428 Chapter 16Credit transactions and intellectual property rights
Cooling-off period
A debtor who makes a regulated agreement anywhere other than at the creditor’s place of
business is given a cooling-off period by ss. 67–74 CCA 1974. During this period, the debtor
can cancel the whole deal, giving back what he gained and escaping from all liability. For
example, if a salesman calls at Mrs Stone’s house and persuades her to make a credit deal
to have the house double glazed, then she has the right to cancel the agreement. If Mrs Stone
had made the deal at the double glazing firm’s place of business then she would not have
such a right.
This cooling-off period lasts for five days after the customer received his second copy of
the credit agreement. (This second copy must be delivered to the customer within seven
days of his making the deal.)Early settlement
Section 97 gives the debtor a right to require the creditor to say how much would have to
be paid to clear the debt. Section 94 gives the debtor a right to clear the debt at any time, and
save some interest on future payments. This right cannot be excluded.Repossession of the goods
Section 90 requires the seller to get a court order to repossess goods if the buyer has paid at
least one-third of the total purchase price of the goods. This prevents the creditor from
‘snatching back’ the goods from the debtor.Unfair relationships
A court can declare an agreement void because there was an unfair relationship between
creditor and debtor. In deciding whether or not this was the case, the court can consider all
of the circumstances, but particularly the terms of the agreement and the way in which the
creditor exercised or enforced his rights. If an unfair relationship is found, the court has
wide powers to alter the agreement or to order repayment of some or all of the money due
or paid under it. These provisions apply whenever credit is provided. There is no require-
ment that the credit was provided under a regulated agreement.Misuse of credit cards
Sections 83 and 84 CCA 1974, along with the Banking Code, protect credit card holders if
their cards are misused by another person.
As long as the card holder did not voluntarily give possession of his card to another
person, his maximum loss for misuse of the card is £50. There is no such maximum loss
where the card holder did voluntarily give possession to another, but as soon as the credit
card company is informed of the situation the holder is not liable for further loss. If a stolen
card is used to make a distance contract then the Consumer Protection (Distance Selling)
Regulations 2000 allow the card holder to cancel any payment. (See Chapter 5 at p. 147.)Interest on trade debts
Businesses which supply goods and services on credit might insist that a term is included
in the contract making interest payable on the money owed. However, many suppliers are
reluctant to do this for fear of losing future contracts with the person to whom credit is pro-
vided. Small businesses which supply large businesses have in the past been particularly
vulnerable to late payment of debts.