business claim 1992 and onwards

[zootscoot]

Just wondering about this relationship between deciet/fraud and contractual interest?

Are you saying that the only circumstances that an action could carry Ci would be one based upon Fraud?

 

 

No.

 

The only way in which you can claim contractual interest is if there is a provision in the contract allowing you to claim interest at that rate. Most banks will set the rate of interest payable to the customer when in credit much lower.

 

A term can not be implied into the contract on the basis of mutuality and reciprocity of contract. Contracts are not required to be balanced. Freedom of contract prevails. It is up to the parties to chose their own bargain and the courts will not interfere with the bargain so entered. This is one of the founding principles of contract law and therefore if the parties agreed that A would sell his brand new Mercedes for 50p, the courts would enforce the bargain. This position was stated in Chappell v Nestle and is also incorporated in UTCCR 1999 under Reg 6. A term can not be unfair in so far as it relates to the adequacy of the price or remuneration.

 

The only way in which a term may be implied is through custom or practice (Hutton v Warren), if it is necessary to give the contract business effect (The Moorcock) or where it is obvious that both parties would have agreed to the inclusion of the term at the time the contract was made (Shirlaw v Southern Foundries) or if it is a contract of a defined type (where the law generally offers some protection) then the court may imply a term where it is reasonable to do so (Liverpool City Council v Irwin, Wilson v Best Travel). Even in these areas where terms can be implied the courts are extremely reluctant to do so. I don't foresee that any of these methods of implying terms are likely to be successful in implying a term providing that the customer is entitled to interest at the contractual rate normally charged by the bank.

 

There may be another route to claiming contractual interest by invoking equity's jurisdiction to award compound interest. Where compound interest is awarded the judge will set the rate of interest at a level which is deemed just in the circumstances and it is open to the parties to suggest what rate they believe would be just and equitable. This is where it may be possible to argue the mutuality and reciprocity of contract. However, compound interest is always discretionary and the judge can refuse compound claim in total or can set it at a level lower than requested.

 

Compound interest is available in limited circumstances. Where money has been obtained and retained by fraud, President of India v. La Pintada Compania Navigacion or where trust money has been witheld or there has breach of fiduciary duty Westdeustsche Bank v Islington.

The tort of deceit is the civil version of fraud and is dealt with in the civil courts. Although you would need to prove that the defendant had made a false statement of fact and either knew that it was false, believed it was false or was reckless in that they did not care whether the statement made was true or false (Derry v Peak).

It may be possible to argue that a trust arises on payment of the charges. For this you would have to show that the bank knew of the circumstances that they had no right to receive the charges and were therefore under a legal obligation to return them from the moment of receipt. If this is succesful this would create the necessary trust relationship to claim compound interest. However, you would still need to convince the judge that the contractual rate is necessary to achieve a just result. This is going to be pretty tough on older claims where the contractual interest element can greatly exagerate a claim.

[zootscoot]

sorry gang your way above me stating all these cases, what does it all mean?

 

If you want to claim compound interest you will need to start reading cases.

 

This is a highly complex area involving trust law where lawyers, academics and judges disagree over the circumstances giving rise to a trust. Even if you fully research the area, fully understand the issues and come up with a strong argument then the chances of success are still going to be minimal.

 

If the interest element takes the claim into the multi-track the cost implications of losing, if you push the claim to court, will be huge.

 

If you do go ahead with the compound interest claim then you will need to put statutory as an alternative and be prepared that this is the amount that you are likely to get.