Consumer Credit Act 1974 and The Garden Contractor
There is clear evidence that our society is becoming less reliant on cash and cheques as popular methods of making payment for goods and services, with an ever-increasing number of transactions taking place by electronic banking. This phenomenon has been accelerated by Covid, but the change has been coming over the years.
Credit cards are today the most readily available source of available finance. Those who wished to retain their sense of reality use debit cards, which are limited to the amount of money available in the holder’s bank account.
In 1974, Consumer’s Credit Act was written, which is a substantial document. There is one section of the Act that is particularly germane to the Garden and Landscape industry. That is Section 75.
Under Section 75 of The Consumer’s Credit Act 1974, the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the retailer or trader. Note those words, as there are very important.
This means that the Credit Card Company is just as responsible as the retailer or trader for the goods or services supplied, allowing the customer to also put a claim to the credit card company.
Case Study
To illustrate an example of such a scenario, Mr and Mrs Average purchased a new shed from a large company, specialising in garden buildings. They elected to go for a product, standard off the shelf, but painted and lined to provide them with a dry storage area. They arranged to have the concrete base laid to specification and to the satisfaction of the shed manufacturer, who was commissioned to supply and erect the unit.
The shed erectors arrived on site and carefully evaluated the concrete base, and deemed it satisfactory. They duly erected the building, and left the site clean and tidy. Mr Average signed off the construction customer satisfaction sheet and the builders left site.
Within the space of a couple of weeks, it became clear that the shed was not waterproof, with many leaks and signs of water ingress through the front walls (pent roof) and joints, plus windows and along the window sill lines.
They duly complained and the shed suppliers returned to make repairs. This was repeated twice over two years, with the shed continuing to leak, and the suppliers coming back to try and patch the building. (It was a substantial shed, 3.6m x 2.4m costing well over £3,000.00) but they never succeeded in solving the problem, as they were only using cosmetic methods, and not addressing the underlying causes (poor fitting panels).
After two years, the suppliers refused to return yet again, and advised Mr and Mrs Average that they would do no more, and that the warranty period had expired. The customers were clearly unhappy with their response, but instead of suing the supplier, they instead chose to make a claim against their Bank, who provided them with their credit card, citing Section 75 of The Consumer Credit Act 1974.
They did not have to reach a stalemate with their retailer or trader before contacting their credit card provider. They could have made a claim to both the retailer and credit card provider simultaneously, although they could not recovered their losses from both.
If a customer, uses a credit card to make a purchase between the value of £100 and £30,000 and things go wrong, they can make a claim against their credit card provider, in this case, their bank.
Section 75 only applies if the credit card provider and the seller of the goods or services are different parties. Section 75 does not apply if the lender is also the supplier. (This matter will not affect Landscapers, but I include that fact for regularity)
To claim under Section 75, the customer does not have to have paid the full amount on their credit card. The card provider is liable if only part payment (e.g. the deposit) on their card.
THE KEY IS THE AMOUNT OF MONEY BEING BORROWED, NOT THE AMOUNT PAID ON THE CARD.
In the case of the shed, the Principal Card Holder (Mr Average) paid a deposit on the shed of over £100.00. The value of the building, supplied and erected, was around £3,500.00, so the value of the credit card providers liability was £3,500.00. If a contractor took a £500.00 deposit, paid by credit card, against a £25,000.00 project, the card provider would be liable for £25,000.00 in the event of a claim.
This method of payment carries ramifications for a landscape or garden contractor, should they choose to offer credit card provider supplied finance. In simple terms, if a customer pays any amount over £100.00 towards a project – whether it is called a deposit, booking fee, part payment or any other similar phrase, and the project total is less than £30,000.00 the whole of the project may become subject to a claim by the customer and well as the credit card provider under Joint and Several Liability.
In the case study above, it is a relatively simple matter. The customer, having failed to get satisfaction from the retailer/trader, is now claiming from the bank. All the bank requires from the customer is a report produced by a reputable independent surveyor or consultant/expert witness, to enable them to decide which action to take, without the need to go through normal Court’s procedures.
I make no recommendations by producing this article. Every business will have their own chosen methods of working, and may decide that it is a sound business idea to accept credit card payments as a means of securing more work by making life easier for potential clients, by accepting projects and putting them into the diary, based on a credit card booking, perhaps even over the telephone.
Every case is different, and there are no hard and fast rules regarding contract Law and Finances in general, but the potential hazards of accepting credit card payments for landscape services should be understood and recognised.
