Contracts, Termination, Repudiation and Rescission

[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

[pt2537]

Re: Contracts, Termination, Repudiation and Rescission

attached is the woodchester case

have a read

[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

[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.

[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"

[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

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

[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.

[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

[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?

[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

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...

[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...

[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!!!!!

[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