Car Hire Purchase Agreement Termination

MataNui wrote: »

Its not been tested in court but i cant see why CCA legislation would exempt anyone from paying these charges. CCA says you can VT and would be liable for 50% of the finance agreement. There is nothing in the CCA to override contract law. Its simply about the finance.

When you sign a PCP or lease you sign a contract that basically says you will look after the car, stick to a mileage limit and hand the car back in good condition allowing for reasonable wear and tear. The fact that you may VT your 'finance' doesnt in any way exempt you from these terms in the contract you signed. In this case the car will be handed back over miles and with damage. In other words the OP has broken the contract they signed so compensation in the form of excess mileage charges and repairs would be legitimately due.

#Edit# Additionally since payments on PCP are based on the mileage specified i dont think it would be unreasonable for the finance company to allege fraud in cases where mileage is significantly higher than agreed and the customer wants to VT. Not saying they will or do but seems reasonable to me.

Exactly. The CCA legislation is only relevant (or intended to be relevant) to the finance part of any contract. The OP could agree separately in the contract to change his name to "Geoffrey" or agree to give up beer for 36 months - this would all just be subject to normal English contract and common law.

Quite a few lenders are now wording their T & Cs such that the mileage limit forms part of the fair wear and tear conditions.

Hello,

I read this thread with interest and came across it by chance, but after reading some of the posts I thought I would respond directly.

I don't know who told you this, but if the clause is part of the contract that you signed then it is enforceable.

That is not entirely true, particularly where contracts are subject to and regulated by legislation, which is the CCA in this case. Just because something is in a contract does not mean it is either lawful or enforceable, or both.

It certainly could not be considered an unreasonable term, because the value of the car reduces as the mileage increases.

Strictly speaking, if the pence per mile was disproportionately high then it could be considered an unreasonable term.

Legalbeagles offer one opinion on the matter and the FOS opinion is the opposite stating that you have contractually agreed to care for the vehicle and not to reduce the value by scratching, denting or exceeding the agreed paid for mileage, the CCA allowing for this.

You are right, my opinion differs from that of the FOS but lets not forget that the FOS is not a court of law nor are they required to strictly follow the law but rather look at what is fair and reasonable. If they deviate from the law then they should explain their reasons why, and this is FOS's downfall in my eyes. I've heard on several occasions (from the inside) that the FOS is not properly trained to deal with the types of cases they get and so their decisions are not always consistent nor do they understand some of it. So if one were to threaten the FOS with a judicial review application, there's a real chance that they would reconsider such a decision rather than defending a judicial review. For the ordinary Joe Bloggs, a JR is simply not viable given the substantial costs involved.

I am not entirely sure of everyone's knowledge of the CCA but section 99 and 100 derived from its predecessor which was the Hire Purchase Act 1967 which had almost identical provisions. The purpose of the provision was to afford the debtor a chance to escape the full liability of the contract should he or she suffer from financial difficulties. The government saw 50% liability plus the return of the goods as a fair measure for lenders to recover most if not all of the sums that would have been due under the agreement. Fast forward time and we do now see people in this industry abusing this provision but not everyone. Indeed, the motor industry lobbied for these provisions to be removed following a government consultation in 2006 citing debtors were abusing this provision (and I might add that in the consultation the government acknowledged that liability is capped at 50%) but the government refused to remove it because it does not just apply to the motor industry but for other types of goods too.

Anyhow, I respect everyone's opinion and their interpretation of these provisions but I have to say there are some particular flaws coming from MataNui in relation to the point about when you VT the liability has no effect on the contractual terms, but only the finance (correct me if I wrongly understood this point). Understanding the liability under 99/100 is a matter of interpretation but it seems that is the mistake that I see people make the most, including finance companies.

As for the point about taking reasonable care of the car, this is a question of whether the debtor has been negligent in looking after the car whilst in their possession. Breaching the agreed contractual mileage does not, on the face of it, create a presumption that you have been negligent. They are two separate causes of action founded on different principles. Can you honestly say that if you exceeded the agreed mileage by 100-200 miles you have been negligent in looking after the car? The answer is likely to be no. So where do you draw the line and how is it determined? There is already case law on what a debtor should be required to do when looking after the car, so even if the agreed mileage has been exceeded the question of negligence will rest on the facts. In my opinion, the value of the car on its own, is not sufficient to warrant a court holding a debtor liable for negligence - there has to be some evidence to that effect and there are several variables to this.

@Molerat, I take your point about putting my money where my mouth is. I've had several cars on finance previously though fortunately I've never actually exceeded the agreed mileage limit. I myself am on PCP at the moment so if I ever VT and exceed the pro-rata mileage i'll certainly be sure to challenge it and let you know

On a final note, if excess mileage was so easy to recover, why haven't finance companies been more active in this area? and why have some tried to change tactic by arguing excess mileage falls under the unreasonable condition than the right to recover contractually?. There is little (but a couple) of case law that I am aware of which supports my views as well as numerous practitioner authorities such as Chitty on Contract, Halsbury's Law, Good on Consumer Credit Law and Practice, Consumer Credit Law: Practice and Precedents all authored by some of the top experts in their field. Taking all of that together, I find it somewhat difficult for a finance company to successfully argue otherwise that the contractual excess mileage charges can be enforced, particularly with little to no evidence and the reliance of mere speculation.

Apologies for the long post, it is my opinion and it is a 'grey area' until a binding authority comes on record.