On 09/09/2012 23:20, John Williamson wrote:
SteveW wrote:
On 09/09/2012 22:10, John Williamson wrote:
The Medway Handyman wrote:
On 09/09/2012 21:33, John Williamson wrote:
charles wrote:
In article , tim.....
wrote:

"alan" wrote in message
...
On 09/09/2012 09:19, Dave Plowman (News) wrote:

It doesn't take 5 grand to valet a car so there is no trace left
of it
being smoked in.
The lease company wouldn't spend more than 5 minutes examining
it and
then sending it to auction in the same state it was returned.

The 5 grand would be a combination of the reduction in the resale
value
and a (previously stated) penalty for breaking the terms and
conditions of the lease.

Such penalties are not legally valid and cannot be enforced. Only
government bodies can fine you for not doing what you are told,
everybody
else has to confine themselves to claiming for "actual loss",
which in
this case is completely covered by the reduction in value as there
is no
extra admin involved if they just send it to the auction whatever
the
condition.

It entirely depends on the terms of the contract.

Is the correct answer.

No it isn't. The Unfair Contract Terms Act applies to all contracts.

"I agree to pay the owner of this vehicle the sum of £5,000 (Five
thousand pounds only) if it is found to be contaminated by tobacco smoke
at the termination of the rental period"

If you are a private individual, this may not be enforceable, but if you
are hiring the vehicle in the course of your business, then you are
deemed to have carried out due diligence and negotiations before
signing, and have agreed to the terms of the contract as printed in
full. There is a difference between contracts between businesses and
those between private individuals and businesses.

The act you refer to only applies where the consumer (i.e. an
individual) is doing business with a Company. The act says:-

"(a)(The consumer) neither makes the contract in the course of a
business nor holds himself out as doing so; and
(b)the other party does make the contract in the course of a
business; and
(c)in the case of a contract governed by the law of sale of goods or
hire-purchase, or by section 7 of this Act, the goods passing under or
in pursuance of the contract are of a type ordinarily supplied for
private use or consumption."

So the act only applies to individuals *not acting in the course of
their business*. If you, acting as The Medway Handyman, for example,
sign a lease for a vehicle, or sign a contract for mobile phone serice,
the rules applying to those contracts under the act are not the same as
those which apply if you lease the same vehicle or use the same mobile
phone for your own private use.

Surely that is a penalty clause and penalty clauses are not permitted
under English law from what I have been told in the past. Liquidated
damages are allowed, but can only cover true losses.

In a contract where you, *as a consumer*, are doing business with a
business *during their normal course of business*, you are correct.

Contracts between "equal partners" such as a house sale or one business
making a transaction with another can be enforced as written (Or, in
exceptional cases, as verbally agreed). We could make an agreement for
me to buy your house, for instance, and in the contract, it could state
that if either party withdrew before completion, but after exhcnge of
contract, damages of twice the agreed price would be payable. If we both
signed that contract, we would both be bound by it, and no court would
uphold an appeal against that clause. They might hold the contract to be
null and void, but they would not alter a single clause in that
contract. This is why most people employ a legal representative to draw
up such contracts.

Think of the "fines" payable by construction companies working on
Motorways in the UK. If they overrun, they are charged a penalty (The
last I heard) of about £10,000 per mile per lane per day they overrun
the contract period, with a smaller bonus if they finish early. This has
been enforced by the courts on the few occasions the case has ended up
there.


While these might be called penalty clauses, they are worded as
incentive payments, where additional payments are added to the baseline
price if the work is finished before a due date.

There are other measures that can be explored if the "incentives" don't
work, such as using a third party to finish off the work with costs
placed on the original company.

Even government contracts have to avoid penalty clauses!