Protection System

Cheque payments can be terminated at any time before its presentation . The bank needs to be informed immediately which requires the issuer to fill up a form containing pertinent data to be submitted to them immediately. If the form was sent through fax, it is necessary to verify the name of the bank officer one is dealing with. Another good side about cheques is the provision of the “non-negotiable” status when crossed. This protects the issuer and the bank from allowing unauthorized withdrawals and payment upon demand by just anyone.

This system actually requires that the cheque still has to pass through the clearing house before finding its way to the payee’s account. In cases where the bank makes mistakes, this is considered a breach of contract and the cheque issuer or the account owner may recover damages or compensation. In most cases though, the bank has established defenses to such action which often requires legal advice if the client wishes to pursue his demand against the bank. Protection System when things go wrong under the Consumer Credit Act 1974

Under the CCA 1974, a supplier engages in a legally binding contract with the consumer and should therefore guarantee to fulfill his obligations. The Act specifically provides an equal liability for the supplier and the buyer in exchange for the goods provided. The supplier can be sued if he does not fulfill his obligation to provide goods of satisfactory quality . Likewise the client can be held legally liable for non-payment in damages in England and Wales

When goods are purchased through credit, the situation can be more complicated because the bank or finance company arranges for the settlement of goods. This is made possible through checks or credit card. Under the CCA 1974, “the credit grantor (Credit Card Company) becomes equally responsible for any breach of contract or misrepresentation by the supplier” . To see if the CCA is applicable, it is necessary to establish the relationship between the supplier and the credit grantor.

When the supplier is not the credit grantor, the Act provides “that the credit grantor is equally responsible with the supplier for any breach of contract or misrepresentation if all of the following four conditions are met” . A limit is however imposed that sets the amount of credit to only ? 25,000 not on the cash price of the item. Frequently, the supplier is the only person a customer has deals with during the negotiations. He provides the information relative to the credit terms, the goods purchased or services being financed by the credit card company.

Under this Act, “the supplier is taken to act on the credit grantor’s behalf – as his agent – as well as his own” . This makes the credit grantor responsible for the negotiations as if he had conducted them himself which is an addition to his responsibility that he may have under section 75. If the customer has a claim against the supplier, he has likewise a claim against the credit grantor and may prefer to choose whether to sue the supplier, the credit grantor, or both for a full amount of the claim. It is however sensible to claim from the supplier first if he is still in business to establish grounds.