Invalid Default Notices

[Undercover-Elsa]

Also this, from Contract Law in Perspective:

 

"If the innocent party (ie the Creditor) gets it wrong and purports to terminate in circumstances where, as a matter of law, it was not entitled to do so, the party in breach (ie the debtor) may be able to treat such wrongful termination as a basis on which he (the debtor) can legitimately terminate the contract"

and..

"where an ineffective termination by the innocent party (creditor) enables the defaulting party to terminate, the end result (termination of the contract) is clearly the same. However, there may be very serious financial consequences for the innocent party. If the party in breach is struggling to meet its obligations, or can only do so on an uneconomic basis, it might like nothing better than for the innocent party to terminate in circumstances where it is not entitled to do so. Not only will the defaulting party have escaped future performance under the contract, but it may also have a claim for damages against the innocent party for wrongful termination. Even the opportunity for the defaulting party to raise such an argument will enhance its position in any subsequent negotiations for settlement which may take place"

 

 

Elsa x

[means2anend]

All the above is good....

 

But let's remember the differences between minor and major breaches of a contract...i.e Conditons and mere terms (or warranties).....

 

The breaking of a mere term (or a warranty) will not be sufficient to affect the performance of the contract( although damages may be entitled to...however if it is a Condition that has been broken then in addition to damages/and/or other remedies the innocent party can then elect to end the contract...

 

Ultimately what IS and IS not s Condition will turn upon the construction of the contract.

 

Usually a Condition is of such importance that overall it affects the contract being performed.

 

m2ae

[Guest HeftyHippo]

All the above is good....

 

But let's remember the differences between minor and major breaches of a contract...i.e Conditons and mere terms (or warranties).....

 

The breaking of a mere term (or a warranty) will not be sufficient to affect the performance of the contract( although damages may be entitled to...however if it is a Condition that has been broken then in addition to damages/and/or other remedies the innocent party can then elect to end the contract...

 

Ultimately what IS and IS not s Condition will turn upon the construction of the contract.

 

Usually a Condition is of such importance that overall it affects the contract being performed.

 

m2ae

 

The above comments, whilst correct, won't be beneficical to the vast majority of readers and will simply cause confusion. The CCA is complicated enough, add Contract law which is just as complex, and then add the uncertainty of identifying Conditions and Warranties and of contact construction and the information becomes unreasonable complicated and not useful.

 

We don't need to fully understand contract law, just the basics as applies to our cases. We're not interested in shipping contracts, employment contracts, freight on board, covenents, privity or anything else, just what constitites reudaition in cases governed by the CCA

 

Repudation only occurs where the breach is sufficently serious to justify termination. That is the definition. Yes, it can be a matter if oipinion as to if a breach does justify termination. That is life.

 

In terms of what constitutes repudiation... in our case, when the bank removes your banking facilities and demands repayment of credit they have extended, I think that qualifies. When that happens, what is left of the contract that existed? Nothing.

 

If removing all the benefits of a contract whilst attempting to enforce the obligations does not qualify as justification, then it is impossible to contemplate that anything ever could.

 

No need for fancy words and definitions. In most cases on this site, the total (usually permanent) withdrawal of facilities and benefits is what we are dealing with.

[means2anend]

I was not trying to confuse and i was NOT trying to be 'clever' as you so eloquently put it....

 

I should have (and was going to end) ended my post above with the fact that most of the actions taken are in all likliehood conditions ANYWAY

 

m2ae

[Guest HeftyHippo]

I was not trying to confuse and i was NOT trying to be 'clever' as you so eloquently put it....

 

I should have (and was going to end) ended my post above with the fact that most of the actions taken are in all likliehood conditions ANYWAY

 

m2ae

Firstly, I never described anyone as trying to be clever. In fact, I never described anyone in any terms.

 

I simply made the point that introducing concepts in terms that would not be likely to be understood, and which were irrelevant anyway, would not be beneficial to many readers.

 

Regardless of what you might have said, or how you may have ended your post, you didn't, and I contributed to clarify the uncertainties that your post introduced. I'm not interested in any argument with you, but you carry on if you wish - just try to make your argument helpful and beneficial!

