Agreement Enforceability

[Peterbard]

IS MY AGREEMENT ENFORCEABLE( Via section 127(3) CCA1974)

PRESCRIBED TERMS FOR THE PURPOSES OF SECTIONS 61(1)(0) AND 127(3) OF THE

CONSUMER CREDIT ACT 1974 Taken from sced.6(1983/1553) regulations

(If you just want to find out, skip the bits in between the stars it’s just some extra information)

 

**What do we mean by unenforceable?

In the Consumer Credit Act section 127 there is a provision for making an agreement unenforceable if it does not contain certain pieces of information.

Subsections 1,2,3,4 state which pieces of information these are, and everything mentioned there must be included within the body of the agreement, if one is missing the agreement is unenforceable.

 

How does unenforceable differ from enforceable with a court order only?

When an agreement is unenforceable it means that the court or the judge cannot make a ruling on it. The court cannot make it enforceable.

When an agreement is enforceable only by ruling of the court it means that the agreement can be stopped by the debtor but the court has the power to re-instate it and allow the credit to continue to enforce.**

 

The Pescribed Terms are these

 

A Amount of credit

A term stating the amount of credit

 

B Repayments

A term stating how the debtor is to discharge his obligations under the agreement to make the repayments, which may be expressed by reference to a combination of any of the following-

(a) Number of repayments;

(b) Amount of repayments;

© Frequency and timing of repayments;

(d) Dates of repayments;

(e) The manner in which any of the above may be determined; or in any other way, and any power of the creditor to vary what is payable.

 

C Rate of interest

A term stating the rate of interest to be applied to the credit issued under the agreement

D Credit limit

This may be a term or the manner in which it will be determined or that there is no credit limit.

--------------------------

 

Which of these applies to you depends on the type of agreement you have?

 

For a Running Account (credit card) agreement

 

BC and D Apply

 

For a Restricted Use Debtor Creditor Supplier

• Where the dealer is the supplier and the creditor is the one providing the finance.
  
• The money can only be used for the purpose it is given.
  
• There is no interest on the purchase (the cash price is the same as the total price)
  
• And there is no advance payment

A is applicable

 

For a fixed Sum Credit Agreement

A conventional credit agreement with none of the above restrictions

 

A and B apply

 

For a Hire Agreement

 

B is Applicable

 

This paper only covers section 127(3) of the Act agreements can also be unenforceable by contravention of sections 1 and4 this will be the subject of the next paper.

Please note that these Prescribed terms where not changed in any way by the 2004/1482 Ammendments although the form in which they appear on the agreement was. Subsection127(3) was repealed on the 6th of April 2007 so that unenforceability due to 127(3) will only apply to agreemens executed before that date.

[Peterbard]

Hi Peter, wouldn't D apply to running account credit rather than A?

 

Thanks Ian nice to see someone is watching .

 

Best regards

Peter

[Peterbard]

HI Yes i am working on a post about cancellation rights for this thread it will include what creditors should supply in order to comply with section127(4).

And therefore have an impact on the enforceability of the agreement.

Best regards

Peter

[Peterbard]

Hi peter could I just check this with you it will probably be of interest to others with less knowledge like me.

 

From your first post on this thread:

 

**What do we mean by unenforceable?

In the Consumer Credit Act section 127 there is a provision for making an agreement unenforceable if it does not contain certain pieces of information.

Subsections 1,2,3,4 state which pieces of information these are, and everything mentioned there must be included within the body of the agreement, if one is missing the agreement is unenforceable.

 

Does included within the body of the agreement mean on the same page/pages of the document or are these still enforceable if the pieces of information are within the Term and Conditions supplied on another document.

 

IE for my CCA I received copy of agreement from Feb 2000 and copy of T/C from June 2006 and if they later supply T/C from Feb 2000 do they have to be able to show a link between these documents.

 

Thanks in advance dpick:oops:

 

HI

this is quote from the 1983/1553 regs i hope it answers your question.

