Clydesdale/Yuill and Kyle ordinary cause credit card debt

[rhodium78]

Hmmm... Scottish Law is not my jurisdiction... You mean the Sheriff reserved judgement....? If that is the case, and he is expecting information either from you or from opposing counsel, then feel free but if he is not, then he can find this information for himself if he is not sure but thinking about it, as long as you send a copy to opposing counsel, I see no harm but I am not versed on the facets of Scottish law so I can't really talk to you about process or procedure unfortunately.

[mystery1]

The Sheriff will advise his judgement in terms of debate. The debate is basically to see if their is a valid reason to go to trial or should we stop now because any 1 side has not put forward a case which is anywhere strong enough to win even if at trial they prove what they say is true.

 

http://www.consumeractiongroup.co.uk/forum/yorkshire-bank-clydesdale-bank/219283-help-clydesdale-cca-please.html

 

The info does help even if it is for another case.

 

Cheers

 

M1

[rhodium78]

Sounds like summary judgement in English terms but thanks for teaching me something new about the Scottish legal system...

[Monty2007]

DearM1

 

The Sheriff should really define which pleas have been repelled and why. The Proof/PBA (leading of evidence) should the next stage, unless (I assume) he has repelled all their pleas and hence there are no aspects of their writ to decide upon?

 

You did very well and I think their position is shot to pieces, best of luck!

 

Monty

 

This is an Ordinary Cause summons under OCR, the closest analogy in English civil litigation procedure would be fast track but the Scottish system differs significantly from that down South. I will try to summarise the OCR process.

 

Within OCR there is an initial admit/deny phase to each part of the claim (the Condescendence), this is part of the "adjustments phase" which serves to remove any areas in the writ where there is agreement or points that can be more easily decided upon. The danger with this phase is that the Defender can simply deny each condescendence.

 

Once the adjustments are complete then the final "Record" is lodged by the Pursuer with the court (note: the adjustments process goes on between the Pursuer and Defender without copy to the court). Once the Record is closed there is then an "Options Hearing" where the case first calls before the Sheriff. Before this the Pursuer/Defender need to file a Rule 22.1 Note which serves to reserve any pleas that they seek to rely upon later.

 

At the Options hearing the Sheriff can (i) move to a legal debate as in M1's case, this is typical where there are any legal arguments to be discussed or (ii) Proof (leading of evidence) and (iii) Proof Before Answer (essentially the same as (ii)).

 

The legal debate should still be followed by a Proof/PBA hearing. I assume though that if the key aspects of the evidence is disposed of at debate then the Sheriff can move to repelling or awarding the Decree (Judgement).

 

In M1's case, the Sheriff should really define which pleas have been repelled and why. He should have made a clear summary of the position with respect to each of the pleas for the Pursuer and Defender.

 

It sounds (to me) from M1's thread that he has provided an excellent response to the Pursuers pleas and given they are not upheld they will be dismissed. The odd part is that the Sheriff has not been clear on these aspects.

[mystery1]

Monty,

 

I believe the Sheriff is just taking his time and perhaps looking for direction on the prospective agreement before making a written judgement in terms of the debate. Void or dismissed are both victories but void is better. He may decide to go to proof before answer.

 

I still intend to prepare for Proof Before Answer when i get a few days off/peace as i'm learning that you need preparation much before any court appearance and now i have 3 good books (the 1 you recommend and 2 from the library) to help in that regard.

 

Cheers.

 

M1

[leedoe]

Any more developments M1 ?

[mystery1]

Section 59 was a punt and an ill prepared punt. I expected that.

 

I do not remember an admission that if the separate terms were there that it was enforceable. I do recall that it was admitted that the terms were in the separate document. Not sure how he gets that it's fatal to the debate but at least it's not fatal to the claim.

 

There is nothing in the note about the credit limit of £200 being less than the minimum (£500) allowed by the terms (which has been admitted).

 

The pursuers plea-in-law was "1. The Defender’s averments being irrelevant et seperatim lacking in specification, Decree de plano should be pronounced as craved."

 

I'm confused by that. If it was lacking then surely they win the debate and if it's not then it should be repelled ?

 

There was also no mention of the default notice.

 

 

I think i need to do plenty of research on the case, how the duff limit helps us, how the expenses hearing will work and what happens at pre proof hearing.

 

Expenses hearing is less than 2 weeks away.

 

Any help welcome.

 

Cheers

 

M1

 

leedoe said:

Any more developments M1 ?

 

You got a direct line to my postie http://images.free-extras.com/pics/s/smiley_face-1609.gif

 

 

Can you see the first of those 2 pics btw ?

 

M1

Edited August 9, 2010 by mystery1

[paulwlton]

It's going to be difficult to prove that the terms were on the reverse without the original.

[mystery1]

The Sheriff indicated that at the options hearing ages ago. The did produce a blank just before debate which i was surprised at since it was 13 years ago. It did say Access instead of mastercard as well which was a pity.

 

I need to take a fresh look at it all again.

 

Not overly happy with the Sheriffs notes from debate as i don't recall anyone saying that if they can prove the blank was signed the prescribed terms are there. The credit limit is £200. The terms disagree (min £500). Terms also state the we will notify you from time to time etc. This was brought up in debate but seems to escape his notes.The prescribed terms can't be mis-stated (wilson). The pursuers were asked what the limit was and stumbled eventually said £200. If they struggle what chance has an ordinary member of public got ? I am looking for the judges comment from a prominent case which i've seen before regards lay people and understanding but it escapes me just now.

 

You can't appeal a Sheriffs notes, only the interlocur but this, i believe, will supply an appeal point if ignored later.

 

It's tougher than i'd hoped but i've got to try.

