Originally posted by welshperson3
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Ok,
My take on this is that firstly if the term is unfair, under UTCCR 1999 the term must be struck from the agreement if the agreement can continue without that term, otherwise the contract falls over and thats that.
In this present case, even if the term is unfair, what benefit would a party gain from striking it from the contract?
It would be of little benefit as the Court does not insert a new term that the party wants, it merely strikes out the term as unfair.
In the present case, the problem is in my view that the the rate of interest has not gone up or down, it is the rate as it was agreed between the parties when the loan was entered into, it was and remains the rate that was agreed.
Now in Harrison v Link, one of the arguments run was that the ramping up of the interest rate was unfair. Judge Chambers said
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 do not see what prejudice you suffer by this, the clause itself does not say they will lower the rate
2 “rate means the higher of %5 above the base rate for the time being of the bank of Scotland or the highest rate payable under any credit agreement and the highest rate payable under the relevant agreement”
It would have far more to bite on in my view if the creditor had raised the rate when the rates went up and failed to lower it when the rates came down, then i could see an argument succeeding, however, as it stands i cannot see any utility in the argument as you have signed a loan at x rate, and the loan remains at x rate.
The courts have repeatedly said under the old extortionate credit bargain provisions, that rates such as 75 to 80% are not unfair, and Chambers QC would be well aware of those authorities, and the likelihood in my view, is that he would take the same view that you suffer no prejudice, that the rate is not entirely disproportionate or extortionate, and in any event, even if the clause were struck from the agreement, it would serve little benefit or comfort to you thus, even if you did win on that point it wouldnt take you anywhere so on the issue of costs, since it would be of no utility, then the Court may well take the view which it did in HSBC v Brookes (Court of Appeal) and order costs neutral or costs against you even, thus you could end with liability for the work done which achieves you no benefit in real terms
does that assist?
I presume you've also read the Skipton Building Society unfair term fiasco too?
I'm quoting from that well known journal called Mortgage Strategy.
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