Brophy v HFC Bank

An application form for a regulated credit-card agreement may itself be an executed agreement. Where the debtor signs an offer on stated terms and the creditor accepts it by countersigning, the agreement is formed at that point. Uncertainty about the eventual credit limit does not create a second, prospective agreement within section 59 of the Consumer Credit Act 1974.

For running-account credit, a credit-limit term complying with paragraph 8(b) of Schedule 1 to the Consumer Credit Agreements Regulations 1983 also satisfies the prescribed-term requirement in Schedule 6. The creditor need not state the criteria used internally to determine the limit.

The debtor appealed, with permission, against a County Court judgment dismissing his defences under the Consumer Credit Act 1974. The County Court had held that a credit-card agreement operating between the parties from 1994 to 2008 was valid and enforceable.

The appeal concerned whether the signed application form was merely an agreement to enter into a prospective regulated agreement, whether the documents supplied complied with section 63, and whether the credit-limit clause satisfied the prescribed terms in Schedule 6 to the Consumer Credit Agreements Regulations 1983.

1. Appeal dismissed. The credit-card agreement was valid and enforceable.
2. The application form was not merely permission to investigate the debtor’s creditworthiness or an agreement to enter a future regulated agreement. By signing it, the debtor offered to contract on the stated terms, expressly acknowledging that he would be legally bound. The bank accepted that offer by countersigning the form. There was therefore one executed agreement for the purposes of sections 59 and 61 of the Consumer Credit Act 1974.
3. The bank’s subsequent provision of the card and accompanying documents supplied the essential terms for the purposes of section 63. The challenge based on omission of the debtor’s name and address was abandoned and, in any event, could not succeed on the findings.
4. Clause 3 stated that the credit limit would be determined by the bank from time to time and notified to the debtor. That complied with paragraph 8(b) of Schedule 1 to the Consumer Credit Agreements Regulations 1983.
5. Schedule 1 addresses information to be provided to the borrower, whereas Schedule 6 prescribes the minimum terms which must be included in the agreement as a condition of enforceability under sections 61(1)(a) and 127(3). The two Schedules must be read coherently. Where a running-account agreement complies with any of paragraphs 8(a) to 8(d) of Schedule 1 concerning the credit limit, it necessarily satisfies the corresponding prescribed-term requirement in Schedule 6.
6. Accordingly, the agreement contained the prescribed credit-limit term. There were no technical breaches of the Regulations or the Act, and the agreement remained enforceable.

1. High Court (Queen’s Bench Division) dismissed the appeal from the Willesden County Court judgment dated 9 July 2009.