 

Cheers

 

M1

 

Central Trust Plc V Spurway [2005] CCLR,where HHJ Overend states

 

24. In my judgment, the passages of Lord Nicholls’ speech cited by Mr Say persuade me that:

 

(a)The amount of credit must mean credit in its technical sense, and

(b)That although the use of the word “credit” is not prescribed, there should not be any confusion in the mind of the lay reader as to what the amount of credit is

 

 

M1

[Peterbard]

Hi

As said it is not good enough for them to show the T and cs where in another document even if was there at the execution it must be in the same document.

Peter

[mystery1]

Explained and averred that the original agreement between the Pursuers and the Defender was executed on 7th March 1987 and was embodied in a document which consisted of an application form which was attached to the back of a booklet which ran to fourteen pages.

 

The application form was perforated and folded onto the back of the booklet.

 

This booklet included, inter alia, explanatory information in respect of the agreement.

 

This booklet also included the terms and conditions in force at the time of the agreement was entered into.

 

The part of the document which contained the terms and conditions is headed “ Credit Agreement Regulated by the Consumer Credit Act 1974”.

 

This part of the document together with the said application form was signed by the Defender on 6th March, 1997 and the Pursuers on 7th March, 1997. This constitutes all the trems and conditions of the agreement other than implied terms.

 

 

Now i'm sure they will say as per Carey this is one document even if so far they think it's McGuffick that this is from. Quite why a single document is designed to be separated mystifies me but that seems to be the interpretation of the courts.(Maybe Scots will be different ?)

 

M1

[paulwlton]

I think in Carey Wacksman concluded that a Barclaycard application was enforceable as it was set out in the same way. Seems the question needs asking was it the providers ONLY practice in providing a "booklet". It is well known that other credit card providers had their application forms in magazines.

[mystery1]

Musing through the misrepresentation act today.

 

They have admitted in court/documents that they induced a contract with a limit that was never going to be available.

 

I'm looking through various sites on the net. It definitely would have been available nearer the start but after 13 years ?

 

Misrepresentation happened but is it actionable ?

 

M1

[Peterbard]

Hi

 

wouldnt that be an incorrectly stated prescribed term.

 

Peter

[mystery1]

It believe it would. Misrepresentation act allows rescission though not just unenforceable.

 

 

M1

[Peterbard]

Hi

I think that if I had proof that they never intended granting the credit limit that was stated , I would definitely pursue the breach of section 127(3).

The bargain was essentially miss-sold the whole idea of section 60 is to ensure you know what you are getting into IMO this is a straightforward breach, and if you have there admition in writing that the agreement and particularly the credit limit was not the one intended to be applied the I think you have them.

Peter

[mystery1]

I have appealed the interlocutor after the debate. Not a certain win by any means but i hope it has a good chance.

 

 

 

The defender appeals to the sheriff principal on the following grounds :

 

By interlocutor on xxdatexx the learned sheriff granted a proof before answer to be heard on xxdatexx and reserved the question of expenses of the debate with hearing of expenses xxdatexx. This interlocutor is appealed on the basis that :

 

1. The learned sheriff has erred in law by

 

a. Not upholding the defenders plea-in-law number 2. The pursuers have admitted that the agreement is a regulated agreement on page 8 of the current closed record. The pursuers also admit the application from was signed first by the defender on 6th March 1997 and then by the pursuers on 7th March 1997 on page 9 of the record. These admissions mean that at the time the defender signed the agreement the agreement was both unexecuted and regulated. Section 189 of the consumer credit act 1974 defines an unexecuted agreement as ““unexecuted agreement” means a document embodying the terms of a prospective regulated agreement, or such of them as it is intended to reduce to writing;” At the time of the defenders signature no executed agreement was in place. Only in the future could an agreement take place.

 

 

 

In Carey v Hsbc [2009] EWHC 3417 (QB) which was a high court test case HHJ Waksman QC makes several references to prospective agreements. These comments I hope your Lordship will find persuasive in this matter.

 

7."Executed agreement" is defined under si 89 (1) as being "a document, signed by or on behalf of the parties, embodying the terms of a regulated agreement, or such of them as have been reduced to writing." An "unexecuted agreement" is defined as "a document embodying the terms of a prospective regulated agreement, or such of them as it is intended to reduce to writing." By si 89(4) "A document embodies a provision if the provision is set out either in the document itself or in another document referred to in it."

 

22.The way in which credit card agreements are made and become executed agreements naturally varies but one common way is illustrated by the "Barclaycard Platinum" booklet provided to me. This consists of 11 pages and attached to the final page by perforations is a form which can be detached and folded into 4 pages, one of which is a stamped addressed envelope to Barclaycard. Pages 6 to 9 contain all the terms of the intended agreement. The Prescribed Terms are set out at page 6 which, together with page 7 contains what is described as key financial and other financial information and key information as well as a box explaining the prospective debtor's right to cancel. Pages 8 and 9 contain what are described as "Barclaycard conditions".

 

27. In this example, the unexecuted agreement does not become executed when signed by the debtor because it has to be signed by the creditor after receipt of the application form. So s62 (1) applies. Here the s62 duty will be satisfied by the provision to the applicant of the booklet from which the form was detached. All of the terms of the prospective agreement are at pages 6 to 9.

 

60.(5) On Reg. 3 (2) © specifically, it was said that this was entailed because it would usually be impossible to put a name and address in the s62 copy which would be presented to the debtor (for example as in the worked example) in a booklet available to all prospective applicants, before he had engaged in the application process. I follow that, but I do not see why that deprives the point made in subparagraph (3) above of its force. Indeed, it may suggest that there had to be a compelling reason (impossibility as Mr Mitchell put it in paragraph 16 © of his written submissions) before the omission of the name and address could be contemplated.

 

 

 

Professor Goode also makes comment regarding prospective regulated agreements. I refer to Goode: Consumer Credit Law and Practice:

 

31.31: What constitutes a prospective regulated agreement?

