Sellers Beware!

The Sale of Goods Act implies certain terms into all sale contracts, one of which is that goods will be of satisfactory quality.

Creditor entitled to be first past the post

Whether a finance company can collect on a finance agreement debt may depend on whether the debtor is insolvent, and if not, how quickly it can take enforcement action.

Keeping the costs of small claims down

Any monetary claim which has a financial value of £5,000 or less will generally be allocated to the small claims track (court). In this track, the strict rules of evidence and procedure do not apply and the trial (or final hearing) is relatively informal.

Any way, any time, any order

The case of White v Davenham Trust Ltd has reaffirmed that a creditor can choose its own method of enforcing a debt which has been guaranteed by an individual even though it continues to hold security for that debt from the principal debtor.
 

Fit for purpose

The Court of Appeal recently reminded us of the application of the statutorily implied term regarding the fitness for purpose of goods, which is important to finance companies where dealers arrange the financing of the vehicles they supply.

Unfair terms in consumer contracts

In the Office of Fair Trading v Ashbourne Management Services Ltd, the court looked at standard form contracts relating to minimum membership periods, cancellation and debt collection.

Bribery Act 2010 - an update on adequate procedures

Implementation of the Act was delayed due to provide guidance on certain provisions of the Act that were raised as concerns during the consultation process. That guidance has now been issued and the Act comes into force on 1 July.

PPI mis-selling decisions in lenders' favour

There has been a further spate of judgments in recent months arising out of the high volume of payment protection insurance (PPI) mis-selling claims being brought against lenders.

Vicarious liability for employee's deceit

This month's case review is a salutary tale that will be of interest to dealerships and finance companies alike.

Finance company is not a private purchaser

The court has confirmed a business that provides finance to consumers, and enters into a bill of sale over a vehicle as security for that finance, is not a private purchaser under the Hire Purchase Act 1964 (HPA).

Adequate procedures needed to prevent bribery

When the Bribery Act 2010 (the Act) comes into force in April 2011, motor finance companies, their directors, mangers and senior officers need to be aware of the penalties for failing to implement adequate procedures to prevent bribery.

Technical defect not fatal to default notice

A minor technical defect in a default notice will not necessarily assist a debtor in invalidating the notice if it can be shown that the debtor has suffered no prejudice as a result of the non-compliance.

Fishing for evidence not permitted

The court has confirmed it will not assist would-be claimants to obtain evidence to try to substantiate wholly speculative claims.

High Court victory on PPI mis-selling claim

In Black Horse Ltd v Speak, the lender advanced the sum of £7,012.39 to the defendants pursuant to a regulated consumer credit agreement.

Debtor fails to win on technicality

In what might be perceived as a further 'try on' by claims management companies, the court has once again taken a robust view in favour of the lender.

Cost on discontinuance of claim

When a claimant discontinues its claim, the usual position is that it has to pay the defendant's reasonable legal costs. This is the general presumption under the Civil Procedure Rules and applies unless there is good reason for it not to.

Contractual right to costs in the small claims track

Finance companies often find themselves litigating in the small claims track. 

Lenders beware

The decision of the Court of Appeal in Shah & another v HSBC Private Bank (UK) Ltd (HSBC) will give lenders cause for concern.

Unfair relationship applies to live agreements only

In the case of Soulsby and Soulsby v FirstPlus Financial Group Plc (1) and Loans.co.uk Limited (2), FirstPlus advanced money to the claimants under three successive written credit agreements arranged via a broker.

Finance company loses out on title fight

There has been a Court of Appeal decision involving Section 27 of the Hire Purchase Act 1964, one of the exceptions to the nemo dat quod non habet principle of English law, that no one can pass better title to goods than they possess.

Reconstituted agreement suffices

In the latest in a line of decisions in favour of finance companies engaged in writing Consumer Credit Act 1974 (CCA) regulated business, the High Court has provided further guidance arising out of s78 CCA request for information.

