Credit Hire and Credit Repair: considered in the light of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 

vv By Vilma Vodanovic

Those of you with experience of dealing with credit hire cases will know the difficulties faced when a hire agreement has no cancellation notice attached to it, or it is not in the correct and prescribed format, very often resulting in a non-enforceable contract and no credit hire charges being recovered. These arguments, under the Cancellation of Contracts made in a Consumer’s Home or Place of Work, etc Regulations 2008, have been the subject of extensive litigation.

The 2013 Regulations came into force on 13th June 2014 and apply to all contracts entered into on or after that date. The 2008 regulations still apply to all contracts entered into before 13th June 2014 but after the 2008 regulations came into force.

So the existence of the 2013 regulations is slightly old news, you might think: the regulations have been in force since June 2014. But it would have taken some time for credit hire/repair agreements entered into after 13th June 2014 to start coming through the litigation process and landing on your desks. If they have not yet, then they are likely to do very soon.

Once they do, the old 2008 regulations arguments will not be of any assistance. Now might be the time to have a look at the new regulations in quite some detail – link to full regulations  http://www.legislation.gov.uk/uksi/2013/3134/contents/made

The first question you might want to ask of course is: do the 2013 regulations apply to credit hire/repair agreements?

The short answer is – they might.

You should also bear in mind that the scope is wider in that the regulations apply not only to contracts concluded at home or at the place of work but anywhere where both the consumer and the trader are simultaneously present, except the business premises of the trader (regulation 5).

 

The longer answer is that there are a number of new provisions/definitions in the 2013 regulations that might be interpreted in a number of different ways or are open to argument by either side. The likelihood is that the arguments will still centre around the provision of a notice of the right to cancel (contained in Part 3 of the 2013 regulations) but also the provision of relevant information (contained in Part 2 of the 2013 regulations).

Here is a quick summary (but not an exhaustive list) of what the likely potential arguments might be:

Regulation 4

Definition of consumer now includes an individual acting for                                                       purposes which are wholly or mainly outside that individual’s                                                     trade, business, craft or profession.

There might still be arguments that those occasional/part-time taxi drivers who use their car for social and domestic purposes too are still caught by the regulations. 

Regulation 6(1)(b)

Regulations don’t apply to a contract for services of a ‘credit’ nature.

Does this mean that provision of vehicle hire or repair services on credit is excluded and therefore the regulations do not apply at all?

Regulation 10(1)(a)

Specified information in Schedule 2 must be provided before the contract becomes binding

Schedule 2 contains 24 separate items of information that must be provided

This is likely to be apply to credit hire agreements as the exception in regulation 28 (see below) does not apply to Part 2. The contract is only binding if the information specified in Schedule 2 has been provided, so a failure to provide one piece of information listed arguably renders the agreement unenforceable?  It is curious though to note that under the regulations it is only an offence under regulation 19 not to provide information listed in paragraphs (l) (right to cancel),(m) (consumers costs on cancellation) or (n) (again consumers costs on  cancellation in different circumstances to (m)) of Schedule 2.  A failure to provide the remainder of the information does not amount to an offence. So will it be argued that a failure to provide any of the other pieces of information cannot be that serious and cannot therefore render the agreement unenforceable?

Regulation 10(1)(b)

A cancellation form as set out in Part B of Schedule 3 must be provided (model cancellation form contained therein)

On the face of it this is likely to apply to credit hire agreements but see below.

Regulation 28(1)(h)

The right to cancel does not apply as regards the supply of vehicle rental services if the contract provides for a specific date or period of performance. 

So regulation 10(1)(a) (provision of information) is not caught by this exception but regulation 10(1)(b) (right to cancel) is insofar as provision of vehicle rental services is concerned.  But what is not included are those credit repair agreements so a cancellation notice is still required for those. 

So the real question is going to be what is meant by specific date or period of performance? Does that mean that where the full period of hire is known at the outset then the regulations do not apply? Or even where only the start date is  known but not the end, then again the regulations do not apply? 

Is a hire agreement which is limited to three months hire (or e.g. 85 days) within the terms and conditions of the agreement in fact an agreement for a specific period and hence the regulations do not apply?

Regulation 30

The cancellation period has been extended to 14 days (as opposed to 7 days under the 2008 regulations)

Watch out for any mistakes made by credit hire companies on this point. A failure to comply with all the provisions of the regulations may well render the agreement unenforceable even if everything else has been complied with. 

Those of you dealing with credit hire/repair will have to study the new regulations carefully and analyse the agreements with great scrutiny, appreciating what potential points you might have to deal with as claimants or raise as defendants. There will be credit hire companies out there that will not have caught on fully and not amended their agreements accordingly. (I am still amazed to see agreements entered into even in 2013 or in 2014 which do not contain a Notice of Right to Cancel. They might refer to it but the physical copy of it never surfaces.)

I suspect there is going to be a period of uncertainty as to the interpretation or the application of the regulations but before long I can envisage appeal points being raised and in particular in relation to regulations 28(1)(h) and 6(1)(b).

And so the credit hire saga continues …

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