Enforcement

Abstract Immediately after the debtor’s breach the creditor may take steps to prevent the debtor making further drawings of credit. The creditor may take ‘such steps as may be necessary to make the restriction or deferment effective’; therefore the creditor may warn suppliers not to accept a credit card where the debtor has exceeded the card limit. By the Consumer Credit Act (CCA) 1974, section 87(3) the doing of an act by which a floating charge crystallizes is not in itself an ‘enforcement of a security’. In the case of breach, the CCA 1974, section 87 requires that a default notice is served which is compliant with the provisions of section 88 and the regulations made thereunder before the creditor or owner can enforce the agreement. The Act provides no sanction against a creditor who: However, remedies lying outside the Act may be available where a creditor has enforced without complying with the requirement to serve a default notice. A creditor who seeks to recover goods under a hire-purchase or conditional sale agreement without the service of a proper default notice will be guilty of an actionable conversion.5 Recovery of land would be wrongful without a default notice and the debtor could set up the non-compliance as a defence. On the other hand, where a debtor has suffered a loss arising out of an enforcement of the agreement without service of a default notice, such will not give rise to a claim for damages as the Act makes no allowance for such a claim and such enforcement would not amount to a breach of contract.6 It may be that a debtor could obtain an injunction to restrain the creditor from enforcing an agreement where he has failed to serve a proper default notice.7 The OFT may take into account a breach of the requirement to serve a default notice in exercising its functions under the Act even though the breach gives rise to no statutory liability.