(4) Subject to paragraph (5) below, the information about financial and

related particulars set out in paragraphs 3 to 19 of Schedule I to these

Regulations, and also the statements of the protection and remedies available

to debtors under the Act specified in Forms 5 to 10 \of Part I of Schedule 2, shall be shown together as a whole in documents embodying regulated consumer credit agreements and not interspersed with other information apart from subtotals of total amounts and cross-references to terms of the agreement:

The form of Prescribed Terms are all contained within sched 1 3-13

 

Regards

Peter

[Peterbard]

Hi,

 

Great thread, would it also be possible at some point to start another thread to explain the correct procedure that creditors should have followed from Application to Executed Agreement (incl cancellation rights)?

 

Hi

Forgot to say welcome to CAG

 

Best reards

Peter

[Peterbard]

Hi

I intend this to be user friendly to the new subscribers amongst us so i am going to go over a few of the points raised in the last few postings. Hopefully it wil help some understand what is going on the rest of you smart alecks can talk amongst youselves.

 

Firstly the diffeence between an executed agreement and a properly executed agreement.

An agreement can be said to be executed upon the signatures of both the creditor and the debtor.

In order to comply with the Consumer credit Act 1974 however the agreement must be properly executed.

This means that it must contain all the terms like how much interest you are being charged and how long you have to cancell before the agreemnt becomes binding.

Not only must this information (Terms )be in the agreemen.They must be in the correct place (Form). The Terms and form are refered to in section 60 of the Act and are listed in a seperate document called a statutory instrumen each one of these has it's own number this particular one is 1983/1553.

 

Regards

Peter

[Peterbard]

Is my agreement unenforceable via section 127(4) of the 1974 Consumer Credit Act

 

 

This section of the Act forbids the court from enforcing any, “cancellable agreement” if the debtor has not received the required information to be able to cancel the agreement if they wished.

A cancellable agreement is one that gives the debtor the extra right (For a short time) to stop the agreement from continuing even after it has been executed (signed by both parties).

This section 127(4) will not apply to all agreements because not all agreements are cancellable so the first question is;

 

IS MY AGREEMENT CANCELLABLE

 

This depends not only on the type of agreement you have but on the way the agreement was discussed (The Antecedent Negotiations) before the agreement was executed. These are set down in section 67 of the ACT.

 

The Following are agreements that are not cancellable on a conventional Regulated Agreement:

 

A. Agreements that are secured on land.

 

B. Agreements that are signed at or within the creditors premise or place of work.

 

C. Agreements that have been signed by the detor without any prior face to face discussion with the creditor.*

 

So any agreement executed under any of the above conditions is immediately binding on both parties.

 

*In the case of condition C. many credit providers, particularity credit card companies voluntarily give cancellation periods and if this is the case it will be mentioned on the agreement.

Usually in a box just next to the signature box, if this is the case they are to be treated in exactly the same way as if they were conventional cancellable agreements.

 

 

What must creditors do in order to comply with section 127(4) and not run the risk of having the agreement made unenforceable?

 

In short they have to send cancellation details in he form of copy documents as detailed below.

 

All the details for the cancellation periods etcetera are contained in the copy agreements the initial agreement you sign may just say ,”After signing you will have a short time to cancel your rights will be sent to you. But the actual details will be in the copies.

 

So the issue is when the copies should be sent.

 

To repeat cancellable agreement information must be given to the debtor showing how they can cancel. The method of supplying this information depends on the way the agreement is executed.

“In a regulated cancellable agreement all copy documents must contain the prescribed cancellation procedures.”

 

It works like this

 

If you sign a blank agreement ie no creditors signature it is unexecuted (Remember to be executed it has to have both signatures). With that agreement there should be a copy for you to keep this should have the details of your cancellation periods and how to cancel. You then send off the unexecuted agreement. (If you think about it if they didn’t leave you a copy they could say you had signed anything.) After 7 days you should get a copy of the executed (Both signatures) agreement to show the agreement has been executed and any other documents referred to in it which means your cancellation details. (This is the one you may want to dispute receiving)

This should arrive by appropriate means (Which means by post or other electronic means)

 

Or

 

You could be presented with or sent an agreement that already has the creditor’s signature on it, and then when you sign it becomes executed. (You usually have to send the original and keep the carbon copy)

In this case no copy agreement will be sent by post but the cancellation details should be sent within seven days.

