RTA July 2010

July 2010 Doorstep Selling Regulations and Credit Hire

The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008

These regulations came into force on 1st October 2008 and are basically there to protect the consumer from high pressure doorstep selling. In fact the Office of Fair Trading has provided a leaflet for consumers on these regulations entitled “Your doorstep, your decision”. Unfortunately though, these regulations affect credit provided in relation to goods and services and as providing a hire car is a service then these regulations cover credit hire charges. If the credit hire agreement isn’t exempt from these regulations then it must comply, otherwise, the hirer could take issue with the hire company and it could then be unenforceable.

Firstly, the credit hire agreement could be exempt from these regulations. If you do not follow the Dimond v Lovell, (2000) 2 All ER 897, approach, and ensure your agreement is exempt, then under the Consumer Credit Act 1974 you have to provide cancellation provisions and thus there is an exemption. However, most hire companies go down the Consumer Credit Act (exempt agreements) Order 1989 (in other words comply with Dimond) and so potentially fall under the new regulations. In which case, there are still some exemptions. You may meet your potential hirer at the garage where the repair work is to be undertaken or anywhere else that is not the home or place of work. If this is the case then these provisions do not apply. However, getting the hirer to sign outside their home in the hire car would likely still be perceived as their home. You might send out your contract in the post similar to that mentioned in the case of Borley v Reed (2005) LTL 12/12/2005. Also, the hirer maybe hiring in relation to his trade or profession, in which case he would not be a consumer for the purposes of these regulations. An example of this would be a taxi driver who is hiring a replacement taxi. These are the main exemptions that are relevant to a credit hire company.

Alternatively, the hire agreement could comply with these regulations. Compliance is fairly straight forward in that the hirer would need to be provided with a cancellation notice giving them a cooling off period of a minimum of 7 days. How to cancel the contract must form part of the contract and the cancellation notice must be given in writing, be dated, be easily legible, indicate the right of the consumer to cancel the contract within the cancellation period, indicate that the consumer may be required to pay for the goods or services supplied if the performance of the contract has begun with his written agreement before the end of the cancellation period, have as much prominence as any other term of the contract and that a related credit agreement will be automatically cancelled if the contract for goods or services is cancelled.

If you are entering into an exempt agreement or you have the correct cancellation notice then the hirer is not able to take issue with you over your contract and this will protect you, as a hire company, with your hire clients. However, there are rumblings in the hire industry at the moment that defendant’s solicitors are taking issue with these regulations and suggesting that, in defences, the hire agreement does not comply and is therefore unenforceable.

Quite obviously this is a new argument to defendants. I suggest this because even when they are being provided with evidence to show that the hire agreement is either exempt or complies with the regulations, they are still running the argument which is quite clearly wrong. Furthermore, if they are running this argument on accidents happening post 30th April then quite clearly, under 7.67 of the new protocol, this is a complicated legal or factual argument and so should come out of the new process and thus incur further costs for the defendant.

However, it should be considered whether or not any documentation should be provided whatsoever. An argument that the defendant has no right to inspect the documents could be put forward. Ultimately the agreement is between the hire company and the claimant, the hire company would not be part of the proceedings and as Deputy District Judge Hodgson in Sheffield has stated on this argument:-“Due to lack of evidence (Accident Exchange not being present or even part of these proceedings) I simply cannot say whether the rental agreement is caught or not by the Regulations. I also cannot say whether the claimant will be exposed to litigation by Accident Exchange if he rules the contract unenforceable and that cannot be the right result for the innocent victim of a road traffic accident recovering the cost of hire in a simple tort claim.”

This kind of attack on an agreement between the hire company and the hirer has also been considered in the case of Borley. At paragraph 24 Judge Hughes states “the focus of this litigation has not been between the claimant verus the defendant but the claimant versus her hire company at the sole institgation of the defendant’s insurers”. He then goes on to say at paragraph 28 that he would hold, in cases such as these where the tortfeasors insurers attempt to meddle in a sensible and beneficial arrangement, that “the defendant is not to be permitted to argue that the contract governing the agreement between the claimant and a car hire company is for some technical reason void or voidable”.

As such, if you are presented with this type of argument then you should warn the defendant’s solicitors that they are clearly misplaced and if they do not withdraw this argument within 7 days then you will make an application to strike this part of the defence out and use the above arguments to support your application. If you are a credit hire company, faced with any aspect of these issues pre-issue then you would be best not engaging whatsoever on these points and contact your panel solicitor so that they can provide the warnings.

Another approach to be wary of is Part 18 questions directed at where the claimant signed the documents as these should be “based on the tests of necessity and proportionality”. As the arguement above highlights this type of question is not necessary in respect of the hirer’s claim against the defendant and so requests with these types of questions should be opposed. What should also be born in mind is that Part 18 only applies to post issue cases in relation to a party's ability to prepare its own case and to understand the case it had to meet as highlighted in the case of LEXI HOLDINGS (In Administration) v PANNONE & PARTNERS (2010) EWHC 1416 (Ch).