Section 75 - Please help! £10,000 claim!

missk_ensington

Hi ppl, Im hoping someone can help me here as all the info on Section 75 doesnt cover my circumstances....

I started a business a few months back designing and manufacturing blouses and dresses. After much research found a manufacturer, and after numerous meetings placed an order for just under £15,000 which the terms being 1/3 on order, 1/3 at sample stage and final 1/3 on completion. I have my samples, and have thus parted with 2/3 (£10,000).

My stock is supposed to arrive next week, but the supplier had gone a bit cold on me. I received a letter today from them saying that £11,000 has gone missing from their Barclays business account and therefore my order cannot be completed as the factory cannot run without this money to pay staff/bills.

Now this is a LTD company, been established for 25 years, the factory is in Vietnam (their own factory) but they are based in Yorkshire. The money I have paid them so far, has mostly been paid on my Capital One credit card (minus £2,000 from the same invoice paid from my current account). I dont know that this company is definately going bust, but as it is a large, established company I do not believe that a £10,000 deficit would bring the whole company to a standstill unless it is already in financial dire straits.

Questions...

1. Most importantly, Am I Covered?? (I am a sole trader, not a ltd company)

2. Assuming I am covered, what happens if I have repaid most of the balance on the credit card? (I took out a loan 2 weeks ago for the business, and used it to repay £4,000 and another £1,200 or so has been repaid out of my monthly payments. However, additional spending has also gone onto the card - so its hard to see where one transaction ends and another begins).

3. If I am covered, how much am I covered for? 50% with the supplier the other 50%? All of it? A certain %?

4. At what point can I look at claiming - when the company announces it has gone bust, or as soon as it becomes clear my stock isnt going to turn up?

Many thanks for any help on this matter. All posts thanked xx

loofer

I don't have much advise for you but one thing to consider is weather your credit card T&Cs cover business use (assuming it's a personal credit card).

Some finance companies could be a bit anal about it.

Hope you get a positive outcome

missk_ensington

Thanks, thats what Im trying to establish. Although section 75 isnt a term of the credit card company being nice, its a legal obligation - so I dont think the credit card companies can stipulate what they do and do not cover, that'd be down to the Ombudsman. Thing is where do you draw the line between business/personal, if this was the purchasing of say, a giant photocopier for my business it would be covered under section 75, or if it was a works van that had fallen to bits and then the company had gone bust, so I dont know if this is any different just because its stock.

I have googled it as many times as I can, but I cant find any info on section 75 and its effect on business transactions :-( xx

YorkshireBoy

As a "sole trader", you appear to enjoy full protection...

For Section 75 to apply, in the first instance the following four conditions must all be satisfied:

• The cash price of the goods or services bought by the consumer must be at least £100 and no more than £30,000.
• The amount of credit provided to the consumer towards the purchase must not exceed £25,000, and must have been provided to an 'individual' (which includes sole traders, small partnerships and unincorporated businesses, as well as ordinary consumers).
• The provider of credit must be in the business of lending money, and the credit agreement must have been made in the course of that business.
• The credit must have been provided to the consumer under pre-existing arrangements between the provider of credit and the supplier of the goods and services.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/62/62-consumer-credit.htm

You'll also find the answers to your other questions on the FOS website.

missk_ensington

Yorkshireboy - Thank you!!!! I can sleep now tonight! Been very worried xxx