In the case of a credit card copy they are allowed to send a copy with the card or at any time between you signing and sending the card.

 

This next bit connects the above to the agreement in that it shows which sections are applied again it is not necessary to understand this straight away but if you use this together with the act it will make comprehension of what the various section do easier.

 

By virtue of ss.62 and 63, a regulated agreement will be treated as not properly executed if the following provisions are not observed –

(a) If the unexecuted agreement is presented personally to the debtor or hirer for his signature, but on the occasion when he signs it the document does not become an executed agreement (e.g. because the creditor has not signed it), then –

(i) a copy of the unexecuted agreement, and of any other document referred to in it, must be there and then delivered to him (s.62(1)); and

(ii) a copy of the executed agreement, and of any other document referred to in it, must be given to him within the seven days following the making of the agreement (s.63(2)); if the agreement is a cancellable agreement, this copy must be sent by an appropriate method (s.63(3)).

(b) If the unexecuted agreement is presented personally to the debtor or hirer for his signature, and on the occasion when he signs it the document becomes an executed agreement, a copy of the executed agreement, and of any other document referred to in it, must be there and then delivered to him (s.63(1)), but no further copy is required to be sent under s.63(3).

© If the unexecuted agreement is sent to the debtor or hirer for his signature, then –

(i) a copy of the unexecuted agreement, and of any other document referred to in it, must be sent to him at the same time (s.62(2)); and

(ii) unless the document becomes an executed agreement on the occasion of his signing it, a copy of the executed agreement, and of any other document referred to in it, must be given to him within seven days following the making of the agreement (s.63 (2)); if the agreement is a cancellable agreement, this copy must be sent by an appropriate method (s.63 (3)).

For appropriate method se section 176(a) of the act or above

 

So getting back to ebforceability .The key question is the second copy (the one sent by post) actually sent. (63(3)

 

If it was not then the agreement may be unenforceable via section127 (4)

Next time we will look at section127(1) and what is required by it

 

Best regards

Peter

[Peterbard]

Ian

 

 

 

Are these law then or just guidance from the OFT?

 

Thes are guidance notes but relate to sectionsd within the Act.

 

Regards

Peter

[Peterbard]

Didn`t know there was such a thing as non- cancellable agreements if you don`t come face to face. What about if you are signed up to a card in the branch?

 

Hi

Although signing in a branch would mean you had face to face contact with the creditor prior to the signing the fact that you signed on the creditors premises would make the agreement uncanellable.

 

Regards

Peter

[Peterbard]

Can someone please clarify...

 

I've got two loans - one with Cahoot and one with Smile that fall into Category C. However, both - voluntarily, it seems - offered cancellation periods.

 

If, as it suggests above, this means they should be treated in exactly the same way as if they were 'conventional cancellable agreements', does it follow that I should have been sent a copy off the executed agreement and, at the same time, provided with a further opportunity to cancel?

 

If it does, and this didn't occur, does it make the agreement unenforceable?!

 

Thanks in anticipation of your help and co-operation

Fred_Funk

 

Hi

 

Yes it does a copy 2 (Section 63) agreement should have been sent in exactly the same way.

 

Perhaps i should have made a note on my posting but the information regarding uncancellable agreements due to no anticedant contact changed with the introduction of the direct marketing regs in 2004 so if the agreement you have is after that time it may be a DM contract.

I intend to do a post on distance marketing but bassically it means that a agreement can be executed without any physicall contacts between the Creditor and Debtor the cancellation period is 14 days forom recieving all the agreement details or signing the agreement if you already have the details.

 

Best regards

Peter

[Peterbard]

Hi#

In fact the commencement of you cancellation period should have begun on the reciept of the 2nd copy.