Voluntary v compulsory liquidation

An agreement with a company has gone into arrears. The vehicles may or may not have been sold. The company has placed itself into voluntary liquidation. Can the finance company take steps to protect itself?

Creditors' rights not extinguished

Last month, I reported on the OFT draft guidance note on how to comply with duties to give debtors and hirers copy documents and statements of account following requests under sections 77 - 79 of the Consumer Credit Act 1974. There has now been a case.

Guidance on giving information

Readers are likely to have seen an increase in requests for information under sections 77(1), 78(1) and 79(1) of the Consumer Credit Act 1974 (the Act).

It's a matter of timing

Securing judgments by way of charging orders over property is a popular way for finance companies to enforce against debtors. Often, this process is a race against time before a bankruptcy or winding-up order is made.

"Without prejudice"

The use of the words "without prejudice" on correspondence or in a meeting where there is a "dispute" over a finance agreement can potentially lull the parties into a false sense of security.

Justice trumps ability to pay

Finance agreements with a debtor company are often backed by personal guarantees from the directors of the company. If insolvency proceedings are contemplated, you need to consider whether you could bring the same action against the principal debtor.

That old chestnut!

Guarantee or indemnity? A guarantee is a promise to answer for the debt of another who remains primarily liable, the liability of the guarantor being secondary. However, with an indemnity, the surety assumes primary liability.

Unfair terms in consumer contracts

In consumer contracts entered into on a business's standard terms, the court can find on a claim by an individual consumer that a term is unreasonable and unenforceable as against that particular consumer.

Debt Relief Orders - the essentials

Individuals unable to pay their debts have an additional form of debt relief available to them following the introduction of the Debt Relief Order (DRO) on 6 April 2009.

Intervening bankruptcy fails to thwart charging order

When an individual is made bankrupt or a company is wound up, any dissipation of assets, or enforcement proceedings completed after the date of the presentation of the petition are liable to be set aside (s 346 Insolvency Act 1986 (IA)).

Payment by instalments

In these difficult financial times it is not unusual for a debtor to ask for additional time to pay outstanding finance instalments, or any judgment that might have been obtained against him.

Funding options for litigation

Conditional fee agreements (CFAs), often combined with insurance policies, have been used in the personal injury market for a number of years to enable parties to bring claims in circumstances where they might otherwise be unable to afford to do so.

Charging orders remain enforceable indefinitely

Having obtained a judgment following default in payment of a finance agreement, the obtaining of a charging order over the debtor's property is an effective way of ensuring that the judgment is secured and that payment will be made.

Guarantees - business or consumer?

Business loans guaranteed by individuals involved in the management of the business are not caught by the UTCCR. Such guarantors are unlikely to be able to prove that the terms of such a guarantee are unreasonable and so unenforceable.

No HPI registration? No problem

Although it is standard practice for finance companies to register their interests on the HPI register, the case of Industrial & Corporate Finance Ltd v Wyder Group Ltd confirmed that there is no legal duty to do so.

Serving proceedings

Lenders issuing and serving proceedings need to be aware of the changes to the rules on service of proceedings in England and Wales which came into effect on 1 October 2008.

Ombudsman complaints

If consumers' complaints cannot be resolved to their satisfaction by the body complained of, they have the right to complain to the Financial Ombudsman Service (FOS) under the Financial Services and Markets Act 2000.

Settlement by cashing cheque

When attempting to negotiate repayment from a debtor, it might initially appear attractive to accept and bank a cheque offered in payment and then pursue the debtor for the remainder.

Conversion for wrongful retention

A recent case has restated the basic principles of a claim in conversion fir wrongful retention of goods.

Civil Procedure Rules

A new pre-action protocol for general litigation claims is likely to be added to the Civil Procedure Rules (CPR) that govern litigation in the UK.Read what this could mean for motor finance companies.

