Is this an unfair term in a consumer contract?

[Paul.]

Re: Is this an unfair term in a consumer contract?

Hi paul

Just a quick question

What is plain intelligible language of a variable interest rate ?

Ahh Wikipedia, not the best place for legal assistance, but i take the point made.

but what benefit are you going to get if the term is unfair?

[welshperson3]

Re: Is this an unfair term in a consumer contract?

Whether or not the Claimant knew it, the fact is that organisations that provide credit to consumers have themselves to use credit for which they must pay. The cost of credit moves up and down. Creditors such as MBNA make their money on the margin obtainable between the cost of their borrowing and the income from their lending. I have no idea whether MBNA were or were not greedy in the amount that they charged debtors as against what they had to pay their creditors. What I do know is that when interest rates rise it will become increasingly hard for debtors to service their borrowings.

I know that my loan company borrows from the bank of Scotland at 3% above base rate (variable) so obviously their cost of funding has fallen and as stated above the judge didn’t know if they were being greedy, but I can prove they are greedy.

Accounts filed at company house show how much they borrow, who they borrow from, and the interest they pay on they borrowing.

[Paul.]

Re: Is this an unfair term in a consumer contract?

I think the point which Gwyn makes, is that even if you did win with that point, the fact it is of no utility may mean Chambers would make an adverse costs order on that point.

In short, he may say, as he did on harrison , that since some of the points served no benefit, then the opponent is entitled to the costs of those points, thus they were given 1/3 of our costs order

I understand from Gwyn that he is happy to run the point, but that the risk is high that you will be penalised in costs

[Paul.]

Re: Is this an unfair term in a consumer contract?

Whether or not the Claimant knew it, the fact is that organisations that provide credit to consumers have themselves to use credit for which they must pay. The cost of credit moves up and down. Creditors such as MBNA make their money on the margin obtainable between the cost of their borrowing and the income from their lending. I have no idea whether MBNA were or were not greedy in the amount that they charged debtors as against what they had to pay their creditors. What I do know is that when interest rates rise it will become increasingly hard for debtors to service their borrowings.

I know that my loan company borrows from the bank of Scotland at 3% above base rate (variable) so obviously their cost of funding has fallen and as stated above the judge didn’t know if they were being greedy, but I can prove they are greedy.

Accounts filed at company house show how much they borrow, who they borrow from, and the interest they pay on they borrowing.

Yes i hear that, but the creditor is entitled to set his price for his service isnt it?

You go to a shop, the shop will set the price it sells to you and that will be higher than it buys in, some shops are cheaper than others, thats life.

But the point still remains, if the Court strikes out this term, what benefit do you derive? are you expecting the Court to write in a new term?

[welshperson3]

Re: Is this an unfair term in a consumer contract?

I think the problem here is that the loan has the same rate of interest now as it had when it was signed, that is the bargain that was struck between creditor and debtor. I dont think Chambers would allow any suggestion that even though that is what was agreed, and the rate has not changed, that there is some kind of prejudice. It seems also to provide little or no remedy, even if unfair i simply cannot see what is gained by removing this clause, as it has nothing to bite on




the 'contra proferentem' rule is that where there is any ambiguity in regards to a clause it is to be interpreted against the party seeking to rely on it. Regulation 7 states this very clearly:[2] "(1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language. (2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail but this rule shall not apply in proceedings brought under regulation 12.


what is the most favourable interpretation ?

[welshperson3]

Re: Is this an unfair term in a consumer contract?

I think the problem here is that the loan has the same rate of interest now as it had when it was signed, that is the bargain that was struck between creditor and debtor. I dont think Chambers would allow any suggestion that even though that is what was agreed, and the rate has not changed, that there is some kind of prejudice. It seems also to provide little or no remedy, even if unfair i simply cannot see what is gained by removing this clause, as it has nothing to bite on




the 'contra proferentem' rule is that where there is any ambiguity in regards to a clause it is to be interpreted against the party seeking to rely on it. Regulation 7 states this very clearly:[2] "(1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language. (2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail but this rule shall not apply in proceedings brought under regulation 12.


what is the most favourable interpretation ?


Yes i hear that, but the creditor is entitled to set his price for his service isnt it? NO not after the agreement is struck

You go to a shop, the shop will set the price it sells to you and that will be higher than it buys in, some shops are cheaper than others, thats life .true , but lets say you but a TV pay for it and the shop says we will deliver it next week, they then turn up a week later and say the tv has gone up in price by £500 is that fair ? its not what you agreed is it.

But the point still remains, if the Court strikes out this term, what benefit do you derive? are you expecting the Court to write in a new term? Yes ther are plenty of ways in which the court ha the power to rewrite a term. 140 CCA, I think 127 CCA (time order) Unfair Contract Terms Act 1977 all allow the court the power to vary the terms

The only act that dosnt allow for a change to the term is the Unfair Terms in Consumer Contracts Regulations 1999

[Paul.]

Re: Is this an unfair term in a consumer contract?

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Yes i hear that, but the creditor is entitled to set his price for his service isnt it? NO not after the agreement is struck Quite, BUT heres your problem!!! has the rate gone up? no, has it gone down? no IT IS WHAT YOU STRUCK

You go to a shop, the shop will set the price it sells to you and that will be higher than it buys in, some shops are cheaper than others, thats life .true , but lets say you but a TV pay for it and the shop says we will deliver it next week, they then turn up a week later and say the tv has gone up in price by £500 is that fair ? its not what you agreed is it.Irellevant, that is not the point i was making, i merely was poiinting out that lenders like other traders set the price at different levels.

