Contract of Sale and Consumer Credit Contract - whether rescinded – measure of damages
The Pursuer purchased a laptop computer from the First Defenders’ retail outlet, PC World, on the understanding that he could return it if it did not have an internal modem. He paid £50 and signed a credit agreement with the Second Defenders. The laptop did not have an internal modem but PC World refused to accept the return of the computer and did not take any steps to repay the Pursuer or to cancel the credit agreement. The Pursuer left the laptop in the shop and made no payments to the Second Defenders. The Pursuer advised the Second Defenders that he was terminating the credit contract. The Pursuer sought a Declarator that he was entitled to rescind, and had rescinded, both the contract of sale and the consumer credit agreement. He also sought damages. The Pursuer had funded his lifestyle by making use of zero percent interest free credit on transferred balances on credit cards by transferring the balance due on his credit card to another credit card on a regular basis. As the Pursuer had made no payments to the Second Defenders, they arranged for his name to be placed on a credit register. As a result, he was unable to open new accounts with credit card companies and other lending institutions. He has to pay a significant amount of interest over the 4½ year period of the dispute. The Sheriff held that it had been a material term of the contract between the Pursuer and the First Defenders that the laptop should have an inbuilt modem. As it did not, the First Defenders were in material breach of that contract and the Pursuer was entitled to reject the computer, to treat the contract as repudiated and to rescind the contract. The contract between the Pursuer and the Second Defenders was a debtor, creditor supplier agreement in terms of Section 12(C) of the Consumer Credit Act 1974. As the First Defenders were in material breach of their contract with the Pursuer, he was not obliged to make payments under the contract with the Second Defenders and was entitled to rescind that contract by virtue of Section 75(1) of the 1974 Act. The Second Defenders had negligently allowed misrepresentation to be made, namely that the Pursuer was in default under a credit agreement. They had taken no steps to withdraw this, despite the Pursuer’s repeated requests. The Pursuer’s loss had resulted from the Second Defenders’ fault and breach of duty. There were three elements to the Pursuer’s claim for damages – his loss of zero interest credit card use; the loss of his proposed purchase of a house in Spain with the capital gain that would have given him; and general injury to his credit.