 

It is not clear at what stage a contemplated agreement becomes a 'prospective' agreement for the purpose of the CCA 1974, s 57. In most cases, nothing turns on the answer to this question, but there may be circumstances in which a supply transaction initially concluded on a cash basis becomes a 'linked transaction' because of subsequent negotiations with a third party for credit to finance it, so that withdrawal from the prospective credit agreement would operate to cancel the supply transaction1. So far as s 57 is concerned, matters must at least have reached the stage where there is something to withdraw from. Mere contemplation of a credit or hire agreement in the mind of the putative debtor or hirer would obviously not suffice, nor, it is thought, would a mere enquiry to the putative creditor or owner about the availability or terms of credit. It would seem necessary that the parties should be engaged in negotiations for agreement, using the term 'negotiations' in its ordinary sense and not in the extended sense of 'antecedent negotiations' employed in the CCA 19742. However, this by itself does not suffice to attract s 57, which operates only in relation to a prospective regulated agreement. Accordingly, what must be in prospect at the time of a purported withdrawal under s 57 is an agreement that would fall within the definition of a regulated agreement3. 'Prospective' necessarily imports a degree of contingency. It is thus not necessary for the projected terms to have become crystallised to the point where it can be said that any ensuing agreement would definitely constitute a regulated agreement; it suffices that there is a clear prospect that it would do so.

 

 

I:30.47

 

It will be recalled that an unexecuted agreement is a prospective regulated agreement which, though reduced to writing, lacks contractual force, either because it remains to be signed by one or more of the parties or because the offeree has not yet communicated his acceptance of the other party's offer.

 

 

Section 59 of the consumer credit act 1974 states :

 

59 Agreement to enter future agreement void

 

(1) An agreement is void if, and to the extent that, it purports to bind a person to enter as debtor or hirer into a prospective regulated agreement.

 

 

With reference to the agreement it is quite clearly headed “access application” (pursuers 1st inventory of productions #1). I would further point out that in the box 4th from bottom on the right hand side it states “I understand that the bank reserves the right to decline the application”. In the box underneath this it says “this is a credit agreement regulated by the consumer credit act 1974. Sign only if you want to be bound by it’s terms”

 

Consequently as the agreement was a prospective regulated agreement it should be void and the pursuers action has no chance to succeed. Plea-in-law 2 for the defenders should be sustained and decree as craved should be granted with expenses.

 

 

 

 

 

 

2. The learned sheriff has erred in fact by not sustaining the defenders plea-in-laws 1 and 3.

a. The consumer credit act 1974, and by extension the consumer (agreements) regulations 1983 (si 1983/1553), require certain prescribed terms which must appear in any regulated agreement if it is to be enforceable by a court. See pages 13-19 of the record. The judge in Wilson & Anor v Hurstanger Ltd said

 

“ In my judgment the objective of Schedule 6 is to ensure that, as an inflexible condition of enforceability, certain basic minimum terms are included which the parties (with the benefit of legal advice if necessary) and/or the court can identify within the four corners of the agreement. Those minimum provisions combined with the requirement under section 61 that all the terms should be in a single document, and backed up by the provisions of section 127 (3), ensure that these core terms are expressly set out in the agreement itself: they cannot be orally agreed; they cannot be found in another document; they cannot be implied; and above all they cannot be in the slightest mis-stated” This was a statement that Lord Justice Tuckey specifically agreed with as in turn did Lord Justice Jacob and Lord Justice Waller during the appeal case Wilson & Anor v Hurstanger Ltd [2007] EWCA Civ 299.

 

On page 9 of the record the pursuer admits that the minimum credit limit that is available is £500. They then admit to increasing the Credit limit to £800 to comply with this term. The application form shows that the defender requested £200 on the application and this was sanctioned later. The pursuers Solicitor at debate admitted the initial credit limit was £200.

 

The initial credit limit was set at £200. This is a prescribed term. The terms and conditions state that this is an invalid limit. The prescribed term is mis-stated and therefore the agreement must be unenforceable. The consumer credit act is an act to prortect consumers. Even if the pursuers prove all they aver this mistake with the prescribed terms means that the court can’t make an enforcement order against the defender and as such the defenders plea-in-laws 1 and 3 should be sustained with expenses.

 

 

 

Any thoughts welcome.

 

M1

[mystery1]

my primary submission for the appeal.

 

 

My Lord, I am the Defender, Mrs x, in this case.

 

The defender appeals to the sheriff principal on the following grounds :

 

By interlocutor on August xxth 2010 the learned Sheriff granted a proof before answer to be heard on xxth October 2010 and reserved the question of expenses of the debate with hearing of expenses on xxth August 2010. This interlocutor is appealed on the basis that :

 

1. The learned sheriff has erred in fact in that no valid agreement was reached.

2. The learned sheriff has erred in law in that the court does not have any power to enforce if an agreement legally exists at all.

 

“For the purposes of argument at debate, the opponent’s averments must be read as if they are true. “the true proposition is that an action will not be dismissed as irrelevant unless it must necessarily fail even if all the pursuer’s averments are proved. The onus is on the defender who moves the action to be dismissed, and there is no onus on the pursuer to show that if he proves his averments he is bound to succeed”” (Charles Hennessey – Practical advocacy in the Sheriff Court page 117 6-07)

 

 

The Pursuers aver/admit that :-

 

On the 7th March 1997 that the pursuer’s and the defender entered into an agreement for the provision of running account credit from the pursuer’s (“the creditor”) to the defender (“the debtor”) and that said agreement is regulated by the Consumer Credit Act 1974 (page 8 closed record)

 

The pursuer’s have lodged a microfiche copy they say is the agreement which is an Application form and a copy of a booklet that they say completes the document. The credit limit applied for and sanctioned on this document is £200. (Pursuers first inventory of productions number 1 and closed record page 9)

 

The pursuer’s aver that the terms and conditions applicable were those of the booklet which they lodged into process as number 1 “Clydesdale bank Access card booklet”

 

The pursuer’s aver that as the terms and conditions allowed only for a credit limit of at least £500 they subsequently changed the limit to £800. (closed record page 9)

 

The pursuer’s aver that they received a section 78 consumer credit act 1974 request from the defender and in response they sent the application page, the terms and conditions and a document documenting the current terms and conditions of the agreement, as amended. (closed record page 9).

