Successfully challenging the enforceability of credit hire agreements

In yet another skirmish between compensators and credit hire companies, Clyde & Co’s Birmingham motor team has successfully challenged the enforceability of credit hire and storage agreements, achieving significant savings for our client in both damages and costs.

The case, heard at Leicester County Court in February 2025, saw the enforceability of hire agreement(s) successfully challenged during the claimant’s cross-examination at trial.

In August 2023, the claimant was involved in a non-fault accident. She duly reported the incident to her insurers and was subsequently – without her realising it – put in touch with a credit hire company. Crucially, she also received a letter from our client offering to supply a temporary replacement vehicle to her free of charge.

The claimant’s oral evidence in court indicated that, upon receiving the replacement vehicle, she believed it had actually been provided by our client (following on from its letter), rather than the credit hire company she had unwittingly contracted with. That evidence was in stark contrast to witness statement prepared prior to the trial, which stated that she was aware she was entering into agreements with a credit hire company.

The decision

The Court concluded that the claimant had genuinely believed the hire vehicle had been arranged by our client, and expressly disavowed knowledge of the credit hire arrangement, and confirmed she had no intention of entering into a legal relationship with the credit hire company when signing the agreements or taking delivery of the vehicle. As a result, the Court ruled the credit hire and storage agreements unenforceable.

The claim for hire and storage charges was therefore dismissed in its entirety, and the costs of the litigation limited to small claims costs only.

Legal team’s perspective

The case was handled by Paul Gibbons and led by Legal Director Verinder Bedi , who commented:

This is a significant victory for our client, reaffirming the innovative approach designed to lower claim costs via the client’s third party strategy. The ruling also underscores the importance of consumers carefully reading any legal documents that they sign.