 

 

If your agreement says "you are entitled to cancel this and details will follow" or something allong those lines, then it has been mentioned in the agreement and as per the terms of the cca request should be sent with the agreemnt and other docs.

[Peterbard]

Hi Fred

 

You must have a distance marketed agrement which give you fourteen days from when you recieve the last of you contrractual information or from signing if you have already recieved it as per distance marketing reg 8 of the DM Regs 2004

 

This information must either have been suppoied in a durable medium with or as soon as possible after the signing of the document and the cancellation period begins on the date you recieve it.

 

Regards

Peter

[Peterbard]

HI

 

Yes as in my orriginal posting they shousd send you a copy of your cancellation details within seven days.Unless it is a distance marketed agreement to which different rules apply.

 

Regards

Peter

[Peterbard]

Hi

Yes distance marketed contracts are usually marked as such there is also a differenci in the cancellation periods being 14 days from the signatue on a dm contract and 5 days on a conventional cca contract.

There should also be a sepperate leaflet with the heading pre contractual information with the agreement on a DM contract.

 

Regards

Peter

[Peterbard]

HI

Srry Noo

I am afraid i missed your posting .

Are they saying that the agreement was on the back of the orriginal application.

The thing with this whole is it an application thing is that no judge is going to enforce an ageement if they think that the debtor was not sure it was an agreement when they signed it. See the letter from the dti in the letter thread.

 

Best regards

Peter

[Peterbard]

HI

For anyone unfamiliar with the issues raised in the previous postings about application forms being used as agreements.

The concern being that if you wanted to check the enforceability of your agreement by sending off a request under section 77-79 of the act(For a copy agreement), the creditor could send you an application form with the prescribed terms and it would be enforceable.

In my opinion this was never a valid argument but I do see the concern.

An application form with all the prescribed terms and a signature would fill al the requirements of section127 (3) and you could not declare it as unenforceable under that clause. However there are other clauses such as 127(1)(ii) and the fact that no cancellation or copies would have been sent that have always made it in my mind to be a cause for concerne.

Anyway to put an end to the controversy a letter was sent to the DTI to settle the matter the reply said unequivocally that an application could never be enforced as an agreement. (The letter is posted on here if you click me then my threads you will find it under letters from the dti).

One of the main sources of confusion is that until lately many of the creditors have been very lax in the way they conform to the regulations, and now they are getting their fingers burned.

Another source of confusion is that if you send off an unexecuted but correctly formatted (with all the Prescribed terms etc) agreement with your signature on it

The creditor can look at it and say yes ok and sign, thus executing it and you get your card or no thanks and you don’t so in that sense it is an application.

So yes an agreement can be used as an application but only if it conforms to the Consumer Credit Act, if it doesn’t it is not going to legally bind the debtor to its terms simple as that.

In my opinion when the creditors send these “Application forms” they are sending out what they regard to be an agreement, until it was pointed out to them that they did not comply with the CCA. Which I think is good news for us.

In the new amended regulations that came out in 2004 SI 1481 there has to be a greater amount of pre contractual information given before the agreement is signed this also should that the debtor understands that when he signs the unexecuted agreement he is in fact applying for the credit.

Best regards

Peter

[Peterbard]

Peter do the prescribed terms on the 'application form' need to be on the signature page or can they be in the small print on the reverse side or just in totally seperate terms and conditions.

 

I have read the regulations which lay out the order in which the prescribed terms should be and the signature box comes last so I assume they have to be on the face of the document but are there any other regulations anywhere saying that they don't have to be?

hi

There is nothing in the regs that say the sig box has to be inthe same place as the financial detailsin pre 2004 agrements in fact the OFT says

Signatures All agreements are to be signed by both customer and trader, or their representatives,

and the date of signature entered. The customer’s signature and its date must be inside a box. This box can be of any size and appear anywhere in the agreement, but the wording inside it must be easily legible and must follow that for the appropriate type of agreement as set out in Appendix 2. The signature of the trader and its date must be outside the customer’s signature box. Similarly the signature of any witness, and its date, must also be outside the customer’s signature box.

