Invalid Default Notices

[IdaInFife]

some posts edited and some unapproved.........

[letsgetitsorted]

Hi All

Can ask these questions,

default notice sent 17th June received 23rd June said i needed to pay arrears by 8th July to clear arrears, but also stated needed to cut up and return credit card, then following on from that a letter sent 1st July and received 6th july then tells me my account is now closed.

 

what are your thoughts on this? is this unlawfull recession? and is this then an invalid default notice?

 

many thanks in advance

 

cheers

lets

[means2anend]

I DONT CARE!!!

 

NO one seems to understand HOW to use legislation..I AM WINNING...M2AE

 

BE CAREFUL GUESTS

[basa48]

I DONT CARE!!!

 

NO one seems to understand HOW to use legislation..I AM WINNING...M2AE

 

BE CAREFUL GUESTS

 

Calm down m2ae!

 

Are you angry or drunk??

[pt2537]

An apology would be nice.

lol

 

Yes, shame i never got one when a certain person went on their crusade against me.

 

apologies seem few and far between

[middenmess]

Hi All

Can ask these questions,

default notice sent 17th June received 23rd June said i needed to pay arrears by 8th July to clear arrears, but also stated needed to cut up and return credit card, then following on from that a letter sent 1st July and received 6th july then tells me my account is now closed.

what are your thoughts on this? is this unlawfull recession? and is this then an invalid default notice?

 

many thanks in advance

 

cheers

lets

 

Sounds like another Halifax? cock up which is likely to be good news for you!

[middenmess]

lol

 

Yes, shame i never got one when a certain person went on their crusade against me.

 

apologies seem few and far between

 

 

Good to see you posting pt:)

[basa48]

Good to see you posting pt:)

 

Seconded and carried

[nks22]

default notice sent 17th June received 23rd June said i needed to pay arrears by 8th July to clear arrears, but also stated needed to cut up and return credit card, then following on from that a letter sent 1st July and received 6th july then tells me my account is now closed.

Received date doesn't matter (unless it arrived early and you tell them). Date of service will be 19th (First) or 23rd (Second) making earliest remedy date the 4th or 8th July respectively. So it would appear valid. However if they terminated it on the 1st July it'll be UR because of that. (Don't think the return of the card is relevant - they can do that without a DN.)

[nks22]

However if they terminated it on the 1st July it'll be UR because of that.

 

And even the Brandon judge would appear to support that.

[patrickq1]

If you are (foolish enough) to write to the creditor and say something along the lines of "i can no longer afford to make the repayments on this financial arrangement" then you would be unlawfully repuditating your obligations and the creditor would be entitled to record the fact that you have done so on your CRA files

i cannot agree with the above staement DD sorry mate the repudiation would have to be followed by a action on non payment ? you may write to the creditor and complain the rates are to high but this does not mean you have unlawfully repudiated the contract unless you follow up a threat to cancell all future payments

patrickq1

[pumpytums]

Hi everyone I found the following that discusses repudiatory breach's. The interesting part I find is the bit that the innocent party can either terminate the contract and be released from further obligations they may have under the agreement or affirm the agreement and seek damages.

 

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

 

Understanding repudiatory breach

Friday, 16 October 2009 00:00 Edwards Angell Palmer & Dodge

 

The basic principles of repudiatory breach are commonly misunderstood both in terms of the nature of this type of breach and its effect. Definitions of the term often refer to ‘immediate’ or ‘automatic’ termination. For reasons discussed in more detail below, such definitions are misleading.

 

A repudiatory breach is a breach that the law regards as sufficiently serious to justify termination. The terms of the contract themselves may also entitle a party to terminate in the event of a breach that would not otherwise be regarded by law as a repudiatory breach.

 

While it is true that the rights and obligations of the innocent party do fundamentally change at the point of breach, it does not follow that the only possible outcome from that point is that the contract is brought to an end.

 

Two recent cases, which will be discussed in further detail below: (Cook v MSHK Ltd & ors [2009] and North Eastern Properties Ltd v Coleman & anor [2009]), provide useful examples of the importance of parties understanding their rights and obligations in this context. This article aims to outline the key aspects of repudiatory breach and to highlight the serious consequences that can arise as a result of a party’s failure to properly grasp its basic principles.

 

WHAT ARE THE EFFECTS OF A REPUDIATORY BREACH?

