Contracts, Termination, Repudiation and Rescission

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

But how do you know the agreement is terminated SeeThumb?

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

[5.330]-[5.340]
170 No further sanctions for breach of Act
(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.
(2) In exercising [its] functions under this Act the [OFT] may take account of any matter appearing to [it] to
constitute a breach of a requirement made by or under this Act, whether or not any sanction for that breach
is provided by or under this Act and, if it is so provided, whether or not proceedings have been brought in
respect of the breach.
Page 498
(3) Subsection (1) does not prevent the grant of an injunction, or the making of an order of certiorari,
mandamus or prohibition or as respects Scotland the grant of an interdict or of an order under section 91 of
the Court of Session Act 1868 (order for specific performance of statutory duty).
Commencement
31 July 1974: see CCA 1974, Sch 3, Note.
Amendment
Sub-s (2): word "its" in square brackets substituted by the Enterprise Act 2002, s 278(1), Sch 25, para 6(1),
(35). Date in force: 1 April 2003: see SI 2003/766, art 2, Schedule; for transitional and transitory provisions
and savings see the Enterprise Act 2002, s 276, Sch 24, paras 2-6.
Sub-s (2): reference to "OFT" in square brackets substituted by the Enterprise Act 2002, s 278(1), Sch 25,
para 6(1), (35). Date in force: 1 April 2003: see SI 2003/766, art 2, Schedule; for transitional and transitory
provisions and savings see the Enterprise Act 2002, s 276, Sch 24, paras 2-6.
Sub-s (2): word "it" in square brackets substituted by the Enterprise Act 2002, s 278(1), Sch 25, para 6(1),
(35). Date in force: 1 April 2003: see SI 2003/766, art 2, Schedule; for transitional and transitory provisions
and savings see the Enterprise Act 2002, s 276, Sch 24, paras 2-6.
General effect
Subsection (1) is of very considerable importance since its effect, in general terms, is that a breach of the Act
(or of any regulations made under it) attracts only such sanctions as the Act itself specifies in relation to that
breach (together with the 'sanctions' presented by sub-ss (2) and (3). The consequences of this principle are
seen most clearly in relation to civil proceedings. First, sub-s (1) prevents any argument that an agreement
which is procured, negotiated or to be performed in breach of the Act is affected by illegality. For example,
although by CCA 1974, s 39 unlicensed trading is a criminal offence, an agreement made by an unlicensed
trader is not void or unenforceable at common law; the 'civil sanction' is restricted to unenforceability under
CCA 1974, s 40 (which permits the enforcement of agreements when the OFT has made an order under that
section). Similarly, sub-s (1) will not allow a breach of the Act to be set up as a defence per se to an action
by a creditor to enforce an agreement, nor is a breach of the Act actionable by the debtor as a breach of
statutory duty (cf Bowmaker Ltd v Tabor [1941] 2 KB 1, [1941] 2 All ER 72) except where the Act itself so
provides (see CCA 1974, s 92). Nor, finally, may a breach of the Act be treated as a breach of contract or as
giving rise to any liability to make restitution of property or money. The intention of the section is, therefore,
not merely to limit civil or criminal proceedings arising from a breach of the Act but (subject to sub-ss (2) and
(3)) to deprive such a breach of any legal consequences other than those provided by the Act itself.
OFT
The reference to the OFT was substituted by the Enterprise Act 2002, Sch 25, para 35. See the notes to s 1
above.
'A breach of any requirement'
Whilst the principle underlying CCA 1974, s 170(1) is clear enough the term 'requirement' is not defined in
the Act with the result that there remains considerable scope for argument as to when it actually applies. The
term 'requirement' (or a very similar expression) is actually used in relation to certain statutory obligations:
see in particular CCA 1974, ss 21, 44, 52, 53, 55, 58 and 61-64. But it can hardly have been intended to
confine the operation of CCA 1974, s 170(1) to these few provisions (important as several of them may be)
Page 499
and the moot point is when what may loosely be described as a 'breach of the Act' is properly to be treated
as a 'breach of any requirement made by or under the Act' when neither the word requirement nor any
cognate expression is used in the relevant provision.
In the first place, there is one category of provision which falls outside the scope of CCA 1974, s 170(1)
altogether, namely provisions which confer enforceable rights upon the debtor. See, for example, CCA 1974,
ss 69, 70(1), 71(2), 73(2), 75, 94, 95, 99, 100 and 101. These are rights which the court is clearly expected
to enforce, and whilst CCA 1974, s 173(1) prevents their exclusion CCA 1974, s 170(1) has no application to
them. But there is room for doubt as to how far this category extends. There are a few provisions of the Act
