Contracts, Termination, Repudiation and Rescission

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

Edit - Below is response to DavyB's last post.

But the contract is regulated by the CCA which entitles the debtor to 14 days. Therefore the creditor is in breach of contract as a result of not complying with statute law when issuing a faulty DN. You simply can not fail to comply with statute law and not be in breach of contract regulated by that same statute law.

A similar arguement was made in regards to distance selling regulations and sales of goods contract where the buyer cancelled within the cancellation period. The DSR gives the seller 30 days to refund, during those 30 days he is not in breach of contract, but should he not issue a refund on or before the 30th day for date of cancellation notice, then he is in brech of the DSR which in turn puts him in breach of contract.

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

No once the account is sold to a new party whether they have a credit license of not is irrelevant as the agreement that permits them to issue a DN would have already been terminated. The account and the Agreement are two seperate things. The account is the debt not the agreement par se. Therefore only the original creditor can issue a new DN. If its been sold, they would have to buy back the account and reinstate the agreement for which they will need the debtors consent to reinstate. A DCA simply can not reinstate an terminated agreement to an account they own, for which they were not an original party to said agreement as only named parties on the agreement can issued a DN or a new DN to remedy a faulty one. Plus the agreement must still be live for them to do so.

The reason there is no case law is simply because 99% of cases are heard in the small claims court and not at high court. If they lose in county court when using the Unlawful rescission or repudation argument, it could be due to other faults in their arguements, or simply down to the judge on the day (something that we hear and see quite often, where one won using the same arguments that another lost on), truth is, we are unlikely to no the true reason why the argument failed in county court, but then there maywell be cases in county court where it was successfully argued, which we don't know about.

As said early, the outcome is still the same should you win in court using unlawful rescission/repudation, as it would be if the contract was terminated under a termination clause. Where they would still only be able to claim amount that was due at the time of termination and not the full outstanding balance.

Re: Contracts, Termination, Repudiation and Rescission

Yes and of course giving 14 days is not a requirement of he contract in any case, it is a requirement of statute so could hardly be repudiation of contract.

D

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

I still do not see how repudiation applies where a pre-2011 contract contains a termination clause. Where has the creditor repudiated the contract? All he's done has been to cock up the default termination. If there is a contractual termination clause then the agreement is probably ended, especially if there is a termination letter of some sort.

An account can be sold according to the contract. If it goes to a credit licenseee then there is nothing to stop a new DN being issued. However, if the assignee doesn't have a credit licence, then that is a bit of a problem as a new DN could never be remedied as the assignee would have no entitlement to invoke s.89 (or serve a DN anyway!).

One problem here is that there is no (AFAIK) case law, where the repudiation argument has been used successfully. In fact I think that 'repudiation' itself is something of a red herring, with 'breach of contract' being the more usual term which might not apply under regulated agreements anyway due to s.170 (no sanction on breach).

I just think that there are better, less risky arguments available to recipients of duff DNs, and that a claim or defence based on 'repudiation' is probably not going to work, unless a DJ is happy to see his judgement appealed.

Just my view of course, and probably complete rowlocks...but very happy that this thread is active again as I think this is an important issue.

LA

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

I would just say that s.98 only applies to rolling credit after 2011 (Feb I think), before then there was no requirement to give notice, AFAIK. For that reason it's important to study the agreement itself. My understanding is that a creditor who wanted to terminate as per a contractual provision rather than default would restrict credit, scoop up the contractual interest, and let the agreement finally come to an end when the balance is zero.

In my view there is mileage to be had here - the Brandon judgement refers to the absence of exclusivity between default and contractual termination, so if a termination notice is issued then the agreement has been ended. However, if the DN is defective, then the termination cannot be a default termination (the creditor has no entitlement) it must be a contractual termination. So, if the OC has recorded a default, and the notice of intent to file a default is contained within the defective DN, then it could be argued that the adverse data was wrongly recorded and this might open up a claim under s.13 DPA. In other words, the OC was wrong to record a default because the termination was contractual, not through default.

The judge in Harrison said he saw no reason why a defective DN could not be fixed. There was a case OTR (last year or early this, I think Pumpkinhead's case) where the debtor claimed repudiation following a duff DN and the judge agreed, stating that the agreement was ended and so the debtor had to pay the balance to the OC. The point being that just because an agreement is improperly binned it doesn't seem to remove the liabilities. In fact, there is nothing in the CCA that enables this to happen. I think this should be remembered where repudiation is used as a defence (or claim).

In addition, it might be that a creditor realises his mistake and then demands the intervening contractual interest (it has happened to me!) - at this point, the debtor can simply refer to the contractual termination and also s.140, by simply saying that a claim for contractual interest from a terminated agreement is unfair (to put it mildly).

Sorry to ramble on but hope helps anyway. I just think that a successful defence or claim must stick to the relevant acts (CCA and DPA) so that a district judge isn't coerced to move into difficult territory which may result in an appeal.

