Unfair Loan AgreementOctober 13, 2021 4:09 am
(b) the manner in which the creditor has exercised or enforced any of its rights under the agreement or any related agreement; In the main case on this issue, Plevin, the Supreme Court held that for the lender not to pass the s140A test of injustice of the law, it does not need to have breached an obligation to the borrower. The law is deliberately very broad, and although the Supreme Court has provided general guidance, each case revolves around its individual facts. This is illustrated by two very recent cases of appeals against first instance decisions, both of which concern short-term loans. (c) reduce or discharge any amount to be paid by the debtor or a guarantor on the basis of the agreement or agreement relating thereto; But when can the terms of the credit agreement be challenged as inappropriate or unfair? Below is a high-level checklist of the most relevant English legal rules. You can ask the Court of Disputes or the District Court to modify the terms of a credit agreement if you consider that it is very unfair (the CCCF law calls this the “reopening” of the contract). The terms can be changed if: At Chubb, an interest rate of 1.85% plus a furniture tax of 1.25% per month was considered a tough but not unfair bargain. Some UK lenders also voluntarily sign the credit code. This requires, among other things, that the credit terms they provide to consumers, micro-enterprises and small charities in the UK be “substantially fair”. English law does not contain a general principle that contractual terms must be fair or proportionate: the parties must live with the business they have done. This is one of the ways english law is “lender-friendly”: it allows lenders to enforce their rights without being subject to wide-ranging objections based on subjective criteria such as “fairness,” which can often only be properly judged in court.
Adam Pierce explains how a recent case illustrates this general approach and summarizes when fairness and adequacy may be relevant to credit agreements in English law. . . .