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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 defendants 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 defendants 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 claimants 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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