hire purchase - voluntary termination help

[cdlech]

Hi There,

I am after some assistance regarding voluntary termination under a hire purchase agreement if anyone can help. I have read the other posts but just wanted some clarification if possible.

After returning my car I have received a request for excess mileage payment which the lender refers to section 99(2) "Termination of an agreement under subsection 1 [the right to terminate] does not affect any liability under the agreement which has accrued before the termination"

The lender is arguing that as I signed my pre contractual agreement which states I am liable to pay for excess mileage if the agreement is terminated early I am liable to pay and that their terms in the agreement are consistent with the consumer credit act.

Would section 173 of the CCA apply here in that a contractual term in my agreement would not mean I am obliged to pay for additional mileage, as the only requirement under statue law is that the goods are in reasonable condition?

Thanks

[Kati]

Re: hire purchase - voluntary termination help

one for you methinks [MENTION=71570]R0b[/MENTION] xx

[R0b]

Re: hire purchase - voluntary termination help

Hi There,

I am after some assistance regarding voluntary termination under a hire purchase agreement if anyone can help. I have read the other posts but just wanted some clarification if possible.

After returning my car I have received a request for excess mileage payment which the lender refers to section 99(2) "Termination of an agreement under subsection 1 [the right to terminate] does not affect any liability under the agreement which has accrued before the termination"

The lender is arguing that as I signed my pre contractual agreement which states I am liable to pay for excess mileage if the agreement is terminated early I am liable to pay and that their terms in the agreement are consistent with the consumer credit act.

Would section 173 of the CCA apply here in that a contractual term in my agreement would not mean I am obliged to pay for additional mileage, as the only requirement under statue law is that the goods are in reasonable condition?

Thanks

That's part of the argument yes but section 100(1) says that if you terminate the agreement under section 99, then you are specifically liable for 50% of the total price payable under the agreement plus any sums due in relation to the total price immediately before termination. The definition of total price is set out in section 189 which excludes any charges for compensation or damages for breach of the agreement. Section 173 reaffirms that any contractual clause which is contrary to your rights under the CCA is void and unenforceable.

To give you an example, you've paid 50% already but are 1 month of £250 in arrears and exceeded the agreed mileage to the sum of £200 and the lender argues the 1 month arrears and £200 excess mileage accrued prior to termination of the agreement (though I disagree that the excess mileage charge accrues before termination let's just play along).

So you allegedly have £450 accrued liability. However, section 99 is subject to the provisions of section 100 because it says that if you terminate under section 99 (which you did) then you will be liable for XYZ. The sums due in respect of the 'total price' immediately before termination would only cover the 1 month arrears because the definition says that 'total price' includes the total sum payable under the agreement but excluding any sum which is payable as a penalty, compensation or damages for breach of the agreement. Section 100(1) effectively acts as a limitation of liability.

As excess mileage charges are considered to be damages/compensation, that's why you are not liable for them. Of course the lenders will argue differently and you may get taken to court over it depending on the amount owed - so I would suggest doing a search of the forum on here and make up your own mind as to whether you want to defend or pay up.

[cdlech]

Re: hire purchase - voluntary termination help

That's part of the argument yes but section 100(1) says that if you terminate the agreement under section 99, then you are specifically liable for 50% of the total price payable under the agreement plus any sums due in relation to the total price immediately before termination. The definition of total price is set out in section 189 which excludes any charges for compensation or damages for breach of the agreement. Section 173 reaffirms that any contractual clause which is contrary to your rights under the CCA is void and unenforceable.

To give you an example, you've paid 50% already but are 1 month of £250 in arrears and exceeded the agreed mileage to the sum of £200 and the lender argues the 1 month arrears and £200 excess mileage accrued prior to termination of the agreement (though I disagree that the excess mileage charge accrues before termination let's just play along).

So you allegedly have £450 accrued liability. However, section 99 is subject to the provisions of section 100 because it says that if you terminate under section 99 (which you did) then you will be liable for XYZ. The sums due in respect of the 'total price' immediately before termination would only cover the 1 month arrears because the definition says that 'total price' includes the total sum payable under the agreement but excluding any sum which is payable as a penalty, compensation or damages for breach of the agreement. Section 100(1) effectively acts as a limitation of liability.

As excess mileage charges are considered to be damages/compensation, that's why you are not liable for them. Of course the lenders will argue differently and you may get taken to court over it depending on the amount owed - so I would suggest doing a search of the forum on here and make up your own mind as to whether you want to defend or pay up.

Thanks Rob,

I think I understand my position after reading all the other posts and your guide. I have decided to defend and will let you know how I get on.