Voidable or void? The enforceability of a credit hire agreement.

The enforceability of a credit hire agreement has consistently led to a flurry of litigation in the sticky web of dispute surrounding credit hire. There have been several cases in recent years that have attempted to clarify this difficult area of law. However the sheer volume of updating cases has at times caused more confusion than clarity. This article addresses only one aspect of the minefield- the enforceability of the credit hire agreement signed on the basis of misrepresentation.

Practitioners within this area will all have experienced the situation where the Claimant gives unequivocal oral evidence to the court that they were unaware (before entering into the hire agreement) that they would be liable for the hire charges. I have encountered such a situation on numerous occasions. What next? Is this an automatic bar on the Claimant being entitled to claim for the credit hire?

There is a significant and widely acknowledged difference between (a) a Claimant who enters into a hire agreement in the full knowledge that they are contractually liable for the charges, but the hire company choses to waive its rights to payment in respect to some/all of the charges or there is an expectation that some/all of the charges will be paid by a third party and (b) a Claimant who is told that they will not have to pay anything towards the hire charges and therefore when signing the hire agreement they reasonably believe they are not incurring any contractual liability.

Voidable or void

There still seems to be wide spread confusion on the differences between a hire agreement being voidable and void. By now the case of Nur Kadir v Graham Thompson, 25th August 2016, Central London County Court, HHJ Luba QC, is well known. At first instance it was successfully argued on behalf of the Defendant, that the assurances from the hire agreement company amounted to fraudulent misrepresentations. The hire agreement was therefore voidable at the Claimant’s election. The Claimant’s evidence was that he had chosen to void the agreement and therefore the charges were not enforceable against the Defendant. It was again eloquently argued on behalf of the Defendant that, the ‘entire agreement clause’, within the terms & conditions of the hire agreement, stipulating that the Claimant could not rely upon any representations made by Accident Exchange, had no effect by dint of the Unfair Terms in Consumer Contracts Regulations 1999.

On appeal, HHJ Luba dismissed the arguments advanced by the Claimant. It was a sound warning that if a misrepresentation has rendered a credit hire agreement voidable, and the Claimant then confirms that they do not consider themselves to be bound by the charges imposed under the agreement- the totality of those charges may be found to be unenforceable.

In the case of Martin Stockley v Advantage Insurance Company Limited, 6th July 2017, Southampton County Court, District Judge Stewart stated, “when one reads the judgment of HHJ Luba, QC it is logical and persuasive.” The Learned Judge found that there had been misrepresentation emanating from Enterprise, which induced Mr Stockley to enter into the agreement. The inducement to sign the agreement was fortified by the fact that he was told it was a courtesy car. Therefore the contract was an unenforceable agreement. Mr Stockley did not accept he had any personal liability and avoided the contract. In those circumstances the claim was dismissed.

Cross examination

It is apparent that a number of issues need to be properly addressed during cross-examination in order to successfully argue the credit hire agreement is not enforceable. Firstly, was there a positive misrepresentation (above and beyond a positive averment) from the credit hire company to the Claimant? Secondly, did the misrepresentation induce the Claimant to enter into the credit hire agreement, consequently meaning the credit hire agreement is voidable at the Claimant’s election? Thirdly had the Claimant chosen to void the agreement meaning the charges were not enforceable against the Defendant?


It is incumbent on credit hire companies to make it plain that credit hire agreements have teeth. It is not satisfactory to point to the Claimant’s signature on a credit hire agreement to prove that he was aware of his liability, if the credit hire company has allowed him to proceed blindly.

It will be interesting to see how this area of law develops.