A question about : Partial settlement & contract law/ Does a debt still lawfully exist??
It seems firms are attempting to dress full & final settlements up as partial settlements whilst failing to clearly explain to the customer that the debt (being liability) they have been lead to believe will no longer exist, actually WILL continue to exist & 'could' lawfully be pursued in the future as liability (being debt) remains.
There needs to be ABSOLUTE TRANSPARENCY regarding settlement payments so i thought i'd start this thread so we can get things clarified.
My understanding is this:
A closed 'account' has no relevance to the existence of debt.
Blacks law dictionary definition of 'partial settlement:'
Partial settlement occurs when performance is given for an isolated part of the contract or any claim, which has been mentioned previously in a partial settlement agreement.
An actual partial settlement is just that, partial settlement of liability (debt), not debt (liability) settlement.
Don't let a firm tell you otherwise.
Some firms are effectually accepting full & final settlements of liability (debt) but dressing them up as partial settlements, then failing to clearly inform the debtor that a debt (liability) will still lawfully exist.
MBNA is one of those firms.
If a firm has accepted a customers offer to settle a debt & informed the customer it will write off the remainder of the debt then consideration has been provided for the whole not just an isolated part.
The firm has effectually 'exchanged' early payment of an agreed sum for full & final settlement of the debt (liabilty).
Performance is then provided by the firm in the form of written contract (settlement acceptance letter) which clearly, formally & unequivocally discharges the debtors liability (debt), performance can then be provided by the debtor in processing the agreed 'settlement' payment... contract is bound.
What is recorded with the CRA is of no relevance then as it can be challenged & corrected by the contract (settlement acceptance letter)
A partial settlement 'flag' will be added to the CRA file but this is just a flag to show that the payment would not clear the outstanding balance at the time, although the payment was accepted 'AS' full & final settlement.
Bottom line is.. if a firm has accepted a customers offer to settle a debt by informing the customer they will no longer be liable (have a debt) as the firm will write the remainder of the debt off in exchange for early settlement...then that is acceptance in full & final settlement.
For a firm to then attempt to dress this up as an actual 'partial settlement' is simply unacceptable & breaches the Lending code & the CPUTR.
No statement within the settlement acceptance letter (contract) which clearly, formally & unequivocally discharges the customers liability (debt) = CONTINUING LAWFUL EXISTENCE OF DEBT/LIABILTY ... FULL STOP.
Law Dictionary: What is PARTIAL SETTLEMENT? definition of PARTIAL SETTLEMENT (Black's Law Dictionary)
Any thoughts anyone?
Best answers:
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