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Failure to provide the right to cancel


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Hi all,

I'm new to this forum and hope you can help.

 

Wanted to check my understanding of The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 with regards to failure of a letting agent to provide the right to cancel as part of the contract (I am a landlord).

To provide you some background, the I appointed the agent for a period of 2 months to let our principal residence last year (before we moved abroad). I ended up sacking him as I was unhappy with the services (in finding the right tenant) and his transparency. Just before I sacked him, he found me a tenant whom I agreed to start the referencing procedures - the references came back OK but I had other suspicions about this prospective tenant so I declined the tenant and at the same time sacked the agent.


Agent is convinced that I am contractually obliged to pay him the whole year of letting and management fee despite the fact that neither party even signed the agreement so no tenancy - this is close to 3000GBP. There was no 'right to cancel' within the first 14days clause within the contract but there is a clause for termination. From reading the statute, it appears that if the right to cancel and the cancellation period (14 days) is not provided, then the cancellation period is 12months (or 14days from the day that information is provided) - Section 31 of the Act. It went onto say that,

The consumer bears no cost for supply of the service, in full or in part, in the cancellation period, if—

(a)the trader has failed to provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, or the information on payment of that cost required by paragraph (n) of that Schedule, in accordance with Part 2, or

(b)the service is not supplied in response to a request in accordance with paragraph (1).


I wonder if this can serve as a defence?

Secondly, I am using the unfair terms within the Consumer Act 2015 which might make this unenforceable:
A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied.'

The consumer laws apply to me; I am not a professional landlord; the property we are letting is our main home before we moved abroad.

The agent has started the proceedings and I am preparing the defence, there are several technical issues with the service too- despite explicitly asking him to serve me at my address abroad, he served me at my previous residence (luckily I had the redirect on) using Thomas 'shitty' Hig**** solicitors etc. Should I simply apply for a strike-out?

 

I appreciate your advice

Nick
 

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Firstly I had no idea that these regulations apply to on premises contracts as well as off premises contracts – that's news to me. Going back and checking with the statute, I now seem to understand that it's perfectly possible but on the other hand should there always be a cancellation clause?
If there is no positive cancellation then I don't really see how the cancellation rights can be explained to you. We need to find out more about this.

In principle when you enter into a contract, you have to have give the other party a reasonable opportunity of fulfilling the contract. On the basis of what you say, the agent suddenly produced a possible tenant. Had you already started to fall out with the agent? Did they have an inkling that things weren't going well. It crosses my mind that they suddenly found this tenant in order to pre-empt your termination of the contract.

Anyway, the fact is that they did find a tenant and the references which were provided were apparently satisfactory but you decided not to go ahead with it on a hunch. I think you need to justify this hunch with some proper evidence of the problem.

I certainly agree with you that the unfair terms regulations support your position that the amount of money being demanded is unreasonable.

Maybe you could give us a break down of how this sum is achieved. Presumably a certain amount it was simply for recruiting the tenant – and then the rest was based on a percentage of the monthly rent. Maybe you can let us know that is. As there was eventually no rental then I suspect that that portion would not be recoverable by the agent. However, the fixed sum for finding a suitable tenant might be recoverable. Had there been no potential tenant at all, then certainly the maximum that the agent might have claimed would be a figure to represent administrative losses caused by your termination/breach of contract. However, on the face of it the agent did find a tenant with satisfactory references. What else does it say in the contract? What other conditions are there which must be met before a tenant is deemed to be satisfactory and then can move into your house?

Please can you put up the claim form in scanned PDF format. Single file multipage

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And in fact I'm going to say now, that you better have a look at the Act again – section 6 (c) and (d).

I think that you now have to fall back on the unfair terms provisions

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Hi Bankfodder,

Many thanks for your elaborative and helpful reply. Section 6c or 6d doesn't apply here- section 6d refers to a tenancy agreement.

My contract with the agent is for providing services and it is not precluded by this statute.

 

With regards to the fee, there is no breakdown- they're trying to charge me a full year of finding and managing the property as if that tenant has lived there for the whole one year.

 

In fact the contract says that the % commission is calculated based on the rent on the tenancy agreement but there's no tenancy agreement so the rent is 0. Any percentage of 0 is 0? 

 

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I understand your position in saying that the regulations do apply to your situation – but I think you could find yourself in an argument about it which would be unnecessarily complicating. They might easily want to try their hand at saying that the purpose of the contract is eventually to create rights in the property – tenancy rights. All the purpose of the contract is to organise rental of accommodation for residential purposes. I think that you have a good argument – but I think that they could give you a run for your money.

