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The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008

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Automatic cancellation of related credit agreement

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11.—(1) A cancellation notice which cancels a contract for goods or services shall have the effect of cancelling any related credit agreement.

(2) Subject to paragraphs (3) and (4), where a related credit agreement has been cancelled under paragraph (1)—

(a)the trader must, if he is not the same person as the creditor under that agreement, immediately on receipt of the cancellation notice inform the creditor that the notice has been given;

(b)any sum paid by or on behalf of the consumer in relation to the credit agreement must be reimbursed, except for any sum which would have to be paid under sub-paragraph (c);

(c)the agreement shall continue in force so far as it relates to repayment of the credit and payment of interest in accordance with regulation 12, but shall otherwise cease to be enforceable; and

(d)any security provided under the related credit agreement shall be treated as never having had effect for that purpose and the creditor must immediately return any property lodged with him solely as security for the purposes of the related credit agreement.

(3) Where a related credit agreement is a cancellable agreement—

(a)its cancellation under paragraph (1) shall take effect as if a notice of cancellation within the meaning of the 1974 Act had been served;

(b)that Act shall apply in respect of the consequences of such cancellation;

(c)paragraph (2)(b) to (d) and regulation 12 shall not apply in respect of its cancellation; and

(d)regulations 13 and 14 shall not apply in respect of the cancellation of the related contract for goods or services.

(4) Where a related credit agreement of a kind referred to in regulation 6(1)(c) is cancelled under paragraph (1)—

(a)paragraph (2)(b) to (d) and regulation 12 shall not apply in respect of its cancellation; and

(b)regulations 13 and 14 shall not apply in respect of the cancellation of the related contract for goods or services.

(5) Where a related credit agreement of a kind referred to in regulation 6(1)(d)(iii) is cancelled under paragraph (1)—

(a)the provisions of this regulation and regulation 12 shall apply in respect of its cancellation; and

(b)the provisions of regulations 13 and 14 shall apply in respect of the cancellation of the related contract for goods or services.

(6) For the purposes of this regulation and regulation 12 “creditor” is the person who grants credit under a related credit agreement.

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