bulletin
Credit hire crunch
12 March 2009
Credit hire agreements signed months after a hire car had been
returned were insufficient evidence to establish a liability
between a claimant and a credit hire company.
The appeal
In a recent appeal before the High Court; Company Call
Centre v Sheehan [2009], in-house Counsel for Browne Jacobson
LLP successfully argued that a District Judge sitting in the
Birmingham County Court had been correct in reaching the view that
late signed hire documents did not establish a liability between
the claimant and Helphire Plc, who had provided a hire vehicle. It
followed that the defendant should not therefore be ordered to pay
the associated charges.
The background
The claimant driver was instructed to contact Helphire Plc to
arrange use of a replacement vehicle. He was advised that any
charges would be met by the defendant’s insurers, and so made use
of a BMW Z4 for the period 19 March to 3 April 2007. At a later
date, and after the hire period had ended, the credit hire
documents were sent to the claimant in the post, which were
returned, signed on 12 August 2007.
His Honour Judge Worcester took the view that there was force in
the defendant’s argument that “past consideration is not good
consideration” and that the later signed documents did not
establish a liability because the vehicle hire was complete before
the contractual paperwork was sent to, and signed by, the claimant.
The District Judge was therefore right to reduce the hire charge
claim from £4,250.00 to nil.
The case differed from that of Borley v Reed and
Carson v Tasaki (in which the late signed documents were
accepted as confirming the claimant’s liability to pay), on the
grounds that the claimant had given clear evidence that he had not
been made aware of the liability to pay the hire charges until
after he had finished using the vehicle.
A significant decision
This is a significant decision in the ongoing battle between
insurers and credit hire firms, as claimant drivers are often
unclear of their liability to pay hire charges until the detailed
Terms and Conditions are sent to them in the post.
We recommend defendant insurers certify that claimant drivers
are fully aware of their liability to pay credit hire charges
before agreeing to use such a vehicle. In addition, always make
careful enquiries as to when contractual documentation is sent to,
and signed by, claimant drivers who are provided with vehicles on
credit hire terms.
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