 

Firstly ,My Lord, we must look at what constitutes an agreement within the confines of the consumer credit act 1974 and it’s secondary legislation and secondly whether there was agreement on the terms.

 

The consumer credit act 1974 states :-

60 Form and content of agreements

 

(1) The Secretary of State shall make regulations as to the form and content of documents embodying regulated agreements, and the regulations shall contain such provisions as appear to him appropriate with a view to ensuring that the debtor or hirer is made aware of—

 

(a) the rights and duties conferred or imposed on him by the agreement,

 

(b) the amount and rate of the total charge for credit (in the case of a consumer credit agreement),

 

© the protection and remedies available to him under this Act, and

 

(d) any other matters which, in the opinion of the Secretary of State, it is desirable for him to know about in connection with the agreement.

 

 

(2) Regulations under subsection (1) may in particular—

 

(a) require specified information to be included in the prescribed manner in documents, and other specified material to be excluded;

 

(b) contain requirements to ensure that specified information is clearly brought to the attention of the debtor or hirer, and that one part of a document is not given insufficient or excessive prominence compared with another.

 

 

(3) If, on an application made to the Director by a person carrying on a consumer credit business or a consumer hire business, it appears to the Director impracticable for the applicant to comply with any requirement of regulations under subsection (1) in a particular case, he may, by notice to the applicant, direct that the requirement be waived or varied in relation to such agreements, and subject to such conditions (if any), as he may specify, and this Act and the regulations shall have effect accordingly.

 

(4) The Director shall give a notice under subsection (3) only if he is satisfied that to do so would not prejudice the interests of debtors or hirers.

 

 

These powers were used to introduce the Consumer Credit (Agreements) Regulations 1983 (SI 1983/1553). Schedule 6 of these regulations contains what are know as prescribed terms for the purposes of section 61(a) and 127(3) of the consumer credit act 1974. One of these prescribed terms is the credit limit which should be stated as “A term stating the credit limit or the manner in which it will be determined or that there is no credit limit”

Returning to the consumer credit act 1974 itself

 

Section 61 Signing of agreement

 

(1) A regulated agreement is not properly executed unless—

 

(a) a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, and

 

(b) the document embodies all the terms of the agreement, other than implied terms, and

 

© the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible.

 

Section 65 Consequences of improper execution

 

(1) An improperly-executed regulated agreement is enforceable against the debtor or hirer on an order of the court only.

 

Section 127 Enforcement orders in cases of infringement

(3) The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).

It is also explained that Schedule 3, Section 11 of the Consumer Credit Act 2006 prevents Section 15 repealing Section 127 (3) of the 1974 Act for agreements made before Section 15 came into effect. Since any agreement would have commenced prior to the inception of the Consumer Credit Act 2006, Section 15 of the 2006 Act has no effect and hence the Consumer Credit Act 1974 is the relevant act in this case.

 

 

My Lord, I return to the closed record page 9 where the pursuer’s admit they have an application which they state is good enough to form “the agreement”. The copy they have provide and aver is “the agreement” has a box which says “I request a limit of (normally) between £500 and £2000 “ and includes a space for an amount to be specified. The amount specified was £200. The actual term from the terms and conditions lodged by the pursuer’s states at term 5 “(b) For new customers, the credit limit on the account will be £500 or such larger amount as may be determined by us from time to time and advised to the accountholder” Further, ther is a section “for bank use only” in which it says that the limit has been sanctioned.

 

 

In Wilson & Anor v Hurstanger Ltd [2007] EWCA Civ 299 (04 April 2007) LJ Tuckey said of the prescribed terms at para 11

“Schedule 1 to the 1983 Regulations sets out the "information to be contained in documents embodying regulated consumer credit agreements". Some of this information mirrors the terms prescribed by schedule 6, but some does not. Contrasting the provisions of the two schedules the Judge said:

33. In my judgment the objective of Schedule 6 is to ensure that, as an inflexible condition of enforceability, certain basic minimum terms are included which the parties (with the benefit of legal advice if necessary) and/or the court can identify within the four corners of the agreement. Those minimum provisions combined with the requirement under section 61 that all the terms should be in a single document, and backed up by the provisions of section 127 (3), ensure that these core terms are expressly set out in the agreement itself: they cannot be orally agreed; they cannot be found in another document; they cannot be implied; and above all they cannot be in the slightest mis-stated. As a matter of policy, the lender is denied any room for manoeuvre in respect of them. On the other hand, they are basic provisions, and the only question for the court is whether they are, on a true construction, included in the agreement. More detailed requirements, which are designed to ensure that the debtor is made aware, so far as possible, of specified information (including information contained in the minimum terms) are to be found in Schedule 1.

I agree. The discretionary power under section 65 (1) to order enforcement of an agreement which does not comply with schedule 1 may be exercised on terms discharging the debtor from having to pay any sum payable under the agreement (section 127 (2)).”

 

I submit, your Lordship, that this is a firm indication that these prescribed terms should be treated as essentials of the contract and consensus in idem must be achieved if a contract is to exist. Indeed I would say that schedule 6 combined with the cca 74 sections 61(1)(a), 65(1) and 127(3) are a clear indication from Parliament that they intended the prescribed terms to be essential

 

In Contract cases and materials 2nd edition by John A.K. Huntley, John Blackie & Craig Cathcart at page 102 they discuss contract formation and consensus.