which do not clearly confer an enforceable right upon the debtor (or a surety) but which equally do not clearly
impose any requirement upon the creditor; rather they state a general rule or principle which is expressed in
general terms to apply to agreements or securities governed by the Act. Perhaps the most striking example
is CCA 1974, s 113(1) which provides that a security 'shall not be enforced' beyond the extent provided for.
This is drafted as a categorical rule, addressed not directly or solely to a creditor but to the world at large -
including the court. It is, accordingly, possible without doing any violence to the wording of that provision, or
of CCA 1974, s 170(1) itself, to construe it simply as a general restriction upon the scope of a security which
may be provided in relation to a regulated agreement (and, indeed, any agreement providing for a greater
security may fall foul of CCA 1974, s 173(1)). Consequently, the court may not merely refuse to assist a
creditor to enforce a security beyond the extent permitted by CCA 1974, s 113(1); it may treat any such
actual enforcement by the creditor as wrongful, vis-à-vis the surety, because it is an attempt to realise a
security which, in law, has not been provided. Thus the court may order restitution, etc, without 'sanctioning'
a 'breach' of CCA 1974, s 113(1). Similarly, CCA 1974, s 81(2) (appropriation of insufficient payments by a
multiple debtor) may perhaps be construed as a direction to the court (as well as to the parties) so that a
non-complying appropriation may be ignored or nullified by the court without any infringement of the principle
set out in CCA 1974, s 170(1). These arguments cannot be advanced or refuted with any degree of certainty,
however, until CCA 1974, s 170(1) has been the subject of judicial decision.
There is a further difficulty. Various sections are mentioned above which clearly, and expressly, impose
'requirements' upon a party. There are various other provisions which clearly impose positive 'requirements'
upon a party, although that expression is not used: see, in particular, CCA 1974, ss 77-79, 80, 85(1), 97, 103
and 107-110. But a 'requirement' may be negative in form or substance, ie a person may be required to
refrain from certain actions: see, for example, CCA 1974, ss 49-51 and 123 (on one view, contrary to that
canvassed above, CCA 1974, s 113(1) falls into this category). But there is probably a further category of
'requirement', where the Act does not compel a party to take any steps at all, but imposes a condition upon
him if he does propose to act (eg to serve a notice before enforcing an agreement or security (see ss 76, 87,
98 and 111)) or to apply to the court for enforcement (see, eg, CCA 1974, ss 80, 86(2), 90, 92 and 126). If
the creditor breaches any of these requirements, the debtor is powerless except to the extent that the Act
provides a remedy (or 'sanction'). This is the purpose of CCA 1974, s 170 and the breach is neither
actionable as such nor the basis of a claim for restitution: cf Orphanos v Queen Mary College [1985] 2 WLR
703 at 712-713. How much further the term 'requirement' extends is then a matter of doubt. The sections
referred to above all impose a specific primary obligation, and that obligation is the 'requirement' referred to
in CCA 1974, s 170(1). But CCA 1974, s 170(1) itself distinguishes the 'requirement' from the 'sanction' (if
any) imposed by the Act for breach of the requirements (as does CCA 1974, s 170(2)). This distinction is
easy to apply where the 'sanction' provided is in the nature of a penalty (whether civil, as in CCA 1974, s 91,
or criminal, as to which see generally CCA 1974, Sch 1). But what of the various requirements for which the
'sanction' provided itself takes the form of a rule or prohibition which can also be 'broken' by
non-observance? For example, CCA 1974, s 21 requires a person carrying on a consumer credit business to
be licensed. A criminal sanction is imposed by CCA 1974, s 39, and CCA 1974, s 40 imposes the further civil
sanction that 'a regulated agreement if made when the creditor ... was unlicensed, is enforceable against the
debtor ... only where the OFT has made an order under [s 40] which applies to the agreement'. If the creditor,
'in breach' of CCA 1974, s 40, enforces an agreement by means of self-help, and without reliance upon CCA
1974, s 173(3), the application of CCA 1974, s 170(1) is far from clear. On the one hand since CCA 1974, s
170(1) as observed above distinguishes a 'requirement' from a 'sanction', it may be argued with some force
that the section applies to the breach of CCA 1974, s 21, but not to the 'breach' of CCA 1974, s 40 since that
provision constitutes the 'sanction' and not the 'requirement'. On the other hand it may be argued that a
'sanction' may itself impose a 'requirement' (ie that a creditor who seeks to enforce an unlicensed agreement
Page 500
must obtain an order under CCA 1974, s 40) and that CCA 1974, s 170(1) applies to the breach of that