 

The key to understanding repudiatory breach and its effects, and therefore to appreciate the necessary steps that an innocent party must take to ensure that their position is protected, is to clearly identify the two changes that occur as the result of a repudiatory breach:

 

the innocent party gains a right to elect whether to affirm or to terminate the contract; and

the innocent party gains the right to claim damages (and will retain that right regardless of the result of their election).

Recognising that there is an election to be made by the innocent party following a repudiatory breach is vital.

 

ELECTION TO AFFIRM

 

In simple cases the innocent party will make its election and expressly communicate that election to the other party. In the case of an election to affirm, the effect of the breach is therefore that the rights and obligations of both parties under the contract remain unchanged but the innocent party will retain their right to claim damages for the breach. However, where a choice is not expressly communicated, an election can be implied.For an election to affirm to be implied two conditions must be present:

 

the innocent party must have knowledge of the facts giving rise to the breach; and

they must also have knowledge of their legal right to choose between the alternatives open to them.

If these two conditions are present and the innocent party then acts or communicates in some way, an intention or wish for the contract to continue, they will be deemed to have affirmed the contract. As a general rule affirmation, once elected, is irrevocable. However, the court may make an exception in circumstances where an innocent party has put pressure on the party in breach to perform the contract (which could, depending on the circumstances, be seen as an election to affirm), but the party in breach continues to be in breach. In these circumstances, it would be unfair for the innocent party to be held to have ‘made its bed’ by urging performance. The court justifies a different approach in such circumstances because it views the act of the party at fault as a ‘continuing repudiation’. An innocent party faced with a continuing repudiation should make it very clear (preferably in writing) that they are revoking their affirmation due to a continuing repudiation to ensure that the revocation is valid.

 

LOSS OF RIGHT TO TERMINATE

 

If the decision of the innocent party is to terminate, the key element here is not to delay in making that decision known to the other party in the form of a clear and unequivocal communication (preferably written). Case law has shown that there is definitely a danger that if sufficient time passes without the innocent party making an election, they will be deemed to have affirmed the contract. As one would expect there are no hard and fast rules about the length of time that the innocent party can take in making its decision but what is clear is that they should do so as soon as possible.

 

RECENT CASE LAW

 

Two recent cases of Cook v MSHK Ltd & ors [2009] and North Eastern Properties Ltd v Coleman & anor [2009] provide neat examples of the importance of a proper understanding of the effect of a repudiatory breach on the rights and obligations of the contracting parties and the serious consequences that can arise out of a misunderstanding of those rights and obligations.

 

FACTS OF COOK

 

Ben Cook was a former head of the ‘artists and repertoire’ division at dance record label Ministry of Sound (MOS). Cook’s employment contract imposed post-termination restrictions on soliciting MOS’s artists, but did not prevent him from competing. Cook accepted an offer of employment from one of MOS’s competitors, and resigned with six months’ notice. During his notice period, MOS allegedly discovered that Cook would be working on competing projects at his new label, and decided to remove him from sensitive commercial work and restrict his computer access. Cook was then absent with work-related stress, but returned to work out the rest of his notice period. He was then dismissed for gross misconduct and breach of fiduciary duty, as MOS believed that Cook had lied when asked directly what work he would be carrying out in the future.

 

MOS issued a claim for a declaration that Cook’s dismissal had been lawful and sought damages for the loss of revenue caused by Cook’s failure to work out his full notice period. Cook sought summary judgment and the judge agreed that MOS had not treated Cook’s conduct as repudiatory, but had instead affirmed his contract of employment. The result was that MOS could not rely on the allegations of breach to justify Cook’s dismissal.

 

Decision

 

The judge found that during the weeks following the known commission by Cook of conduct that constituted a repudiatory breach, MOS had given no indication to Cook that it was disposed to bring disciplinary proceedings against him, and had repeatedly made it clear that it regarded him as bound by his contract to work to the end of his notice period. The judge had been fully entitled to find that, on the admitted facts, MOS had affirmed Cook’s contract in the face of the known commission of breaches. Based on MOS’s own pleadings, it was clear that the company knew of Cook’s intention to compete (ie the breach) for over two months before his dismissal. Once MOS knew that the breach had occurred, it had to decide what to do about it. It had decided to affirm the contract and invite Cook back to work.

