Full & Final Settlement Offers - Advice please

[Bigdebtor]

Fred

 

Some great stuff in here - but I take your point in that it could be double edged if one DCA or Card Company susses out they are much softer (or less hard?) than most of the others? Although I guess the info on Experian or Equifax would tell them that already in any case?

 

What do the much more experienced caggers think - pros and cons?

 

BTW I have already put a post into Winston 44's site about the deals I have had:

 

MBNA (2 MBNA and 2 A&L Cards) 35% of £34k in total

Barclaycard 45% of £10k

- both settled in mid 2007.

 

Everyone seems to offer 75% relatively easily - but getting below 50% not so easy!

 

BD

[andie_303]

That is why Fred it must come from a 3rd party - there is clear case law that states as a 3rd party has no liability to the creditor then if they are to cash the cheque that is it.

 

 

It is only sneeky in the fact that you are not writing to them first to see if they will accept X% to settle - you just send it. Then they make the decision on whether to cash it or not. If they cash it then thats it - if they don't you are no worse off then you were originally.

 

Case law is as follows

 

The Law – ‘Full and final settlement’ - Voltimum UK - Electrical Installation Products and Contracting

 

There are some instances when a cheque sent in ‘full and final settlement’ will discharge a debt, cautions Barrister Rudi Klein. This article, of great interest to all contractors who’ve suffered payment problems, was originally published in Electrical Ti

 

A contracts with B to carry out certain electrical works. A invoices B for £100. B sends A a cheque for £50 in 'full and final settlement'. A banks the cheque but, subsequently, sues B for the outstanding balance of £50. A argues that the balance is legally his.

This question has arisen in a number of cases and as recently as the case of Andrew Bracken and Ann Trickett v Graham Billinghurst [2003]. Billinghurst carried out work for a Mr.Bracken and a Ms.Trickett. Matters went to adjudication. Eventually Bracken and Ms. Trickett offered to settle for £6,000. Billinghurst sent a cheque made out by a third party - his building company, Advanced Technology Ltd - for £5,000 'in full and final settlement'. The cheque was banked three weeks after receipt. Subsequently Billinghurst was informed the offer of settlement was rejected and the clients were going to pursue the full claim. In the circumstances, said the court, Bracken and Ms. Trickett had accepted the £5,000 in full satisfaction.

The law:

A distinction has to be drawn between debts which are undisputed and those which are disputed. With regard to the former the law relating to part payment of debts was established over four hundred years ago in the case of Pinnel [1602]. Cole owed Pinnel £8-10s-0d (£8.50) due on 11 November. At Pinnel's request, Cole payed £5-2s-2d (£5.11) on 1 October, which Pinnel 'accepted' in full settlement of the debt. He then sued Cole for the balance. The court held that Pinnel would only be bound to accept the smaller sum if Cole had provided some benefit to Pinnel for this concession, or in legal parlance, consideration. In this case Cole had paid the money earlier and had therefore, provided consideration. Unfortunately he lost on a technicality.

A much more modern case is D&C Builders Ltd v Rees (1966). D&C Builders did some work for Mr & Mrs Rees. The work was done with no complaints. But, the builders did not receive the outstanding sum of £482. Months went by and the builders were experiencing financial difficulties. Eventually Mrs Rees offered £300 to settle the matter. The builders agreed to take the cheque for £300 which was honoured. They sued for the balance. Lord Denning in the Court of Appeal gave judgment for the builders. They were not bound to take the £300 in satisfaction of the whole debt because the Rees' had not given any consideration for the builders agreeing to forgo the balance.

Therefore if the amount of A's invoice of £100 is undisputed, B is bound to pay the balance of £50. A further point - the rule in Pinnel's case - that consideration is required for an agreement to accept part payment of an undisputed debt - sounds unduly harsh. Subsequently some exceptions were made. If part payment of the debt is made by a third party, a promise to accept a smaller sum in full satisfaction will be binding on the creditor (where the payment is made on the condition that the debtor is released from the obligation to pay the full amount). This is what occurred in Bracken case, the third party being Advanced Building Technology Ltd.

Amount disputed:

When a cheque is sent in 'full and final settlement' in a situation where the actual amount claimed is in dispute, it is in the interests of both sides to compromise their respective positions or, in legal parlance, achieve accord and satisfaction.