[DontPushMe]

It's OK - I understand that something that goes to the root of a contract is a "condition" and that something not so important is a "warranty" and the bits in between are intermediate or innominate terms but what I wanted to know was what happened to the money outstanding. Does the lender walk away rubbing their chin or can he still press for its repayment? I understand how rescission ab initio can set the two parties of a contract back to their opening positions but I can't see what happens with repudiation. Didn't mean to start a war...

 

DPM

[pumpytums]

I would say that the remaining money (other than arrears) went the same way as the contract. If the creditor decides to throw the contract out the window, you get the gist. Under the contract/agreement the debtor is expected to repay the monies, if the creditor decides that the contract no longer applies and they no longer want to be bound by it so be it.

 

Pumpytums

[DontPushMe]

Thanks Pumptytums, that's all I wanted to know. Will the creditor be able to resurrect any claim in the future?

 

Presumably if one can ask for damages then one would ask for sufficient to clear the arrears and any costs.

 

The reason I ask is that I see a lot of posts suggesting various courses of action but I never see whether these suggestions work.

 

DPM

[Undercover-Elsa]

The effect of the repudiatory breach is that both the creditor and the debtor are relieved of any further obligations in respect of the contract, following the breach. Effectively money due up to the point of breach ie arrears, is still due.

Money not yet due, ie the future payments, are no longer due. The creditor would indeed be rubbing his chin, Dontpushme .

Naturally, the victim of wrongful termination is entitled to sue for damages, which sensibly would be set as a counterclaim to equal or exceed the amount of the arrears still owed.

That's the principle. Now you just have to convince the creditor and/or the judge...if you do so the balance not yet due is lost to the creditor and unrecoverable except by a successful appeal against the repudiation verdict.

Edited September 2, 2010 by Undercover-Elsa

[Guest HeftyHippo]

Elsa and Pumpty are correct, the innocent party of repudiation is relieved of his future obligations. In our case that means his obligation to repay. He could if he wished, repay it. (ho hum)

[means2anend]

Firstly, I never described anyone as trying to be clever. In fact, I never described anyone in any terms.

 

I simply made the point that introducing concepts in terms that would not be likely to be understood, and which were irrelevant anyway, would not be beneficial to many readers.

 

Regardless of what you might have said, or how you may have ended your post, you didn't, and I contributed to clarify the uncertainties that your post introduced. I'm not interested in any argument with you, but you carry on if you wish - just try to make your argument helpful and beneficial!

 

 

No...I do not wish to get into destructive arguments with you...

 

I appreciate your straightforwardness and am grateful for your input:-)

 

m2ae

[basa48]

Anyone any comments regarding a creditor terminating an agreement where there has been no default but simply relying on the usual "we can end this agreement anytime" clause.?

[the_shadow]

Anyone any comments regarding a creditor terminating an agreement where there has been no default but simply relying on the usual "we can end this agreement anytime" clause.?

 

If they are not seeking repayment earlier than the norm then its allowed as a non-default termination I believe... Just a removal of your right to draw on credit. However! If they are seeking repayment of all sums earlier than normal then without the default notice they "should not" be allowed to do this.

 

But after reading Brandon I must admit to confusion myself on what the judiciary will allow

 

S.

[diddydicky]

when dealing with repudiation, it is the law of contract that applies.

 

when one party breaks the contract, the other party has the option of holding the party to the contract, or can choose not to be bound by the contract themselves. In the latter, it is important to make the party know that you are not bound by the contract. If you don't, the other party can assume you wish the contract to continue. That situation applies when a contract runs over a period of time and there is a hiccup during its term. ie you agree to have your van fleet valeted every week, and one week the valet doesn't do them, or only does the insides and leaves the outsides. If you say nothing, it is assumed that you wish the contract to continue.

 

However, if that party still does not honour its part, the situation is one of continuing repudiation, and they cannot expect you to honour your part. So, in the case of the valet, if he misses out one week, and you tell him to stop messing about and carry on as usual, and he then disappears for a few weeks, the fact that he broke the contract again after you accepted his earlier breach does not mean he can expect payment for the work he didnt do ie expect you to honour your side.

 

In our circumstances, when a bank says they have closed the account, and will not honour cheques, ATM transactions, or credit card transactions, there is nothing we can do to force them to.

