Partially regulated agreements
Two kinds of agreements are only partially regulated by
the Act.
1 Small agreement.A small agreement is either a regu-
lated consumer credit agreement (other than an HP or
conditional sale agreement) where the credit does not
exceed £50, or a regulated consumer hire agreement
which does not require the hirer to pay more than £50
in rentals (s 17).
2 Non-commercial agreement.This is a consumer
credit agreement or consumer hire agreement which is
not made by the creditor or owner in the course of a
business carried on by him (s 189(1)).
Exempt agreements (s 16)
1 Exempt consumer credit agreements.The exemp-
tions are as follows:
(a)Agreements secured on land– various agreements to
finance the purchase of land secured by a mortgage.
(b)Low-cost credit– e.g. DCAs where the APR does not
exceed the highest of the London and Scottish clearing
banks’ base rates plus 1 per cent.
(c)Finance of foreign trade– credit agreements made
in connection with the export of goods and services out-
side of the UK or their import into this country.(d)Normal trade credit– the exemption covers two situ-
ations: first, where traders advance credit to sell goods
and services and require the bill to be paid in one instal-
ment (e.g. the milk and paper bill). Second, a DCSA for
fixed-sum credit where the number of payments does
not exceed four, within a year of the start of the agree-
ment or, where it is for running-account credit, the
credit is payable in one amount (e.g. American Express
and Diners’ Club cards). The agreement will not qualify
for exemption if it is an HP or conditional sale or
secured by an article taken in pawn.
(e)Land transaction lending– certain DCSAs and DCAs
to finance the purchase of land or buildings.(f )Certain insurance policy loans– the exemption is
confined to loans made by building societies and other
bodies whose lending is already exempt (see (a) above)
to cover the payment of insurance premiums related
to the mortgage, i.e. mortgage protection insurance
premiums.
(g)Credit union agreements – where the APR does not
exceed 26.9 per cent.2 Exempt consumer hire agreements. The only exempt
consumer hire agreements are those for the hire of meters
or metering equipment for electricity, gas and water,
where the owner is an organisation authorised by statute
to supply electricity, water or gas.3 New categories introduced by the 2006 Act – which
apply to both consumer credit and consumer hire
agreements.(a)High net worth individuals –the individual must be
a natural person, they must agree to forgo the protection
contained in the Act and they must provide a statement
of high net worth by a specified person, e.g. a solicitor or
accountant. ‘High net worth’ means that the individual
has a net income in excess of £150,000 or net assets
exceeding £500,000.(b)Business agreements – where the creditor provides
credit exceeding £25,000 or the hirer is required to makePart 3Business transactions
390
was unenforceable because it did not contain all the
terms ‘prescribed’ in regulations made under the Con-
sumer Credit Act 1974. Lord Hoffmann noted that 1st
Automotive could obtain exemption from the 1974 Act
by including a clause in its agreement requiring that the
hire charges be paid within 12 months. (For details of
‘exempt agreements’ see below.) Their Lordships also
considered what the position would have been if the
agreement had been exempt and, as a result, enforce-
able. They took the view that although Mrs Dimond acted
reasonably in engaging the services of 1st Automotive, it
did not mean she was entitled to recover the full amount
of the charges. She had obtained additional services
(e.g. not having to pay over the cost of the hire car, relief
from the trouble and anxiety of pursuing a claim against
Mr Lovell). These additional services are not recoverable
in English law. Mrs Dimond’s claim, therefore, would
have been limited to the ‘spot rate’ for hire cars.
Comment.In the Court of Appeal, the Vice-Chancellor
found that the 1st Automotive agreement was a personal
creditagreement, a consumer creditagreement, an
agreement for a fixed-sum creditfacility, a restricted-
use creditagreement and a debtor-creditor-supplier
agreement. It would also have been a consumer hire
agreement if it had been capable of lasting for more than
three months.