Source: https://creditboards.com/forums/index.php?/topic/619951-were-does-the-ucc-define-credit-cards-as-open-accounts/&tab=comments
Timestamp: 2019-10-16 15:44:00
Document Index: 89987197

Matched Legal Cases: ['§ 226', '§\u202f1602', '§\u202f1602', '§\u202f1601', '§ 28', '§ 29', '§ 29', '§ 226', '§ 1602', '§ 47']

Were does the UCC define credit cards as Open Accounts? - Credit Forum - CreditBoards
Were does the UCC define credit cards as Open Accounts?
By Renfro72, October 5 in Credit Forum
Renfro72
I was reading Whychat's site, and if I read it right, it says credit cards are always Open Accounts, even after default, as part of the Uniform Commercial Code. I'm just wondering what part of the UCC says that.
Or is it the Truth in lending Act that defines a CC as Open?
Each state is different. Look up your UCC, which by the way, does not always cover credit cards. Usually you find the definition of open account in the statute of limitations. I believe TILA makes reference to open accounts, but it does not define them. § 226.12 Special credit card provisions. This has some info, but you didn't say what your issue is.
2 hours ago, legaleagle2012 said:
TILA defines an “open-end credit account” in 15 USC § 1602j, however the terms defined in TILA only apply to that Act.
§ 1602b
(a)The definitions and rules of construction set forth in this section are applicable for the purposes of this subchapter.
Nowhere does the Act imply that states must adopt or accept the definitions for the any purpose other than that for which TILA was enacted. Here is the stated purpose of the Act.
15 USC § 1601a Informed use of credit
“The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this subchapter to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.”
Thanks guys. I was reading about the SOL for credit cards in Tennessee on Whychats site. If I understand it correctly, Credit Cards aren't contracts, but rather open accounts, so the states 6 year SOL doesn't apply. The 3 year SOL applies because a credit card is a personal line of credit.
But from how the law reads, the "personal" part has to do with property. The 6 year SOL it talks about is for "contracts" not otherwise expressly provided for, but since a credit card is not a contract, that wouldn't really apply, either. It's almost like TN has no SOL for credit cards at all.
Open Accounts : 3 years
28-3-105. Property tort actions - Statutory liabilities.
(1) Actions for injuries to personalor real property;
(2) Actions for the detention or conversion of personal property; and
(3) Civil actions based upon the alleged violation of any federal or state statute creating monetary liability for personal services rendered, or liquidated damages or other recovery therefor, when no other time of limitation is fixed by the statute creating such liability.
This is the INCORRECT statute that was previously quoted for a 6 year SOL for Open Ended accounts,it is the CORRECT statute for WRITTEN contracts 28-3-109. Rent - Official misconduct - Contracts not otherwise covered - Title insurance - Demand notes. (a) The following actions shall be commenced within six (6) years after the cause of action accrued: (1) Actions for the use and occupation of land and for rent; (2) Actions against the sureties of guardians, executors and administrators, sheriffs, clerks, and other public officers, for nonfeasance, misfeasance, and malfeasance in office; and (3) Actions on contracts not otherwise expressly provided for. (b) The cause of action on title insurance policies, guaranteeing title to real estate, shall accrue on the date the loss or damage insured or guaranteed against is sustained. (c) The cause of action on demand notes shall be commenced within ten (10) years after the cause of action
14 hours ago, Renfro72 said:
What TN law supports that a credit card is a personal line of credit? What TN law says the SOL for a personal line of credit is 3 years?
Edited October 7 by Bluesie58
That's what I was wondering. The info on Whychat's site is kind of confusing
54 minutes ago, Renfro72 said:
ALWAYS do your own legal research to ensure that things are correctly citing the most recent appellate holdings...
58 minutes ago, Renfro72 said:
Section 28-3-105 only references personal or real property. You would have to show that a credit card is considered personal property under the statute.