 

FACTS OF NORTH EASTERN PROPERTIES

 

In North Eastern Properties the High Court looked at whether an innocent party has the right to make an election prior to the repudiatory breach. This was a dispute involving the sale and purchase of land. The sale of the property had been delayed due to problems with the completion of construction work. The purchaser sought to rely on a letter sent together with notices to complete to the vendor as notification of an election to terminate the contract. The letter stated:

 

‘Accordingly unless the properties are ready for occupation with final building regulation certificate and premier guarantee certificate within no later than ten working days from the date of this letter then our clients will deem your clients in breach of contract and will consider themselves discharged from the contract and entitled to the return of their deposit with interest.’

The purchaser sought to rely on this letter as evidence of an election to terminate the contract. The judge agreed with the vendor’s argument that there is no authority to support the right to make an election prior to the repudiatory breach. Instead the judge viewed the letter as a simple statement of intention. The result was that the contracts remained in force.

 

COMMENTS

 

Faced with a breach of contract, an innocent party has some tough choices to make. First, whether the breach is sufficiently serious to justify termination. Wrongly treating a contract as terminated could itself be a breach of contract. Secondly, once satisfied that the breach is sufficiently serious to constitute a repudiatory breach then an election must be made as to whether to terminate or to treat the contract as continuing. To avoid pitfalls, this election should be made without unreasonable delay and in a clear and unequivocal manner. Cook and North Eastern Properties provide good examples of the very serious consequences that can result from an innocents party’s failure to act promptly and properly when faced with a repudiatory breach.

 

By Charlotte Bunn, associate, Edwards Angell Palmer & Dodge.

 

E-mail: [email protected] .

 

At-a-glance GUIDE

The effect of a repudiatory breach is that the innocent party gains the right to choose whether to either affirm the contract or to terminate.

If the innocent party elects to terminate they are released from performance of their obligations under the contract and from any obligation to accept further performance by the party in breach.

If the innocent party elects to affirm the contract, they remain obliged to perform their duties under the contract, but can seek damages.

Prior to making their election the innocent party must continue to perform their part of the contract.

Affirmation may be express or implied.

Affirmation is generally irrevocable.

It is possible for an innocent party to lose the right to terminate (for example by acceptance of goods or passage of time).

 

Interesting reading

 

It now sits right in my mind the fact that a repudiatory breach by either the creditor or debtor does not automatically terminate the agreement it's up to the debtor (in our instance) to make a decision whether the agreement continues. If the debtor makes the breach the creditor can choose to terminate once they have issued a DN.

 

An interesting occurrence to me recently is that the Creditor terminated demanded sums not yet due because of my repudiatory breach i.e failure to make payments but failed to issue a DN. From the above you can see that the creditor been the innocent party because of my breach terminated the agreement then demanded sums not due. Unfortunately for them they failed to use s87 which by law they have to as the CCA 1974 is designed to protect the consumer. So their termination is unlawful and as they elected to go out side of the contract to demand sums I have accepted their repudiatory breach by terminating. They could claim that this was a mistake but again I have accepted their breach I'm the innocent party. They believed the contract was terminated I agree with them. If they decide to affirm that the contract continues they can do that but I of course consider the contract/account terminated which is my right.

 

Simply putting a statement in an agreement that the Creditor can terminate at any time in my mind is fair enough however the fact remains then how do they expect to recover any outstanding monies. You have not broken your agreement and any term that then allows them to demand the full amount would be very unfair indeed and then we get into a whole other area of fun. Would you be allowed to claim back all the interest you have paid under the agreement along with all payments made? Would the interest the OC has charged now be forfeit? Any OC that decides now or in the future to mistakenly believe that they can just terminate and reap the benefits may be up for a very nasty shock indeed. If you have breached your agreement and they correctly follow s87 they are indeed entitled to claim damages for your failure to stick to your contract these damages been the outstanding monies due for your repudiatory breach. Why any company would decide against using a 100% route set in a statute that's 36 years old proven and tested rather than some dodgy ruling is beyond me.

 

These are just my views they could be complete bobbins.

 

Pumpytums

[middenmess]

Simply putting a statement in an agreement that the Creditor can terminate at any time in my mind is fair enough however the fact remains then how do they expect to recover any outstanding monies. You have not broken your agreement and any term that then allows them to demand the full amount would be very unfair indeed and then we get into a whole other area of fun. Would you be allowed to claim back all the interest you have paid under the agreement along with all payments made?

