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Re: Creditor - Debtor - Supplier (liability protection)

Can any one please point me in the right direction.

> > I am trying to find out if thier is any liability insurance that a > creditor can obtain should the debtor take legal action against both > the creditor and the supplier, which will cover any liability by the > creditor.

In what way might the creditor be liable? Let me guess what you mean.

A proposes to lend B money to buy stuff from C. A is the creditor, B the debtor, and C the supplier.

The stuff turns out to be faulty and C decides to be difficult about giving B his money back. Under the Consumer Credit Act, if A is a credit card company, it can be jointly liable with C. However, CCCs generally make such a huge profit that they self-insure for this kind of thing, which after all is really C's problem, not A's. All the CCA really does is try to make life less difficult for B by in effect forcing A to put pressure on C.

If A is a private individual it's unlikely the CCA would apply, and if A is a budding small-time loan shark, I think he would have some rather unorthodox insurance arrangements already.

So what kind of liability are you thinking of?

Reply to
Ronald Raygun
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Thanks for the response - will try and be more clear

A = The Creditor = High Street Bank. B = The Debtor = Student wishing to undertake private learning. C = The Supplier = Private Training Company.

If B is unhappy with C (for whatever reason) and takes legal action against A and C under the CCA could A obtain insurance in case of any monetry loss. A would not want to pressure C to pay their monetary loss as they want to keep a good business relationship with.

Hope this makes sense.

J Clarke

Reply to
Jclarke

It doesn't, actually. AFAIA, the basic deal is between B and C. The CCA makes A a co-defendant with C for no other reason than to give the consumer, B, protection against C failing to honour their obligations by playing silly buggers or by going bust.

What you say about A not wanting to put pressure on C makes no sense. If C sells rubbish, and B has a valid complaint, then A would be unlikely to wish to continue its association with C. If the goods are not rubbish, and B is just complaining because he's too thick to understand the learning materials, it's unlikely B's case would be upheld, provided the contract is done well.

Presumably CCA only gets invoked where provisions such as those of the Sale of Goods Act are breached. Stuff sold to consumers is required to be satisfactory, and in the case of simple goods, the test for whether they's satisfactory is reasonably straightforward. Not so with courses, where a problem is more likely to arise from a defect in the consumer than in the goods, and accordingly I'd have expected the consumer's rights to be toned down.

In any case, I don't see why a bank would be interested in buying insurance for that purpose. They're big enough to self-insure and if they want to bail out the company that's up to them, but really the bank's liability is only a backstop. The primary responsibility lies with the supplier.

Reply to
Ronald Raygun

In message , Ronald Raygun writes

Thats right. I assume their is a credit card in the background here. This is the reason why banks dont dole out 'merchant' status for credit cards easily.,

Reply to
john boyle

I suspect there's more to it than a credit card. Something like the teaching company having an arrangement with the bank to broker their student loans, perhaps also tied in with this ILA fiasco, MIRIP.

Reply to
Ronald Raygun

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