I think you would be better off keeping it simple and referring to the charge they are making.
You haven't addressed my question as to what is the basis of your hunch.
 

You still haven't scanned up the claim form in PDF format – single file multipage

 

 

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The tenant wanted to do a third viewing of the property on the day that he was meant to sign the agreement, having wasted good part of two weeks and having had two viewings already. I considered him to be non- transparent and rejected him.

Thanks again

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On the face of it, I don't see that it is unreasonable for a prospective tenant to be extremely cautious about the new home that they are going to move into.

I'm still waiting to see the claim form.

I still think that you will have an easier time of it arguing that the charge is unfair

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At the end of the day, the landlord can reject the tenant for any reason but the agent cannot charge for simply introducing a tenant as if the tenant has occupied the property for whole one year.

The claim form simply says the invoice date and the amount only ( served through MCOL) and no further particulars of the claim served

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Please can you put out the terms and conditions that you're relying on. Also we'd like to see the claim form.

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Hi there,

The clause that the agent is relying on is as below (Termination Clause)

This Agreement will end immediately if the Landlord withdraws their instruction before the Agent finds a Tenant. Once the Agent finds a tenant who meets the criteria agreed which was agreed with the Landlord, the Landlord must pay the Agent the agreed commission.

 

The criteria wasn't agreed in writing but in general I wanted a trustworthy and a transparent tenant - when I rejected this tenant, I gave it in writing that I considered the tenant not to be transparent and therefore, the tenancy not to be granted.

 

This is what the agreement states with regards to commission on the contract.

The Initial Commission fee is payable on the commencement of the tenancy and charged as a percentage of the total annual rental amount of the agreed term as specified in the tenancy agreement

There is no tenancy agreement so there is no annual rent amount.

 

Sorry I can't upload the Claim form - please let me know if there is any information other than I have supplied already that would like to know.

thanks,

 

Bankfodder, on your earlier note about whether the consumers have to always be provided with the cancellation rights, yes they have to - this is what the Regulations 2013 imposed compared to 2008 regulations which did not.

 

Even with the 2008 regulations, not providing a cancellation rights is not a route to escape - please see the case precedence below.

 

https://www.walkermorris.co.uk/publications/brief-october-2014/consumers-cancellation-rights-are-unaffected-by-failure-to-give-notice/

 

I have to disagree with you on your point about Section 6c being applied here - that again is likely to be applicable to tenancy agreement (with the tenant) certainly doesn't apply to the agency agreement. My agreement with the agent is to provide services. 

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Just because criteria won't agreed in writing, doesn't mean that there are criteria and they are not to be implied into the contract.

As I've said, you have to give your contracting partner reasonable opportunity to complete their side of the bargain. If you employ a builder to build a wall and they start work, then you have to give them a reasonable opportunity to complete.

Here you have an agent who apparently has found a tenant and the tenant has satisfied the reference requirements. You keep on saying that they were transparent – but you haven't told us what that means and the most important thing is that you might have to explain that to a judge.
I'm afraid so far the impression one gets is that you are simply trying to escape a commitment – even if it is for the best of reasons.

I see that you disagree with me. Well that's fine. It's not me that decides the outcome.

I think that you are in difficult terrain in respect of your first grounds of objecting.

I think that the unfair terms provisions are far more useful to you and are likely to have some success.

Once again, your only answer to this is that a tenancy contract haven't actually been signed. Once again I say to you that all of the practical conditions for the contract to go ahead had been satisfied but on your hunch you then prevented the agent from completing their side of the bargain.

I think that you are going to have to find a reasonable settlement. I don't think it will be very much – but you are certainly going to have to find a reasonable settlement – and if the agent objected, as well they might, at least you can then demonstrate to a court that you at least have attempted to act fairly and it is simply the agent who is being unfair.

I don't think it would be too good for you if a judge came to the conclusion that the agent was trying to cheat you – but you also were trying to cheat them, for whatever reason.

I don't thing I can say anything more
 

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5 minutes ago, BankFodder said:

Just because criteria won't agreed in writing, doesn't mean that there are criteria and they are not to be implied into the contract.

As I've said, you have to give your contracting partner reasonable opportunity to complete their side of the bargain. If you employ a builder to build a wall and they start work, then you have to give them a reasonable opportunity to complete.

Here you have an agent who apparently has found a tenant and the tenant has satisfied the reference requirements. You keep on saying that they were transparent – but you haven't told us what that means and the most important thing is that you might have to explain that to a judge.
I'm afraid so far the impression one gets is that you are simply trying to escape a commitment – even if it is for the best of reasons.