But the point still remains, if the Court strikes out this term, what benefit do you derive? are you expecting the Court to write in a new term? Yes ther are plenty of ways in which the court ha the power to rewrite a term. 140 CCA, I think 127 CCA (time order) Unfair Contract Terms Act 1977 all allow the court the power to vary the terms

The only act that dosnt allow for a change to the term is the Unfair Terms in Consumer Contracts Regulations 1999

I am aware 140 allows the Court broad discretion and also the various other statutes, but i simply am struggling to construe the term complained of as unfair. If you want to run the point then thats fine but the risks are there, it is a matter of judicial interpretation and i think that Chambers will take the same view. I may be wrong and of course law is about opinions

I will have a chat with Gwyn in the morning about this, and go back over the points along with the authoritive texts we have such as Chitty and Goode to see if there is anything we have missed, but i do doubt it.

[welshperson3]

Re: Is this an unfair term in a consumer contract?





Paul I hope you don’t mind this debate, but I need to be sure that I am making the best choice as to whether I drop this point or run it and to do that then I have to understand why this point is weak.


Just to try and explain why I think this is unfair.

My mortgage 3years ago was £400a month now it is £200 it is a variable interest rate mortgage.

My loan 3 years ago was £200 a month now it is £200 it is a variable interest rate loan


Now the facts of both these agreement are that they both borrow money from the banks and then add a few % on top, which is their profit margin.

So my mortgage has gone down by £200 a month, and it has gone down because the bank that lent my mortgage company the monies to lend to me reduced they interest rate and then this interest rate was passed on to myself.

So would it be fair if my mortgage company were still charging me £400 a month?
Would my mortgage company be making an extra £200 a month profit if they didn’t drop the interest rate?
Do you think the mortgage company are making a loss by passing on the rate cut?

The % mark-up that my mortgage company make on top of the rate at which they borrow money is the same now as it was when I took out my mortgage and thus the profit they make per month is the same today as it was when I took out my mortgage and I am financially better off to the sum of £200 a month.

The above paragraph shows all is fair my mortgage company is making the same profit per month as they always have and I am saving £200 a month and everybody is happy.


Now my loan agreement works on exactly the same principle they borrowed money and put a % on top witch is they profit. When I borrowed this money the banks base rate was 6% and my loan agreement is %11 so they were making a profit of %5 now the bank base rate is ½% and my loan is still 11% so now my loan company is making a profit of 10.5% over double what it was when I took out this agreement.


Now if my loan company had passed on the inters rate cut I would be paying £100 a month not £200 so the determent I suffer is £100 a month.


Summery


As both my mortgage and my loan are variable interest and both borrow money from banks to lend to me (which I can prove) then either my mortgage company are losing lots of money by dropping my interest rate or my loan company are making a lot of extra profit by not dropping the interest rate.



I do know the rules governing first and second charge mortgages are different but the rules are irrelevant to a finding of fair or unfair,

Both my mortgage and loan operate a variable interest rate but operate it in a completely different way so who is operating a variable interest rate in the correct way loan company or mortgage company.


Thanks for your help Paul I need try and clarify this and I do understand that law is subjective and that I need to see the other side of the argument and then I will be able to drop this point and sleep at night

[Never-In-Doubt]

Re: Is this an unfair term in a consumer contract?

I don’t really want to go in to who the solicitor is as the last thing I want to do is upset them, but I think I am right in my belief about the terms of my agreement, and im just trying to find out what others think about these terms,

Other peoples opinion will either strengthen my belief or show me were im going wrong. And then I make the decision whether to proceed on this point or to drop it.

Fine, my point was if you're using the firm of solicitors we do then asking here won't achieve much as the main advice given will be from that exact same firm so instead of wasting reams of typing, just pick up the phone and ask your solicitor the question!

If you're not using the same firm then obviously the above is irrelevant.

I think your argument is flawed however lets see what the experts think! Good luck.

[SXGuy]

Re: Is this an unfair term in a consumer contract?

So what do you hope to acheive after this? are you hoping that they will be forced to lower the interest rate to a more acceptable level?

Ive read through the whole thread and im still unsure what you hope to gain from it.

[Paul.]

Re: Is this an unfair term in a consumer contract?

So what do you hope to acheive after this? are you hoping that they will be forced to lower the interest rate to a more acceptable level?

Ive read through the whole thread and im still unsure what you hope to gain from it.

WEll this is the difficulty.

There is no authorities on this point from what i can see.

You are asking a High Court judge to hand down a binding decision that would open the floodgates on Blemain and other Sub prime lenders.

Courts are mindful of decisions which do that, and the Court may well make a policy decision, weve seen it in Harrison if you notice, Chambers found the terms were not there when the agreement was signed, yet he found all the info had been provided so that he could avoid rendering the agreement unenforceable.

So i do doubt that the Judge will be with us on this, and of course theres always the Court of Appeal but the sticking point there is costs, you need serious funding to fight the likes of Blemain at that level, they would undoubtedly use a QC and junior counsel which would cost thousands.

[kilasuit]

Re: Is this an unfair term in a consumer contract?

I know that we are now in July and this was from March but was there any outcome of this at all?


I see the point being made on both sides here and feel that there could have been a mid point between the £100 monthly detriment as seen in post 23 and how it could have forced a possible change in the t&c