 

In such a case, when they close the account and end the agreement, if we accept or not, will not change their mind. The agreement is ended whether we accept it or not. Even if we wish to continue the agreement, and honour our side from that moment, their position will not change, they will not honour transactions. If you add our lack of knowledge about these legal matters, we have a lot of leeway. You could argue for instance, so what if you did not accept the repudiation? Would it have changed the banks position? Would the bank have acted differently if they suspected you knew about repudiation? Did the bank at any time actually honour any terms of contract before it terminated, such that they could argue that you accepted the change to the agreement? ie, you accepted (affirmed) that your bank account now had a different agreement - that they would not honour any transactions.

 

When they close the account, it isn't as if there are some changes to the account that restrict your use of it, ie, your cheque book now has 10 cheques not 25, and your card only guarantees then up to £25 rather than £100, you can now only get £50/day from the ATM, rather than £500, or your credit card limit is now £3000 rather than £5000. No, the whole account has gone, no cheques, no ATM card, no credit card.

 

Would any reasonable person believe that you actually intended to keep an account, and honour your side of the contract when you were not allowed to make any transactions? Would anyone accept that because you did not write to accept their repudiation, that you actually accepted that you account now had completely different terms, and that whilst you still had to abide by your contractual terms, teh bank didn't have to? Ie, the bank would not provide any banking services at all, but you were still contracted to them as if they had?

 

There is plenty of stuff on the www about continuing repudiation, have a look at

http://www.inhouselawyer.co.uk/index.php/contract/7474-understanding-repudiatory-breach

 

I'm not saying that contract and repudiation are not important to identify and point out to the bank, just that the situation regarding acceptance is not so clear cut. If you don't accept the repudiation, and 8 months later the bank reinstates the account and agreement, then may claim that because you didn't accept or identify any repudiation, then you actually accepted the new terms (ie a useless account) and they were modifying the terms again. They may have a point. However, has anyone ever known a bank reinstate an agreement once they close it? Although a timely acceptance may prove useful, it isn't the end of the world if you don't. In my case, 2 banks closed accounts and didn't tell me! I didn't have any chance to accept the closure for several months! Even after acceptance, the banks' behaviour doesn't change.

 

IMO this argument falls on the fact that most agreements allow for the fact of the creditor refusing FURTHER credit.

 

the creditor HAS performed- to the extent that it has already made the money available to the debtor- therefore the fact of the debtor continuing to repay as agreed under the contract does not require the creditor to reciprocate by continuing to offer lending facilities to the debtor- the agreement may continue in the form of the debtor making repayments with the creditor doing nothing

 

the DN proceedure is simply a prescribed device whereby the creditor can (if he complies with a valid DN) reclaim immediate payment of sums not yet due

 

therefore if he has terminated unlawfully and no acceptance of that termination has been received from the debtor- the creditor would be entitled to "correct" his mistake by issuing a new an valid DN and terminating again- because the original "termination" was never accepted by the debtor

 

the debtor cannot expect the creditor to have the benefit of foresight and to assume that the debtors silence indicates acceptance of his unlawful attempt to terminated

 

The fact that the debtor was "unaware" of his rights to accept an unlawful repudiation may well be ruled by a court at a later date not to affect his (the debtors) ability to do so much later or indeed for his silence not to be construed has meaning the agreement endured - but it will not be ruled (IMO) that the creditor should have been expected to know what the state of mind of the debtor was as to the reason for his silence on the matter

 

thus IMO a creditor who remedies an unlawful termination by serving a new, valid DN, before the debtor has indicated his acceptance of the creditors unlawful repudiation - is more likely to succeed than fail!

 

 

this argument has already been used to defeat a cagger in the county court and i suspect will be again

 

my advice is simple- on balance the sooner the unlawful repudiation is accepted- the better

[Guest HeftyHippo]

I would like to know why the threads occupy only one third of my monitor width......... total waste which makes a post hard to follow.

 

DD, you're always a pessimist.

 

Yes, as I say, in general, it is best to accept a repudiation. However, not doing so will not always harm your case because banks rarely reopen accounts after closing them, often don't even say they have closed them, and you have ignorance of the fact of repudiation on your side

 

If a bank wishes to issue a second DN to an account it has closed, it would have to clarify what status the account (agreement) had inbetween the 'termination' and 2nd DN. ie, were normal facilities available to the customer? If not, how could the account be open? etc.