Just call a TN consumer attorney and ask about the SOL. That would be the easiest way to get an answer. You would also be more likely to get an accurate answer.
28 3 109 TN SOL is 6 years for contracts. Credit cards are considered to be issued under contract. I have never heard of anyone successfully using a 3 year SOL in TN.
Tennessee's statutes have not been tested. That State is in the same position now as Ohio used to be before there were challenges in Court that cited the TILA. I stand by my interpretation of the Tenn statutes just as I did years ago regarding Ohio statutes. If someone has been sued on a credit card in Tennessee and answered with ANY kind of defense I have not been able to locate any such case. Perhaps "legaleagle2012" can find one.
Note that Tennessee requires CAs to be licensed in order for them to file suit. There have been several FDCPA cases regarding this. If the OP's debt has been placed with a CA they should look up that CAs licensing. If they are NOT licensed the risk of being sued (SOL or not) is minimal.
Edited October 8 by Why Chat
All I know is that a board member from a different board is a consumer atty in TN. He confirmed that the SOL for credit cards is 6 years.
18 minutes ago, legaleagle2012 said:
This is from the federal bk court which says 6-years.
“Accordingly, the Court finds that LVNV's claim is time barred pursuant to T.C.A. § 28-3-109(a)(3)”. In re Shippy 2016 Bankr. Lexis 916 (Bankr. M.D. Tenn. March 23, 2016).
I don’t know how default on an open account could in any way fall under the 3-year SOL. Do you see it?
Edited October 9 by Bluesie58
The case cited by Blusie DOES reference the SOL for a credit card debt in Tenn. as being 6 years, however, it also cites it as being an "open ended" contract.
https://casetext.com/case/in-re-shippy
My OPINION is that the Tenn. statute of frauds should be used as a valid defense to the 6 year SOL as an open ended credit card agreement does not meet the definition of a "contract" as it is only signed by the applicant and has no fixed term.
Tennessee's Statute of Frauds is codified at T.C.A. § 29-2-101, and provides that
(a) No action shall be brought:
(5) Upon any agreement or contract which is not to be performed within the space of one (1) year from the making thereof;
unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorized.
T.C.A. § 29-2-101 (Supp. 1996).
IV. ELEMENTS OF THE CAUSE OF ACTION
The first element of the cause of action is a valid, binding contract.
Legal prerequisites for a binding contract.
In Tennessee, a "contract is an agreement, upon sufficient consideration, to do or not do a particular thing.
36 A contract contemplates a legally effective offer and acceptance,
37 and its terms must be sufficiently definitive to provide a basis for determining the existence of a breach and for providing an appropriate remedy.
38 A contract may be express or implied,
39 or written or oral,
40 but must result from a so-called meeting of the minds, which is construed primarily in an objective sense.
41 Other elements of an enforceable agreement include competent parties,
42 and lawful subject matter.
43 Valid contracts are free from fraud or undue influence, and must be consistent with public policy.
44 Lastly, the contract must satisfy any statutory formalities, such as the statute of frauds, codified in Tennessee at section 29-2-101 of the Tennessee Code, which requires certain contracts to be in writing to be enforceable.
45 By definition, this "legal contract" element is lacking with expired or terminated contracts.
It is well established that a contract can be express, implied, written, or oral, "but an enforceable contract must result from a meeting of the minds in mutual assent to terms, must be based upon sufficient consideration, must be free from fraud or undue influence, not against public policy and must be sufficiently definite to be enforced." Klosterman DevelopmentCorp. v. Outlaw Aircraft Sales, Inc.,102 S.W.3d 621, 635 (Tenn.Ct.App.2002).
In an express contract, the parties assent to the terms of the contract by means of words, writings, or some other mode of expression. Thompson v. Hensley,136 S.W.3d 925, 930 (Tenn.Ct.App.2003).
28-3-109. Rent -- Official misconduct -- Contracts not otherwise covered -- Title insurance -- Demand notes.