An example is Stour Valley Builders v Stuart (1992). Stour Valley Builders carried out work for Mr & Mrs Stuart. The builders sent a revised account of £10,163 after the Stuarts had disputed some of the items. Eventually the Stuarts sent a cheque for £8,471 in 'full and final settlement'. Two days after the cheque had been cleared the builders informed the Stuarts that the cheque was not accepted in full and final settlement. The builders sued to recover the outstanding balance.

It was argued in the Court of Appeal that the court should adopt the American rule that the banking of a cheque in these circumstances amounted to an acceptance that it was tendered in 'full and final settlement'. The Court refused to go along with this. Instead, it relied upon the Victorian case of Day v McLea: whether there is an agreement to accept a cheque in full and final settlement is dependent upon the creditor's conduct.

Did the creditor cause the debtor to believe that the money was taken in full satisfaction? In this case the builders had made clear, shortly after the cheque had been cleared, that it was not accepted in 'full and final settlement'. The outcome would have been different if there had been significant delay in informing the debtor. Therefore A must inform B, either at the time the cheque is presented (or shortly thereafter) that he does not accept it in 'full and final settlement'. If he fails to do this he will be regarded as having accepted the amount stated on the cheque.

Summary:

The circumstances in which you will be bound by a cheque made out in 'full and final settlement' are as follows:

• The cheque is offered in circumstances where there is a dispute about the amount owed.
  
• The offer in 'full and final settlement' of the dispute is made at the time the cheque is presented.
  
• You present the cheque in payment and it is duly honoured.
  
• At the time of presenting the cheque or within a short time thereafter you fail to inform the payer that the cheque is not accepted in 'full and final settlement'Number 4 in the above list is critical.
  

Otherwise, as the Court of Appeal explained in another case, Ferguson v Davis; '...paying in and clearance of the cheque [is] a clear and unequivocal acceptance...'

Furthermore, if you bank a cheque from a third party (as in the Bracken case) in "full and final settlement' of a sum (whether or not disputed) owed by your debtor you will have signified acceptance of it as discharge of the debt. Bank Charges You should have started your claim for your bank charges by now.

Don't wait.

You should send your bank a Subject Acess Request asking for all personal data they hold on you - not just statements.

You should calculate all of your bank charges and related interest as far back as 1995.

You should send your bank a demand for a refund giving them 7 days.

You should commence your legal action adding 8% statutory interest.

If you wait for the outcome of the test case, you may not be able to claim like this. you may not be able to claim interest. You may only be offered the difference between the charge and the OFT "fair charge".

The repayment scheme will try to limit you to refinds from 2001 only.

A repayment scheme will not deal with any bank charges related defaults on the credit register whereas in a court action you can ask for these to be removed and to be compensated for the damage caused to you and your family by them.

You should also write to the bank and to the CRA and put all charges related credit entries in disupte and warn them that you will want them removed from the Register when the test case is over. Warn them also that you are likely to be seeking compensation for these wrongful data entries.

 

Full and final settlement

 

Have you previously accepted a partial repayment of your bank charges in full settlement?

You will still be able to claim the rest of your money back after the Test case is decided.

Get all your information back to 1995 and put in your claim now.

[andie_303]

The letter I used was along these lines

 

Acc Number xxxxxxxxxxx

 

Dear Sir/Madam

 

Please find enclosed a cheque for the amount of £xxxx for full and final settlement of the above account.

This cheque is sent on the clear understanding that if presented to the bank on receipt of cleared funds the above account will be closed, ANDIE_303's liability discharged and credit reference agents updated showing the account as fully satisfied.

 

Should you not be able to fulfill this request please return the cheque to myself at the above address within 7 days.

 

Yours Faithfully

 

 

 

Also written on the back of the cheque was "In full and final settlement of acc number xxxxxxxx - not to be used for any other purpose"

 

The cheque was then photocopied front and bank with the accompanying letter and sent recorded delivery.

[andie_303]

Bank Charges You should have started your claim for your bank charges by now.

Don't wait.

You should send your bank a Subject Acess Request asking for all personal data they hold on you - not just statements.

You should calculate all of your bank charges and related interest as far back as 1995.