Having said that, in reality a creditor might just give up (as Teaboy points out). On the other hand, if a defence was made based on "unlawful rescission" then a judge might simply apply the concept of recission and require both parties to pay to each other what they have taken. This may or may not be a good thing. For "repudiation" I have no idea - does a defective DN amount to repudiation, especially when a termination clause exists in the contract? Personally I doubt it.

LA

Repudation in legal terms under contracts is where one party refuses to fulfill his obligations or duties owed to the other party - i.e they refuse to allow you 14 days to rectfiy a default notice by terminating (especially by selling the account) the agreement. As once sold they are no longer the owners of the account of have any rights or entitlements connected to the account and therefore can not issue a new DN. Neither can the new owner of the account as the agreement was terminated therefore no agreement exists for them to beable to issue a DN under.

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

No section 98 applied since the act was introduced, but only on fixed term agreements section 76 applies to all agreement, both state that 7 days notice had to be given before any action was taken on the account.

The requirements introduced by the EU directive in Feb 12 were related to open ended accounts(credit cared) only, and stated that 28 days must be given before a contractual termination was activated, there were also requirements for a reason to be given for the termination.

Yes i think a creditor who has gotten as far as taking proceedings only to be halted in his tracks by the debtor confronting hem with a faulty DN may well balk at the task of reissuing a new notice and going through the whole thing again.

D

Just to clarify for those with credit card agreements terminated prior to Feb 2011;

http://www.legislation.gov.uk/ukpga/1974/39/part/VII

There is no statutory requirement for notice to be given to terminate a rolling credit agreement prior to 1/2/11. For this reason it is important to understand any contractual termination clause within the contract as CCA will not apply.

S.76 does not apply to rolling credit agreements and never has.

If a creditor has taken a debtor to court on the strength of a duff DN, the debtor still has to defend and ask the court to strike out the claim. This does not automatically prevent a further court appearance when a creditor re-issues and the debtor still fails to pay. In fact this may be worse for the debtor as he may risk additional, or 'corrected', adverse data appearing on his credit file. It is therefore a risk.

I would suggest that a counterclaim involves DPA and/or s.140. In my opinion, a defence based solely on a duff DN should be a last resort.

LA

Re: Contracts, Termination, Repudiation and Rescission

Just to clarify.

Sections 76 and 98 nor the Directive give permission to contractually terminate, that has to be contained within the contract(t and C's), all that these sections do is say that there must be warning given before they are activated.

D

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

Personally i think unlawful rescission/repudation should not be used in defence, after all you have the faulty DN or unenforacble CCA for that, especially in mine and basa's case where account was sold prior to us getting the DN. Instead it should be made as a counter claim, as you are in fact claiming the creditor unlawfully rescinded or repudated the contract and is only entitled to the actual sum due at the time of termination and not the full outstanding balance.

Re: Contracts, Termination, Repudiation and Rescission

No section 98 applied since the act was introduced, but only on fixed term agreements section 76 applies to all agreement, both state that 7 days notice had to be given before any action was taken on the account.

The requirements introduced by the EU directive in Feb 12 were related to open ended accounts(credit cared) only, and stated that 28 days must be given before a contractual termination was activated, there were also requirements for a reason to be given for the termination.

Yes i think a creditor who has gotten as far as taking proceedings only to be halted in his tracks by the debtor confronting hem with a faulty DN may well balk at the task of reissuing a new notice and going through the whole thing again.

D

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

I would just say that s.98 only applies to rolling credit after 2011 (Feb I think), before then there was no requirement to give notice, AFAIK. For that reason it's important to study the agreement itself. My understanding is that a creditor who wanted to terminate as per a contractual provision rather than default would restrict credit, scoop up the contractual interest, and let the agreement finally come to an end when the balance is zero.

In my view there is mileage to be had here - the Brandon judgement refers to the absence of exclusivity between default and contractual termination, so if a termination notice is issued then the agreement has been ended. However, if the DN is defective, then the termination cannot be a default termination (the creditor has no entitlement) it must be a contractual termination. So, if the OC has recorded a default, and the notice of intent to file a default is contained within the defective DN, then it could be argued that the adverse data was wrongly recorded and this might open up a claim under s.13 DPA. In other words, the OC was wrong to record a default because the termination was contractual, not through default.

The judge in Harrison said he saw no reason why a defective DN could not be fixed. There was a case OTR (last year or early this, I think Pumpkinhead's case) where the debtor claimed repudiation following a duff DN and the judge agreed, stating that the agreement was ended and so the debtor had to pay the balance to the OC. The point being that just because an agreement is improperly binned it doesn't seem to remove the liabilities. In fact, there is nothing in the CCA that enables this to happen. I think this should be remembered where repudiation is used as a defence (or claim).

In addition, it might be that a creditor realises his mistake and then demands the intervening contractual interest (it has happened to me!) - at this point, the debtor can simply refer to the contractual termination and also s.140, by simply saying that a claim for contractual interest from a terminated agreement is unfair (to put it mildly).

Sorry to ramble on but hope helps anyway. I just think that a successful defence or claim must stick to the relevant acts (CCA and DPA) so that a district judge isn't coerced to move into difficult territory which may result in an appeal.