requirement as well as to the original breach of CCA 1974, s 21. The same question arises in relation to
other important provisions. In particular CCA 1974, s 65 provides that an improperly executed agreement is
enforceable against the debtor on an order of the court only (and, unlike CCA 1974, s 40, CCA 1974, s 65
specifically treats repossession of goods or land as an 'enforcement'). Like CCA 1974, s 40, CCA 1974, s 65
is clearly a 'sanction' within the meaning of CCA 1974, s 170(1) (as to the relevant 'requirements' see CCA
1974, ss 55, 58, 60-64 and 105(9)) and once again it is unclear whether CCA 1974, s 65 is also to be treated
as itself imposing a 'requirement' (cf CCA 1974, ss 105(7), 111(2), 113(2) and 124(1), (2)). It is unfortunate
that the quest for brevity and generality in s 170(1) has left scope for uncertainty and dispute on so
fundamental a question, for the section was inserted in the Act to avoid precisely this sort of uncertainty. For
if CCA 1974, s 170(1) does not apply to 'sanction-requirements', it by no means follows that the court will
allow redress to a debtor against a creditor who ignores the sanction. The court will be subject to competing
arguments, first that redress should be granted in order to give teeth to the statutory sanction, and secondly
that even if CCA 1974, s 170(1) on its true construction does not apply, an analogous rule should be applied,
denying relief in accordance with the general tenor of the section.
Sanctions
The sanctions referred to in CCA 1974, s 170(1) may be criminal (see generally CCA 1974, Sch 1) or civil.
Civil sanctions may take the form of liability in damages (see CCA 1974, s 92(3)) or to make restitution (see
CCA 1974, s 91). The commonest form of sanction, however, is a restriction upon enforceability of
agreements. In some cases an enforcement order must be sought from the court (see CCA 1974, s 127(1))
or an order must be obtained from the OFT (see CCA 1974, s 40). In other cases, a creditor 'is not entitled to
enforce' an agreement as a consequence of non-compliance with a statutory duty (see, eg, CCA 1974, ss
77(4), 78(6), 79(3), 85(2) and 97(1)): in yet other cases he 'is not entitled to enforce' the agreement if he has
failed to serve a statutory notice (see CCA 1974, ss 76 and 98) or must serve a notice before he 'can
become entitled' to take certain steps to enforce the agreement (see CCA 1974, s 87). Quite apart from the
question whether certain of these sanctions may be treated in themselves as 'requirements' for the purposes
of CCA 1974, s 170(1) (see the note 'A breach of any requirement' above) the question arises what
significance is to be read into the different forms of 'sanction' and the different words used to impose them. In
particular, where the Act provides that a creditor is 'not entitled' to enforce an agreement, or must serve a
notice before he can become entitled to do so, a natural inference is that any attempt to enforce the
agreement must be wrongful, vis-à-vis the debtor (for example, a contractual right to repossession of goods
will be suspended); if so, the debtor may resist judicial or extra-judicial enforcement (but if he is unable to
prevent the creditor from enforcing the agreement, eg by preventing further drawings on a facility, is he
entitled to redress for any consequent loss?)
As being such a breach
The CCA 1974, s 170(1) merely restricts sanctions (or remedies) in respect of the breach of a requirement
made by or under this Act. In so far as an act or omission is also wrongful in some other respect, eg it is a
breach of contract, or a tort, nothing in this section operates so as to prevent an action lying in respect of that
civil wrong. The position would be the same in respect of a breach of a requirement made by or under the
Act which is also a criminal offence under some other statute. Where an offence has been committed,
whether under this Act or the general law, this section does not directly affect the capacity in which the
accused is charged. Thus he may be charged with an inchoate offence (eg conspiracy or attempt) or as a
secondary party (with aiding, abetting, counselling or procuring): Brookes v Retail Credit Card Ltd (1985) 151
JP 131, [1986] CCLR 5.
The OFT
The OFT may take account of matters 'appearing to him' to constitute a breach of a requirement of the Act or
of regulations made under it for the purposes of his functions under the Act. In particular, such breaches will
Page 501
be relevant in relation to his licensing functions, as to which see generally CCA 1974, s 25. Where no judicial
proceedings have taken place in relation to an apparent breach, the OFT must nevertheless be satisfied that
the breach has occurred. He may wish to take account of matters which would, if prosecuted, require to be
proved beyond a reasonable doubt as constituting the commission of an offence. Semble, for the purposes
of his statutory functions the OFT is entitled to take account of matters which appear to him to constitute a
breach of the Act on a balance of probabilities.