No contractual effect

In ING Lease (UK) Ltd v Harwood a director unsuccessfully attempted to escape liability under a personal guarantee by alleging an agreement had been reached in negotiations that he would not be personally liable.

It's still my property!

In Schwarzschild v Harrods Ltd, the court confirmed that for a claim in conversion to arise, there has to be both an unequivocal demand for delivery up and an unequivocal refusal to do so.

Consumer or business contract?

Clarification from the Court of Appeal in Evans v Cherry Tree Finance Ltd & Anor, concerning consumer and business contracts.

Get the basics right

The case of County Leasing Ltd and another v East is a reminder of the need to get the simple things right when enforcing hire-purchase and loan agreements, such as calculations of arrears, notices of termination and demands for payment.

Get the basics right

The case of County Leasing Ltd and another v East is a reminder of the need to get the simple things right when enforcing hire-purchase and loan agreements, such as calculations of arrears and demands for payment, even the agreements are unregulated.

Dishonest valuations - lender wins mortgage fraud case

A look at a case showing an increasingly robust judicial attitude benefiting lenders.

Fraudulent misrepresentation

Renault UK Ltd v Fleetpro Technical Services Ltd & Anor is an interesting case. It confirms that fraudulent misrepresentations can be made to a machine such that, if loss is suffered as a result, a claim in damages can be brought.

Limit to ROT reach

ROT clauses are often found in agreements for the sale of goods whereby a seller seeks to reserve the ownership of those goods until certain conditions are met, usually payment in full. However, they may not be suitable in every transaction.

Bear in mind the 12 year rule

Usually, a mortgagee has 12 years from the date on which the right of action accrued to take action under its security; and after the expiry of that period, will be 'time barred' under the Limitation Act 1980 from taking steps to enforce its security.

Title disputes

Fairfax Gerrard Holdings Ltd and others v Capital Bank Plc (now Bank of Scotland Plc by substitution) is a reminder that retention of title clauses are a clumsy and unreliable method of taking security over an asset, including over motor vehicles.

Surrendering life policies to aid mortgage arrears can still lead to posession

Wragge & Co's experts look at Mr & Mrs Banfield v Leeds Building Society, which saw an unhappy Christmas for the Banfields. This was due to the dismissal of their appeal by the Court of Appeal in relation to a Possession Order granted in LBS' favour.

Damages for fraudulent misrepresentation as to ability to supply cars

The case of Parallel Imports (Europe) Ltd  (T/A Baglan Car Centre) v Radivan & Anor is a reminder to dealers that care needs to be exercised where there is a history of trading with a supplier.

Court of Appeal decides on bankruptcy and marital breakdown

The New Year sees an important decision in relation to two of the competing modern day realities: financial difficulties and marital breakdown. 

Promotional literature and directors' warranties

Wragge & Co takes a look at the legal implications of statements made in a company's promotional literature used to attract customers.

Bankruptcy and its impact on property ownership

Fiona Hayles, associate at Wragge & CO LLP Solicitors, discusses two very different cases illustrating the varied impact of bankruptcy in the property arena.

Who owns what share of the home

In Stack v Dowden, the House of Lords handed down a judgement setting out the rights of ownership in relation to a marital home following the marriage breakdown. Wragge & Co's experts look at the Court's attitude to the division of property ownership.

Bankruptcy and matrimonial court orders

In Scottish & Newcastle plc v Lancashire Mortgage Corporation Limited, both companies had registered legal charges over 109 Wellington Street, Grimsby (the Property) which was owned by Mr & Mrs Pexman.

Counting the costs

Failure by a party to a dispute to reasonably consider alternative dispute resolution procedures (ADR), including mediation, can result in severe cost sanctions being imposed by the court. Wragge & Co provide expert material on this issue.

VFS Financial Services (UK) Limited v Euro Auctions & Others Limited

This article analyses a case about the correct measure of damages payable to a finance company whose goods have been unlawfully converted by a third party.