No contracting out

Wilson v Robertsons (London) Ltd ChD TLR 28 July

Section 116 of the Consumer Credit Act 1974 provides that pawned goods are redeemable for a period of six months after they have been taken and s173 of the Act prohibits the contracting out of that protection for the borrower. It was not open to the parties to agree to ante-date the agreement because the effect of such backdating was to contract out of the statutory six-month minimum redemption period. It was irrelevant that the backdating was done with the borrower’s full knowledge and consent and that it was to the borrower’s advantage, because the prohibition on contracting out applies even if there is good consideration and gives substantial benefits to the borrower. Further, although the loan purported to be for £400, the borrower received only £392 because on entering the agreement a document fee of £8 was immediately deducted. Accordingly the total amount of credit £392 and not £400.