thats what Goode says on s170

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

They have passed the debt on to a collection agency, and the agency are stating that payment of the full amount is overdue.

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

Wow Pt,

Thanks. I will have to get back to you on that!

I appreciate you posting it.

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

point is, where in the Act does it provide recission for breach of statutory requirement in respect of failing to comply with s87?

Thats the point, show me the provision of the act, ill accept that what is being suggested can be done, and of course that the Court of Appeal is wrong.

However, im sorry to say that despite many people trying to argue this point, i have never seen it succeed.

[Guest]

Re: Contracts, Termination, Repudiation and Rescission

point is, where in the Act does it provide recission for breach of statutory requirement in respect of failing to comply with s87?

Thats the point, show me the provision of the act, ill accept that what is being suggested can be done, and of course that the Court of Appeal is wrong.

However, im sorry to say that despite many people trying to argue this point, i have never seen it succeed.

I think much of the confusion derives from a misunderstanding of the relationship between the statute and the contract.

A section 87 notice is a requirement of statute, the remedy for an incorrect notice is contained within the statute, in that the creditor will not be allowed to terminate upon breach. No other sanction is permuted as stated.

d

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

I think much of the confusion derives from a misunderstanding of the relationship between the statute and the contract.

A section 87 notice is a requirement of statute, the remedy for an incorrect notice is contained within the statute, in that the creditor will not be allowed to terminate upon breach. No other sanction is permuted as stated.

d

Indeed which in my view restricts the right to claim recission notwithstanding that as a matter of law it wouldnt be available in such circumstances anyhow, but it is not around for someone with a bad default, the remedy as HHJ Chambers made clear is no termination

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

They have passed the debt on to a collection agency, and the agency are stating that payment of the full amount is overdue.

If all you have posted is correct SeeThumb and I'm sure it is then you probably need to look at s.140, as I really doubt you'll get anywhere with a 'repudiation' argument.

I think you are in a difficult situation.

If you do nothing, or just write letters to the OC that are ignored, then you may see your credit file trashed with a default marker probably followed by a claim for the balance, whether justified or not.

