Is contract the correct basis for charges claims?

[BankFodder]

Claims for contractual interest are experimental. There is an inherent and unassailable justice in the principle. They are also about pushing the envelope for the benefit of the claimants and also very much for the purpose of putting greater pressure on the banks.

 

In some of the initial posts which I put up on this topic I made it clear that a claim for the contractual rate of interest could very possibly have the effect of delaying settlement of a claim. i also suggested that it might be used for negotiating an earlier settlement - i.e giving up the CI in return for a quicker payment of the claim plus 8%.

I also said that people should exercise great caution when the inclusion of CI pushed the claim above the small claims track limit - which it could easily do.

 

Personally I would only claim CI if it did not bring the total claim above £5000.

 

On the matter of whether CI is included in the claim for the purposes of allocation - there has been debate about this and I have held each view at various times.

I think that it is included in the claim. The claimant is saying that the defendant is contractually obliged to pay the reciprocal rate of interest. therefore it is a part of the substantive claim. On that basis - one could even ask the court to use its discretion to award an extra 8% interest on top - but I think that would go very much against the court's antipathy towards unjust enrichment.

 

I think that CI and s.69 interest must be pleaded in the alternative and if there are some people who are not doing this then they are being foolish because they could lose on the principle of CI and then not get their s.69 because they never asked for it.

 

Of course, CI must be argued. It can't just be pleaded and left at that.

 

the basis of the argument is that the contract is characterised by reasonableness and fairness and says that much in the Banking code (which I am convinced is incorporated in the account contract anyway).

 

English contracts are always based upon the reasonable expectation of the parties at the time they made the contract. Of course one has to look at that reasonable expectation with hindsight. However, if you were to ask at least the customer would he expect that if money was taken unlawfully from his account, could he have it back on the same terms upon which the bank enjoy in the contract - he might say yes. Of course the banks would give a different answer - but then what would be the parties' answer if they were asked whether the account contract entitled the bank to make unlawful deduction from the account in the first place?

 

The whole picture is further muddled because probably an action in contract is not the correct action in which to bring these claims anyway.

 

What contractual term has been breached? Well unless you imply a term into the contract that no charges will be taken unlawfully (perfectly reasonable and fair) there is no term.

 

What has happened is that the banks have made unlawful seizures of their customers' money.

Really the correct remedy is something akin to detinue (now abolished), conversion, debt - or my favourite - breach of trust.

 

The problem is that the remedies are not quite right or they are too complex for our circumstances.

The contract action is easily understood by everyone - including the judiciary at the county court level and so everyone just agrees that this is the way to go and not rock the boat.

 

On the matter of CI - it is clear that we need to go back to basics.

 

People should understand the problems, what is necessary to bring the action, the alternatives and the fact that they must be prepared to argue the implied term and that if they do not understand this then they should not start.

 

It is encouraging to see that in some cases the banks are scared enough of it to want to pay out rather than go to court.

 

Of course, the big feature of it is that to resist an action for CI on the fast track, the banks will still have to make their disclosure.

 

CI must always be linked to the question of the unlawfulness of the charges to which the interest is linked.

 

Claimants must never allow the banks the opportunity to have this issue discussed in isolation.

 

 

I see that the principle of unjust enrichment has been referred to in this thread.

 

Firstly this is an issue which needs to be decided by a court. It is not for us to say that it is or is not unjust enrichment. Our position is merely to the best for our users - and also for the campaign if that aspect of this forum interest you.

 

Secondly to use the phrase "unjust enrichment" in this context is quite incorrect.

Unjust enrichment expresses the court's repugnance of a duplicated benefit - such as CI plus s.69 together or an award of compensation which does not include deductions for NI benefits payments received.

 

If the court decides that there is an implied reciprocal term then that becomes the law and the enrichment becomes just.

 

from a moral standpoint I see nothing unjust about applying the same draconian terms to a very wealthy industry which has systematically abused its position of trust over a period of at least 20 years and has systematically looted the accounts of its vulnerable customers and which has gone on to charge them 29% whenever they have been unable to repay - and for as long as they have been unable to repay.

 

This is the industry which is making about £4.5 billions per year out of penalty charges and which in the next 10 days or so will be declaring annual profits of between £37 billions and £40 billions.

[Glenn UK]

An interesting thread I am surprised it has attracted little comment, particularly from those gain sayers who feel CI is itself immoral in some way (or would it be amoral?, English language never was my strong point, being from Essex an all).

 

Having gained and lost in the CI 'game' its good to see this post with some encouragement for those of us that believe its a fair response to the banks unlawful removal of our money.

 

Glenn

[Guest NATTIE]

I missed this thread as well, and it is a fairly balanced approach. I think the only issues i have ever had in relation to CI from my reading of the forums is simply the confusion some people have in working it out and the s69, that has been within some media programmes. have made it more hazier than maybe it should be.JMHO

[Guest bong]

ah, you beat me to it, I was gonna say, where's this thread been hiding then?