 

In terms of restricting credit, few agreements specify how they calculate the credit limit. Most say they will decide a credit limit and inform you. It is not incompatible with that for their 'black box' to decide to reduce your credit limit. However, having offered a credit facility, removing the benefits of that facility in terms of not allowing borrowing is disingenuous in the least!

 

I'm not quite sure what you mean that its ok for the bank to lend money initially but can then refuse further credit. To require credits whilst refusing to allow debits, converts a credit card account into a loan - which is definateoly not what I signed up for. To remove running credit and turn it into a repayment only facility would seem itself to be a repudiation. If I have £1000 credit facility, I expect to be able to use all of that limit. If I pay in £300 I expect to be able to spend £3000. I certainly did not sign up for an account where the bank, at any time, could prevent me from using the very key facility of a credit card account - to be able to use it up to my credit limit when I wish.

 

In terms of closing the account completely, and ending the agreement however, a credit card account, as has been mentioned on here, is not only about borrowing money. The card can be used to reserve something eg hotel room via phone or internet, and the actual purchase can be made by other means. Money can also be paid into a credit card account so the account is in credit, thus allowing transactions via card without needing credit - eg travelling abroad (yes, a minority occupation perhaps, but possible definitely, and therefore a benefit of having the account). That's particularly useful when travelling through places for short spells as it avoids repeatedly changing money, and provides security. Indeed, there are now pre-payment cards designed just for that reason.

Edited September 2, 2010 by HeftyHippo
Duplicate Post

[Guest HeftyHippo]

Anyone any comments regarding a creditor terminating an agreement where there has been no default but simply relying on the usual "we can end this agreement anytime" clause.?

depends who you listen to!

 

some say that the CCA doesn't allow termination unless in default and only after following the requirements of the CCA, ie Default Notice.

 

Others such as me say the CCA neither prevents it or allows it - it is silent on the matter either by intent or accident.

 

However, consider this:

your credit card account is in arrears, and you receive a (proper complying) Default Notice. Happily, you do some overtime and take the required action to rectify the default within the time allowed. The Regs say that the situation should be as if the default never occurred - you're safe.

 

Almost immediately, you go into default again, and get another DN. Again, you do some overtime, pull the belt tighter, and rectify. Safe again. Unfortunately, things are tight and the situation happens, again and again, but somehow, you always manage to rectify the breach within the time allowed. You're just no good with money, and you are constantly in and out of default.

 

Now, consider my card. I'm never in default, I take pride in it. Then, Egg, or Amex, who I have the account with, decide that because I always pay the bill off every month, and never pay interest, that I'm not profitable enough so the rely on a term in their agreement which allows them to end it when they like, by giving notice. I receive a letter saying they will end the agreement in accordance with condition 22.2

 

Now, did the CCA provide you with any protection? Yes, because even though you were constantly in default, your lender followed the rules and gave you a chance to rectify.

 

Did the CCA protect me? No, because my agreement contained clauses which allowed them to do as they like. I was therefore exposed to whatever tricks and exploitation the lender could dream up. As they thought of new tricks, they simply updated the agreement. Effectively, my agreement contained the clauses that the CCA requires but also conditions that were designed to remove the protection of the CCA.

 

If a lender is allowed to put whatever terms it likes in the agreement, then effectively, they can create an agreement containing the required clauses of the CCA, and then insert other clauses that allow them to do as they like. Whenever they want to do something, they rely on the clause in 'their' part of the agreement, and not the CCA part.

 

The CCA should over rule any part of the lenders personal wishes. And where the CCA doesn't describe how it covers a particular situation, IMHO, the protection of the consumer should be paramount.

 

In this instance, allowing a lender to close an account when they like is not compatible with the aims of the CCA which is to protect the consumer and regulate lenders. In the above example, a properly run account can be closed down simply by giving notice, whilst an account that is badly run is protected if the owner can remedy the breach.

 

Take it to extremes...... what if a lender decides to categorise defaults - Default and Serious Default, and have different rules for them? Defaults would be dealt with as the CCA requires, but Serious Defaults? Well, theyre not covered by the CCA (it only mentions default) so a lender can do whatever he likes with Serious Defaults. What is a Serious Default? well, whatever the lender wants it to be because CCA doesn't define serious defaults!

