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the case of Salat v Barutis (2013) EWCA Civ 1499

28 November 2013

Salat v Barutis is a credit hire organisation’s (CHO) challenge of the Cancellation of Contracts, made in a Consumer’s Home or Place of Work Regulations 2000 in the context of a credit hire agreement. The Bikers Legal Defence Group stated that this is a “potentially a landmark case”, but who for?

Case facts
The case arose as a result of a road traffic accident on 28 April 2009. Mr Salat was deprived of the use of his motorbike following an accident with Mr Barutis. Mr Salat was referred to Bikers Legal Defence Group (BLD), a credit hire organisation.

He arranged to hire a replacement motorbike from BLD on deferred payment terms, which allowed BLD to seek recovery of the hire charges on his behalf. Furthermore a policy was entered in respect of those hire charges if the were not recovered within a specified period of time.

Insurers for Mr Barutis refused to pay for the hire charges on the basis that the credit hire agreement entered into did not contain a Notice of the Right to Cancel pursuant to The Cancellation of Contracts made in a Consumers Home or Place of Work etc Regulations 2008 (‘the regulations’).

First instance and on appeal to the High Court
District Judge Jenkins, and on appeal His Honour Judge Powles QC, both held that the contact in this case had been made at Mr Salat’s home when he signed the paperwork, and accordingly the contract was subject to the regulations. Since the contract did not include a cancellation notice as required by Regulations 7 (2) and 7 (4) it was deemed to be unenforceable against Mr Salat.

Court of Appeal
On 22 October 2013 Lord Justice Moore-Bick, Lord Justice Patten and Lady Justice Rafferty considered the arguments submitted on behalf of Mr Salat, in that the contract was not made during a visit to a consumer’s home or place of work, but rather in the course of a telephone conversation, and further that the parties had entered into a legally binding agreement for hire on BLD’s standard terms, which had been formally recorded in a document that would be signed by Mr Salat when the motorbike was delivered to him. As such, it was argued that the regulations had no application in the instant case.

The Court of Appeal however distinguished the arguments put forward on behalf of Mr Salat and held that that the regulations require such a consumer contract to include a cancellation notice and without such notice, the contractual agreement was unenforceable (judgment handed down on 26 November 2013).

Implications of the judgment
Those on the receiving end of a credit hire claim should, as a matter of course, continue to closely scrutinise the credit hire agreement. Where the hirer is a ‘consumer’ and the agreement is entered into at the consumers ‘home’ or ‘place of work’ (bearing in mind some of the arguments that are put forward in this regard) then such agreements must be strictly compliant with the regulations. If there is any breach of the regulations then further consideration should be given and, where applicable, the claim should be contested as an unenforceable credit hire agreement.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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