Stuart Stone
Oct 29, 2013 1:23 PMHarold Austerman, from what I understand (and the relevant legislation for the UK):
When you sign the credit agreement/promissory note/charge etc, you have created a specie of money...you deposit that as property/security in exchange for a loan...the fees and interest are the lender's compensation for acting as a currency exchange & converting your specie of currency into legal tender.
Once the 'loan' relationship is complete, you have the right to demand your promissory note back...problem is, it has often (meaning virtually ALWAYS) been on-sold to some third party, so it cannot be returned...therefore, you have the right to bill them for the agreed upon value of the promissory note (the principal amount of the loan)...
The Consumer Credit Act 1974, section 189 defines a security as follows:
�security �, in relation to an actual or prospective consumer credit agreement or consumer hire agreement, or any linked transaction, means a mortgage, charge, pledge, bond, debenture, indemnity, guarantee, bill, note or other right provided by the debtor or hirer, or at his request (express or implied), to secure the carrying out of the obligations of the debtor or hirer under the agreement;
The Administration of Justice Act 1970, Section 39 states:
�mortgage� includes a charge�
The Bill of Exchange Act 1882, Part 1(2) states:
�Bill� means bill of exchange, and �note� means promissory note.
Case Law:
�The principle is that a bill, cheque or note is given and taken in payment as so much cash�
(see Jackson v Murphy [1887] 4 T.L.R. 92).
"We have repeatedly said in this court that a bill of exchange or a promissory note is to be treated as cash. It is to be honoured unless there is some good reason to the contrary"
(see per Lord Denning M.R. in Fielding & Platt Ltd v Selim Najjar[1969] 1 W.L.R. 357 at 361; [1969] 2 All E.R. 150 at 152, CA)
The Bills of Exchange Act 1882, Section 30(1) states:
Every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value.
You may need to dredge through the clubhouse rules where you are, to find the equivalent legislation in order to defend your claims.
...If, from this, you wish to (re)negotiate an early settlement & use the original promissory note to set off the loan amount, then that may be acceptable to the 'lender'. In that case, you'll need to use your own money of exchange to settle any fees for completing the relationship early, but hey, it's all contract & all down to offer/counter offer until you reach an agreeable solution :D
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