Agreement Enforceability

[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

[Fred_Funk]

Peter

 

Thanks for this. It's always good to see a definitive post from someone who, clearly, knows what they're talking about.

 

With that in mind, I was hoping you might be good enough to take a look at this thread of mine...

 

http://www.consumeractiongroup.co.uk/forum/general/103541-banks-obliged-provide-cca.html

 

... which is, it seems to me, not unconnected.

 

Thanks in anticipation of your help and co-operation

Fred_Funk

[noomill060]

I sent Barclaycard a CCA request last November- didnt get anything til May, and then it was just a copy of my signed application form (a mail shot)- no other prescribed terms.

 

Sent a letter thanking them for this and reminded them this was unenforceable.(But was worried that the prescribed terms had been printed on the back of this form I had signed)

 

Recieved a photocopy of the T & Cs with the prescribed terms today.

 

This consists of two sheets of pfotocopied A4 stapled together, back to back, to give the impression that the original was a double sided leaflet. Appears to be dated 8/99, so current at the time I filled out the application form. No sigs or dates written.

 

Enforceable? If it is, I'll just get on with reducing my liability by reclaiming the charges and restart my token repayments.

 

I'll scan the docs and put them up here, (unless Peter would prefer it to go onto one of the other threads which deal with this.)

[Laughing Boy]

Re: Agreement Enforceability

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;

 

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)

 

 

 

If this is disputed what ways would they be able to prove it was sent, and would a whole dispute come down to their word against mine ?

[ian1969uk]

You can't prove a negative, so there is no obligation on you to prove you didn't receive it. The onus is on them to prove they sent it, and their records should show this if it is true.

[noomill060]

I would think at the very least, evidence in the way of a signature for an item of post sent by Recorded Delivery would suffice to prove they sent you something.

 

If you didnt sign, they have no evidence, just an internal record of something being sent. Doesnt prove you recieved anything, though.

[Fred_Funk]

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.

 

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

[davefirewalker]

ok guys..Ive asked this before there seems to be new faces here that might put a new slant on things

 

I think I know the answer (pretty sure) but I want to see what you come up with.

 

ok, I have a loan arranged over phone and signed at home

 

this would normally be a non cancellable agreement (yes)

 

BUT........

 

the agreement gives cancellation rights

 

AND....

 

they signed before me.

 

so it was executed on MY signature

 

NO seperate cancellation details sent by post!

 

Any thoughts

 

the agreement is here

 

http://www.consumeractiongroup.co.uk/forum/general-debt/84285-ccas-dave-against-world-post757767.html#post757767

 

MBNA agreement

 

Dave

[Fred_Funk]

Dave

 

Hi. So, am I right in thinking that, in essence, you're asking the same question as I am in the post above? It seems so to me.

 

Fred_Funk

[Monty2007]

This is a very interesting thread, Peter you had done some outstanding work and helped a lot of people - THANKS!

 

The question then arises about enforcement, post non compliance in terms of the CCA (i.e. s77-79). I had this from Amex:

 

"I would also like to make clear that even if the Agreement was improperly executed and/or failed to include the prescribed terms set out in the Consumer Credit Act, which is not accepted, this would not render the Agreement void or illegal, but either unenforceable without an enforcement order or irredeemably unenforceable. In either case, the debt would remain outstanding and therefore the information we have exchanged with the credit reference agencies remains accurate".

 

My thread is at http://www.consumeractiongroup.co.uk/forum/general-debt/103600-non-conformance-under-s10.html

 

I assume, given that they would probably sell the debt to a DCA for a nominal amout that they may wish to negotiate a deal. BUT, and what is important to me, is the removal of the default on my credit files. Given they don't have the agreement who would be the best to approach in terms of them reversing this? The ICO? FOS/FSA?

