Doorstep credit agreement unenforceable

Posted: 21st November 2013

MotorbikeThe Court of Appeal has ruled that a vehicle credit hire agreement with an accident victim was unenforceable from the outset because of the failure to inform him in writing of his cancellation rights.

A motorcyclist’s vehicle was written off when a motorist carelessly opened his car door in his path. He obtained a temporary replacement vehicle for a 47-day period from a credit hire company at a cost of almost £5,800. The company subsequently sought to recover that sum from the motorist’s insurers in reliance on the hire contract which had been signed by the motorcyclist at his home.

In dismissing the company’s claim, the county court found that it had no valid cause of action, either against the motorcyclist or the motorist. In contravention of the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008, the company had failed to give the motorcyclist written notice of his right to cancel the contract.

In challenging that decision, the company pointed out that it had not ‘cold called’ the motorcyclist but had delivered a replacement vehicle to his home at his request. It was submitted that the Regulations were not designed to embrace such a situation and that the company had a right, or at least a legitimate expectation, to receive payment under the contract.

The company also argued that the unfair way in which the Regulations had operated to extinguish its contractual entitlement to payment amounted to a violation of its private property rights, enshrined in Article 1 Protocol 1 of the European Convention on Human Rights.

However, in dismissing the company’s appeal, the Court found that no distinction could be drawn under the Regulations between cold-calling and solicited visits by tradesmen to consumers’ homes. The failure to comply with the Regulations meant that the contract was unenforceable from the outset and the company could have no legitimate expectation that it would receive payment.

The Court acknowledged that extending the ambit of the Regulations to solicited visits - as well as doorstep selling, cold-calling and similar unfair commercial practices - could have ‘surprising and unsatisfactory consequences’. However, it was not possible to read the regulations in a way which excluded contracts of the kind in question.