“Formal rules and contract creation

The ultimate task for the court, in each case, is to establish what, if anything, the parties have agreed. There are, therefore, two stages to this approach: first, to establish whether the parties have reached agreement and secondly, to decide what that agreement comprises. Thus, whether a contract has arisen is seen as an issue separate from, though not unrelated to, what the obligations of the parties might be. This begs the question : to what must the parties have agreed? Inescapably, courts again turn to formal rules. The technique inherent in the Scottish approach to contracts is to look for it's incidents. If it cannot be shown that the parties have agreed the incidents, or essentials of a contract, then no enforceable obligations arise. This does not mean that those incidents are immutably laid down as formal rules; the incidents established as formal rules are a minimum requirement to which the parties may freely add through their negotiations. It has been argued that the `problem with such solutions, however, is that they depend upon elaborate classification of terms which may be difficult to implement in practice and encourage even more litigation`[Forte & MacQueen, `Contact procedure, Contract formation and the battle of forms`(1986) 31 J.L.S. 24 at p. 225). There is no evidence to suggest that the Scottish courts are presently suffering under the strain of litigation in this area; nor that the task of classifying the essentials of a contract will prove difficult.

 

It is therefore too mechanistic (perhaps even misleading in the Scottish context) to rely on the rigid terminology of offer and acceptance as the appropriate formal rule for determining whether consensus in idem exists between the parties. If the parties have demonstrated by their words or acts as a commitment to the essential parameters of the agreement, they have a binding contract-even though they have not resolved every minor issue or contingency. That is the appropriate rule for establishing consent. The parameters, or essential elements of the agreement will in each case depend on the class or type of contract being transacted, so that at the very least the parties must have reached agreement on those essential elements. The stress which Scots law places, above all, on this fundamental principle that the essentials must be agreed before an obligation arises pervades, for example, the institutional writings (consider e.g.,Professor Bell's categories of error in substanialibus) and the case law on error (see e.g. McBryde, Contract, paras.3.39-3.4b, 5.09-5.12 and cases referred therein; and see Scot. Law.Com. Memo. 42 Defective consent and Consequential Matters (1978))

 

As a consequence, regardless of the stage of negotiations and the degree of detailed agreement as to terms, there can be no contract unless the essentials of the contract have been agreed.

 

The underlying formal rule suggested by [the] cases is that the parties must consent to predetermined essentials. Those essentials are primarily determined by the nature of the contract in question. Scots law, being a law of contracts, rather than contract, of necessity must define the essentials of the standard classifications of contracts. If there is no consent to all the incidents of a contract then there is no agreement. Conversely, if there is agreement on those essentials then a contract arises, regardless of whether the communings of the parties can neatly classified into offer, acceptance etc.”

 

In R & J Dempster Ltd v Motherwell Bridge and Engineering Co Ltd [1964] ScotCS CSIH_1 (03 July 1964) Lord Wheatley set out some information on contract formation and consensus in idem as follows :-

In Scammell (G.) and Nephew Ld. v. Ouston (H. C. and J. G.), [1941] A. C. 251. Viscount Maugham said (at p. 255):

 

"In order to constitute a valid contract the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty. It is plain that unless this can be done it would be impossible to hold that the contracting parties had the same intention; in other words the consensus ad idem would be a matter of mere conjecture. This general rule, however, applies somewhat differently in different cases. In commercial documents connected with dealings in a trade with which the parties are perfectly familiar the court is very willing, if satisfied that the parties thought that they made a binding contract, to imply terms and in particular terms as to the method of carrying out the contract which it would be impossible to supply in other kinds of contract."

There then follows a reference to the case of Hillas & Co. Limited v. Arcos Limited, (1932) 147 L. T. 503. In the case of Foley v. Classique Coaches Ld., [1934] 2 K. B. 1, Lord Maugham (then Maugham, L.J.) had said (at p. 13):

 

"It is indisputable that unless all the material terms of the contract are agreed there is no binding obligation. An agreement to agree in the future is not a contract; nor is there a contract if a material term is neither settled nor implied by law and the document contains no machinery for ascertaining it."

The phrase "contract to enter into a contract" was explained by Sargant, L.J., in Chillingworth v. Esche, [1924] 1 Ch. 97, in a passage at p. 113 which was later endorsed by Lord Buckmaster in May & Butcher Ld. v. The King, [1934] 2 K. B. 17, at p. 20:

 

"In the strictest sense of the words the Court will often enforce a contract to make a contract. The specific performance of a formal agreement of purchase is the enforcement of a contract to make a contract; the ultimate conveyance being often in itself in many respects a contract…The true meaning of the phrase is that the Court will not enforce a contract to make a second contract part of the terms of which are indeterminate and have yet to be agreed, so that there is not any definite contract at all which can be enforced, but only an agreement for a contract some of the terms of which are not yet agreed."

 

Muirhead & Turnbull v Dickson [1905] ScotCS CSIH_2 (14 June 1905) sets out what can happen if there is no consesus in idem. The Lord President said “In other words, the view to which the Sheriff came was that although the defender had not proved the contract which the Sheriff-substitute held proved, the pursuers on their part had not proved that upon 26th November they had made out a hire-purchase contract, so that in law there was no consensus in idem—no contract at all—and that consequently the only title to the piano being in the original proprietors of the instrument, the pursuers, they were entitled to delivery.”

