Credit Card Agreement Enforceable

by Kidd Rapinet on August 16, 2011

In a recent case, the Court of Appeal decided a debtor, Patrick Brophy, must pay his credit card bill, following the failure of his bid to overturn a High Court decision.

Philip Hind, a solicitor at Kidd Rapinet’s Maidenhead office says: “This decision runs contrary to a recent run of decisions where the courts were backing consumers, rather than the finance industry.”

Mr Brophy took his case to the Court of Appeal, alleging that a credit card agreement he signed was unenforceable under the Consumer Credit Act 1974. When Mr Brophy applied for the credit card in 1994, the terms and conditions of the agreement were included on the reverse of the application form. Accordingly, it constituted one document for the purposes of the Consumer Credit Act. The form clearly stated that it was a ‘Credit agreement regulated by the Consumer Credit Act 1974’ between HFC Bank Ltd. and ‘you, the customer named below’. Mr Brophy argued that there was no intention to create legal relations as there was no certainty as to whether he would be granted credit and, if so, in what amount. It was further argued that the application form was simply an agreement to allow HFC to investigate Mr Brophy’s credit rating and that unless HFC returned a true copy of the agreement stating the credit limit, there was no agreement. It was held in the Court of Appeal, however, that the purpose of the relevant sections of the application form was to fix the manner in which the credit limit should be determined, not to specify its precise terms. The manner in which the credit limit would be determined in this case was by notification to the debtor.

Phil Hind comments: “Clearly, in this case the courts thought this was a claim too far. Potential litigants should carefully consider the likely chances of success.”

If you feel you may need advice, Kidd Rapinet can advise you on the latest law in this field. Call Phil Hind on 01628 621301 for further information.