Legal Question in Business Law in United Kingdom

Mitigation of loss

I paid for something for a friend with my Visa card. It cost �49. She gave me a cheque to cover this. Her cheque was made payable to the Visa company and I enclosed it with my cheque for the rest to pay off the entire monthly Visa account.

The cheque bounced because her bank, unknown to her, had cancelled her chequebook last November. They are unable to explain why this happened.

Because I did not afterall pay off the whole of my spending with my Visa company I got charged �23.73 interest on the whole sum.

Now I am close to the next month's settlement date. If I leave the �72.73 unsettled I shall incur a further interest charge on that Visa card

If on the other hand I were to pay off the whole of the next month's Visa statement myself I would effectively be carrying the full charge myself - the true loss to me would be smaller.

I propose to write to the bank to allow them the opportunity for them to carry this debt themselves. Am I required by the law to find an alternative way of financing this debt until it is settled by my friend's bank?


Asked on 7/19/02, 7:04 pm

1 Answer from Attorneys
Richard Grams Oldham, Li & Nie

Re: Mitigation of loss

I understand your concern about being compelled to shoulder this burden by yourself. However, apart from certain very basic consumer protection restrictions imposed on banks by legislation and non-statutory codes of practice, there are virtually no legal guidelines which dictate credit card arrangements between banks and their customers. Accordingly, banks are generally free to impose whatever contractual terms and conditions they see fit in respect of issues such as how customers should settle their outstanding credit balance.

All of the relevant terms and conditions regarding the use of your credit card should be incorporated in a document which the bank is required to have given you when you received the credit card. This will constitute the contract between yourself and the bank regarding the use of the card. These may contain provisions which apply to your present circumstances. In that case, you will be bound by those terms and there will be no way to compel the bank to incur the debt themselves.

I appreciate that this is probably not the answer you had been hoping for. However, I might suggest another albeit non-legal alternative. If you very politely explain your circumstances to the bank's customer service department and request that they exercise some discretion, they may possibly agree to waive the interest charge on a one-off basis.

Good luck.

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Answered on 7/19/02, 9:26 pm


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