 

“But commercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are made according to what people say, and accordingly I come to the conclusion that what was said here was, in the words of Mr Grant himself, that he offered the defender an instrument of the value of £26, payable 15s. per month, and that the defender accepted that offer, namely, to buy a piano at £26, but payable on the instalment principle at the rate of 15s. a month. In other words, I think the finding of the Sheriff-substitute which I read is a true finding in fact, because I think that was the meaning of Grant's words which the defender was entitled to accept according to their ordinary meaning. Grant could have made it clear if he had liked that his meaning was not the ordinary meaning of these words, but that their meaning was that he really wanted a hire-purchase agreement by producing the hire-purchase agreement on the spot. But he admits himself that he did nothing of the sort, and that as matter of fact the hire-purchase agreement was never put before the defender till long after, when certain of the instalments had been paid. Mr Lees made an attempt to shew that really the defender proved the pursuers' case by saying that he used the words that he would require to get it on the instalment principle, and Mr Lees argued that the instalment principle really meant the hire-purchase system. I do not think it is possible to arrive at that result. In the first place, if a man says “I will take a thing on the instalment principle,” I do not think that in ordinary language he does anything more than say “I will take it by paying up instalments.””

 

“The result is that I think we must return to the judgment of the Sheriff-substitute, and while one feels that the result is not altogether an equitable one, because the defender meantime retains the piano while he does not seem to be in a position immediately to pay for it, yet that result I think is due entirely to the pursuer's loose mode of doing business in that he did not take care to confine his purchaser to the contract which he says he intended to make.”

 

 

Further reference is made to McBryde "the law of contract in scotland"

 

“p101 5-29

Contradictory agreement

 

This problem is likely to arise when parts of different standard terms are used together. As it was put by Fletcher Moulton LJ (the Hibernian [1907] p.277 at 282)

"The difficulty in this case is due solely to the slovenly way in which the document constituting the contract of carriage is drawn up. I regret to say that in this respect it resembles many other mercantile documents which by their nature have grown up by a long process of adding new terms and conditions to documents of older date, without any regard to whether they fit in with the provisions of those prior documents. Such documents become well nigh unintelligible as contractual documents, and so far as my experience goes i have never met with so gross a case as the present one. Again and again i have found myself on the point of coming to the conclusion that it is the duty of the court to refuse to interpret this document."

 

In the end his Lordship did interpret the document. Lord Denning noted that if there was an acceptance saying:

" I desire to have either the freehold or an extended lease', then there is no contract, because no one knows which it is. It is too uncertain to be a contract. It is just as if i say: "I offer to sell you my horse for £100 or my cow for £50" and you reply "i accept your offer". There is no contract: for the simple reason stated by Lord Wright: When the words fail to evince any definite meaning on which the court can safely acy, the court has no choice but to say that there is no contract. " (Byrnlea Property Investments Ltd v. Ramsay [1969] 2. Q.B. 253 at 264)”

 

Your Lordship, i then refer to the opinion of Lord Osborne in STEPHEN ANTHONY TENBEY against STOLT COMEX SEAWAY LTD & MACGREGOR ENERGY SERVICES LTD

“[9] Having reached the foregoing conclusions, I now consider the effect of the application of the ordinary rules of the law of contract to the pursuer's offer in the circumstances of this case. As I understand it, there is no doubt about the law as regards the effect of the refusal of an offer. The matter is put in this way in Gloag on Contract, Second Edition, at page 37:

"An offer falls if it is refused. If the refusal is not peremptory, but combined with a request for better terms, the general construction is that the offer is gone, and that the party to whom it was made, on failure to obtain the terms he requests, cannot fall back on an acceptance of the original offer".

Lawrence v Knight appears to me to be an example of the operation of that principle in relation to an extrajudicial offer of settlement, which had impliedly been rejected by the pursuer. The same principle was applied outwith the context of litigation in Wolf & Wolf v Forfar Potato Company. Turning to the circumstances of this case, as revealed in the correspondence, 6/2 of process, it is quite clear to me that the pursuer's offer to settle at £15, 000 on the conditions there described, which the defenders have purported to accept, was refused on their behalf in their solicitors' letter of 10 October 2000, the terms of which I have already quoted.

[10] In my view, that letter contains a clear refusal of the pursuer's offer, in association with the making of a counter offer. As matters progressed, in their letter of 17 November 2000 the pursuer's solicitors made it quite clear that they regarded the original pursuer's offer as dead when they said: "It might be that something over £20, 000 might be of interest but we cannot even say that at the present moment". Accordingly my conclusion is that when the defenders purported to accept the pursuer's offer by lodging their minute of acceptance on 30 January 2001, that pursuer's offer was no longer available for acceptance. In this situation I shall refuse the defenders' motion for decree in terms of the pursuer's minute of offer and acceptance thereof.”

 

I then refer to Royal Bank of Scotland plc v Wilson & Anor (Scotland) [2010] UKSC 50 (24 November 2010) where Lord Hope said at para 72 “The answer to the problem is to be found in the words of the statute, to which all too frequently insufficient attention appears to have been given.”

 

 

I submit, Your Lordship, that it is clear that parliament have dictated that the credit limit is an essential of the contract. It is clear from the authorities cited that there must be consensus in idem on the credit limit as an essential. Schedule 6 of the 1983 regulations allow such agreement in 3 different ways and must be included in the agreement in writing. The Pursuer’s offered on the application an option to chose a credit limit and their terms were that it had to be a minimum of £500. The defender made a counteroffer of £200. This document is the only one upon which the pursuer’s aver they got the defenders signature. I submit that consensus in idem was never reached and that the learned Sheriff XXX erred in law and fact on these points and accordingly the pursuers claim must fail and as such should be dismissed and decree pronounced.

 

 

Should you Lordship not be with me on the above submissions i would refer My Lord to section 127(3) of the consumer act 1974 once more. Section 127 Enforcement orders in cases of infringement

(3) The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).

It is also explained that Schedule 3, Section 11 of the Consumer Credit Act 2006 prevents Section 15 repealing Section 127 (3) of the 1974 Act for agreements made before Section 15 came into effect. Since any agreement would have commenced prior to the inception of the Consumer Credit Act 2006, Section 15 of the 2006 Act has no effect and hence the Consumer Credit Act 1974 is the relevant act in this case.

