Credit Hire & Cancellation

The English case of Salat v Barutis from November 2013 is a timely reminder that careful consideration of whether or not a credit hire agreement complies with any relevant Regulations may pay dividends.

This case involved the application of the cancellation of contracts made in a Consumer’s Home or Place of Work, Etc Regulations 2008 and the Court of Appeal in England dismissed a credit hire claim because the agreement which had been concluded in the claimant’s home didn’t include a cancellation notice.

The claimant was involved in an accident with the defendant when he was knocked off his motorcycle as a result of the defendant carelessly opening his car door.

The claimant required a replacement motorcycle in order to get to his work. The accident itself occurred on 28 April 2009 and on 9 May a BLD Group employee took a motorcycle to the claimant’s home.

The claimant completed the relevant paperwork which included a credit hire agreement. The motorcycle was required until 24 June 2009 at which point the hire came to an end.

The total amount of the credit hire was £5,718.53 and BLD raised an Action against the defendant in the claimant’s name.

At first instance the defendant’s arguments were successful and the claim was dismissed on the basis that BLD had failed to comply with the 2008 Regulations. Accordingly, the credit hire agreement was not enforceable.

The decision was appealed and the Court of Appeal upheld the original dismissal of a claim.

It was held that the credit hire agreement signed by the claimant did not include a cancellation notice in terms of the 2008 Regulations, Regulation 7(2).

On the basis of the evidence, the contract had been entered into when the BLD employee went to the claimant’s home. A contention that a contract had actually been entered into when the claimant and BLD had a telephone discussion prior to BLD visiting the claimant’s home was rejected.

Their failure to comply with Regulation 7(2) meant that the contract could not be enforced. The Court made the point that the contract was a type which fell within the 2008 Regulations.

Clearly, each case of this type is going to depend on the circumstances of the individual case. Nevertheless, careful scrutiny of the credit hire agreement documentation may well disclose breaches, or potential breaches, of the relevant Regulations.

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