You cannot presumably keep paying, as I assume the OC has stopped sending monthly statements that tell you how much to pay.

There may be a breach of contract by the OC, in failing to send monthly statements and in restricting credit without notice, but s.170 scuppers all possibilities here.

You could start proceedings against the OC under s.140 and ask the court to discharge or reduce your liabilities, or even to force the OC to act according to contract.

Maybe a chat with your local trading standards is an idea? They can be quite helpful.

I think pt is correct - his Harrison judgement was seminal in resolving the issue of termination following a duff DN. For that reason I would for sure look for alternative arguments, and s.140 is probably your best bet.

[Guest]

Re: Contracts, Termination, Repudiation and Rescission

I find this interesting from the above.

The CCA 1974, s 170(1) merely restricts sanctions (or remedies) in respect of the breach of a requirement
made by or under this Act. In so far as an act or omission is also wrongful in some other respect, eg it is a
breach of contract, or a tort, nothing in this section operates so as to prevent an action lying in respect of that
civil wrong. The position would be the same in respect of a breach of a requirement made by or under the
Act which is also a criminal offence under some other statute. Where an offence has been committed,
whether under this Act or the general law, this section does not directly affect the capacity in which the
accused is charged. Thus he may be charged with an inchoate offence (eg conspiracy or attempt) or as a
secondary party (with aiding, abetting, counselling or procuring): Brookes v Retail Credit Card Ltd (1985) 151
JP 131, [1986] CCLR 5.

The act does not prohibit action being taken for contractual breach beyond the function of statute.

So if for instance a creditor issues an invalid DN and continues to attempt to enforce in knowledge of that error, he could be open for other civil sanction.

He would be attempting to enforce an un-terminated contract. This however would not be rescission of contract nor would he , in any way be repudiating it, in fact in the contry he would be trying to enforce it.

I suspect as stated in the above paragraph suggests the remedy would lay with the regulator, advice given on here to report such things to the OFT is I believe the correct course.

If the creditor should ignore and continue to pursue through the courts, he would suffer the sanction of having to start the whole process again.

D

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

point is, where in the Act does it provide recission for breach of statutory requirement in respect of failing to comply with s87?

Thats the point, show me the provision of the act, ill accept that what is being suggested can be done, and of course that the Court of Appeal is wrong.

However, im sorry to say that despite many people trying to argue this point, i have never seen it succeed.

Thanks again.

Just to clarify once again, I am not citing failure to comply with s87 as the cause of their fundamental breach, I have just put it here to demonstrate a single part of the OC's mismanagement of this case. There seems to be an obsession with faulty DNs, not just here, and everyone seems to think that the repudiation argument is exclusively attached to them, but please understand, this is not about a faulty DN.

Any s87 failure is insignificant to the fact that they have just thrown the agreement away, and continued to act having been challenged. They have not complied with CCA 1974, they have contravened DPA 1998, they have completely failed to follow OFT guidance. They have also failed to respond to any of my messages regarding their error, and they have so far taken no action.

People may not have seen a successful rescission claim in case history before, but I doubt very much that they have ever seen such a monumental failure to provide the service and protection within a credit agreement as this. If this isn't a case of fundamental breach (that is, fundamental repudiation), then I question the terms' use in English Law. They have failed on every level and compounded their error until it has got to this stage. They offer me nothing of the agreement, but expect me to fulfill my obligations? What else can that possibly represent?

I'm not at all sure the OC will want to take this to court, as it represents a complete failure of their processes, (you'll have to trust me there, I am telling the truth) and if it can happen to me, it could happen to anybody; and that means at least the risk of the OFT requiring a review of their systems, for the greater good of the consumer. If it becomes apparent that their processes rely specifically on telephone contact by the debtor in response to errors in order to rectify data issues, then their systems will not be seen as robust enough. Quote, 'The OFT expects businesses to take all reasonable steps to ensure they have suitable business practices and procedures in place to facilitate their own compliance '.