[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

[Fred_Funk]

Peter

 

Thanks again for all your assistance. So, just to clarify, despite the fact that the copy of the loan agreement I was sent to sign mentioned the fact that there was a cancellation period, the provider should have notified me in writing of this after the agreement was executed, yes?!

 

That being the case, what's my best hope of establishing this never occurred? I guess, in this respect, an SAR is likely to prove more illuminating than a CCA request?

 

Thanks in anticipation of your help and co-operation

Fred_Funk

[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.

[Fred_Funk]

What if it says: "you have 14 days from the day we open your cahoot fixed rate loan account in which to cancel this agreement. You can do this by going to 'account manager' from your personal homepage and clicking on 'close account'."?

[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

[davefirewalker]

Dave

 

Hi. So, am I right in thinking that, in essence, you're asking the same question as I am in the post above? It seems so to me.

 

Fred_Funk

 

It would seem so.....

 

According to my interpretation (in my case)

 

I have a loan which was arranged over the phone and signed at home (non cancelable)

 

It was given cancelation rights so now treated as a cancelable agreement

 

I signed last so it became executed on my signature.

 

As the law stands it would appear that they have to send me by post a sepperate notice of cancellation which must conform to a specific format.

 

they actually sent me a copy agreement with some cancelation rights on it.

 

excerpt from oft cancelable agreements

 

An unexecuted agreement is a document embodying the terms of the proposed agreement. It becomes executed when both the trader and the customer have signed,no matter who signs it first. For example, an agreement would become executed on the customer’s signature if the trader had signed it before sending it to the customer.

 

Unless the agreement becomes executed when the customer signs it, a second copy must also be sent by post to him within seven days of the making of the agreement. Where a second copy is not required because the agreement becomes executed when the customer signs it, the trader must send by post a separate notice of cancellation rights to the customer within seven days of the making of the agreement.

 

Form of separate notice of cancellation rights

 

The separate notice of cancellation rights – to be sent in cases where a second copy of the agreement does not have to be sent to the customer

 

– must be on a single sheet of paper and in the form appropriate to the type of agreement as set out in Appendix 5. If the notice is entirely on one side of the paper, the cancellation form must also be on that side. If the notice is continued overleaf that must be indicated by the word ‘/over’ appearing on the front of the sheet after the end of the incomplete text.

 

All copies must be accompanied by the supporting documents except for:

documents obtained by the customer from someone other than the trader and

supplied by the customer to the trader

documents of title to property (except security documents)

documents kept by the customer under the terms of the agreement

copies of entries in any official public register

any Act of Parliament or other published official document, other than Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970

in the case of modifying agreements, a document embodying the terms of the earlier agreement other than a document a copy of which is required to be given under sections 77–79, 85, 105, 107–109 of the Act

 

 

Have I got this right.....?

 

they needed to send a sepperate cancellation notice on a single sheet of A4 with no other stuff on it.

 

Dave

[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

[davefirewalker]

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

 

How can you tell if it is a "distance marketed agreement" would it need to say somewhere on the document ?

 

Also just for info it was signed 2003 so may have missed the distance marketing regs 2004

 

Dave

[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

[noomill060]

I take it from the lack of opinions to my last question, that either no one knows or the answer is (as peterbard has said with some exasperation in another thread) staring me in the face where it says this is an "Application Form" and therefore not enforcable under any circumstances)

[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

[Monty2007]

my credit card company cannot produce the original CCA, I requested they stop processing my data and their response (with respect to enforcement) was:

 

"I would also like to make clear that even if the Agreement was improperly executed and/or failed to include the prescribed terms set out in the Consumer Credit Act, which is not accepted, this would not render the Agreement void or illegal, but either unenforceable without an enforcement order or irredeemably unenforceable. In either case, the debt would remain outstanding and therefore the information we have exchanged with the credit reference agencies remains accurate".

 

my thread is at: http://www.consumeractiongroup.co.uk/forum/general-debt/103600-non-conformance-under-s10.html

 

 

 

[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