NON CANCELLABLE AGREEMENTS

Consumer credit agreements regulated by the Consumer Credit Act can be cancellable or non-cancellable. Both kinds must be made in writing and provide specified information in the way set down in regulations. Rules also govern how and when you supply hirers with copies of agreements.

Cancellable agreements are those where face to face discussions are held with the customer about the credit arrangements or the goods or services being financed, but the customer does not sign the agreement on trade premises (this applies whether discussions are held with a creditor, credit broker or the supplier).

Agreements where there are no face-to face discussions, or which are signed on the trader's premises, are non-cancellable.

Agreements secured on land or for the purchase of land or bridging finance are also not cancellable (although if certain consumer credit agreements are secured on land, the debtor must be given an earlier opportunity to withdraw from it).

Cancellable agreements have a cooling-off period starting on the day the customer signs. This period is 14 days for goods bought from a mail-order catalogue. Otherwise, it is five days from the day the customer receives either a second copy of the agreement or a separate copy of a notice of cancellation rights. Cancellation places obligations on you and the customer.

In all cases, the Consumer Credit Act requires you to present specified financial and related details, and statements of the customer's protection rights. You must follow set procedures for modifying agreements.

A cancellable agreement is an agreement which is cancellable by the debtor, or hirer, within a stipulated period. Broadly speaking, a regulated credit agreement is cancellable under the 1974 Act where the agreement is entered into following face to face oral representations between the debtor and creditor, credit broker or supplier and the agreement is signed away from the business premises of the creditor.

It is important to correctly identify whether an agreement is cancellable or non-cancellable. This is because regulations require prescribed cancellation notices to be included in all copies of cancellable agreements provided to the debtor. Previously, the failure of an agreement to include the correct cancellation notices rendered such agreement irredeemably unenforceable. Although this provision has been repealed in relation to agreements entered into after April 2008, an order from the Court will still be needed in order to enforce an agreement which fails to include the requisite cancellation notice.

ARTICLES

SPEAK TO AN EXPERT