Having said that, in reality a creditor might just give up (as Teaboy points out). On the other hand, if a defence was made based on "unlawful rescission" then a judge might simply apply the concept of recission and require both parties to pay to each other what they have taken. This may or may not be a good thing. For "repudiation" I have no idea - does a defective DN amount to repudiation, especially when a termination clause exists in the contract? Personally I doubt it.

LA

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

I agree, in cases of unlawful rescission/repudation all they would be entitled to would be sums due at the time of termination and not total balance. So if you had a total used balance of £2,000 and were in arrears of say £100, then all they would be entitled to would be £100.

Unlawful termination is unlawful rescission/repudiation of contract. So although the termination is unlawful, it is not prohibited - So the act of termination itself is lawful, even if terminated unlawfully after an invalid default notice was issued (unlawfully as in not entitled to terminate). Which means it still amounts to unlawful rescission/repudation. So eitherway they would still only be entitled to amounts already due. In which event they are likely to write it off anyway, though only after 2-3 years of back and forth communication of various legal arguments.

Re: Contracts, Termination, Repudiation and Rescission

I suppose my take or argument on this is that the creditor is not 'entitled' to terminate, but that doesn't mean the same as 'prohibited'.

The creditor can still terminate but cannot take the next step to enforce because he has terminated the very agreement / contract where his rights to enforce are enshrined in law.

This is my view also, and fits with the facts as i have seen.
I find it hard to understand how a termination can be unlawful, if it is as you say enshrined in legislation and even when it wasn't, the fact is that there was no legislation prohibiting it.

Section 76/ 98 of the act say that notice must be given before.

I think Basas example earlier where the creditor only issued a for the arrears shows the procedure.
Because the original DN was defective they were forced to admit that they terminated under a contractual term and thus only could sue for sums already due under the contract.

D

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

I suppose my take or argument on this is that the creditor is not 'entitled' to terminate, but that doesn't mean the same as 'prohibited'.

The creditor can still terminate but cannot take the next step to enforce because he has terminated the very agreement / contract where his rights to enforce are enshrined in law.

Exactly - once sold, the OC no longer has any rights under the agreement as they have assigned them to a 3rd party after unlawfull termination, so the OC can not simply reissue a DN thats valid without buying back the account and having the debtors permission to reinstate the agreement. People say that the sale to a 3rd party is unlawful, but fail to note that the very terms and conditions of said agreements allow for OC to sell to 3rd parties whether agreement still live (though agreement and account continue as normal if agreement still live and not defaulted - card companies are always buying each other out) or after termination. Though if sold after termination all the 3rd party is entitled to is to collect outstanding balance and enforce, though only if termination was lawful.

Some say as the termination was unlawful then the sale/assignment to another party is invalid - This is not the case. For example if i bought goods from a shop on finance where agreement was between me and the seller and i kept to the payments and paid off in full, only for the seller to fail to pay his supplier for the goods, is the property of the goods still that of the sellers supplier? No, property has passed to me as i have paid for said goods. So although the sale was unlawful on the sellers part due to him not paying the supplier for the goods and therefore not having property of the goods (in legal sense), it doesn't effect my ownership of the property of the goods since i paid for them and my agreement was with the seller not the supplier, meaning supplier cannot claim property of the goods from me, but only from the seller whom the supplier had agreement with.

So even though termination was unlawful, the sale isn't invalid. As once the 3rd party pays the agreed price for it, property of the goods transfer to them and are legally theres along with any rights to it. Only thing is as the termination was unlawful, then the rights they bought can not be enforced as the CCA prevents them from doing so as a result of the OC's unlawful termination prior to 3'rd party buying the account - basically the 3rd party bought a dud, in which case they should pursue the OC for a refund, after all they bought goods, which is what a credit account is at the end of the day.

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

I suppose my take or argument on this is that the creditor is not 'entitled' to terminate, but that doesn't mean the same as 'prohibited'.

The creditor can still terminate but cannot take the next step to enforce because he has terminated the very agreement / contract where his rights to enforce are enshrined in law.

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

If you are arguing that the termination was "unlawful" I have a feeling you won't get far with this. If it was "unlawful" then presumably it should be corrected, as there are no sanctions for the creditor under the Act.

Hi and Thanks Me Lud,

I believe that unlawful here isn't a mere error, such as a spelling mistake on a DN which can be put right easily, and one may say rightly so, but a massive failure of the OC to comply with many key parts of CCA 1974, and that the collections notices, which are still coming to me, are very real indeed. In short, they have voluntariliy repudiated the agreement by denying me any part of it, and although there was a faulty DN, it has no bearing on this case as that element is totally insignificant to other aspects of the unfair relationship between myself and the OC.

I believe this is also true of the DN in Harrison, where there are many more pressing issues given weight by the Judge that allowed his judgement. I believe that the DN evidence would have been the last thing the Judge would have considered in making his decision; if the case had hung on it, I believe it would have been lost.