Office of Fair Trading (Respondents) v. Lloyds TSB Bank plc and others (Appellants) and others (Respondents)
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
Office of Fair Trading (Respondents)
Lloyds TSB Bank plc and others (Appellants)
and others (Respondents)
 UKHL 48
LORD HOPE OF CRAIGHEAD
LORD WALKER OF GESTINGTHORPE
LORD BROWN OF EATON-UNDER-HEYWOOD
A credit card involves a debtor-creditor-supplier agreement falling within section 12(b), the consumer being the debtor and the card issuer the creditor: the agreement is "a restricted-use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier"; a restricted-use credit agreement within section 11(1)(b) is "a regulated consumer credit agreement to finance a transaction between the debtor and a person (the 'supplier') other than the creditor". Section 75(3) disapplies section 75(1) to a claim under a non-commercial agreement or relating to any single item with a cash price of or under £100 or over £30,000.
A right of indemnity was duly incorporated in section 75(2) which I set out in paragraph 34 below. Its existence and scope are central to the banks' case on this appeal.
Further, the card issuer was "much better placed than the cardholder to secure redress from the offending supplier" and agreements between issuers and suppliers would usually impose an express obligation on the supplier to deal promptly with legitimate complaints by cardholders (para. 6.12.10). The consideration that a card issuer might be unwilling to make a claim on a particular supplier for fear of losing that supplier's goodwill was "a commercial matter which the issuer or other lender has to decide for itself"; it did not justify depriving the consumer of the protection which the Committee believed he should otherwise have (para. 6.12.11).
(2) the contract was governed by a foreign law; and
(3) the goods were delivered, or services supplied outside the United Kingdom, or the goods were despatched outside the United Kingdom for delivery within the United Kingdom."
Section 75(3) introduces only two (presently irrelevant qualifications to the generality of section 75(1). But the appellants seek to derive such a limitation from a variety of considerations. First, they submit that the implications, if section 75(1) applies to overseas transactions, are "startling and readily apparent", in that it would make United Kingdom card issuers the potential guarantors of some 29 million foreign suppliers, with whom they would not have any direct contractual relations. Gloster J in a clearly reasoned judgment accepted this among other of the appellants' submissions. But it is one which depends on today's market. The 1974 Act falls to be construed against the background of the market as it existed and was understood and foreseen at the time of the Crowther Report and the passing of the Act.
This is supplemented in section 75(5) by a provision entitling the creditor "in accordance with rules of court" to have the supplier made a party to any proceedings brought against the creditor under section 75(1). The appellants submit, and Gloster J accepted, that the "whole premise" of these provisions is that a United Kingdom court will have jurisdiction over the supply transaction and the supplier.