(b) The cause of action on title insurance policies, guaranteeing title to real estate, shall accrue on the date the loss or damage insured or guaranteed against is sustained.
(c) The cause of action on demand notes shall be commenced within ten (10) years after the cause of action accrued.
I agree that a credit card agreement fulfills the requirements of "It is well established that a contract can be express, implied, written, or oral, "but an enforceable contract must result from a meeting of the minds in mutual assent to terms, " However it does NOT (IMO) meet the requirements of the Tennessee Statute Of Frauds as it is not signed by the creditor and has no FIXED TERM. And the TILA defines credit cards as:
37 and its terms must be sufficiently definitive to provide a basis for determining the existence of a breach and for providing an appropriate remedy. 38 A contract may be express or implied, 39 or written or oral, 40 but must result from a so-called meeting of the minds, which is construed primarily in an objective sense. 41 Other elements of an enforceable agreement include competent parties, 42 and lawful subject matter. 43 Valid contracts are free from fraud or undue influence, and must be consistent with public policy. 44 Lastly, the contract must satisfy any statutory formalities, such as the statute of frauds, codified in Tennessee at section 29-2-101 of the Tennessee Code, which requires certain contracts to be in writing to be enforceable. 45 By definition, this "legal contract" element is lacking with expired or terminated contracts.
43 minutes ago, Why Chat said:
A credit card agreement is in writing. There is nothing that says only signed contracts are enforceable and that only signed contracts are contracts.
If you are asserting that only signed contracts as defined by the Statute of Frauds are governed by the 6-year SOL, what part of the Statute of Frauds or any other statute makes such an indication?
28-3-109 says that the 6-year SOL applies to contracts “not otherwise expressly provided for”.
It does not matter how TILA defines credit cards. TILA specifically says the definitions are for the purpose of that Act only. It has nothing to do with how each state chooses to determine the SOL for a credit card account
Citibank (South Dakota), N.A. v. Johnson (TN. Court of Appeals 2016], discusses an unsigned agreement and includes information from TILA.
“On appeal, plaintiff asserts that the Motion to Dismiss should have been overruled, because federal law allows a credit card to be issued without a signed application or agreement, and also provides that use of the card constituted acceptance of the Agreement.l
“12 C.F.R. § 226.5a, part of the regulations dealing with Truth in Lending, provides that certain disclosures must be made with a solicitation, which is defined as ‘an offer by the card issuer to open a credit or charge card account that does not require the consumer to complete an application.’”
“Likewise, 15 U.S.C. § 1602(l), deals with consumer credit, and defines an accepted credit card as one used to obtain money or goods on credit, and contains no requirement that it actually be applied for in writing. The Tennessee statute on unsolicited credit cards provides that ‘use of the card or retention of the card with intention to use it by either the person to whom it was issued or anyone to whom the person entrusts it will result in the person to whom the card was issued being subject to the terms of the agreement and liable for its unauthorized use’, if the card agreement so provides. Tenn.Code Ann. § 47-22-102(b).”
“Both federal law and State law provide that a signed agreement/application is not always required to obtain a credit card, and the Trial Court should not have dismissed the Complaint for the lack of a signed agreement. We reverse the Trial Court and reinstate the case and remand for further proceedings.”
Unless and until a case is brought before the Tennessee Court SPECIFICALLY citing the TILA definition of credit cards being OPEN ENDED (IE without a specific term) as a SOL defense to the 6 year Tn. SOL there will be no resolution of the issue in Tennessee. Ohio went through the same process years ago and the case law reflects this. The issue is NOT the validity of the contract per se, but rather the definition of a contract having to have a specific (closed end) term.
Here are some links from my website that addressed this issue years ago BEFORE Creditboards was first started and before there were separate forums for lawsuits. I and "Breeze" were posting on Cardreports
https://whychat.me/answer.html
https://whychat.me/definst.html
https://whychat.me/pinklady.html
Edited October 10 by Why Chat