Laptop case reboots in Supreme Court

Laptop case reboots in Supreme Court

Banking and Finance analysis: Do customers rescind a credit agreement to finance a purchase when they rescind the purchase agreement? Catherine Robert, of Hogan Lovells International LLP, explains the Supreme Court’s answer to that question.

Original news

Durkin v DSG Retail Ltd and another [2014] UKSC 21, [2014] All ER (D) 249 (Mar)

The appellant had entered a credit agreement with the second respondent bank to purchase a computer from the first respondent shop. When he rejected the computer because it did not conform to his contract of sale, the shop did not accept that he had validly rescinded that contract and the bank treated him as being in default of the credit agreement and intimated that default to credit reference agencies. The appellant claimed damages for financial loss caused by the damage to his credit. The Supreme Court decided that the appellant had been entitled to rescind the credit agreement on rescission of the contract of sale.

What issues did this case raise?

The key issue was whether Mr Durkin was entitled to rescind the credit agreement with HFC Bank (HFC) when he rescinded the purchase agreement for the computer.

Mr Durkin also challenged the amount of damages awarded to him. He had originally claimed damages of £250,000 under three heads of loss:

  • damage to his credit rating because HFC had reported defaults on his loan
  • the additional interest he had paid as a result of the impact on his credit rating, and 
  • loss caused by his inability to put down a deposit on a house in Spain, measured by the difference in the price of the house in 2003 and its price three years later

At first instance, he had been awarded £8,000 for damage to his credit rating, an additional £6,880 for additional interest, and £101,794 in relation to the Spanish property. HFC had not challenged the award of £8,000, but had successfully appealed against the award of damages for the

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