Contracts, Termination, Repudiation and Rescission

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

I think the issue is really what happens once the OC has obtained the arrears in court: PT cannot tell us (for obvious reasons), and Swain doesn't say (other than to describe the costs they won!).

What isn't clear is whether the OC can serve a new DN having been told in court that the original is bad. Clearly, to do that, he would have to "reinstate" the contract, thereby admitting that he made a mistake in "terminating" it. This sort of caper may fall foul of S140 - I have no idea - but PT's comments re S129 are extremely worrying.

S140 seems to be getting little attention here - after all, it is pretty much the only place in CCA where sanctions can be applied against the OC. S170 allows for sanctions prescribed by the Act, so clearly this must be of some importance for PT's recent but still hidden judgement.

So I suppose a process of elimination is all we can do in order to arrive at the outcome of the judgement before it is handed down. Key questions (for me, at any rate) would be;

1. Can a claimant issue a new DN on being advised that the one he used to bring the debtor to court is bad?

2. Are there any case examples of S129 in action?

3. If a new DN is served, must the arrears of necessity be those that have accumilated since the bad DN was served?

4. Can the debtor stymy things in court by claiming unfairness under S140B(2)?

5. Are there any benefits in allowing the OC to bring his case to court, rather than the debtor trying to find a solution that avoids court?

I'm sure there are a lot more, but these are the ones giving me a headache at the moment.

[diddydicky]

Re: Contracts, Termination, Repudiation and Rescission

its not a breach of the consumer credit act- it is a breach of the agreement (contract) between the creditor and the consumer

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

170 No further sanctions for breach of Act.E+W+S+N.I.

(1)A breach of any requirement made (otherwise than by any court) by or under this Act shall incur no civil or criminal sanction as being such a breach, except to the extent (if any) expressly provided by or under this Act.

then you fall on that point

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

[diddydicky]

Re: Contracts, Termination, Repudiation and Rescission

Im sorry but i dont follow that argument

Repudiation occurs when one party refuses to perform or fulfill the obligations of the contract basically, so who is the repudiator?

Who is the contract breaker? arent you the one intimating that you no longer intend to be bound by the contract by refusing to perform your obligations?

and in any event, a commentator on the Act pointed out that the sanctions of repudiation are not prescribed by the Act, therefore as the Act itself states, only a sanction criminal or civil is available if prescribed by the Act

The Court of Appeal rejected an argument for restitution under the common law doctrine of mistake on the same basis as the Court said that recovery of monies paid under an unenforceable agreement was only available if there was a provision in the Act such as for secured lending.

So applying that, the act may remove the argument in any event.

if you look at s170 it is clear there on that point

i dont agree with that analysis,

for the debtor to have repudiated" he would have had to have breached the agreement in a manner which significantly prejudiced the other party (creditor) and removed a major benefit of the agreement from the creditor

i would argue that ALL CREDITORS factor in to their calculations that many of their customers from time to time will or may be overdue in monthly payments and that such an event is NOT a contract breaking repudiation

the consumers mere failure to pay a few months payments is not IMO a significant breach that would be considered as having removed a major benefit to the creditor- who would still be adding interest and late payment charges to the account

parliament, in formulating s 87 indeed forsaw that such breaches may occur on the part of the consumer- hence the need for the creditor to point out the alleged breach and the opportunity for the debtor to remedy and continue as if nothing had happened- it would not have done so- had it thought that such a breach had led to repudiation on the part iof the consumer

the termination of the agreement and the demand for earlier repayment of sums not yet due- which the creditor imposes (unlawfully in this instance) upon the debtor is , however indeed a major breach since it takes away a (the only) benefit of the agreement from the debtor.

Further, the act is predicated on the consumer not being as financially or legally savvy as the creditor which is why the creditor is charged with the responsibility of acting and issuing documents "with precision"

if the sophisticated creditor writes and tells the unsophisticated consumer that he has failed to comply with the terms of the agreement and the agreement is therefore terminated and he is no longer required to make monthly payments but must instead pay up in full- if the creditor - with all his financial and legal muscle is unable to spot that he has acted unlawfully- how the hell is the consumer supposed to know that!

the creditor is "bound by his (written) word- it matters not a jot if he terminated erroneously- he ought not to write it if he is unsure of its meaning or imnportance- it is surely what the consumer BELEIVES has happened that is important- and if he thinks the "game is over" he is naturally going to be prejudiced since if he could not pay the 3 months of arrears- he certainly aint got the money to pay the entire balance and so "throws in the towel"

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

attached is the woodchester case

have a read

Read it many times!

It only goes to the fact that the creditor can ONLY pursue the arrears after a bad DN.

Are we saying that is still the case, i.e. this case supports Woodhester.

I don't see how this ties up with the agreement enduring after a bad DN.

That means they collect the arrears, re-establish the agreement and possibly re-issue a good DN and start again.

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

attached is the woodchester case

have a read

Held: Allowing the appeal, that the Consumer Credit Act 1974, s 88, required the owner to specify not only the nature of
the breach but the action required to remedy it. It was part of a statute plainly enacted to protect consumers. Since many
regulated agreements would be complex, most hirers would be individuals, and the owner would be in a far better position to
provide precise information about that remedial action, the section should be construed as requiring an accurate statement not
only of the nature of the breach but of the action required to remedy it (subject, it might be, to a de minimis dispensation).
Accordingly, the default notice did not satisfy s 88 and was not effective.

