultimately be complied with (or not) at the hearing; S129 uses the word "just", and as the case is brought to court on a different matter I do not see how this (a time order) could be granted. I could be wrong and have asked PT for some S129 cases.

Another alternative would be to serve a new DN, showing the new breach as those missed payments between the original breach and today's date (ie, the date of the trial). But that cannot work, because the OC has already told the debtor that the agreement is terminated and the facility for monthly payments has been removed. Therefore the new arrears is a fait accompli and the debtor would, I think, have grounds for defending this under S140.

So I simply cannot see how, once it gets to court, the OC can then go on to claim the balance, unless he obtains the explicit permission of the debtor to reinstate the contract.

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Ed - the unfairness in my cases is: (a) a DN that demanded twice the arrears and an OC that would not accept his mistake at any cost; and (b) a DN that offered almost no period for remedy (and another OC who refused to accept his mistake) when my circumstances were rapidly improving and I could have fixed the problem.

In both cases, the OC was utterly insistent on demanding everything. There was (is) no prospect of anything other than payment of the balance or court.

You seem to be of the view that this is perfectly acceptable, and that my (and our) quibbles are based on technicalities. You would also, I assume, regard Woodchester as a technicality and the wrong judgement? After all, that was based on a minor slip of the pen in the DN.

When the OC plays hardball and it is not possible to pay the balance in one hit, what exactly would you do? Like many, I look for anything I can use to defend myself. PT has announced a judgement that may help, but he cannot reveal the facts yet; as many of us are dealing with litigious OCs now, we are merely trying to uncover possibilities.

As for the moral question that you raise, in both my terminated credit card agreements I paid more in than I took out and the OC made additional money in the fees he charges his merchants for use of the cards.

I just do not accept that this is "petulance". The "unfarness" is, surely, obvious? Denying the debt is merely a side-effect of the OC's actions; had both of mine acted within the bounds of the regs and a little more reasonably, I would not have to be posting here and winding you up!


Rant over...carry on...

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

If a traffic light is on green, I can go forward without penalty
If the traffic light is on red I risk causing a crash
If there is a crash it will be held to be soley my fault & I face the penalty, no matter how severe - I took the wrong action at the wrong time.

[ed.]

Re: Contracts, Termination, Repudiation and Rescission

Sorry folks, are we really basing everything on such technicalities.

If consumers act in such a petulant way, can we blame Judges now for considering CCA claims as a means of removing liability on ridiculous points?

Where is the unfairness, where is the brow beating?

The DN is wrong, not enough days, states the wrong figure, states the wrong address, etc

Come on.

YES there has to be recourse in claimants not paying enough attention, dragging people to court when they can;t even cross their T's and dot their 'I's etc but to think on it's own such an error removes the entitlement to the debt.

Sorry don't agree. Behaviour like that should limit liability, not extinguish it.

We are getting bogged down in pointlessness.

If a creditor makes a material breach they should only be entitled to their risk which is the principle sum...no interest, no charges etc...

A paperwork error irrespective of a 100 or 100,000 loan is what gives us a bad name.

We all want to fight, we all want to address the unfairness....but what is wrong with the moral offer?

On errors, repay the principle sum loaned?

I appreciate this isn't probably the right thread for this, but I've had enough.

As an amatuer I'm good at left field arguments, I'm running them. Won them, some ongoing.

But really deny an entire debt, even the principle sum, over what could be a misprint? And a daft technicality?

It's these cases who **** us all.

If you've had the money, repay the money. If the agreement is wrong, argue about the interest, argue about charges....but pay the principle - it' the moral and ethical thing to do.

I await flaming and PM's.....but I don't care, I've done this since 2007 and whilst people bang on about CMC's all I am actually seeing is more people jumping on the bandwagon for no good reason and the real people who need the protection are being buggered by those with the money to try and take advantage.

Those it doesn't apply to will not feel offended....those who feel offended, kind of prove my point.

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

One thought - PT has not said to us that the contract endures, only that the OC may not terminate by a bad DN.

That doesn't mean to say that the agreement endures. In fact, I do not believe that PT has in fact stated this.

See about 2/3 down.

the collected thoughts of 'pt'

A creditor is not able to terminate without a good notice, if the notice is bad he cannot (because he is barred by statute), terminate no matter what he says, he cannot terminate, without a good notice, that is what the view of counsel was, and also the High Court.

Quite rightly it is established in law, a bad notice can be remedied, and the court has held that the same applies here and that the creditor effectively cannot terminate under a bad notice.

s170 of the act bars any remedy unless provided for expressly by the act, this is said to also exclude the common law repudiatory breach, on the basis that its not prescribed by the act as being available for breach of s87, the Court said common law remedies, were not available due to the statute preventing them.

The Appellant court has already said common law remedies are not available unless prescribed by the Act, for example you cannot rely on the doctrine of mistake for recovery of monies under a CCA agreement because of s170.

Only a sanction criminal or civil is available if prescribed by the Act. If you look at s170 it is clear there on that point

The only bar on s87 is that they cannot take the next step til a good notice has been served and this reinforces Woodchester vs Swain

If it is bad [the DN] it must be remedied first, and afford the debtor the time to remedy the breach, you cannot take the "next step" (to quote Woodchester) on the back of a bad notice.

