Rental Agreement - Late payment penalties

bengal-stripe

geordie_joe wrote: »

Judges have been ruling that penalty clauses are illegal for over 100 years, what judge today is going to say they were wrong?

If there weren’t any penalty clauses, Wembley Stadium would still be a building site,
and the 2012 Olympic Games will have to be cancelled.

geordie_joe

bengal-stripe wrote: »

If there weren’t any penalty clauses, Wembley Stadium would still be a building site,
and the 2012 Olympic Games will have to be cancelled.

Doesn't make them legal. besides, there is nothing wrong with a clause that says "if you do not finish the project on time we will lose £10,000 per day in revenue, therefore you will pay us £10,000 for every day you go over."

What would be wrong is claim £50,000 per day for £10,000 in lost revenue.

The main point is if one side does not fulfill their side of the contract the other party can only charge/claim what it has lost because of this. It cannot add on extra as a punishment or penalty.

believe me, there isn't a judge in this country who doesn't think only the courts should be allowed to issue punishments and penalties. They don't like it when anyone, even Mr Murray, tries to inflict a penalty or punishment on someone, even when that person has agreed to it by signing the contract.

exel1966

What legal stance do you personally have to make bold statements such as "there isn't a judge in this country who doesn't think only the courts should be allowed to issue punishments and penalties" ?

exel1966

geordie_joe wrote: »

As you say, £12 is a fair charge, which means £30 is not fair.

I' didn't say it was fair, the OFT did, but that doesn't mean to say the consumer thinks it's fair.
Does it really cost an organisation £12 ? No, it's more like a couple of pound only, yet because the OFT have set a reccomendation it's deemed OK. Find me a judge to challenge that penalty charge ?

geordie_joe

exel1966 wrote: »

What legal stance do you personally have to make bold statements such as "there isn't a judge in this country who doesn't think only the courts should be allowed to issue punishments and penalties" ?

Because the entire legal system of this country is based on jury's deciding guilt, or innocence and judges and magistrates issuing penalties and punishments. It's what they believe in, it's what they do! They do not like it when they see someone else issuing punishments and penalties.

geordie_joe

exel1966 wrote: »

I' didn't say it was fair, the OFT did, but that doesn't mean to say the consumer thinks it's fair.
Does it really cost an organisation £12 ? No, it's more like a couple of pound only, yet because the OFT have set a reccomendation it's deemed OK. Find me a judge to challenge that penalty charge ?

Actually the OFT has not set a recommendation that they think is fair. In fact they specifically said that "the OFT did not necessarily consider £12 a fair charge, and that this would be up to a court to determine."

In 2006 the Office of Fair Trading investigated the charges being imposed on customers of credit card companies. In its report, the OFT said that many of their default charges were unlawful, as they constituted unjust enrichment. It stated that it would act upon receiving notice of any charge over £12 as a penalty, and therefore unlawful. However, the report also specifically stated that the OFT did not necessarily consider £12 a fair charge, and that this would be up to a court to determine. It suggested that the £12 "cap" was intended as an initial step towards fair practice and compliance with the law. Whether or not an individual charge constituted a penalty fee would be based on the established legal precedent that the only cost recoverable would be actual costs incurred.

The last sentence in bold is, for me, the important one.

TrickyDicky

geordie_joe wrote: »

If the law says you can't punish someone with a penalty, but you get them to sign a contract that says you can, which is right the law or the contract?

The law. You cannot put a clause in a contract and enforce it if the clause is illegal, or deemed illegal

geordie_joe

TrickyDicky wrote: »

The law. You cannot put a clause in a contract and enforce it if the clause is illegal, or deemed illegal

Exactly, but as someone pointed out, if you don't pay your landlord might not want you as a tennant any more.

If it were me I would still point out to him/her that the penalty is illegal and see what happens from there.

Then again, I live in a town that is out in the country with the nearest other towns 20 and 25 miles away.

Ten years ago the would be developers started buying up all the houses and flats to rent out. But they've bought/built so many now that there is a glut and many stand empty for month and sometimes years.

Last Oct I moved as my landlord decided to cash in and sell his block of 20 flats for £220,000. After living in there for 10 years I looked around for somewhere else to live. I emailed all the local letting agents and landlords and was inundated with offers of flats similar to mine but £100 per month cheaper.

I accepted a house from the housing association, because it was far better than any of the flats and in a better area, also £106 per month less rent than my flat.

As for my ex-landlord, he's had a block of 20 flats which have been empty since last sept/oct.

The sign on the block that said "coming soon, 20 luxury 2 bedroom apartments - £220,00 each" last September now says "19 luxury 2 bedroom apartments - £142,00 each" and has done since March.

That's what happens when too many people think they can make money from property development in a small town with a finite number of people. Sooner or later the supply far outstrips the demand.

Quentin

People rightly expect their wages or giro to arrive on time and would kick up if they didn't.

Why shouldn't the landlord expect to be paid on time? A landlord has commitments just like everyone else.

geordie_joe

Quentin wrote: »

People rightly expect their wages or giro to arrive on time and would kick up if they didn't.

Why shouldn't the landlord expect to be paid on time? A landlord has commitments just like everyone else.

Nobody has said that he can't expect his rent on time. What they have said is that the law says he can't penalise you for it, he can only claim any costs incurred because of the late payment.

In other words, if you are late paying and he sends a reminder, and that reminder costs him £5 then he can only claim £5 from you. He can't make a £30 charge as that would be a penalty.