You should send your bank a demand for a refund giving them 7 days.

You should commence your legal action adding 8% statutory interest.

If you wait for the outcome of the test case, you may not be able to claim like this. you may not be able to claim interest. You may only be offered the difference between the charge and the OFT "fair charge".

The repayment scheme will try to limit you to refinds from 2001 only.

A repayment scheme will not deal with any bank charges related defaults on the credit register whereas in a court action you can ask for these to be removed and to be compensated for the damage caused to you and your family by them.

You should also write to the bank and to the CRA and put all charges related credit entries in disupte and warn them that you will want them removed from the Register when the test case is over. Warn them also that you are likely to be seeking compensation for these wrongful data entries.

 

Full and final settlement

 

Have you previously accepted a partial repayment of your bank charges in full settlement?

You will still be able to claim the rest of your money back after the Test case is decided.

Get all your information back to 1995 and put in your claim now.

 

Sorry not sure where this came from in the above post - it doesn't relate to what we are talking about now so sorry about that.

[Bigdebtor]

Andie

 

I think your approach - and your letter - would work well in cases where a previous low F&F offer was ramped up by a DCA because the debtor was a few days late in getting the money gathered together.

 

The letter (and cheque) could be dated before the offer expiry date and refer to the offer letter (I don't think it really matters when it was actually sent off - and VERY unlikely then to be picked up by the DCA cashier as a potential [problem]). That way I really think the DCA would struggle to claim it wasn't accepted in F&F - as they themselves could easily have held on to it for a few more days until their offer had expired - not that any DCA would stoop so low (or is it stretch so high? - from their slimy repose?).

 

BD

[andie_303]

Hi BD

 

You are probably correct - I have not used this with DCA's I used it direct to companies I owed money to.

 

I'm sure a DCA would never do such a dispicable act..........

[middenmess]

andie---Your idea has some merit but can be viewed as 'chancing your arm'

 

 

The crucial line is the highlighted section below....

Summary:

The circumstances in which you will be bound by a cheque made out in 'full and final settlement' are as follows:

• The cheque is offered in circumstances where there is a dispute about the amount owed.
  
• The offer in 'full and final settlement' of the dispute is made at the time the cheque is presented.
  
• You present the cheque in payment and it is duly honoured.
  
• At the time of presenting the cheque or within a short time thereafter you fail to inform the payer that the cheque is not accepted in 'full and final settlement'---Number 4 in the above list is critical.
  

Until there is a defined timescale as to within how many days from banking/presenting the cheque the creditor can still demand the balance of the amount owed by refusing to credit the money as F & F,there will exist a huge problem for the debtor.

 

A resolve as to how a creditor would so inform the debtor would also have to be created given that our postal system, as we now know it, is likely to be a thing of the past.

 

A number of F & F's sent in this way will probably slip through and not be chased dependant on the sum owed, but others would be challenged meaning that whatever payment you had sent would be of little benefit to the debtor in their quest to clear their debts.

 

It would be difficult to prove that you had actually sent the money as F & F if the creditor denied that it was sent as such and conveniently 'lost' the accompanying letter.

 

Whether stating it was only to be used as F & F by writing on the back of the cheque is another debatable issue.

[andie_303]

You're correct if you do it that way it is chancing your arm.

 

However that is not what I have advised and I believe this section is much more pertinant and why I have said 3rd party cheques.

 

Furthermore, if you bank a cheque from a third party (as in the Bracken case) in "full and final settlement' of a sum (whether or not disputed) owed by your debtor you will have signified acceptance of it as discharge of the debt

FYI this is the bracken case summary

This question has arisen in a number of cases and as recently as the case of Andrew Bracken and Ann Trickett v Graham Billinghurst [2003]. Billinghurst carried out work for a Mr.Bracken and a Ms.Trickett. Matters went to adjudication. Eventually Bracken and Ms. Trickett offered to settle for £6,000. Billinghurst sent a cheque made out by a third party - his building company, Advanced Technology Ltd - for £5,000 'in full and final settlement'. The cheque was banked three weeks after receipt. Subsequently Billinghurst was informed the offer of settlement was rejected and the clients were going to pursue the full claim. In the circumstances, said the court, Bracken and Ms. Trickett had accepted the £5,000 in full satisfaction

[andie_303]

I agree that if I was to send a cheque from my cheque book I am indeed "chancing my arm" and the reasonable time period is a very grey area.