I think its fair to say, even since the Woodchester case, it has been the view of the courts that a notice t hat 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

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

attached is the woodchester case

have a read

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

Basa, i suggest PT is saying that the creditor can get the arrears even though the DN was slightly bad. He has not said the creditor can claim sums not yet due.
I suppose the arrears can continue to grow but would suggest that the courts can only enforce the arrears at the time of the original DN

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

so, let me get this straight

Lender gives notice that is bad

the only defect is that he dont allow 14 days for debtor to remedy but in any event if the debtor had 20 years he still wont be able to remedy

and then as a consequence for this minor slip of the pen the creditor should lose all his money?

Is that what we are suggesting here?

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 arent gonna escape through the net with s87

No

In my case (and there are many similar) the lender issued the DN asking for the WHOLE outstanding debt (not just the arrears).

There was no way any debtor could find the whole amount in 14 days if they were struggling to find minimum payments. When I couldn't pay the account was terminated (or so I thought!!).

I am now faced withe the lender re-issuing a DN asking for who knows how much arrears now the account has been 'on hold' for 18 months.

Result??!! Yeh - for the bank!

(Edit: I never did think that 'de minimus' defects in DNs should write off a debt).

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

So in effect yet another win for the lenders.

Make as many mistakes as they like, they can always be remedied despite the stress this puts on the debtor!

All the debtor can wish for is extra time to pay. Not exactly what I envisioned as "very, very much in favour of the debtor."

so, let me get this straight

Lender gives notice that is bad

the only defect is that he dont allow 14 days for debtor to remedy but in any event if the debtor had 20 years he still wont be able to remedy

and then as a consequence for this minor slip of the pen the creditor should lose all his money?

Is that what we are suggesting here?

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 arent gonna escape through the net with s87

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

quite rightly it is established in law, a bad notice can be remedied,

So in effect yet another win for the lenders.

Make as many mistakes as they like, they can always be remedied despite the stress this puts on the debtor!

All the debtor can wish for is extra time to pay. Not exactly what I envisioned as "very, very much in favour of the debtor."

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

Thanks for the opinions, would the revisions of the 2006 ammendments apply to earlier agreements?
I was looking at the CCA as enacted, hence the confusion
As I understand it PT's latest victory will help clarify once he can discuss it

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

s140 is the Unfair Relationships clause in CCA2006:



The idea is the creditor with an invalid DN and subsequent termination has created an unfair relationship by terminating where he had no entitlement and the termination is therefore ineffective.

Quite where this gets anyone is beyond me since the way the courts are behaving I reckon they will just set the clock back to pre debtor breach time and start again. No sanction on the creditor for breaking the law.

Unfortunately 'pt' is unable to explain why this ruling is:



Personally I don't get it.

But the point of a default notice is A) to inform the debtor what he has done wrong and B) what he needs to do to put it right.

A creditor will only need to serve a default notice if YOU fail to honour the terms of your contract.

So i dont get why people all of a sudden want to use the default provisions as being some method of defeating the CCA, the CCA is an information act, its there to give information to the debtors,

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.

As for remedies

Have we all forgotten about s129?

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Looking at it from the other angle...

1. Would a court really allow a creditor to re-open a contract after "terminating" it and dragging the debtor to court just to re-issue a good DN?

2. S138 considers an agreement "extortionate" if it contravenes "ordinary principles of fair dealing", and this is expanded by the new S140. It is clear that if someone is dragged to court by a lender when there is no entitlement, a court must consider the "fairness" of that. But how would a court come to the conclusion that taking such action was "fair"? Clearly, it is not.

3. It may also be that the debtor's "human rights" are infringed. I know nothing of the legalities of HR, but I would have thought that there exists in this country a view that courts are there to sort out legitimate disputes, and not as an unjustified threat to be used by another party in order to obtain what he wants. Bear in mind that it really costs very little (proportionately) for a bank to sue a debtor, wheres for the debtor it can be a life-changing event.

4. By taking the debtor to court on the back of a bad DN, the lender immediately falls foul of Reg 5 of the 2008 CPRs (misleading business practices) plus Reg 7 (aggressive business practices) (by suing the debtor where no entitlement exists). While there is no ability for a private person to use these regs in an action, I understand that they nevertheless cannot but support a S140 claim (ie, general "unfairness").

5. Then there is S89. For a court to just say to the creditor that his DN is bad and he must serve a new one would have to ignore all of S89. The debtor can never set things back to how they were as though the breach "had never occurred" once he's dragged to court. For this section to work for both parties, a new breach would have to be invented.

It seems to me that now we know that the agreement is not terminated, or has been terminated without entitlement, we can look at S140 to apply sanctions on the creditor for his various mistakes and his subsequent activities, assuming this goes to court where the debtor can claim unfairness under S140B(2).

Just a few thoughts...

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

LA, not sure of the significance of S140, please enlighten me - I don't want the situation to be as Basa views it...

s140 is the Unfair Relationships clause in CCA2006:

140A Unfair relationships between creditors and debtors
(1) The court may make an order under section 140B in connection with a
credit agreement if it determines that the relationship between the
creditor and the debtor arising out of the agreement (or the agreement
taken with any related agreement) is unfair to the debtor because of one
or more of the following—
(a) any of the terms of the agreement or of any related agreement;
(b) the way in which the creditor has exercised or enforced any of
his rights under the agreement or any related agreement;
(c) any other thing done (or not done) by, or on behalf of, the
creditor (either before or after the making of the agreement or
any related agreement).

The idea is the creditor with an invalid DN and subsequent termination has created an unfair relationship by terminating where he had no entitlement and the termination is therefore ineffective.

Quite where this gets anyone is beyond me since the way the courts are behaving I reckon they will just set the clock back to pre debtor breach time and start again. No sanction on the creditor for breaking the law.

Unfortunately 'pt' is unable to explain why this ruling is:

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

Personally I don't get it.