Section 140A Consumer Credit Act 1974 gives the court wide powers to order relief – so far as to extinguish a debt – if the terms of a debtor/creditor relationship are unfair. The 1st May first instance judgment in Carney & Others v N.M. Rothschild & Sons Ltd is the first reported case on Section 140A and “basis clauses”.

The claimants had borrowed from Rothschild to effect a scheme to reduce Spanish inheritance tax, but ended up losing money. They claimed Rothschild had had a duty to advise them on the scheme, that it had advised negligently, and that the loan agreement’s standard “no advice” and “no reliance” clauses made the relationship between them and the bank unfair. The Judge disagreed. The clauses defined the basis upon which the parties were transacting business, rather than having been inserted as a means of evading liability, they were a reasonable, clearly stated and legitimate means for the bank to limit the scope of its role, and so were effective to negate any duty to give advice, and since that was the basis on which the loan had been borrowed, they could not be said to have made the relationship unfair. This is consistent with decisions over recent years in cases such as IFE v Goldman Sachs (2007), J.P. Morgan Chase v Springwell Navigation (2008) and Thornbridge v Barclays Bank Plc (2015). Basis clauses operate by way of contractual estoppel and protect a party – usually a bank – from liability under section 3 Misrepresentation Act 1967 or common law negligent misstatement and/or an argument that they are unreasonable (under UCTA) exclusion clauses. So far as consumers are concerned, for the most part UCTA has now been replaced by the Consumer Rights Act 2015. However, UCTA and the 1967 Act remain in effect for non-consumers.