The law in relation to Consumer Credit

Revision on credit law

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Define 'debtor-creditor-supplier' agreement.

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An agreement where there is a business connection between the creditor and the supplier.

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What does S.75 of the Consumer Credit Act state?

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'If the debtor has any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor.'

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Where did the Consumer Credit Act 1974 come from?

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The recommendations of the Crowther Committee's Report on Consumer Credit.

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What are the 3 conditions of a Consumer Hire Agreement.

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  • It is not a hire-purchase agreement.
  • It is capable of lasting more than 3 months.
  • The hirer is not a body corporate.

There was a 4th condition giving an upper threshold of £25. This was removed by the 2006 Act.

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Grove v American Express Services Europe Ltd [2003]

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It was held that S.75 did apply overseas. The decision was challenged by numerous credit card companies but they lost in the Court of Appeal.

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Aims of the Agreement Formality Provisions

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1. That the debtor is fully aware or the nature and cost of the transaction he is about to enter.

2. That the written agreement gives him a clear account of his rights and obligations.

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Agreement Provision Formalities

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1. Names and adresses of parties

2. Price of product.

3. Credit Limit

4. APR

5. Rights of Cancellation

6. Total Amount Payable

7. Amount of each payment and when it is due

etc

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Agreements Exempt from the Agreement Formality Provisions.

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  • non-commercial agreements
  • agreements under £50
  • restricted-use agreements
  • Debtor-Creditor-Supplier agreements
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Effect of Non-Compliance with Agreement Formality Provisions

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Agreement is 'improperly excecuted'. Debtor can still enforce the agreement, but creditor may find it impossible. The agreement will be entirely unenforceable if either;

  • if the debtor did not sign the agreement
  • if they were not given a copy of the agreement which includes their rights of cancellation
  • if the creditor has failed to serve the required copy of the agreement to the debtor.
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Campell Discount v Gall

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Agreement Formality Provisions

The customer chose a car, and it was agreed that he would apply to a finance co on hire purchase terms. The price was £265. The customer signed the proposal form and left it with the car dealer for the latter to fill in the details and send it off to the to the finance company. The dealer filled in the price as £325.

The Court of Appeal held that there was no contract between the finance company and the customer.

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Criminal Offences under the CCA 1974.

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1.To 'canvass' cash loans off trade premises unless requested in writing

2. To give a minor a circular inviting them to obtain credit or goods on hire

3. To issue a credit token (eg credit card) to someone who has not asked for it in writing

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What are the debtor's Rights of Cancellation?

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The Consumer Credit Regulations 2010 state that the borrower can withdraw from from an agreement within 14 days following conclusion of the agreement or, if later, once they have received a copy of the excecuted agreement.

They must repay the credit, along with interest for every day they had it.

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Under the Consumer Credit Act 1974, a credit advertiser commits an offence if they.........

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1. Convey information that is false of misleading

2. Indicate a willingness to supply goods on credit terms when they are not also available for cash

3. Infringe the Consumer Credit (Advertising) Regulations 2004

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Requirements of the Consumer Credit (Advertisements) Regulations 2004

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Every credit advertisement shall:

1) Use plain and intelligible language

2) Be easily legible

3) Specify the name of the advertiser

4) Specify adress of the advertiser

5) Give equal prominence to all items listed in Schedule 2

6) If secured on a property, must include a spcified warning.

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Requirements of Schedule 2

Consumer Credit (Advertisements) Regulations 2004

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1. Amount of credit

2. Requirement of deposit

3. Cash Price of goods

4. Requirement of Advance Payment

5. Frequency, number and amount of credit repayments

6. Other payments and charges

7. Total amount payable.

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Requirement of creditor before he can reposses goods.

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C must derve a default notice on the debtor giving him 7 days to remedy the breach before he can terminate the contract and reposses the goods.

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What does Section 90 of the Consumer Credit Act state?

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PROTECTED GOODS

Where the debtor defaults on goods after having paid more than 1/3 of the total cost, the creditor cannot reposses the goods without a court order. If they do, the agreement terminates and the debtor can recover all sums paid to the creditor.

However, the goods can be repossessed from a 3rd party or after being abandoned.

See Bentinck ltd v Cromwell Engineering co

and

Mercantile Credit co v Cross

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Bentinck ltd v Cromwell Engineering co.

Mercantile Credit co v Cross

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Bentinck:

C repossessed goods without a court order. However, this was allowed as the goods had been abandoned at a garage.

Mercantile:

The hirier, having gone into arrears but having paid more than 1/3 of the price, voluntarily returned the goods (a motorbike) to a shop. The credit co were held not to be in breach of the CCA.

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