 

Egg didn't seem to have a problem with this when they terminated thousands of credit card agreements for housekeeping purposes a few years back.

 

Dear Mx xxxx

 

We're writing to tell you that we've reviewed your Egg Card account, and under condition 20.2 of your Egg Card agreement, we are giving you formal notice that your agreement will end 35 days after the date of this letter (31st January 2008).

 

After the agreement ends, any cards issued on the account may not be used for new transactions of any kind. Please cut up all cards and dispose of them securely. Any regular payments such as monthly subscriptions will not be paid from the Egg Card account so you will need to cancel them with the service provider and arrange an alternative means of payment.

 

You must continue to pay at least the agreed monthly repayment each month until any debt balance on the account is repaid in full. The Egg Card agreement continues to apply until the balance is repaid in full.

 

You must make sure that any additional cardholder is aware of this notification.

 

Our lending policy requires us to keep our portfolio within an acceptable level of risk. The decision to end this agreement has been based on an assessment of the credit profiles of this account in accordance with our credit strategies. Factors that impact a credit profile may include payment history, account conduct and other credit information.

 

We will not record adverse information with credit reference agencies just because we are ending your agreement. However, we will share information about your payment record in accordance with our normal practices.

 

To find out more about your credit record you can get in touch with a credit referencing agency such as Experian at www.experian.co.uk - they'll be able to give you an up to date credit report.

 

If you have any additional questions about the termination of your Egg Card Agreement, please visit www.egg.com and log on to 'your accounts', if you still require further assistance call 0845 301 0891.

[nks22]

Egg

didn't seem to have a problem with this when they terminated thousands of credit card agreements for housekeeping purposes a few years back.

They don't demand repayment of the existing debt sooner than it would otherwise have been due, though. They withdraw the right to any new borrowing but that's permitted under CCA without a DN.

 

"You must continue to pay at least the agreed monthly repayment each month until any debt balance on the account is repaid in full. The Egg Card agreement continues to apply until the balance is repaid in full."

 

 

[middenmess]

From my naive view point then,doing as Egg did would seem to be a better way of getting card holders to repay their borrowings over an indefinite? period of time rather than all the cock ups that companies seem to make with sending out dodgy default notices and the latter selling off as a bad debt to a DCA?

[nks22]

The creditor would claim the DN route was necessary because the debtor had defaulted and couldn't be relied on to repay a debt in the agreed way.

[pumpytums]

And thereby hangs a tale.

 

Turning a credit card agreement into a loan at credit card rates. With no option to opt out.

 

Till this day I still wonder what their thinking was behind this. One theory could have been that faced with a credit card account with no credit card facilities debtors would have jumped ship to 0% interest. Thus Egg get back a huge chunk of cash in a small time. I believe the credit market was still booming around this time.

 

160,000x 2k(average lets say) =320million if everyone jumped ship.

 

Unfortunately for them it backfired.

 

I don't see anywhere in the CCA 1974 that allows them to "Terminate" a consumer credit agreement s87 nope (default only) s98(nope fixed term only).

 

"If you have any additional questions about the termination of your Egg Card Agreement, please visit http://www.egg.com and log on to 'your accounts', if you still require further assistance call 0845 301 0891."

 

I wonder if the individual who agreed that last paragraph got roasted.

 

Pumpytums

[nks22]

"...where a choice is not expressly communicated, an election can be implied.For an election to affirm to be implied two conditions must be present: the innocent party must have knowledge of the facts giving rise to the breach; and they must also have knowledge of their legal right to choose between the alternatives open to them. If these two conditions are present and the innocent party then acts or communicates in some way, an intention or wish for the contract to continue, they will be deemed to have affirmed the contract."

 

This part is pretty important for those who delay claiming or fail to claim UR. Ignorance is a defence.

[nks22]

I don't see anywhere in the CCA 1974 that allows them to "Terminate" a consumer credit agreement s87 nope (default only) s98(nope fixed term only).

 

"If you have any additional questions about the termination of your Egg Card Agreement, please visit www.egg.com and log on to 'your accounts', if you still require further assistance call 0845 301 0891."

