As the COVID-19 crisis escalates, many businesses and individuals face acute financial pressure. Wherever possible, lenders and suppliers of goods and services are being asked to accommodate requests for payment holidays and forbearance.
The rules and requirements relating to regulated modifying regulated credit and hire agreements (e.g. personal loan agreements, credit card facilities, vehicle lease and hire purchase agreements) under the Consumer Credit Act 1974 (“CCA”) are notoriously complex and there are several obstacles to overcome before a lender can simply agree revised payment terms with a customer. In particular, lenders and borrowers should be aware of that informal arrangements are not automatically contractually binding, notices of default may still need to be issued even if informal modifications are agreed, and any variation of the terms of a regulated credit or hire agreement demands a regulated modifying agreement under the CCA, otherwise the lender risks being unable to enforce the agreement against the customer;
Suppliers of goods and services in all sectors, from goods retailers and service providers through to professional services firms and private schools are likely to be asked by customers to allow time to pay or to offer instalment payment schemes in relation to outstanding and forthcoming invoices for the supply of goods and services. Suppliers need to be aware that agreements made are capable of varying the supplier’s invoice terms and forming a new contract between the parties for credit by way of financial accommodation.
WE CAN HELP
Having the right legal advice at the right time is crucial. Our expert team offers clear, concise and problem-solving legal advice around credit and hire agreement queries.
Please do not hesitate to get in touch with Richard Craig or your normal Mills Selig contact to discuss.
21 Arthur Street
Belfast, BT1 4GA
T: +44 (0) 28 9024 3878