 

I have often wondered about these claims being termed as contractual, because it is irrelevant in my mind that we breached our contracts - the claims are about the banks' unlawful behaviour, not ours. Having said that, I don't think the entitlement to contractual interest depends upon contract being the basis of the claim, and I've also wondered about s.5 of the limitation act being relevant for the same reasons. I have read that there is no period of limitation if the basis of the claim can't be found in the limitation act. However I'm not sure whether tort is in there, haven't checked.

[photoman]

Just trying to get my head around this. And please anyone correct me if I'm wrong.

The short of it is, as I understand from Bankfodders post is; that so far we have been basing our claims upon the principle that they have breached their contract with us. However, he then goes onto say that strictly speaking there is no actual breach, they could argue (and often do in their defences), that they are contractually entitled to claim these charges, as it was an inherent part of the contract.

What we are actually claiming therefore, is that the contractual term is unlawful in the first place, as we, (quite rightly so) expect the contract to abide and be governed by the greater principles of law. However, to take actions upon this principle is a more complex matter, that even the courts would rather not deal with.

I for one have included a paragraph in my POC that alleges an explicit or probable breach of contract by the Bank by not acting within the scope of their duty of care (an easier point to argue than Fiduciary I gather), by failing to actually justify the actual sums taken, so have failed to act within their fundamental duties of trustworthiness, transparency, diligence and care. Now, am I asking for trouble here?

 

Surely it is much the same as arguing that the contract was invalid in the first place as per UTCCR ?

 

Anybody ??

[elsinore]

Well, I've only picked up on this thread thanks to Photoman's link from another thread.

 

Maybe somebody could devise a way to give Bankfodder's announcements more prominence. They are too important to be missed.

 

Els

[Mad Nick]

What contractual term has been breached? Well unless you imply a term into the contract that no charges will be taken unlawfully (perfectly reasonable and fair) there is no term.

 

What has happened is that the banks have made unlawful seizures of their customers' money.

No doubt I'll regret this, but I don't agree. First off, I don't just agree with something just because a Bank says it nor because we've all been claiming in relation to breach of contract and LDs for over a year. I'm all for questioning why we're doing something. But I really don't see how claims for charges can be anything else but related to the contract.

 

The contracts vary from Bank to Bank but they say things like

24.3 An unauthorised overdraft occurs if without our agreement you overdraw your Account or exceed the limit of an overdraft which we have agreed. If you overdraw your Account when we have not given you an overdraft you are in breach of these Conditions and must immediately pay sufficient money into your Account to put it into credit, taking account of any interest and charges you will have incurred. Similarly, if you exceed the limit of an overdraft which we have given you, you must immediately pay sufficient money into your Account to bring yourself within your overdraft limit.

24.4 If you have an unauthorised overdraft, you will be charged fees as set out in our tariff or specified to you (please see Condition 4.1) and these may include fees for transactions we are unable to process due to lack of available funds on your Account.

They look like valid contract terms to me. I breached 24.4, so the basis of my claim for repayment of charges is that the fees are not based on a genuine pre-estimate of loss. Or am I missing something. Regards, Mad Nick

[TANZARELLI]

An interesting post, I have been considering all other angles for my claim with Barclays especially as contract was entered into in 1993 so UTCCR was not an option to rely on.

 

Breach of fiduciary duty, unlawfull and dispropotionate charges, restitution, et al have all been things which I and others have been trying to get our heads around, also the whole limitation debate aspect too.

 

Tanz

[Guest bong]

24.4 If you have an unauthorised overdraft, you will be charged fees as set out in our tariff or specified to you (please see Condition 4.1) and these may include fees for transactions we are unable to process due to lack of available funds on your Account.

 

They look like valid contract terms to me. I breached 24.4, so the basis of my claim for repayment of charges is that the fees are not based on a genuine pre-estimate of loss. Or am I missing something. Regards, Mad Nick

 

Mad Nick, you couldn't have breached 24.4, that was a term saying they would charge you fees. The only way this particular term could be breached is if the bank failed to charge the fees.

[TANZARELLI]

......... The only way this particular term could be breached is if the bank failed to charge the fees.

 

lol. Like that is gonna happen.

 

Tanz

[Mad Nick]

Mad Nick, you couldn't have breached 24.4, that was a term saying they would charge you fees. The only way this particular term could be breached is if the bank failed to charge the fees.

Alright, fair point. 24.3 then. Regards, Mad Nick

[Guest bong]

Ha! still got ya! you breached 24.3, but the basis of your action is not in you having exceeded your limit. Why would you for instance take someone to court because YOU breached your side of the contract? The action is based in the bank having levied disproportionate charges.

[Mad Nick]

Bong, I agree with your last sentence - that's what I said. I take it, therefore, that you agree that claims for repayment of charges are founded on contract law ? Regards, Mad Nick

[Guest bong]

which term of the contract are you basing your claim in then?

 

The term itself, as to the levying of charges upon your breach is not unlawful, and has not been breached. If they had charged you actual costs you would have no claim/complaint. The claim arises because of the amount they've taken.

[Mad Nick]

Bong, 24.3 defines an unauthorised overdraft and 24.4 says what will happen if you have one. I don't see where you're going with this. Regards, Mad Nick

[TANZARELLI]

which term of the contract are you basing your claim in then?