 

I then refer to the judgment of TUCKEY LJ in the case of Wilson and Anor v Hurstanger Ltd [2007] EWCA Civ 299"[11] Schedule 1 to the 1983 Regulations sets out the "information to be contained in documents embodying regulated consumer Credit Agreements". Some of this information mirrors the terms prescribed by Schedule 6, but some does not. Contrasting the provisions of the two schedules the Judge said:

 

“33 In my judgment the objective of Schedule 6 is to ensure that, as an inflexible condition of enforceability, certain basic minimum terms are included which the parties (with the benefit of legal advice if necessary) and/or the Court can identify within the four corners of the Agreement. Those minimum provisions combined with the requirement under s61 that all the terms should be in a single document, and backed up by the provisions of s127(3), ensure that these core terms are expressly set out in the Agreement itself: they cannot be orally agreed; they cannot be found in another document; they cannot be implied; and above all they cannot be in the slightest mis- stated. As a matter of policy, the lender is denied any room for manoeuvre in respect of them. On the other hand, they are basic provisions, and the only question for the Court is whether they are, on a true construction, included in the Agreement. More detailed requirements, which are designed to ensure that the Debtor is made aware, so far as possible, of specified information (including information contained in the minimum terms) are to be found in Schedule 1."

 

If the Agreement does not contain these terms in the prescribed manner it does not comply with section 60(1)(a) of the Act, the consequences of which means it is improperly executed and only enforceable by Court order. Notwithstanding this point, the Agreement must be signed in the prescribed manner to comply with Section 61(1)(a) of the Act. If the Agreement is not signed by Debtor or Creditor, it is also improperly executed and again only enforceable by Court order, although without a Debtor’s Signature, enforcement would not be possible.”

 

I now wish to make reference to an excerpt of case law from the case of Wilson v Robertsons (London) Ltd [2005] EWHC 1425 (Ch).

 

In Wilson v Secretary of State for Trade and Industry [2003] UKHL 40, [2004] 1 AC 816, [2003] 4 All ER 97, the House of Lords explained that the 1974 Act was, like the Moneylenders Act 1927 before it, designed to tackle a significant social problem. The activities of some moneylenders have given the money lending business a bad reputation. Something had to be done to protect the borrower, who frequently, indeed normally, would be in a weak bargaining position. Protection of borrowers is the social policy behind the legislation. Part of that policy is to be achieved by setting stringent rules, which have to be complied with by the lender if his money lending Agreement is to be enforceable. The strictness of the discipline imposed on lenders is illustrated by the following passage in the speech of Lord Nicholls:

 

"72. Undoubtedly, as illustrated by the facts of the present case, section 127(3) may be drastic, even harsh, in its adverse consequences for a lender. He loses all his right under the Agreement, including his rights to any security which has been lodged. Conversely, the borrower acquires what can only be described as a windfall. He keeps the money and recovers his security. These consequences apply just as much where the lender was acting in good faith throughout and the error was due to a mistaken reading of the complex statutory requirements as in the case of deliberate non- compliance. These consequences also apply where, as in the present case, the borrower suffered no prejudice as a result of the non-compliance as they do where the borrower was misled. Parliament was painting here with a broad brush.

 

The unattractive feature of this approach is that it will sometimes involve punishing the blameless pour encourager les autres. On its face, considered in the context of one particular case, a sanction having this effect is difficult to justify. The Moneylenders Act 1927 adopted a similarly severe approach…

 

Despite [criticism in the Crowther report] I have no difficulty in accepting that in suitable instances it is open to Parliament, when Parliament considers the public interest so requires, deciding that failure to comply with certain formalities is an essential prerequisite to enforcement of certain types of Agreements. This course is open to Parliament even though this will sometimes yield a seemingly unreasonable result in a particular case. Considered overall, this course may well be a proportionate response in practice to a perceived social problem. Parliament may consider the response should be a uniform solution across the board. A tailor-made response, fitting the facts of each case as decided in an application to the Court, may not be appropriate. This may be considered an insufficient incentive and insufficient deterrent. And it may fail to protect consumers adequately…"

 

It is clear from the above authorities and the closed record, that if your Lordship doesn’t agree with my initial submission that no agreement exists, that the credit limit has been mis-stated which it cannot be. There is no signature document containg the prescribed credit limit term which the pursuer’s aver was agreed at £800 and state in the record cannot be £200. The pursuer’s might try to say that they stated the manner in which it will be determined but statute cleary said or and clearly you cannot have a situation where there is a fixed limit agreed (which may be subject to later variation depending on the terms) and there is also an agreement that the credit limit is to be determined. As per the authorities cited above a missing or mis-stated prescribed term renders any agreement unenforceable. The Defender craves that the court uses its powers under Section 142 of the Consumer Credit Act 1974 and declare that the purported credit card agreement supplied by the Pursuer as unenforceable, dismiss the claim and grant decree as craved with expenses.

 

Should Your Lordship not be with me on these points i would submit that the agreement is a “prospective regulated agreement”. The pursuers have admitted that the agreement is a regulated agreement on page 8 of the current closed record. The pursuers also admit the application from was signed first by the defender on 6th March 1997 and then by the pursuers on 7th March 1997 on page 9 of the record. These admissions mean that at the time the defender signed the agreement the agreement was both unexecuted and regulated. Section 189 of the consumer credit act 1974 defines an unexecuted agreement as ““unexecuted agreement” means a document embodying the terms of a prospective regulated agreement, or such of them as it is intended to reduce to writing;” At the time of the defenders signature no executed agreement was in place. Only in the future could an agreement take place.

 

 

 

In Carey v Hsbc [2009] EWHC 3417 (QB) which was a high court test case HHJ Waksman QC makes several references to prospective agreements. These comments I hope your Lordship will find persuasive in this matter.

