Help with the contra proferentem rule?

[stax68]

Can anyone help me? I think I get the idea of the contra preferentem rule - that if a contractual term is ambiguous, then the ambiguity should be resolved against the interests the party at whose instigation it was included in the contract (which for us is always the bank as they write the entire contract and we can't negotiate it.)

 

Assuming this is near enough for our puposes, my problem is how this would apply to the argument about whether there's a contractual duty not to go over the overdraft limit.

 

The rule says that an ambiguous term is to be resolved against the bank, but might taht be interpreted as meaning that it should be resolved so as to minimise the obligations owed to the bank under the contract? If so, then presumably a term which might be thought to give us an obligation not to go over the OD limit would be interpreted so that it didn't impose such an obligation, which would then mean that it worked in the bank's favour in respect of the bank charges issue, as unusually we are in the position of arguing that a certain term does impose an obligation, while the bank wants to argue that it doesn't. In other words we are arguing to increase rather than decrease our contractual liability.

 

Hopefully, if there was a situation in which the contra proferentem rule came into play at all, the court would just decide (a) who the proferror is - i.e. the bank - and then (b) which decision would work against them in the context of the suit; and then go with that decision. But I'm not sure that's how it would work.

 

Anyone have any ideas?

 

cheers,

 

stax

[lookinforinfo]

Before deciding what action a Court may take, there has to be a term in

the contract that is ambiguous.

As I read my banks' terms and conditions covering overdraft limits, there

does not appear to be any ambguity.

If you exceed the limit, you will be charged. That seems quite clear. You are

in breach of the contract.

 

There is no ambiguity as to how much they charge. There is a large question

as to its legality and that is often being remedied in Court. There is also a

question as to when and whether the bank will allow the account to exceed

the limit but it is hardly ambiguous. The bank exercises its judgement on

an individual basis on what they know about their customer and when funds

are expected etc to determine such matters.

 

Or are you asking for help in deciding if there are any ambiguities rather than

what the outcome in Court might be to any ambiguity?

[stax68]

lookinforinfo - thanks for your reply.

 

I was thinking specifically of a term which was changed in 2002 from 'you must always stay within the limit' to 'you should always stay within the limit'.

 

I think it is possible that the bank (if forced into a corner) would argue that the second version does not impose an obligation, and that therefore there is no breach. They would then argue that it is well-established that unless the triggering event is a breach the charge cannot be a penalty.

 

While there is every reason to think that the penality of the charges can be established, I'm thinking of contra proferentem (and possibly other similar provisions, e.g. i think there's something in the Supply of Goods and Services Act) as a sort of 'long stop' since I think the best the bank could do would be to cast doubt on whether 'should' imposes a contractual duty.

 

I've also taken on a bigger burden of proof as I'm applying for summary judgment. So - as I understand it - I don't just need to win the case on the balance of probabilities, I need to show their case is basically hopeless.

 

If you're interested, I'm working on the argument here, and would be glad of any advice you could give:

 

http://www.consumeractiongroup.co.uk/forum/hsbc-bank/55086-stax68-hsbc-2.html#post857370

 

cheers,

 

stax

 

P.S. I've been looking at what scraps I can find about it ont' internet, and the decisions seem to tacitly assume that the profferor of the term is also the person seeking to rely on it, and that the term as they want it interpreted either reduces their obligation, or excludes their liability, or imposes an obligation on the other party.

I haven't found a case with suitable facts or a suitably generalised dictum to resolve the question of what happens if these assumptions don't apply.

As I say, I've only looked at scraps - and in case you haven't guessed, I'm not legally trained :o, so I realise I may be talking er, "through my hat", but I can only go on what I've managed to work out so far. Any guidance you could give much appreciated.

[lookinforinfo]

I have just been across looking at your little HSBC thread and can see where

you are coming from.

My own view in your case is that whether the bank has changed its wording

recently is irrelevant since your account will be governed by the T&CS

applicable at the time you opened the account. I assume they must have

thought the change had not much merit as I understand they have now reverted to the old wording.

 

I think you are wise to ensure there is no doubt that the charges are penalties

ias the presiding Judge appeared fairly sympathetic to the banks' arguments.

 

The difficulty with Judges is that, being individuals, it is likely that several

different opinions may be arrived at and it might require appeals all the way up to [and perhaps beyond] the House of Lords for a definitive interpretation

[stax68]

I'm not convinced about this business of only the first set of T&Cs being relevant. Why do you say that's the case?

 

BTW from 1 Dec 2006 they completely overhauled all the relevant terms to fit the story of an informal OD request and a fee for 'reviewing' the OD, so yes they obviously didn't think that 'should' was good enough. But that's not any sort of evidence really I don't think.

 

stax