Victorian Consolidated Legislation

Credit Act 1984 - SECT 24

Linked credit provider

24. Linked credit provider



(1) Where a buyer who has entered into a tied loan contract or tied continuing
credit contract with a linked credit provider of a supplier for the provision
of credit in respect of the payment by the buyer for goods or services
supplied by the supplier under a contract of sale is entitled to claim damages
against or recover a sum of money from the supplier for misrepresentation,
breach of contract or failure of consideration in relation to the contract of
sale, the supplier and linked credit provider are, subject to this section,
jointly and severally liable to the buyer for the damages or sum of money.

(2) It is a defence to proceedings arising under subsection (1) against a
linked credit provider of a supplier if the linked credit provider proves-

   (a)  that the credit provided by him to the buyer was provided as a result
        of an approach by the buyer to the credit provider that was not
        induced by the supplier;

   (b)  where the proceedings relate to a contract of sale with respect to
        which a tied loan contract applies, that-

   (i)  after due inquiry before he became such a linked credit provider, he
        was satisfied that the supplier was of good reputation in respect of
        his financial standing and ethical standards of trading;

   (ii) since becoming such a linked credit provider, but before the tied loan
        contract was entered into, he had not had cause to suspect, and had
        not suspected, that the buyer might be entitled to claim damages
        against or recover a sum of money from, the supplier for
        misrepresentation, breach of contract or failure of consideration as
        referred to in subsection (1); and

   (iii) since becoming such a linked credit provider, but before the tied
        loan contract was entered into, he had not had any cause to suspect,
        and had not suspected, that the supplier might be unable to meet his
        liabilities as and when they fell due; or

   (c)  where the proceedings relate to a contract of sale with respect to
        which a tied continuing credit contract entered into by the linked
        credit provider under an agreement of the kind referred to in section
        48(2)(a)(ii) applies, that, having regard to-

   (i)  the nature and volume of business carried on by the linked credit
        provider; and

   (ii) such other matters as appear to be relevant in the circumstances of
        the case-

the linked credit provider, before becoming aware of the contract of sale or
of proposals for the making of the contract of sale (whichever the linked
credit provider first became aware of), did not suspect, and could not
reasonably have been expected to suspect, that a person entering into such a
contract with the supplier might be entitled to claim damages against, or
recover a sum of money from, the supplier for misrepresentation, breach of
contract or failure of consideration as referred to in subsection (1).

(3) Subject to subsection (4), a buyer may in any proceedings set up the
liability of a linked credit provider for damages or a sum of money under
subsection (1) in diminution or extinction of the buyer's liability upon any
claim for damages or a sum of money made by the linked credit provider against
the buyer in the proceedings.

(4) Subject to subsection (5), a buyer may not-

   (a)  bring proceedings for damages or to recover a sum of money from a
        linked credit provider; or

   (b)  where proceedings are brought against the buyer by a linked credit
        provider, make a cross-claim or exercise a right referred to in
        subsection (3) against the linked credit provider-

in respect of a liability for which, by reason of this section, a supplier and
a linked credit provider are jointly and severally liable unless he brings the
proceedings against the supplier and linked credit provider jointly, or in the
case of a cross-claim or right referred to in subsection (3), claims in the
proceedings against the supplier in respect of the liability.

(5) Subsection (4) and paragraph (a) of subsection (8) do not apply where-

   (a)  the supplier-

   (i)  is a bankrupt or a person whose affairs are being dealt with under
        Part X of the Bankruptcy Act 1966 of the Commonwealth as amended and
        in force for the time being;



   (ii) being a body corporate, has been dissolved or is commenced to be wound
        up; or

   (iii) being a natural person, has died;

   (b)  the Court believes on reasonable grounds that it is not reasonably
        likely that any part of a judgment obtained against the supplier would
        be satisfied and has on the application of the buyer declared that
        subsection (4) and paragraph (a) of subsection (8) do not apply in
        that case; or

   (c)  the buyer satisfies the Court that he has made reasonable efforts to
        locate the supplier but has been unable to do so and the Court
        declares that subsection (4) and paragraph (a) of subsection (8) do
        not apply in that case.

(6) A reference in subsection (5) to the commencement of winding-up is a
reference to commencement of winding-up as determined under the law relating
to companies in the place where the body corporate is being wound up.

(7) The liability of a linked credit provider to a buyer for damages or a sum
of money in respect of a contract of sale referred to in subsection (1) does
not exceed the sum of-

   (a)  the amount financed under the tied loan contract or tied continuing
        credit contract in relation to the contract of sale;

   (b)  the amount of interest (if any) or damages in the nature of interest
        allowed or awarded against the linked credit provider by the Court;
        and

   (c)  the amount of costs (if any) awarded by the Court against the linked
        credit provider or supplier or both.

(8) Where in proceedings in respect of the liability arising under subsection
(1) judgment is given against a supplier and a linked credit provider, the
judgment-

   (a)  shall not be enforced against the linked credit provider unless a
        written demand made on the supplier for satisfaction of the judgment
        has remained unsatisfied for not less than 30 days; and

   (b)  may be enforced against the linked credit provider only to the extent
        of-

   (i)  the amount calculated in accordance with subsection (7); or

   (ii) so much of the judgment debt as has not been satisfied by the
        supplier-

whichever is the lesser.

(9) Where, in proceedings in respect of the liability arising under subsection
(1), a right referred to in subsection (3) is established against a linked
credit provider, the buyer-

   (a)  shall not receive the benefit of the right unless judgment has been
        given against the supplier and linked credit provider, a written
        demand has been made on the supplier for satisfaction of the judgment
        and the demand has remained unsatisfied for not less than 30 days; and

   (b)  may receive the benefit only to the extent of-

   (i)  the amount calculated in accordance with subsection (7); or

   (ii) so much of the judgment debt as has not been satisfied by the
        supplier-

whichever is the lesser.

(10) Unless the linked credit provider and supplier otherwise agree, the
supplier is liable to the linked credit provider for the amount of a loss
suffered by the linked credit provider, being an amount not exceeding the
maximum amount of his liability under subsection (7) and, unless the Court
otherwise determines, the amount of costs (if any) reasonably incurred by him
in defending the proceedings by reason of which the liability was incurred.

(11) Notwithstanding anything to the contrary in any other Act, where in
proceedings in respect of the liability arising under subsection (1), judgment
is given against a supplier and a linked credit provider or against a linked
credit provider, for damages or a sum of money, the Court shall upon
application by the buyer, unless good cause is shown to the contrary, allow or
award interest to the buyer against the supplier and linked credit provider or
against the linked credit provider, as the case may be, upon the whole or part
of the damages or sum of money-

   (a)  at the percentage rate per annum that is the annual percentage rate
        under the tied loan contract or tied continuing credit contract; or

   (b)  at 8 per centum per annum or, where some other percentage rate per
        annum is prescribed, that other rate-

whichever is the greater, from the time when the buyer became entitled to
recover the damages or sum of money until the date on which the judgment is
given.





(12) In determining whether good cause is shown against allowing or awarding
interest under subsection (11) on the whole or part of the damages or sum of
money, the Court shall take into account any payment made into court by the
supplier or linked credit provider, as the case may be.

(13) Where a judgment in respect of a liability arising under subsection (1)
in relation to a contract of sale is enforced against a linked credit
provider, the linked credit provider is subrogated to the extent of the
judgment so enforced to any rights that the buyer would, but for the judgment,
have had against any person in respect of the loss or damage suffered by him
as a result of the misrepresentation, breach of contract or failure of
consideration in relation to the contract of sale from which the liability
arose.



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