If a lender has no signed agreement from a customer, is the debt enforceable?

Voyager2002

andyfromotley wrote: »

So your 'friend' has already declined to correct the bank about the true position of this loan with all this 'i'll look into it' nonsense. Now 'your friend' is desperately searching for a way out of paying. Your 'friend' sounds like a total douche.

No need for abuse... I am sure that if I (or you) were to experience something similar, I would wonder whether there was a way to keep the money without breaking the law. However, I would know that this was not going to be possible and so would not bother to ask the question.

PeacefulWaters

timbo58 wrote: »

Unless you have seen the loans agreement you cannot state whether it has a clause in it that covers a requirement for immediate repayment if payments are missed.

Neither can I, however it is a very commonly used clause in all types of loan or credit agreement.

Show me one lender who offers personal loans in the UK that are repayable in full should a payment be missed.

And then show me an example of a court enforcing this.

andyfromotley

Voyager2002 wrote: »

No need for abuse... I am sure that if I (or you) were to experience something similar, I would wonder whether there was a way to keep the money without breaking the law. However, I would know that this was not going to be possible and so would not bother to ask the question.

Oh voyager if you think thats abuse you must live a very sheltered life indeed. I laid out what had been said by the OP and i stand by my view that the friend is a total douche.

As for your query as to what we may have done in the same situation, i think i may have a slightly different moral compass to you.

Personally i hope they say fine, no loan agreement, you owe us £16k payable now.

timbo58

PeacefulWaters wrote: »

Show me one lender who offers personal loans in the UK that are repayable in full should a payment be missed.

And then show me an example of a court enforcing this.

I could simply tell you to google it.
However-
http://www.nationwide.co.uk/support/support-articles/terms-and-conditions/personal-loans-terms-and-conditions

http://www.allaboutmoney.com/loans/falling-behind-loan-repayment.asp-0-1297.htm

As for court enforcement, you can google that.
However i did state the lender can request/demand, I didn't say all such cases were then enforceable.

Clearly the OP isn't getting anywhere with opinion and pedantry on this thread and needs serious legal advice.

PeacefulWaters

timbo58 wrote: »

I could simply tell you to google it.
However-
http://www.nationwide.co.uk/support/support-articles/terms-and-conditions/personal-loans-terms-and-conditions

Much as I hate to admit it, that rather successfully puts me in my place.

dumpyboy

InsideInsurance wrote: »

Yes they have to be able to produce a reconstituted copy. IE as these things are computer generated they need to be able to have the computer regenerate the document as it would have on the date it was issued. These wordings dont change often and they will have the things like the APR/ your name etc on file to be able to do it.

It do not even has to be accurate after 7 years from requesting one of my credits supplied a recontusitued one with the wrong surname my bank details from a bank not in existence at the time ( pre takeover one I took the card out)

timbo58

To be fair, I think only repeated non payment would result in a full refund demand, however almost all contracts have a get out clause where if one party defaults in any way the contract at least demands both parties are returned to their original state.

Interest would be pretty much not relevant, however.
As I said before;

Either they will expect the contractual obligations (regardless of bits of paper) to be followed by the debtor

Or
They will cancel the contract and demand repayment.

There are two basic principles in contract law, implied or express- as I understand it if there is no physical evidence of a contract (ie a signed or electronic copy agreed by both parties), then an express contact hasn't been formed.
however simply by accepting a sum of money into an account and then not taking steps to find out what it was and where it came from with the intent of returning it to its legal owner, then an implied contract is formed.

Clearly the lenders staff are incompetent to some degree but this does not absolve the debtor of their obligations.
I repeat they need to seek legal advice and I would strongly advise against non payment of the instalments.

In fact the lender could as I understand it, have in the meantime turned down the loan and demand repayment, could they not?

Tom_R

Update for you almost 1 year on from the OP:

To date there still hasn't been any contact whatsoever from the bank in question, despite the loan already bridging 2 financial years and approaching a third this April.
I'm making an assumption that one one might expect a hole within a P&L to be picked up at FY end, no?

Anyway, my friend did two things. Firstly he spoke to a solicitor friend who specialises in forensic financial investigations for a Top 4 firm.
He was pretty adamant that the bank has absolutely zero recourse in terms of recalling any unsecured loan without any proof of agreement whatsoever, as I suspected.
They do, however, absolutely have a claim to recall any and all payments made in error, should it be discovered, and they have the right to demand that such payments be returned in full and immediately, as others have suggested.

To mitigate against the scenario of the payment being recalled in full my good friend decided (even if it makes him a "massive douche" yadda yadda) to simply place £350 per month (the loan repayment is £303, so plus a little interest) in to a savings account backdated to the start of the agreement.

So basically he's going to chance it and see if he gets away with it, as he has for a year to date.

Sorry if this deeply offends any of you gentle souls out there. Perhaps you should just deal with it?

Yours,

Friend of Massive douche. *ahem*

Westminster

If the lender's only recourse is to reclaim full repayment - then what good is it to be saving small amounts every month as you and they acknowledge there never was a formalised loan agreement and thus loan repayments do not apply.

I would feel safer knowing I had the full balance sitting ready for any eventual recall unless you are very confident that you can obtain a loan quickly for the balance.

Brock_and_Roll

As a banker, I am amazed that a bank has such poor accounting systems that they cant spot a £16k shortfall going over several accounting periods. Lord knows the possibilities for fraud......


I think the original part of the legal advice is absolutely correct. Without trying to remember or dig out legal precedents from my company law training, my recollection is that the requirement to pay back monies paid over by a bank in error in part depends on the extent to which a reasonable person might have noticed the error and the financial actions they took after the error took place.


So if someone on £25kpa received a £5 error, they are unlikely to have noticed and would have based their spending decisions on their bank balance being accurate. However, if the same person received an erroneous payment of £20k, then the error would be picked up by any reasonable person.


In my area we have had several cases in recent years where we have tried to recover erroneous payments - sometimes we win, sometimes we lose, and quite often its not worth playing the game!