I believe I have taken every step I can to prevent and then stop their actions, and they have done nothing. I don't believe any court will look upon their actions and inaction favourably.

They can trash my credit score, I have no plans to use any credit facilities, but ultimately, every negative step they take will be another black mark, and they will still have to make good.

I think it is fair to attempt to settle this between the two parties, but I will be taking further action through solicitors (starting tomorrow), the OFT and FOS as and when required.

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

Sorry chaps,

Please don't think I am just gain saying your advice. I am grateful for everything being posted here and am taking it all on board; and am relishing going through the info Pt has put here, but I need some time there...

I am taking on board everything that is being said, but I do want to try to make it clear why I think this case is different. I am not just trying to use a faulty DN as a loophole, and I recognise that such is clearly no argument for repudiation or, indeed, much at all.

It seems that everyone comes back to that as if it is my main defence, but it really isn't. A faulty DN is a technicality and seeking it as a loophole, I agree, is a little bit futile! I've not defaulted, so in my case it is totally insignificant.

Thanks again

[Guest]

Re: Contracts, Termination, Repudiation and Rescission

Yes this thread carries a lot of baggage. Perhaps a thread of your own?

In any case I fear that if your argument is based on repudiation of a consumer credit agreement by the creditor it is doomed to failure.

D

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

The act does not prohibit action being taken for contractual breach beyond the function of statute

Interesting. In effect, SeeThumb's creditor serves a DN which alleges a breach, but there is no breach. The OC stops sending monthly statements and demands the balance, which is presumably a breach of contract and not a failure to observe the requirements of the act, therefore s.170 may not apply in his case.

It is not a failure to observe the requirements of the act because the act doesn't say when a DN should be served. The OC hasn't failed to observe the act, he's failed to observe the contract. On reflection I don't see how s.170 applies.

The only failure to observe the act is in serving a DN that cannot comply with s.88, but that is an effect not a cause. The issue is service of the notice in the first place.

(There is also possibly an offence under CPUTR as the OC is claiming a breach which did not happen, and using that allegation to be repaid sooner and contrary to contract).

So if s.170 might be eliminated, what are SeeThumb's options...

LA

[Guest]

Re: Contracts, Termination, Repudiation and Rescission

Interesting. In effect, SeeThumb's creditor serves a DN which alleges a breach, but there is no breach. The OC stops sending monthly statements and demands the balance, which is presumably a breach of contract and not a failure to observe the requirements of the act, therefore s.170 may not apply in his case.

It is not a failure to observe the requirements of the act because the act doesn't say when a DN should be served. The OC hasn't failed to observe the act, he's failed to observe the contract. On reflection I don't see how s.170 applies.

The only failure to observe the act is in serving a DN that cannot comply with s.88, but that is an effect not a cause. The issue is service of the notice in the first place.

(There is also possibly an offence under CPUTR as the OC is claiming a breach which did not happen, and using that allegation to be repaid sooner and contrary to contract).

So if s.170 might be eliminated, what are SeeThumb's options...

LA

Yes although i think the issue is purely theoretical. Because there would be dispute between the parties as to the validity of the notice, and as to if the agreement had been terminated or not.

If complaint were made i suspect the court would just rule on the validity of the notice and either enforce or discontinue and tell the creditor to start again.

I don't think that the intervening actions(between issue of DN and court proceedings) would suffer any sanction, although it is a possibility I suppose.

D

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

It may be that it is not the validity of the notice that is key here, but the fact that a notice alleging default was served in the first place. That is, the OC used a statutory notice to carry out his breach of contract. The notice should only have been served on breach but there was no breach.

Given pt's post re s.170 and your analysis of the same it looks to me like s.170 would not apply, therefore sanctions are implied rather than ruled out.

One issue might be the risk of obtaining a 'pumpkinhead judgement' - disregarding s.170, what would the liabilities be on breach by the OC? I can't help thinking that a court would see no difference and just say that the liabilities remained, less costs.

LA