Contractual Interest - Mutuality and Reciprocity

[Mad Nick]

I want to claim back charges plus contractual interest. I've seen loads of threads citing "mutuality & reciprocity" as the justification for this. I understand the principle, but I've never seen the actual legal reference and/or the legal mumbo-jumbo to quote at the Bank or in Court. Please can anyone help. Thanks. Mad Nick.

 

PS All I could find was "fairness and balance" : UTCCR Schedule 2, para 1(b) plus OFT Guidance document (OFT143) Annex B.

[noomill060]

Put it this way:

 

They unlawfully charge you £30, then they have the brass neck to charge you interest on it.

 

The interest has been obtained by deception.

[noomill060]

The interest is indeed beyond the UTCCR or the OFTs ruling on diproportionate charges.

 

It is however unlawful to charge a disproportionate penalty charge (it is well established in law to do so. The OFT ruling has simply brought this issue to the notice of many people.)

 

It is illegal to profit from an unlawful act.

 

Ergo: Interest charged on unlawful penalty charges is also unlawful, if not down right criminal.

 

(But we arent allowed to say that, it is up to a court to decide that. Which is why the banks run from any opportunity to justify their charges to a judge, and always cough up before the case gets to court)

[Mad Nick]

noomill060, Thanks. I'm happy with the issue of charges being a penalty because they are not a genuine pre-estimate of loss for breach - and there's all the statute and precedent to back it up. But what is there to back up the statement of "mutuality and reciprocity" which is mentioned on this forum so often. I want to nail Abbey for the contractual interest, and I'd prefer not to use an argument which I can't back up - there is always a risk this ends up in Court.

[c_allen]

i'm having the same problem trying to decide how to continue with my claim as the halifax have paid back all my charges without me accepting their offer , so now i'm faced with the prospect of having to go to court for the contractual rate of interest on the charges that they've already paid into my account and i've spent, any ideas or advice would be great

[rbrears]

I think the mutuality and reciprocity is an attempt to say that either its fair for the term to apply for the benefit of both parties or that the contract either says this or should be interpreted in this way. None of those arguments on their own hold water in my opinion and indeed the terms of these bank account terms and conditions appear to expressly state the opposite. It is not unusual for a contract to contain terms that allow one party to charge a sum and interest for breach and to exclude the the other from the benefit of the term or indeed to apply a different charge and/or interest in case of breach by the other party.

 

A simpler and more successful argument must be that if the penalty charge is unenforceable and should not have been made then the interest would and should not have been charged either. It seems to me that if you strike out charges as having been applied unlawfully then it would be unjust enrichment for the bank to keep hold of the interest it charged on those amounts.

[thecornflake]

Looking at BF's original post on this, I believe the term you may want is 'implied term' (in the contract with your bank) based on the principle of mutuality or reciprocity. I think this is actually a legal term relating to '

where a contract makes provision for a rate of interest to be paid on outstanding money'.

 

I haven't got time now but I'll see what I can find as afr as specific legal rules are concerned. It is probably part of UK contract law.