 

However a third party cheque does not have the same reasonable time period attached - once banked that is it.

[middenmess]

Hi andie--oops! I was reading it that the same conditions applied throughout even if paid using a third party.

 

The statement...

Furthermore, if you bank a cheque from a third party (as in the Bracken case) in "full and final settlement' of a sum (whether or not disputed) owed by your debtor you will have signified acceptance of it as discharge of the debt.

 

I'm a bit lost here----Is banking a cheque considered to be a 'signed acceptance?'

 

In the instances that you have had F & F accepted, and obviously not knowing what the amount involved was, do you think that the F & F 'slipped' through their systems or was genuinely accepted as the percentage offered was high enough to satisify?

[andie_303]

A 3rd party check banked "signifies" acceptance - that basically means that bank it and they've accepted it.

 

The first one did tell me that they seperated letters from cheques and the letter wouldn't have been read before they banked the cheque - that doesn't go to say they wouldn't have accepted it - just in that case they admitted it had not been read.

 

The second just sent a letter confirming the account was closed - therefore I assume they accepted it as it was a high enough percentage for them to close it.

[middenmess]

Thanks andie,

 

Another arrow for my bow,my quiver is getting full!!

[fredsdebt]

Hi 'andie_303' and 'middenmess' thank you both for the postings.

 

So can I take it that there dosn't need to be a dispute on the account to make a F&F?

 

Also, a key point is that money has to come from a 3rd party (friendly family member for instance) and a statement contained within cover letter saying what the cheque is for etc......

[andie_303]

Correct Fredsdebt - the money does need to come via a third party - make sure this is a third party you can trust and that if they cheque is returned to them they return your money to you.

 

and yes you should be explicit in the letter about what the money is for. I wrote the letter and my 3rd party signed it and put the cheque in.

[fredsdebt]

Anyone got any views on this?

[bobdauilda]

Correct Fredsdebt - the money does need to come via a third party - make sure this is a third party you can trust and that if they cheque is returned to them they return your money to you.

 

and yes you should be explicit in the letter about what the money is for. I wrote the letter and my 3rd party signed it and put the cheque in.

 

Thanks for this info, I was wondering if a parent (with the same surname) could be classed as a 'third party' to use?

[andie_303]

I believe a third party is anyone but yourself - in my case my cheques came from my mother who has the same surname as myself.

[bobdauilda]

I believe a third party is anyone but yourself - in my case my cheques came from my mother who has the same surname as myself.

 

Thanks Andie

[bobdauilda]

Andie- one further question- had you already missed any payments on your loans cc debts before trying this? Just wondered if it was worth trying to do on any non-defaulted debts to clear them?

Edited October 23, 2009 by bobdauilda

[andie_303]

Andie- one further question- had you already missed any payments on your loans cc debts before trying this? Just wondered if it was worth trying to do on any non-defaulted debts to clear them?

 

Hi both were non-defaulted - they had had some previous late payments but were currently up to date - I did it to get rid of charges and higher interest that had been applied when I had missed payments.

 

Both were made direct to the companies I owed money to.

 

Hope this helps

[middenmess]

Hi both were non-defaulted - they had had some previous late payments but were currently up to date - I did it to get rid of charges and higher interest that had been applied when I had missed payments.

 

Both were made direct to the companies I owed money to.

 

Hope this helps

 

Just to rub it in then,you could still reclaim all your late charges from them:-D

[bobdauilda]

Did they close your accounts after accepting the F&F's?

Edited October 25, 2009 by bobdauilda

[bobdauilda]

I cannot find the Winston44 thread despite using the search facility. Can someone help please?

[maroondevo52]

I cannot find the Winston44 thread despite using the search facility. Can someone help please?

 

 

This one................

 

http://www.consumeractiongroup.co.uk/forum/getting-out-debt/227482-whats-lowest-final-settlement.html

 

Regards.

 

Scott.

[auggloop]

Hi last year i had 2 debts with lloyds tsb for a credit card £7000 and overdraught £1500 had been going on for 8 years they offered me settlement of £1500 on the card and £400 on the overdraught so this might give you some idea of how much can be written off