H.P. Depreciation Clause Invalid
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,A CLAUSE in a hire-purchase agreeI. 1'tient stipulating that the owners of a vehicle taken back by them could claim compensation for depreciation at the rate of 75 per cent, of the price was held to be invalid by Lord Justice Denning in the Queen's Bench Division of the High Court, last week.
The case concerned a vehicle bought by a finance company, Lamdon Trust, Ltd., for £525, and let to Mr. William Hurrell, Shepherd's Bush Green, London, W., on instalment terms payable over 12 months until a total of £558 8s, was paid. Four monthly
instalments and £175 were paid, hut. the sum due on January 28, 1954, was not paid. On February 10, Lamcion Trust took possession of the vehicle.
They resold it for £270, and although they were then £14 8s. better off than if the agreement had been fulfilled, they were not content. Under clause 6 of the agreement, which stated that if the owners terminated the hiring or retook the car, the hirer would pay a sum sufficient to bring his total payments up to £425 by way of compensation for depreciation, they claimed another £122 4s.
His Lordship said he could not regard the figure of 75 per cent, as a genuine pre-estimate of damage, and that, therefore, the clause was a penally, as opposed to liquidated damages, and was not recoverable.