 

7."Executed agreement" is defined under si 89 (1) as being "a document, signed by or on behalf of the parties, embodying the terms of a regulated agreement, or such of them as have been reduced to writing." An "unexecuted agreement" is defined as "a document embodying the terms of a prospective regulated agreement, or such of them as it is intended to reduce to writing." By si 89(4) "A document embodies a provision if the provision is set out either in the document itself or in another document referred to in it."

 

22.The way in which credit card agreements are made and become executed agreements naturally varies but one common way is illustrated by the "Barclaycard Platinum" booklet provided to me. This consists of 11 pages and attached to the final page by perforations is a form which can be detached and folded into 4 pages, one of which is a stamped addressed envelope to Barclaycard. Pages 6 to 9 contain all the terms of the intended agreement. The Prescribed Terms are set out at page 6 which, together with page 7 contains what is described as key financial and other financial information and key information as well as a box explaining the prospective debtor's right to cancel. Pages 8 and 9 contain what are described as "Barclaycard conditions".

 

27. In this example, the unexecuted agreement does not become executed when signed by the debtor because it has to be signed by the creditor after receipt of the application form. So s62 (1) applies. Here the s62 duty will be satisfied by the provision to the applicant of the booklet from which the form was detached. All of the terms of the prospective agreement are at pages 6 to 9.

 

60.(5) On Reg. 3 (2) © specifically, it was said that this was entailed because it would usually be impossible to put a name and address in the s62 copy which would be presented to the debtor (for example as in the worked example) in a booklet available to all prospective applicants, before he had engaged in the application process. I follow that, but I do not see why that deprives the point made in sub¬paragraph (3) above of its force. Indeed, it may suggest that there had to be a compelling reason (impossibility as Mr Mitchell put it in paragraph 16 © of his written submissions) before the omission of the name and address could be contemplated.

 

 

 

Professor Goode also makes comment regarding prospective regulated agreements. I refer to Goode: Consumer Credit Law and Practice:

 

31.31: What constitutes a prospective regulated agreement?

 

It is not clear at what stage a contemplated agreement becomes a 'prospective' agreement for the purpose of the CCA 1974, s 57. In most cases, nothing turns on the answer to this question, but there may be circumstances in which a supply transaction initially concluded on a cash basis becomes a 'linked transaction' because of subsequent negotiations with a third party for credit to finance it, so that withdrawal from the prospective credit agreement would operate to cancel the supply transaction1. So far as s 57 is concerned, matters must at least have reached the stage where there is something to withdraw from. Mere contemplation of a credit or hire agreement in the mind of the putative debtor or hirer would obviously not suffice, nor, it is thought, would a mere enquiry to the putative creditor or owner about the availability or terms of credit. It would seem necessary that the parties should be engaged in negotiations for agreement, using the term 'negotiations' in its ordinary sense and not in the extended sense of 'antecedent negotiations' employed in the CCA 19742. However, this by itself does not suffice to attract s 57, which operates only in relation to a prospective regulated agreement. Accordingly, what must be in prospect at the time of a purported withdrawal under s 57 is an agreement that would fall within the definition of a regulated agreement3. 'Prospective' necessarily imports a degree of contingency. It is thus not necessary for the projected terms to have become crystallised to the point where it can be said that any ensuing agreement would definitely constitute a regulated agreement; it suffices that there is a clear prospect that it would do so.

 

 

I:30.47

 

It will be recalled that an unexecuted agreement is a prospective regulated agreement which, though reduced to writing, lacks contractual force, either because it remains to be signed by one or more of the parties or because the offeree has not yet communicated his acceptance of the other party's offer.

 

 

Section 59 of the consumer credit act 1974 states :

 

59 Agreement to enter future agreement void

 

(1) An agreement is void if, and to the extent that, it purports to bind a person to enter as debtor or hirer into a prospective regulated agreement.

 

 

With reference to the agreement it is quite clearly headed “access application” (pursuers 1st inventory of productions #1). I would further point out that in the box 4th from bottom on the right hand side it states “I understand that the bank reserves the right to decline the application”. In the box underneath this it says “this is a credit agreement regulated by the consumer credit act 1974. Sign only if you want to be bound by it’s terms” It is also the case that on the application that the credit limit was an issue that the 2 parties were yet to agree.

 

Consequently as the agreement was a prospective regulated agreement it should be void and the pursuers action has no chance to succeed. Plea-in-law 2 for the defenders should be sustained and decree as craved should be granted with expenses.

 

If My Lord is still not with me then i submit that the pursuer’s have failed to comply with the defnders request under section 78 of the consumer credit act 1974.

 

SECTION 78 OF THE CONSUMER CRFDIT 1974.

Section 78(1) of the Consumer Credit Act says that this: -

"The creditor under a regulated agreement far running account credit

•within the prescribed period [12 working days] after receiving a request in

•writing to that effect from the debtor and the payment of a fee of£l, shall

give the debtor a copy of the executed agreement (ifany) and/or any other

document referred to in It, together with a statement signed by or on behalf

of the creditor showing according to the information to which it is

practicable for him to refer, -

(a) the state of the account, and

(h) the amount, if any, currently payable under the agreement by the

debtor to the creditor, and

© the amounts and due dates of any payments which, if the debtor law

does not draw further on the account, will later become payable

under the agreement by the debtor to the creditor.

Subsection 6 says this: -

12

'If the creditor under an agreement fails to comply -with subsection(l)(a) he

is not entitled, while the default continues, to enforce the agreement'

 

The pursuer’s aver that they received a section 78 consumer credit act 1974 request from the defender and in response they sent the application page, the terms and conditions and a document documenting the current terms and conditions of the agreement, as amended. (closed record page 9).

They did not send a signed statement of account nor have they said that they did. Accordingly they cannot gain judgement (see MBNA v McCullagh) and the claim should be dismissed with expenses.

 

 

 

M1