Contracts, Termination, Repudiation and Rescission

[New_Age_Biker]

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...

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

So the situation now is a creditor can issue as many invalid DNs and termination notices as he wishes until he happens to get one right. He then can drag your ass through court.

In the meantime the poor debtor doesn't know whether he is coming or going, doesn't know which DN is right or how much he is required to pay and by when, then ends up in court because he hasn't paid or can't pay.

Yup - that's consumer protection at its best!!!

Maybe we debtors should all hand over our house keys now, cos' it seems sure as eggs are eggs the judiciary are hell bent on turning the CCA1974 into a lenders charter such that we'll end up owing them anyway.

[toomanycalls]

Re: Contracts, Termination, Repudiation and Rescission

Could the answer to this be simpler than we think?

You get dragged to court on the back of a defective DN. The defence demonstrates that the agreement was terminated where there was no entitlement, and strictly speaking the contract endures. For the creditor to get his money, he would then have to persuade the court to completely ignore all of S140.

Were the debtor to claim unfairness under S140, any court would surely have to accept that dragging someone to court where there is no lawful entitlement is grossly "unfair", and that to then reinstate the contract as it was (in order for a new DN to be issued) compounds that unfairness.

S140 also provides scope to a court to apply sanctions against a creditor.

Perhaps all that is required is for the debtor to claim unfairness and for the creditor to prove to the court that his actions were fair?

I for one would like to think so.

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Could the answer to this be simpler than we think?

You get dragged to court on the back of a defective DN. The defence demonstrates that the agreement was terminated where there was no entitlement, and strictly speaking the contract endures. For the creditor to get his money, he would then have to persuade the court to completely ignore all of S140.

Were the debtor to claim unfairness under S140, any court would surely have to accept that dragging someone to court where there is no lawful entitlement is grossly "unfair", and that to then reinstate the contract as it was (in order for a new DN to be issued) compounds that unfairness.

S140 also provides scope to a court to apply sanctions against a creditor.

Perhaps all that is required is for the debtor to claim unfairness and for the creditor to prove to the court that his actions were fair?

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

Sorry if I did not make myself clear.
If there has been a breach of the agreement.
If the DN is invalid (no matter in what way)
I understand you to say that the agreement cannot be terminated by the creditior.

If this is the case and the agreement endures the creditor simply issues a new, compliant DN
All charges, interest, penalties etc can now be enforced if the default situation continues.

How is it possible to issue a replacement DN? I thought the prupose of a Dn was to give the debtor a last chance to correct a breach as though it had never happened.
As this is unlikely to happen ( CRA reporting, likely termination on notice are likely) where would that leave the creditor and debtor?

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

A worrying thought, some people, myself included have accepted the repudiation - based on advice read here and on CAG believing this to be the way forward.
If we are returned to the agreement because they cannot terminate there will be years worth of late payment charges & interest that have been added whilst we are all jockeying for position.
Surely this is not what the CCA was enacted for.
PT, if this in any way drifts into the areas decided in your judgement that you cannot reveal plese just say so, I would not wish to compomise your position.

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

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

A worrying thought, some people, myself included have accepted the repudiation - based on advice read here and on CAG believing this to be the way forward.
If we are returned to the agreement because they cannot terminate there will be years worth of late payment charges & interest that have been added whilst we are all jockeying for position.
Surely this is not what the CCA was enacted for.
PT, if this in any way drifts into the areas decided in your judgement that you cannot reveal plese just say so, I would not wish to compomise your position.

[mystery1]

Re: Contracts, Termination, Repudiation and Rescission

How does that fit in to s 140 ?

It must be somewhat unfair to tell a borrower the agreements over when it's not whether that statement is deliberate or not.

M1

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

If a creditor cannot terminate because of a bad DN what would the status of the agreement be? Would:

a) The agreement endure, 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.
b) If the debtor had accepted the repudiation of the agreement, the OC would not be able to issue a valid DN as the agreement did not endure so there would be a stand off.
c)Some other situation???

Id suggest (A)

[New_Age_Biker]

Re: Contracts, Termination, Repudiation and Rescission

If a creditor cannot terminate because of a bad DN what would the status of the agreement be? Would:

a) The agreement endure, 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.
b) If the debtor had accepted the repudiation of the agreement, the OC would not be able to issue a valid DN as the agreement did not endure so there would be a stand off.
c)Some other situation???

[jumper999]

Re: Contracts, Termination, Repudiation and Rescission

Peter is saying (and I agree his evaluation) that even if a DN only gives say 12 or 13 days to remedy on paper, if the lender does nothing more (like termination or enforcement) until say 20 days after the date for remedy, the debtor is seen by the courts to have suffered no prejudice and the DN/termination are good.

I personally think this is an insane ruling for example when does 12 days become 10, then 6 then none? Secondly if the debtor thinks he has only 12 days he doesn't know that nothing more will happen until 20 days (as in my example above) and therefore had that much more time. He thinks he is dead in the water after the 12 days and concedes defeat when in fact he may have been able to remedy in the 20 days. That is surely an unfair relationship.

Thanks Basa, looks like were all in a pickle hey ..........my DN gave me 14 days and I believe it was approx 3-4 wks after that HSBC terminated my agreement. OK fair enough maybe HSBC have complied with the law and the act but the unfair thing which I believe was that I was in negotiations with them whilst all this was going on. They were well aware of my financial situation and still they expected me to cough up £200 'ish or so to rectify the DN.

Hopefully these recent judgments will help others and will clarify things once and for all.

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

I agree but I'm sure this will change soon when Brandon has another go.

Im not sure what the outcome will be to be honest.

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 whats wrong and whats 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.

So i am not sure which way the Court of Appeal will go, it may well say, no the notice is bad end of, in Brandons case, but it may also give some guidance on the matter, until they do we just dont know.

Of course the High Court judgment may be out by then, so the COA may approve that judgment also,

its a waiting game

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

I have a problem with non default terminations.

What happens when a lender decides he's had enough and gives notice to terminate (using a 'convenience' clause in the T&Cs). Where is there any statement as to the notice required, the method / schedule for repayment, is interest frozen or does it continue? What provisions are there for variations in repayments, interest etc?

Note I have used the term 'terminate' not restrict or defer.

[toomanycalls]

Re: Contracts, Termination, Repudiation and Rescission

I personally think this is an insane ruling for example when does 12 days become 10, then 6 then none? Secondly if the debtor thinks he has only 12 days he doesn't know that nothing more will happen until 20 days (as in my example above) and therefore had that much more time. He thinks he is dead in the water after the 12 days and concedes defeat when in fact he may have been able to remedy in the 20 days. That is surely an unfair relationship.

I agree but I'm sure this will change soon when Brandon has another go.

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

Thank you peter I think I kinda understood that

Peter is saying (and I agree his evaluation) that even if a DN only gives say 12 or 13 days to remedy on paper, if the lender does nothing more (like termination or enforcement) until say 20 days after the date for remedy, the debtor is seen by the courts to have suffered no prejudice and the DN/termination are good.

I personally think this is an insane ruling for example when does 12 days become 10, then 6 then none? Secondly if the debtor thinks he has only 12 days he doesn't know that nothing more will happen until 20 days (as in my example above) and therefore had that much more time. He thinks he is dead in the water after the 12 days and concedes defeat when in fact he may have been able to remedy in the 20 days. That is surely an unfair relationship.