Guarantees and Distance Selling Regulations

[Aequitas]

Does anyone have any view on whether the Distance Selling Regulations apply to the situation where the tenancy is agreed face to face, but the guarantee is sent by post to the guarantor?

[mariner51]

I would opine DSR does NOT apply.

[MrShed]

OK it isnt the appropriate legal act, but:

 

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075385183&type=RESOURCES

 

This link states:

 

ere are some exceptions to these rights of cancellation, including:

• contracts for the provision of accommodation,

More generally, I would be surprised if the act of being a guarantor constitutes as a "purchase".

[Ed999]

MrShed points out that as nothing is being sold to the guarantor, it would be surprising if the Distance Selling regulations had any application.

 

But Regulation 5(1)(a) provides that the Regulatiions can apply to a land rental contract, which would presumably include a shorthold tenancy; and Reg 5(2) provides for a contract to be within the Regulations if it can be made orally, presumably therefore including a periodic tenancy and a fixed term of less than 3 years.

 

Regulation 6(2)(b) refers to accommodation as being excluded, but the context appears to suggest that this refers to short term accommodation, e.g. an overnight stay in a hotel or holiday accommodation.

 

The tenant therefore does appear to come within the scope of the regulations.

 

Reg 3(1) provides that “credit” includes a cash loan and any other form of financial accommodation, suggesting that a financial transaction can fall within the regulatiions. A guarantee might be a 'form of financial accommodation'.

 

Reg 3(1) also provides that “means of distance communication” means any communication without the simultaneous physical presence of the supplier and the consumer. This presumably includes a letter, or exchange of correspondence.

 

The guarantor therefore might come within the scope of the regulations.

 

But under Regulation 15, there appears to be an implication that a contract falling within the regs can be supported by a related credit agreement; and there is no implication - at least, no obvious implication - in reg 15 that the credit agreement is subject to the regs.

 

My opinion is that when the regs say they relate to 'goods and services', in the context of a tenancy agreement the service is the rental of the tenanted premises, and not the provision of any related credit, i.e. not any related financial services - which are regulated seperately, by other legislation such as the Consumer Credit Act 1974, so do not need to come within the Distance Selling regulations.

 

The guarantor presumably is the creditor mentioned in Reg 15; and the regs do not apply to the creditor, only to the consumer and the supplier.

Edited July 18, 2011 by Ed999