. Best regards

Peter

[Peterbard]

Hi

Regarding the above this situation was remedied in the 1482 regs whe it says that the sig box must reside within the key information ,doesn't help you much i know .

 

Best regards

Peter

[Peterbard]

Hi

My post don't come til after noon now used to be able to read it with me breakfast.What is this bloody country coming to

Sorry lost the plot

 

Regards

Petr

[Peterbard]

can you have a look over this agreement for me please, i'm not sure if it's unenforceable or improperly executed. what would i do if it's improperly executed? etc etc etc.

Comments and advice most welcome

HI

I havn't had time but have you checked the maths.

Also was the insurance optional or mandatory if the latter it should be in the tcc of the loan and not included in the credit.

I will have a more in depth look later

 

Regards

Peter

[Peterbard]

No 1983 regs state the the prescribed terms must be in the signature document

 

dave

 

 

edit

 

sorry didnt fully read the post

 

Dave

Unfortunately "document doesnt mean the same as same piece of paper.

Their is nothing in the 1983 regs that says it must be part of the financial details in fact in the contrary the OFT says the signature box can be located anywher whithin the document.

 

Best regards

Peter

[Peterbard]

HI

 

I just thought I would try and clarify the what is required on the agreement and the what are terms and conditions question.

 

Terms and conditions and what should be on your agreement

 

The Consumer credit Act requires that certain information be on the executed agreement, that is if it is not to put itself in jeopardy of being enforceable only by the order of a court or indeed wholly unenforceable.

The Statutory Instrument 1983/1553 lists what should be on an agreement this is amended for post 2004 contracts by the agreement regulations 2004/1482.

There are only a small number of amendments in the area of content, the main difference is in form in that the Key structure that is used to contain various clumps of information (Key Financial Information, Key Information) etc.

The 1983 regulations say that all information included in Schedule 1 (This is where the prescribed terms are) should be included in a solid block together with the protections and remedies of schedule 2 unless they are mentioned elsewhere and referred to in the text.

There should also be a signature box and if the agreement is cancellable or subject to section 58(secured loan) details of this next to it.

This is all that is required and form the basic requirements of the agreement.

 

The creditor may wish to include other information i.e. other than as specified above, this must be included following all of the required information and the signature box and would include terms and conditions other than as required by the Regulations. It would also include details of the parties other than a name and address or logo

 

This” other” information plus the information on the agreement is what makes up the Terms and conditions.

 

This combined information should be what makes up your copy documents under section 62etc.

 

Best regards

Peter

[Peterbard]

Could you point to where it says this, please?

 

Hi HOpe you don't mind Dave

 

It is in section 2 para 7 of the regulations

 

(7) Documents embodying regulated consumer credit agreements shall

contain a signature box in the Form numbered in Column 1 of Part I of

Schedule 5 to these Regulations and set out in Column 3 in so far as it relates to the type of agreement referred to in Column 2 and shall, if the agreement is one to which section 58(1) of the Act applies, is a cancellable agreement or is an agreement under which a person takes any article in pawn and under which the pawn-receipt is not separate from the document embodying the agreement, contain a separate box immediately above, below or adjacent to the signature box in which shall be included the appropriate statements specified in Forms 1 to 4 of Part I, and in Part Il, of Schedule 2.

See previous post regarding lacement of prescribed terms.

 

Best regards

Peter

[Peterbard]

Ahhh maybe if I try to dig my old one out I will discover the same???

 

i never signed in the loan agreement in their office so there should have been cancellation rights, shouldn't there been?

HI

It depends on the type of agreement and weather you discussed the contract face to face before signing see post 26 this thread.

Regards

Peter

[Peterbard]

i never signed in the loan agreement in their office so there should have been cancellation rights, shouldn't there been?

ho sorry just realised which agreement we were talking about I din't recieve a response as to whether the PPI was mandatory or did you chose to take it on it is quite important and the difference beween the agreement being enforceable or not.

 

Regards

Peter