 

The term itself, as to the levying of charges upon your breach is not unlawful, and has not been breached. If they had charged you actual costs you would have no claim/complaint. The claim arises because of the amount they've taken.

 

It is the level of the disproportionate charges that is unlawful and therefore this is our arguement which is backed up by case law.

 

The unfair terms states:

 

Unfair Terms

5. – (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

 

Unfair Contract Terms Act 1977 states:

 

"11. The "reasonableness" test.

(1) In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act, section 3 of the Misrepresentation Act 1967 and section 3 of the Misrepresentation Act (Northern Ireland) 1967 is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made."

 

"(3) In relation to a notice (not being a notice having contractual effect), the requirement of reasonableness under this Act is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances obtaining when the liability arose or (but for the notice) would have arisen."

 

"(5) It is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does."

 

Tanz

[Guest bong]

Bong, 24.3 defines an unauthorised overdraft and 24.4 says what will happen if you have one. I don't see where you're going with this. Regards, Mad Nick

 

I'm trying to show you that your cause of action does not lie in your breach of 24.3 and neither does it lie in their breach of 24.4. There has been no breach of contract, for the purposes of these claims, at least the express terms of the contract anyway.

[Mad Nick]

Bong, I'm afraid you've failed ! Regards, Mad Nick

[Glenn UK]

Im with Bong on this and have been for a while.

 

THe UTCCR may make the terms unlawful because they are in effect unfair.

 

Read on thier own this term cannot be unfair, however, read in conjunction with the schedule of charges it then becomes unfair imho.

 

But the term alone is not unfair and no one has breached the term.

 

Something that has been bugging me for ages is that the commentators on TV keep saying that these charges have become ulawful due to consumer regs, they havent, they are unlawful beacuse they are penalites and the law has been establisehd since the 1880 or so.

 

JMHO

 

glenn

[bill-k]

An interesting thread I am surprised it has attracted little comment, particularly from those gain sayers who feel CI is itself immoral in some way

I missed this thread as well, and it is a fairly balanced approach.

ah, you beat me to it, I was gonna say, where's this thread been hiding then?

Please pardon the intrusion, I am having a recurring nightmare here. I believe I may be able to explain why BF's original post here has not been discussed until yesterday. I believe you will find it was originally made on Bong's thread here, but then immediately removed for some reason:

 

http://www.consumeractiongroup.co.uk/forum/site-questions-suggestions/49074-can-we-have-new-3.html

 

Karnevil has quoted a passage from it in post #134 here:

 

http://www.consumeractiongroup.co.uk/forum/post-561801.html

 

but the remainder of the post never re-appeared, despite Glenn's request to see it in post #136:

Karne where was that quote taken from?

 

The reason i ask is that the context is important and i want to be sure i understand what BF was talking about.

[unquote]

 

http://www.consumeractiongroup.co.uk/forum/post-562134.html

 

It seems to have suffered the same fate as some contractual interest templates that Bong and the others had been working on, which also completely disappeared.

 

Coincidentally, BF's post disappeared at the same time that the confusion over contractual interest claims began here:

 

http://www.consumeractiongroup.co.uk/forum/royal-bank-scotland/43071-dtollan-rbos-2.html

 

For anybody still following the story, a number of posts were removed from that discussion, and placed here:

 

http://www.consumeractiongroup.co.uk/forum/site-questions-suggestions/78615-bill-ks-complaints.html

 

I just happened to have taken an interest in this discussion, so I thought I'd let you know some of its' history, as you seemed understandably puzzled at the top of the thread - just for completeness.

 

Thanks guys. Carry on. Sorry for the interruption.

[Guest bong]

nice to know I'm not going completely mad then Bill, I was wondering why I had missed this thread first time around.

 

I don't know why Karnevil decided not to progress the CI templates, if that is what has happened, I haven't heard. I took it as far as I could and presumed she was working on finalising them or was going to come back with some answers to the questions that were being raised. Good communication round 'ere innit? Never mind, I'll leave it now to the top brains.

 

I'm quite perplexed now actually, to think that there was all that kerfuffle and confusion a few months back while this post had all the while been written. Seems it could have been nipped in the bud there and then. No point crying over spilt milk and all that but there were a few casualties from those discussions that could have been avoided in my opinion.

[bill-k]

I'm quite perplexed now actually, to think that there was all that kerfuffle and confusion a few months back while this post had all the while been written. Seems it could have been nipped in the bud there and then. No point crying over spilt milk and all that but there were a few casualties from those discussions that could have been avoided in my opinion.

 

....weren't there, just.

[redsonja]

Well well....I dont believe for one minute that this has been on here since 13.02.07. Surely someone would have seen it.

 

I agree with you Bong, it does seem silly that all the aggro etc could have been avoided if this post had been made available at the time. It seems a lot of distress was caused for no real gain!

 

Still, I suppose at least a post has been made by BF eventually. We have finally received our reply.

[TANZARELLI]

All I can say is fair play for spotting that Bill, is your middle name columbo? lol

[chezt]

All I can say is fair play for spotting that Bill, is your middle name columbo? lol

 

I don't know how he does it for the money! (Espesch in his current avatar situation too - what has he got down there? )