Wragge Lawrence Graham & Co

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Finance litigation briefing — May 2014: credit agreement conditional upon survival of supply agreement

By Greg Standing

Where a Consumer Credit Act debtor-creditor-supply agreement finances a specific supply transaction, the law implies into the finance agreement a term making it conditional on the survival of the supply agreement. Where the supply agreement is rescinded for breach of contract, the credit agreement can also be rescinded.

This was the finding of the Supreme Court in Durkin v DSG Retail Ltd. Durkin has entered into this debtor-creditor-supplier agreement to fund the purchase of a computer. Durkin attempted to return the computer the day after purchase as it did not meet his requirements. The retailer refused to accept that rejection or cancel the credit agreement. Durkin refused to make any payments and told the lender he had rescinded both the purchase and credit agreement. The lender continued to demand payment and issued a default notice that was registered with the credit reference agencies.

Durkin sought damages for the lender’s negligent misrepresentation as to his alleged defaults. He claimed damages, including a sum for injury to his credit rating…

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