Lloyd's Maritime and Commercial Law Quarterly
CAR ACCIDENTS AND CREDIT HIRE AGREEMENTS
Philip Rawlings * and Joanna Rudd **
A motorist whose car is damaged by the negligence of another may recover for the loss suffered, but must take reasonable steps to mitigate that loss. Where a replacement car is hired the charges can be recovered, if the car is needed for use and is similar to the damaged vehicle. Real difficulties arise if the motorist hires on credit. The agreement must comply with regulations applicable to credit agreements and constitute an enforceable contract, and, even then, full recovery of the charges is possible only if the motorist is impecunious. In spite of attempts to calm conflict over these matters, credit hire has prompted a flood of litigation that has often confused issues and created difficult distinctions, which, in turn, have increased tensions in the industry and caused bafflement among motorists.
I. THE CREDIT HIRE INDUSTRY
Damages in tort are meant to put the claimant into the same position as if he or she had not sustained the wrong.1 A motorist whose car is damaged by the negligence of another is entitled to recover for the loss suffered as a result of the vehicle’s being out of use during the period it is being repaired, or a new car obtained, if repair is not economically viable.2 But the simplicity of these propositions is deceptive. This paper will reveal a story of apparently endless litigation, uncertain definitions, procedural strategies, baffled motorists, aggrieved insurers, bitter differences of opinion, a footballer’s broken supercar and even a conviction for contempt of court. These problems have arisen because the law has struggled to keep pace with the rapid development of an industry that has exploited gaps in the response to accidents by insurers.
The aggrieved motorist will, typically, want to hire a replacement car and, as long as he or she acts reasonably, these charges can be recovered from the defendant.3 The real problems arise when the claimant does not have access to sufficient funds to carry this expenditure and so hires on credit, perhaps as part of a broader accident management
* Roy Goode Professor of Commercial Law, CCLS, Queen Mary University of London.
** Faculty of Laws, University College London.
1. Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39.
2. Giles v Thompson [1994] 1 AC 142, 154, per Lord Mustill; Pattni v First Leicester Buses Ltd [2011] EWCA Civ 1384, [30].
3. Martindale v Duncan [1973] 1 WLR 574; [1973] 1 Lloyd’s Rep 558; Lagden v O’Connor [2003] UKHL 64; [2004] 1 AC 1067; [2004] Lloyd’s Rep IR 315; Pattni v First Leicester Buses Ltd [2011] EWCA Civ 1384, [30].
CAR ACCIDENTS AND CREDIT HIRE AGREEMENTS
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