So there can be no termination on a bad notice. The statute sets out clear in plain English that the service of a default notice is a prerequisite to being able to terminate.

The High Court judgment is in favour of the debtor, trust me, very very much in favour.

s87 is mutually exclusive to default circumstances. While a creditor can terminate in non default circumstances, the moment there is a breach he must follow the acts requirements.

If he doesnt he cannot terminate, that is what counsel for both parties agreed in the High Court.

It seems to me that in Brandon they took steps which were not available to them, and then placed reliance on the fact that they could terminate by using clauses in the terms and conditions. That is plainly wrong, however, I see considerable thrust in an argument that if the creditor serves a bad notice, then he cannot terminate while there is an ongoing breach unless he serves a valid notice.

I think one thing we miss with the 1974 Act is that its protection mechanisms were to provide the debtor with information. That is what the default notice is for, to inform what's wrong and what's to be done to put right, the same applies for example to the Prescribed terms, they are terms parliament thought so important to debtors so that they could make informed decisions.

The Act was never put there to provide an escape from debts, but of course that is a consequence which is available for certain breaches.

I'd suggest a) The agreement endures, the creditor then could issue a revised – corrected - DN. The debtor would have time to rectify the breach. A non default termination could then be actioned. The remaining balance would have to be paid off at the rates / instalments of the agreement.

I thought that if the notice was bad, then that provides protection for the debtor from enforcement procedures, s87 was never designed to allow a debtor to avoid his debt, you only need to read Woodchester vs Swain for that. In Woodchester, the court still ordered payment of arrears even though the notice was bad, so it ought to be obvious that you aren't gonna escape through the net with s87.

I think its fair to say, even since the Woodchester case, it has been the view of the courts that a notice that doesnt comply with s87 is bad. It is even longer established law that a bad notice can be put right unless there are express restrictions on that, so what is there to stop a creditor issuing a new default notice?? I can see nothing to stop them in general.

As for remedies, have we all forgotten about s129? I'm saying that s129 is available thats all, and it was indeed thought of to work along side default notices as a notice should tell you you can seek a time order for example

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

without permission of the court

In todays political climate what makes you think the courts wouldn't give permission ............... every time!!!!!

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

If the OC / DCA issues on the back of a faulty DN
The claimant enters a defence that there is no entitlement to action

Surely the OC cannot recommence proceedings (after the issue of a compliant DN), as the evidence will be the same, without permission of the court

or is that too simple a view???

Thank goodness March is coming...

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

One thought - PT has not said to us that the contract endures, only that the OC may not terminate by a bad DN.

That doesn't mean to say that the agreement endures. In fact, I do not believe that PT has in fact stated this.

The 'debt' where a DN is bad and the parties are in court can only be the arrears, and I think Woodchester supports this. So perhaps the answer to this is that the OC has terminated but has merely lost entitlement to the balance by failing to observe S88; he then cannot serve a new DN without reinstatement, but reinstatement would require the agreement of the debtor, and if he then tried to unilaterally revive the agreement he would surely fall foul of S140.

The 'facts' that support this view are that Woodchester appears to end after judgement, although it could be that the agreement was revived (although the photocopier in question was, I think, repossessed), and that it is difficult to understand how a court would grant a S129 request for a time order where the request is made at a hearing which should not be taking place. I may be wrong, but I also do not think that PT has even suggested that the agreement endures.

So perhaps the phrase "the OC cannot terminate on the back of a bad DN" merely means that he cannot do this and expect the benefit of S87(1) (entitlement to the balance or goods)?

The point being that it is not the bad DN that is relied upon, but the fact that the OC terminates without entitlement.

Just a thought...could be complete rubbish of course...

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

We just don't have enough information at the moment to make a reasonable assessment of this judgement.

We do not know what happens when a creditor terminates after a bad DN.

How can an agreement that has to all intents and purposes lapsed be suddenly revitalised as if nothing has happened, possibly after a prolonged period.
If a new DN is issued what arrears will it reflect?
What if the debt was re-assigned. Does the new creditor have a legal right to issue a new DN and if that good DN was remedied how can the agreement be re-established as if the breach never occurred (i.e. the debtor will have access to credit)? Or can they restrict credit at the same time as the new DN?
Can DCAs even be creditors?

Confused? You will be after the next episode of "Contracts, Termination, Repudiation and Rescission" !!!!

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Yet Woodchester did not use it, when it looks like they could have done in order to fix their mistake.

But I notice that S129 begins, "If it appears to the Court just to do so"; perhaps it isn't really "just" to bring an action to court without entitlement and then expect that same court to grant a time order so that the OC's mistake is voided?

In reality, how would a court view an application for a time order when that application is triggered by the claimant's realisation that it's his only option, having already brought the case to court with no entitlement whatsoever?

Is S129 a red herring?

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

im saying that s129 is available

thats all, and it was indeed thought of to work along side default notices as a notice should tell you you can seek a time order for example