Finance companies that provide online loans will be relieved by the High Court decision in Bassano v (1) Toft, (2) Biddulph and (3) Borro Loan Ltd.
Bassano had taken out loans from the first and third defendants which were secured against her valuable viola. This included a loan of £130,000 from Borro Loan Ltd. Bassano made no repayments. Borro took possession of the viola and sold it through a dealer to Biddulph for £230,000.
Bassano argued that the online loan agreement with Borro was unenforceable as she had not signed it and therefore it was not properly executed under the Consumer Credit Act 1974.
S61 of the Act requires a regulated agreement to be signed in the prescribed manner. The Consumer Credit (Agreements) Regulations 2010 set out the prescribed form. Regulation 4(3)(a) provides that the signature must be in a space indicated in the document for that purpose. Regulation 4(5) recognises that a regulated agreement could be concluded electronically.
The High Court held there is nothing in the Act to suggest that a signature could not be affixed and communicated electronically.
The loan agreement had been generated online at Borro’s office in the presence of Bassano and a Borro representative. Bassano had electronically communicated her agreement to be bound by its terms by clicking on the "I Accept" button, on the loan agreement presented to her on screen. That generated a document sent to Borro bearing her typed name.
The words "I Accept" appeared in the designated space as per Regulation 4(3)(a). Her name appeared on the previous page. The court held a signature need not consist of a name, but may be of a letter by way of mark, or an unambiguous description of the signatory, or, in this case, the electronic communication of the words "I Accept".The word "I" could be treated as Bassano’s mark affixed for the purposes of authenticating and agreeing to be bound by the terms of the document. Her name on the previous page was relevant because it was evidence that "I" was Bassano’s mark. However, it was the words "I Accept" which constituted the signature, not the name on the previous page.
Bassano’s signature was in the designated space and constituted a signature so as to fulfil the requirements of s 61 of the Act. Borro’s claim for repayment of the loan succeeded.
The court further held that even if it was wrong on the signature point, it would have exercised its discretion under Sections 65 and 127 of the Act to enforce the agreement in full. There was no doubt Bassano deliberately indicated her consent to be bound by the terms of the document, a copy of which she had received. It contained all the matters prescribed by the Act and the Regulations in the prescribed form. She had also pleaded that she had entered into and executed the agreement.
This is a good decision for lenders many of whom now undertake online transactions, some almost exclusively.
Greg Standing is a partner at Wragge & Co’s motor finance litigation team