Thread: Egg Loan improperly executed? What next?

Absolutely right - There are 2 parts to the agreement:

1. For a cash loan which is a fixed-sum, unrestricted-use, debtor-creditor agreement
2. for PPI which is a fixed-sum, restricted-use, debtor-creditor-supplier agreement

As the 2 parts ar ein different categories as defined in ss8-15 of the CCA 1974, the agreement has to be treated as 2 seperate agreements under s18.

To be properly executed, under schedule 1 of the Consumer Credit (Agreeements) Regulations 1983 it must have the loan amount for each agreement (which it does), the repayment terms for each agreement (which it does not, only the 2 together) and the interest rate (which it does as they are the same for each agreement).

As it is not a signed agreement in the correct form as defined by s61 and corresponding regulations (Consumer Credit (Agreeements) Regulations 1983), it is not properly executed and can thererfore only be enforced by a court (s65). (Also the title is wrong which would also make it not properly executed)

Now, is it enforceable? Unfortunately, I think it may be for the follwoing reasons:

An agreement that is not properly executed can only be enforced by court order (s65) and s 127(3) limits the court's ability to enforce an agreement to a document signedby the debtor and having the prescibed terms. The prescribed terms relevant to s127(3) are given in schedule 6 of the 1983 regulations referenced above.

For a fixed sum agreement, the prescibed terms are:

1. A term stating the amount of the credit (this applies to each part of the agreement seperately, and your agreement has these)

2. A term stating how the debtor is to discharge his obligations under the agreement to make the repayments, which may be expressed by reference
to a combination of any of the following--
(a) number of repayments;
(b) amount of repayments;
(c) frequency and timing of repayments;
(d) dates of repayments;
(e) the manner in which any of the above may be determined;
or in any other way, and any power of the creditor to vary what is payable.

Again this term needs to be there for each part of the agreement, which it is not, which would seem on the face of it to make the agreement unenforceable.

However, there is a subtlety:

The APR is not normally a prescribed term except where the agreement falls in one of the exceptions in paragraph 9 of schedule 1. One of these exceptions is

[9. Agreements for fixed-sum credit except agreements--

(a) which do not specify either the intervals between repayments or the amounts of repayments or both the intervals and the amounts.

Your agreement falls into this exception (albeit by mistake) as the repayment amounts are missing. This makes the APR a prescibed term (schedule 6(1)4 but also leads to a contradiction: that the repayment amount of the repayment is a prescribed term (Schedule 6(1)5 - without qualification) on one hand and that the APR is required if the repayment term is missing on the other.

So - a simple reading of schedule 6 would indicate that the agreement(s) are (both) unenforceable.

A more in-depth reading, including the execptionin schedule 1 para 9 leads to a contradiction which may mean that both are in fact enforceable.

I am going to ask one of my colleagues to have a look.

This thread seems to have died. I have an almost identical agreement and would like more info so just bumping back into circulation