 

They were wrong to describe it as a termination since there was no demand for the repayment of monies not yet due. It falls under Sect. 87(2) of CCA74:

 

(2) Subsection (1) does not prevent the creditor from treating the right to draw upon any credit as restricted or deferred, and taking such steps as may be necessary to make the restriction or deferment effective.

 

The letter itself is contradictory: "we are giving you formal notice that your agreement will end" and "The Egg Card agreement continues to apply".

[cymruambyth]

So, following on from the above

CC company issue a DN which is not complied with. Inhouse solicitors state account closed and may take legal action etc. Account goes through various inhouse collection agencies before a very reduced repayment plan is agreed. 5 or 6 years later, repayment plan is ended and put back on major repayments which results in another DN etc.

Can they issue another DN? Was account by being closed terminated? Was this 'unclosed' when a repayment plan was agreed?

Thank you for any answers!

[nks22]

A demand for monies not yet due is effectively termination, whether the preceding DN was correct or not. A fresh DN cannot be issued except against a fresh agreement (which the repayment plan might be but only if it satisfied all of the usual requirements for a credit agreement).

[Dotty50]

From my naive view point then,doing as Egg did would seem to be a better way of getting card holders to repay their borrowings over an indefinite? period of time rather than all the cock ups that companies seem to make with sending out dodgy default notices and the latter selling off as a bad debt to a DCA?

 

But even when they do terminate just to stop you using the card, they still issue dodgy DN's anyway!

 

Here is one I had when the account had been terminated (up to date at the time) probably about 4 months before.

 

http://www.consumeractiongroup.co.uk/forum/attachment.php?attachmentid=18092&d=1272624733

[middenmess]

So how about....

Reported a fraudulent transaction on my card.

Creditor investigated and agreed with my claim.

Letter arrived 'we have closed your account,cut up your cards and use these new cards with new numbers'

They transferred the o/s balance to the new card [new account?]

Question is should I have entered into a new written agreement for this or would previous terms and conditions have covered this?

[diddydicky]

If you are (foolish enough) to write to the creditor and say something along the lines of "i can no longer afford to make the repayments on this financial arrangement" then you would be unlawfully repuditating your obligations and the creditor would be entitled to record the fact that you have done so on your CRA files

i cannot agree with the above staement DD sorry mate the repudiation would have to be followed by a action on non payment ? you may write to the creditor and complain the rates are to high but this does not mean you have unlawfully repudiated the contract unless you follow up a threat to cancell all future payments

patrickq1

 

 

well i think your last sentence is what i previously referred to (someone foolish enough to write and say that they were not going to /are unable to make any further payments...

 

however for clarity...............

 

 

A renunciation of a contract occurs when one party by words or conduct evinces an intention not to perform, or expressly declares that he is or will be unable to perform, his obligastions under the contract in some essential respect.

 

 

the injured party in a contract or agreement has a duty to mitigate his losses- therefore he is entitled- upon being envinced of the other parties INTENTION not to perform- to take those actions which will mitigate his losses,

 

I know of no better way to envince someone of your INTENTION to unlawfully repudiate your obligations ....than to write to the other party and say so-

 

the innocent or performing party therefore does NOT have to wait until the physical act is carried out- which is one reason why i have said previously that a DN that contains the phrase we WILL terminate/demand repayment of sums not yet due- can be taken as a repudiation as it is clearly a statement if INTENT

 

(it is just that it makes it easier for caggers to wait for the termination letter to tidy things up)

 

having said that- and if you read another thread just posted by pumpytums- there is a real danger- if you wait TOO LONG for the termination letter/demand for payment- that you will lose the right to elect AND leave the door open to the creditor to put right any defective DN- which again is why i personally advocate waiting no more than a few weeks- before accepting the DN itself as an unlawful repudiation

Edited August 11, 2010 by diddydicky

[letsgetitsorted]

Hi And thanks for the response to my questions

 

Hi All

Can ask these questions,

default notice sent 17th June received 23rd June said i needed to pay arrears by 8th July to clear arrears, but also stated needed to cut up and return credit card, then following on from that a letter sent 1st July and received 6th july then tells me my account is now closed.

what are your thoughts on this? is this unlawfull recession? and is this then an invalid default notice?

 

 

i have actually received a letter from them closing the accounts 19/4 - 1/6- and then the latest 1st july, but only the one default notice, each of these letters closing the account have different amaounts on them...

any advise

 

cheers