Success for hire purchase lenders in vehicle rejection case

The Sheriff Appeal Court has considered the appeal in Alan King v Black Horse and anr [2023]-sac-(civ)-004 . This case concerned a hire purchase contract for a car and whether a rejection of the vehicle by the consumer was effective if he continued to use the vehicle after communicating the rejection to the trader.

In June 2019, Mr King entered into a hire purchase agreement with Black Horse in respect of a car. In October 2020, by email he rejected the car, citing section 9 of the Consumer Rights Act 2015 (CRA). However, after sending the email, Mr King continued to use the car (adding 6,231 miles to it), kept it taxed and insured and upheld the contractual monthly payments under the hire-purchase agreement.

Mr King issued a claim and Black Horse lodged a motion for summary decree (the Scottish equivalent of a summary judgment) on the basis that the use of the car after Mr King rejected it prevented him from relying upon the rejection. The Sheriff agreed and rejected Mr King’s arguments. However, Mr King then appealed to the Sheriff Appeal Court.

The Sheriff Appeal Court held that the rule, at common law, that defective goods should not be used after rejection, is a bar on the exercise of the remedies which are available where there is a valid rejection. The CRA does not alter this position.

As such, Mr King's appeal was refused, and the Sheriff Appeal Court found in favour of Black Horse.

What it means for you

This is a useful case for lenders who enter into hire-purchase agreements with consumers which are governed by the CRA. It considers a specific point and gives clarity to the right of rejection under the CRA. It offers lenders and traders means to argue that rejection of goods will not be effective in cases where the consumer continues to use them post rejection. Mr King is now seeking permission for leave to appeal to the Court of Session.