finance-law.info

Sign and deliver! Is the person signing bound by the deed?

Under English law, contracts can generally be made without them having to be in writing.  However, there are certain types of contract that are not enforceable unless in writing.  These include guarantees.  Beyond this, there are some contracts that not only have to be written, but must be in the form of a "deed".  With deeds, there are specific formalities that have to be followed. 

The Law of Property (Miscellaneous) Provisions Act 1989 provides that a document is only to be treated as a deed if it makes clear on its face that it is intended to be a deed by the person making it (or, as the case may be, the parties to it).

A deed only becomes binding when it is "delivered".   This does not necessarily mean simply handing over the document.  The courts have held that for "delivery" to take place, the parties must have shown an intention to be bound by the deed. 

The recent case of  Bibby Financial Services and others v Magson and others [2011] EWHC 2495 illustrates this.  This involved a claim against directors of a company in relation to guarantees and warranties signed by them.  Mr Magson and his co-director submitted that although they had signed the guarantees and warranties to which manuscript amendments had been made, they had done so in the expectation that typed versions would subsequently be produced to them for re-signing and dating.  Their position was that they had only signed the documents as a gesture of good faith and their intention to proceed; as corrected documents had not been produced, the guarantees and warranties were not properly executed.

The High Court found that the guarantees and warranties were not enforceable because they were not "delivered":  "On my findings none of the Guarantees, the Warranties or the Bibby ID Agreement was intended to be delivered in a technical sense, when handed to [Bibby's] Mr Darling at the meeting on 27 August 2008 after signature by Mr Magson and Mr Scott...It follows that neither Mr Magson nor Mr Scott was bound by his Guarantee or his Warranty, and so is not liable to [Bibby] in this action". 

The court made clear that signature alone is not enough; nor is it enough that "what looks like a deed has been given to the person who appears to be the beneficiary of it - the issue is not whether the document has been physically handed over to the beneficiary, but whether the person whose deed it is supposed to be intended to be bound by it". 

It is not uncommon for guarantors, for example, to sign a guarantee in anticipation of a finance agreement being entered into with a customer.  This case therefore highlights an important legal and practical issue.

It can be useful to include a statement in a deed indicating when it is treated and delivered and comes into effect, but even more significant, all parties need to be absolutely clear on when it is intended to be delivered and the parties bound by the executed document.

This article is a general summary only.  If you would like advice on any of the issues raised by it, please contact us.  Please bear in mind that the law may change from time to time and this article may not be (or have been) updated to reflect those changes. © afl Solicitors

Debt sale and purchase agreements and the Consumer Credit Act 2006

Whether selling or purchasing live agreements regulated by the Consumer Credit Act (CCA), or debts that have arisen under terminated regulated agreements, the CCA 2006 has undoubtedly had an impact.

Post-contract information:  who is responsible after the debt sale?

When an agreement is assigned, the general rule is that the buyer acquires the “benefit” of the agreement, but not the “burden”.  In other words, under English law, the buyer will not automatically be liable for performing the seller’s ongoing contractual duties under the agreement.  For this reason, where the buyer is to undertake these responsibilities, the debt sale agreement should impose an obligation on the buyer to do this.

However, the CCA imposes various statutory duties on “creditors” and “owners”.  For example, CCA 2006 introduced additional requirements upon creditors to provide debtors and hirers with post-contract information.  These include sending debtors notices of sums in arrears in relation to their accounts, notices of default sums that have become payable (for example, default interest) and some new periodic statements. 

Our customer is in administration: can the administrator sell our goods?

 In certain circumstances, an administrator has the right to sell goods subject to a lease or hire-purchase agreement.  In other situations, the administrator may be personally liable where they have been sold.

Right to sell under the Insolvency Act 1986

 Under the Insolvency Act 1986 (IA 1986), the court may make an order enabling the administrator to dispose of goods which are in the possession of the company under a hire-purchase or lease agreement as if the company had all the rights of the owner under the agreement.  

An order of this kind may only be made on the administrator’s application and where the court thinks that disposal of the goods would be likely to promote the purpose of administration (paragraph 72, Sch B1, IA 1986).  Any such order is subject to the condition that: 

Protecting personal information: the Data Protection Act 1998

The recent undertakings given by Brent Teaching Primary Care Trust and Abertawe Bro Morgannwg University NHS Trust to the Information Commissioner’s Office and to be given by Tees Esk and Wear Valleys NHS Foundation Trust, highlight the current data protection hot topic of data encryption. 

 The Information Commissioner’s Office has legal powers to ensure compliance with the requirements of the Data Protection Act 1998 (the DPA).  Both Brent and Abertawe gave undertakings to the Information Commissioner’s Office to implement appropriate security measures following the theft of unencrypted laptops containing patients’ personal data.  Tees Esk and Wear Valleys was also required to sign a formal undertaking after the “loss of an unencrypted data stick by a contractor with various patient and staff personal data on it”, although the data stick was found and later returned to the Trust.

Recap on some of the relevant DPA requirements

Under the DPA there are various requirements that have to be complied with by “data controllers”.  A data controller is a person who determines the purposes for which and manner in which any “personal data” are to be processed.  An example is an NHS Trust in relation to its patients’ personal data:  the Trust will decide how and for what purposes that patient information would be “processed”. 

Processing is given a very wide meaning by the DPA.  It covers probably everything one can imagine relating to dealing with the relevant information including obtaining, recording, holding, altering, retrieving, using, disclosing and erasing or destroying the information. 

It is important to remember that the DPA only protects “personal data”. 

Consumer Protection from Unfair Trading Regulations: first enforcement order

Hot on the heels of the Consumer Protection from Unfair Trading Regulations that came into force at the end of May, the first enforcement order was made under the Regulations on 31 July.  

The defendants, Jimmy and Shane Stockwell, who engaged in home handy man services were the subject of a number of complaints including for aggressive behaviour and about the quality of their work.  They were ordered by the judge not to breach a range of provisions in the Regulations including: 

• not to act in a misleading manner by presenting false information or presenting it in a manner likely to deceive the consumer
• not to make contracts away from business premises without first giving written notice to the consumer of his/her cancellation rights
• not to act in an aggressive manner either in trying to get the consumer to enter into a contract or by obtaining payment
• not to act without professional diligence.

If they disobey the terms of the order the Stockwells risk being in contempt of court which can attract imprisonment, a fine, or both. 

The new Regulations provide stronger consumer protection measures and this early action should be a warning to those who engage in unfair trading practices.

This article is a general summary only.  If you would like advice on any of the issues raised by it, please contact us.  Please bear in mind that the law may change from time to time and this article may not be (or have been) updated to reflect those changes. © afl Solicitors