50% liability or not on termination

[postggj]

Interesting

[Peterbard]

Bit of a sweeping generalization to say that the charge following a creditors termination is not a penalty i would have thought.

 

Also the problem with the rebate according to my pal Francis is that the full sum is payable before it is due, you have to have the cash in order to take advantage of it, if you don't and the agreement goes into arrears and hence full term you get nadda.

 

A VT can be done at any time however, once the car has been returned and the car as gone back the sum owed remains the same.(50% etc.)

[postggj]

Interesting

[Gaston Grimsdyke]

Bit of a sweeping generalization to say that the charge following a creditors termination is not a penalty i would have thought.

 

Really? So how much extra profit does a creditor make from a debtor who defaults and they terminate, repossess and sell compared to a debtor on an agreement that runs its course? If the answer is nothing (which it is) then it's not a penalty clause. The fact is that the VT calculation is a creature of statute and a departure from the general common law.

 

Also the problem with the rebate according to my pal Francis is that the full sum is payable before it is due, you have to have the cash in order to take advantage of it, if you don't and the agreement goes into arrears and hence full term you get nadda.

 

Why should a debtor get the advantage of a rebate before he has actually made any accelerated payment of instalments? Have a read of Forward Trust v Whymark.

[sequenci]

Just got off on the wrong foot I think

 

Awww you guys!

[Peterbard]

Really? So how much extra profit does a creditor make from a debtor who defaults and they terminate, repossess and sell compared to a debtor on an agreement that runs its course? If the answer is nothing (which it is) then it's not a penalty clause. The fact is that the VT calculation is a creature of statute and a departure from the general common law.

 

Depends on what charges he applies on default I would have thought

 

 

Why should a debtor get the advantage of a rebate before he has actually made any accelerated payment of instalments? Have a read of Forward Trust v Whymark.

 

No reason why it is just the way it works.

 

Yes thanks.

 

See above

[Gaston Grimsdyke]

Depends on what charges he applies on default I would have thought

 

Exactly so, and those charges can only represent the creditor's actual losses associated with the default e.g. costs of running a collections department, producing reminder letters etc. The default charges cannot be a source of profit as well, otherwise it is a penalty clause.

[Peterbard]

Exactly so, and those charges can only represent the creditor's actual losses associated with the default e.g. costs of running a collections department, producing reminder letters etc. The default charges cannot be a source of profit as well, otherwise it is a penalty clause.

 

They should, however these would not be applicable in a VT, so as far as the debtor is concerned they represent an additional charge.

[Gaston Grimsdyke]

Not talking about a VT. Talking about whether a termination clause by itself is a penalty clause. No it isn't, because it only provides for recovery of actual losses. The VT liability is a loss for the creditor and a benefit for the debtor, so that's why creditors don't like them and will make sure they mark against a debtor's credit file that he has VTed so any future potential lender can load his rate to reflect the increased risk of a loss.

[Peterbard]

Not talking about a VT. Talking about whether a termination clause by itself is a penalty clause. No it isn't, because it only provides for recovery of actual losses. The VT liability is a loss for the creditor and a benefit for the debtor, so that's why creditors don't like them and will make sure they mark against a debtor's credit file that he has VTed so any future potential lender can load his rate to reflect the increased risk of a loss.

 

Ah we agree creditors don't like them, good.

 

I think the thread is talking about VT's.

 

I suppose using this logic they wold not be a penalty, if the debtor could pay the sum claimed, however if he could do that he would not have been defaulted and terminated anyway. If a charge levied on an account is to avoid becoming a penalty it must by definition be only enough to return both parties the the position they would be in, the termination of an agreement cannot do that because all sums(whatever they are) become immediately due.

[Gaston Grimsdyke]

Ah we agree creditors don't like them, good.

 

Show me where I said any different.

 

If a charge levied on an account is to avoid becoming a penalty it must by definition be only enough to return both parties the the position they would be in, the termination of an agreement cannot do that because all sums(whatever they are) become immediately due.

 

What? Are you trying to say advancing payment by reason of early termination is a penalty?

[Peterbard]

Basic difference between contractual and breach on repudiation of contract.

 

The point, as far as this thread is concerned is that a termination by the creditor can be more costly than a VT, and often is, the question posed is, should this be the case.

[postggj]

basic difference between contractual and breach on repudiation of contract.

 

The point, as far as this thread is concerned is that a termination by the creditor can be more costly than a vt, and often is, the question posed is, should this be the case.

 

Agreed

 

And is it lawful

[Gaston Grimsdyke]

Yes it is lawful, because Parliament say so and judges can't interfere with that.

[postggj]

Just for clarity

 

What is the statutory authority that states it is lawful??

 

Clarity being the word for people looking in who do not understand what we are talking about (including me)

[Gaston Grimsdyke]

There isn't a statutory authority, it is the common law that a party can recover its losses flowing from the breach of contract by the other party. In the case of a hire purchase agreement, that means the balance of all sums which would have been paid had there been no breach. In other words the full purchase price less what has been paid, less the sale proceeds of the vehicle if repossessed. This is established by cases such as Hadley v Baxendale and Dunlop v New, it's all trite law.The common law is modified by statute in the case of a hire purchase or conditional sale agreement regulated by the CCA, in that the amount owed by the hirer is limited if the agreement is terminated by the hirer under section 99 of that Act. It's an exception to the common law rule.

[postggj]

I feel we have gone full circle

 

There isn't a statutory authority

[Peterbard]

In common law all sums under the agreement are payable following repudiatory beach, including all interest not yet due.

Consumer credit agreements are modified in that a rebate is issued under the regulations, that gives relief of interest not yet payable under the contract.

[Gaston Grimsdyke]

I feel we have gone full circle

 

There isn't a statutory authority

 

To be expected when we don't have a codified legal system. You won't find the concepts of offer, acceptance and consideration in any statute either but they are still established principles of law.

[postggj]

Keep the debate going

 

still not convinced, but a credible argument given

[sequenci]

Hadley v Baxendale.

 

Just had a MASSIVE flashback to my Contract Law lectures with that one!

[Peterbard]

This is quite a good illustration of the difference between contractual and repudiatory breach.

 

Stocksnya Gdynia SA V Geaarbrook Holdings Ltd 2009

[Gaston Grimsdyke]

Just had a MASSIVE flashback to my Contract Law lectures with that one!

 

LOL! Still good law and used in court though! As is L'Estrange v Graucob.

[postggj]

Great case law links people

 

Much appreciated

 

Will be burning the midnight oil on these