Commercial/Employment UPDATE

Issue No.14 June2006

What your bank doesn’t want you to know!

When you buy goods or services with your credit card, the credit card company is liable to you for any misrepresentation or breach of contract made by the seller (subject to certain exclusions). This may be an extremely useful remedy because:

• you may not be able to locate the seller (for example if the seller has relocated, or if you bought online).
• the credit card company is likely to be solvent, whereas the seller may not be.
• the credit card companies tend to take a purely commercial view of any potential claim. That view is usually to pay up rather than to dispute the facts or negotiate. Having not been a party to the sale contract, the credit card company is usually in no position to dispute the facts in any event.

What is more, a recent decision by the Court of Appeal has held that the credit card company is not only liable in respect of transactions effected in the UK but also those effected abroad. Given the difficulties in pursuing a seller who is located in a different jurisdiction, this is a particularly significant development.

The main points to remember are:

• that you enjoy the Statutory protection described when using a typical credit card but not when using a “single repayment” cards (e.g. American Express, Diners Club), a Switch card or cash.
• that you are protected whether the transaction is effected in the UK or abroad.
• that the protection only applies to claims in excess of £100 but not exceeding £30,000.

CVS has an experienced Dispute Resolution department which provides practical legal advice to both companies and individual

Note:

Please note that this newsletter is not intended to be a comprehensive statement of the law and should be used for guidance purposes only. If you require specific legal advice please contact Mark Machray or Edward Bond or by telephone 020 7493 2903.