 

Although I don't think the CCA deals with the issue of non default closure except for fixed term account, you can argue either way - it doesn't prohibit it, so its ok, or it doesn't permit it so its not allowed, if you think about the consequences of allowing terms outside that allowed by the CCA such as this one, you allow clever dick shylock lenders to create an "agreement within an agreement" ie, an agreement with clauses to satisfy the CCA, and other clauses designed to circumvent the CCA

 

I'm quite sure someone cleverer than me can think up a clause or two in an area on which the CCA is silent and which could be added to an agreement in order to undermine the CCA. That would be a good example to a judge of why the interpretation of silent or grey areas of the CCA should be interpreted conservatively for the protection of the Consumer.

 

We shouldn't forget the CCA was not drafted to ensure fairness to both parties, it was designed to protect the consumer.

 

Take the case of faulty agreements. In general, the law tries to ensure fairness and if you borrow £20,000 and cannot be made to pay it back because the agreement was faulty, you are enriched at the expense of the lender. Is that fair? No, obviously. You have benefited from another's mistake in a disproportionate way. But the CCA explicitly prevents fairness in that situation. Why would it do that? Well, one answer is to motivate the lender to ensure that the agreement HE drafts complies with the CCA. What would the situation be otherwise? We'd have to take an agreement to a solicitor to have it and our risk explained to us. We'd have agreements with all sorts of terminology designed to disquise the true contents and meaning. We'd only find out what they really meant when the bank told us our solicitor didn't understand it and took the shirt off us.

[Lord_Alcohol]

If a lender is allowed to put whatever terms it likes in the agreement, then effectively, they can create an agreement containing the required clauses of the CCA, and then insert other clauses that allow them to do as they like. Whenever they want to do something, they rely on the clause in 'their' part of the agreement, and not the CCA part.

 

This is a good point HH.

 

If an OC sends a new (replacement) agreement out with a new (replacement) credit card, but the new agreement contains brand new terms although does not require (according to the OC) signature of either party, is it valid (ie, properly executed)?

 

I'm wondering whether updated terms couched within a new agreement (but not a modifying agreement) are actually binding on the debtor.

 

Any thoughts?

 

LA

[Undercover-Elsa]

If they are not seeking repayment earlier than the norm then its allowed as a non-default termination I believe... Just a removal of your right to draw on credit. However! If they are seeking repayment of all sums earlier than normal then without the default notice they "should not" be allowed to do this.

 

But after reading Brandon I must admit to confusion myself on what the judiciary will allow

 

S.

 

Me too..that judgement is ludicrous. It shocked me to the extent that I spent an entire afternon transcribing the blurry faxed transcript into MS word, then back to pdf, the better to understand it and so it would be easier to refer to. (How anal is that, LOL).

 

What did strike me is that while the clause 10 termination rights were quoted as making the dn irrelevant etc...it did not make it apparent whether Amex had ACTUALLY issued a clause 10 termination on paper. I seems they were purporting to say that hypothetically they COULD have, so the dn is of no relevance.

If that is the case, then what imo should have been pointed out is that the case was brought to court on the basis of a Section87 / 88 default for breach, and that no clause 10 termination was issued, therefore it is irrelevant.

 

The other aspect which wasn't apparently argued is the 14 day one, in that apart from not allowing time for service (which was dispensed with using a fantasy argument based on sixth sense!) a dn should state an actual DATE for clarity, which is clearly defined both in the CCA and the OFT guidelines.

 

Still there are none so blind as those who will not see!

 

For anyone who hasn't got the easy reading version, here it is again

 

Brandontranscript-U-E.pdf

Edited September 3, 2010 by Undercover-Elsa
html tweaks

[middenmess]

If an OC sends a new (replacement) agreement out with a new (replacement) credit card, but the new agreement contains brand new terms although does not require (according to the OC)

signature

of either party, is it valid (ie, properly executed)?

 

I've had a couple of replacement cards [through fraudulent transactions] with a new account number but never received a new agreement!

[basa48]

I would like to know why the threads occupy only one third of my monitor width......... total waste which makes a post hard to follow.