I see that you disagree with me. Well that's fine. It's not me that decides the outcome.

I think that you are in difficult terrain in respect of your first grounds of objecting.

I think that the unfair terms provisions are far more useful to you and are likely to have some success.

Once again, your only answer to this is that a tenancy contract haven't actually been signed. Once again I say to you that all of the practical conditions for the contract to go ahead had been satisfied but on your hunch you then prevented the agent from completing their side of the bargain.

I think that you are going to have to find a reasonable settlement. I don't think it will be very much – but you are certainly going to have to find a reasonable settlement – and if the agent objected, as well they might, at least you can then demonstrate to a court that you at least have attempted to act fairly and it is simply the agent who is being unfair.

I don't think it would be too good for you if a judge came to the conclusion that the agent was trying to cheat you – but you also were trying to cheat them, for whatever reason.

I don't thing I can say anything more
 

 

Bankfodder, I don't understand why you think that I am trying to cheat them. It is in the best interest of the landlord to have a tenant occupying the property rather than having it vacant. But having it vacant is better than having a 'bad' tenant - there are plenty of horror stories. As a landlord, you don't have a lot to rely on before you let some occupy the property so how the tenant behaves leading up to signing the agreement is important. 

 

I have had other issues with the agent which I didn't want to elaborate here that led me to terminate the contract as soon as I rejected this tenant. But ultimately the law is law and if my interpretation regarding the 2013 Regulation is correct, this should be straightforward and we don't even need to rely on the other clauses.

I'll see how it goes.

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Good luck and please keep us updated. I'm sure that your experience will be very helpful to other people who have similar problems and find this thread

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nickpatel - presumably you entered into this contract with the agent off-premises if you were thinking of possibly trying to use s31 of the CCR?

 

If that is the case then I was under the impression (although I may well be mistaken) that the 14 day cancellation right was lost in the case of a contract for services, if the provision of those services commenced within the 14 day period, which would make whether or not you were informed of the right a moot point as it would no longer apply(?).

 

In any case, I'm also a bit surprised that a situation could arise where the initial "cancellation period" of a contract for services could be extended to over 12 months.  It seems a bit extreme to me that the 14 day off-premises cancellation provisions would apply here.  But I may be wrong.

 

I tend to agree with BankFodder that you'd be on firmer ground arguing the amount of the fee claimed (for a full year) is unfair.  But I'm not sure you could get away with arguing that you owe nothing - even though there is no tenancy agreement.  The agent seems to have done what they agreed to do, but you decided to reject the prospective tenant on the grounds that they were not "transparent"(?) because they wanted to view the property for a third time.  I'm not sure a court would find that reasonable on your part and would probably consider that the agent deserves to be paid in some respect for their work in finding that prospective tenant.

 

I think I'd be trying to settle on a reasonable sum rather than arguing that there was no liability at all.

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Hi Manxman,

Yes, the contract was signed on-line and I'm relying on s31 of CCR

I think what you are alluding to is the fact that if the contract started within the first 14days and if it was commenced with the expressed consent of the consumer (on a durable medium such as letter or email not phone call or webforms), then the consumer has to be pay for the portion of the services that was provided. Also, if the service has already been completed (which is not the case here as the service will be completed after 12months from the commencement of the tenancy which never commenced) then, full service fee is payable. In this case, no express consent was given - I have checked all my emails to them so they cannot charge for the portion of the services either i.e. arranging some viewings and finding a prospective tenant. In fact, I offered to pay for the reference check costs but they want it all.

There was an implementing guidance on CCR2013 which categorically says that the regulation applies to letting agent's services - I have attached it here. At the end of the day, regulations are regulations and if anything, consumer is recognized as the weaker bargaining party as the contract was created by the business. Please google Robertson vs Swift - case prior to CCR 2013 came in where the supreme court ruled in favour of the consumer and went above and beyond what the regulation said at the time (although it derived some criticism). 

bis-13-1368-consumer-contracts-information-cancellation-and-additional-payments-regulations-guidance (1).pdf

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Manxman, I have highlighted the relevant bits in bold. The proportion of the services can only be charged if the express consent was given in a durable medium.

 

(1) The consumer may cancel a distance or off-premises contract at any time in the cancellation period without giving any reason, and without incurring any liability except under these provisions—

(a)regulation 34(3) (where enhanced delivery chosen by consumer);

(b)regulation 34(9) (where value of goods diminished by consumer handling);

(c)regulation 35(5) (where goods returned by consumer);

(d)regulation 36(4) (where consumer requests early supply of service).