 

Look near the top of the page just below the three yellow bands of colour and the thread page numbers there is a smallish box headed 'Consumer Forums Menu'. To the right of that box is an arrow tab. Click on it and voila.

[basa48]

depends who you listen to!

 

some say that the CCA doesn't allow termination unless in default and only after following the requirements of the CCA, ie Default Notice.

 

..........................snipped for clarity

 

Some good moral arguments and some maybe good legal arguments, but the judges in these cases don't always seem to have good legal judgement let alone morals!

 

I have been looking at this in relation to the Egg 'Ending your Agreement' letter.

 

It is clear from the words used that the intent of Egg is to terminate the agreement and terminate any line of credit the debtor was entitled to enjoy under the agreement yet still require the debtor to continue payments. This goes to the heart of the intent of the Egg Card agreement, i.e. the debtors ability to draw down credit to be repaid on a monthly basis.

 

However the anomaly is that the letter also argues that the agreement must endure until such time as the balance is repaid.

 

It is my assertion that what Egg are trying to do is impossible in that these two actions are inconsistent. I would argue Egg cannot enjoy both positions, i.e. to end the agreement such that they are no longer contracted to provide credit and at the same time benefit from the consumer being obliged to repay the balance of the account. All of this is inconsistent with the provisions of consumer protection provided by the Consumer Credit Act 1974 and the Unfair Terms in Consumer Contracts Regulations 1999.

 

I submit there are two possible outcomes:

 

1. The agreement is ended, and with it the rights, duties and obligations of the parties.

 

2. The agreement continues.

 

However in regard to outcome 2. ‘The agreement continues’, it is the fact that Egg have subsequently affirmed their ending the agreement by non performance of the agreement, to wit, the provision of credit to the debtor.

 

This non-performance I argue is a breach of contract by Egg which the debtor has accepted.

[basa48]

deleted - double post

[pumpytums]

Check this out for a laugh.

 

Ok Santandur sell an account without issuing a DN which is actually OK. The new legal owner then terminates demands the full balance discontinues in court for no DN.

 

Back to Santandur who seem to think that by issuing a nice DN sticking plaster everything is good again.

 

 

The prompt action took them 11 months after I wrote to them accepting their unlawful recession. The new owner simply stated that the contents of the letter was noted.

 

I wonder why it took them 7 months to fulfill my DSAR hmmm.

 

Needless to say a crafted letter will shortly be gracing their doorstep. All comments will be accepted. Even their T&C state they have to follow the CCA and can't simply terminate.

 

Pumpytums

[middenmess]

Muppets!

[Bill Shidding]

Hi,

 

but the judges in these cases don't always seem to have good legal judgement let alone morals!

 

Reminds me of the saying "Don't Judge in my Church, and I won't Preach in your Court"

IMHO, if a judge wishes to make decisions on moral grounds he should have become a man of the cloth, not of silk.

I don't think we should criticise our judges, they are the best money can buy.

 

 

I seems they were purporting to say that hypothetically they COULD have, so the dn is of no relevance.

 

In the trial I had, it was apparent that the claimant can/will try any avenue to secure a "win" if their initial argument fails.

Our job as defendants is to counter these "new" avenues as they occur (and squash them) but we need a sound knowledge of every possible route the claimant may take first. That is the hardest part to predict and research and exactly why LIPs should do all their own research for their own cases.

Whether or not the judge allows them to continue on grounds that are not mentioned in the POC will show where the judge morally stands. If you successfully counter the POC then the judge should legally dismiss the existing case, and/or allow the (lip) defendant to re-defend or admit the claim in its new particulars. However, that would mean more expense for the claimant (tough, they should've issued on firm ground).

 

IMHO, in the brandon case, I suspect that the account was a rolling contract (charge card) or one that requires the "debtor" to pay an annual membership fee. Non-payment of same would result in the immediate closure of the account in the T & C's. Therefore, a notice under sec 76 or/and 98 would not be "earlier payment" and the account would be of "fixed duration" (1 Year) because it would be "renewed on every annual anniversary of account opening" and only upon payment of the membership fee. This is just a guess and somewhat moot anyway.

Edited September 5, 2010 by Bill Shidding