(2) The cancellation period begins when the contract is entered into and ends in accordance with regulation 30 or 31.

 

Cancellation period extended for breach of information requirement

31.—(1) This regulation applies if the trader does not provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, in accordance with Part 2.

(2) If the trader provides the consumer with that information in the period of 12 months beginning with the first day of the 14 days mentioned in regulation 30(2) to (6), but otherwise in accordance with Part 2, the cancellation period ends at the end of 14 days after the consumer receives the information.

(3) Otherwise the cancellation period ends at the end of 12 months after the day on which it would have ended under regulation 30.

 

Supply of service in cancellation period

36.—(1) The trader must not begin the supply of a service before the end of the cancellation period provided for in regulation 30(1) unless the consumer—

(a)has made an express request, and

(b)in the case of an off-premises contract, has made the request on a durable medium.

 

 

(4) Where the service is supplied in response to a request in accordance with paragraph (1), the consumer must (subject to paragraph (6)) pay to the trader an amount—

(a)for the supply of the service for the period for which it is supplied, ending with the time when the trader is informed of the consumer's decision to cancel the contract, in accordance with regulation 32(2), and

(b)which is in proportion to what has been supplied, in comparison with the full coverage of the contract.

 

 

(6) The consumer bears no cost for supply of the service, in full or in part, in the cancellation period, if—

(a)the trader has failed to provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, or the information on payment of that cost required by paragraph (n) of that Schedule, in accordance with Part 2, or

(b)the service is not supplied in response to a request in accordance with paragraph (1).

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OK - I see your argument.  Two questions:

 

1.  You say you "signed" the contract online - does that mean there were no negotiations or other discussions about the contract at the agent's business premises?  (I ask because you specify it was signed online and not eg "conducted wholly online").

 

2.  I didn't realise this, but looking at the guidance you posted, the express request from the consumer referred to in s36 needs to be in a durable medium in the case of an off premises sale.  But the guidance distinguishes between off-pemises and distance.  Online is a distance sale, not off premises.  The requirement for express consent to be in a durable medium only applies to off premises sales and not to distance sales (eg online - see G 6 in the guidance)

 

If I'm right (and I'm not sure I am) does that make a difference to your argument?  The agent can just say that you told him to start work straightaway - he doesn't need to produce a written request from you.

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13 minutes ago, Manxman in exile said:

OK - I see your argument.  Two questions:

 

1.  You say you "signed" the contract online - does that mean there were no negotiations or other discussions about the contract at the agent's business premises?  (I ask because you specify it was signed online and not eg "conducted wholly online").

 

2.  I didn't realise this, but looking at the guidance you posted, the express request from the consumer referred to in s36 needs to be in a durable medium in the case of an off premises sale.  But the guidance distinguishes between off-pemises and distance.  Online is a distance sale, not off premises.  The requirement for express consent to be in a durable medium only applies to off premises sales and not to distance sales (eg online - see G 6 in the guidance)

 

If I'm right (and I'm not sure I am) does that make a difference to your argument?  The agent can just say that you told him to start work straightaway - he doesn't need to produce a written request from you.

 

No negotiations or discussions took place at the agent's premises - the only face-to-face contact was at my home when the agent came for initial introduction and appraisal of the property. Good question regards to the difference between the two.

I guess the distance contract applies to sole online purchases whereas bullet (b) of off-premises contract applies to me as the agent's represented visited my home and the offer was made then for the services.

 

distance contract” means a contract concluded between a trader and a consumer under an organised distance sales or service-provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded;

 

 

off-premises contract” means a contract between a trader and a consumer which is any of these—

(a)

a contract concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;

(b)

a contract for which an offer was made by the consumer in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader;

(c)

a contract concluded on the business premises of the trader or through any means of distance communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader in the simultaneous physical presence of the trader and the consumer;

(d)

a contract concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer;

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Or even the off-premises definition c will apply here too.

a contract concluded on the business premises of the trader or through any means of distance communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader in the simultaneous physical presence of the trader and the consumer;

 

I am not sure what would be classed as 'immediately'

 

Great to have this discussion by the way which I hadn't contemplated.

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Well you seem to have an appreciation of the arguments both for and against.  Good luck.

 

(You ought to charge the agents a fee for identifying the loophole in their off premises and distance contracts by not highlighting the 14 day right to cancel as per the legislation... )

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