Financial Services and Markets Bill - continued        House of Lords
PART II, REGULATED AND PROHIBITED ACTIVITIES - continued
Enforceability of agreements - continued

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Agreements made through unauthorised persons.     25. - (1) An agreement made by an authorised person ("the provider")-
 
 
    (a) in the course of carrying on a regulated activity (not in contravention of the general prohibition), but
 
    (b) in consequence of something said or done by another person ("the third party") in the course of a regulated activity carried on by the third party in contravention of the general prohibition,
  is unenforceable against the other party ("the purchaser").
 
      (2) The purchaser is entitled to recover-
 
 
    (a) any money or other property paid or transferred by him under the agreement; and
 
    (b) compensation for any loss sustained by him as a result of having parted with it.
      (3) "Agreement" means an agreement-
 
 
    (a) made after this section comes into force; and
 
    (b) the making or performance of which constitutes, or is part of, the regulated activity in question carried on by the provider.
      (4) This section does not apply if the regulated activity is deposit-taking.
 
Agreements made unenforceable by section 24 or 25.     26. - (1) This section applies to an agreement which is unenforceable because of section 24 or 25.
 
      (2) The amount of compensation recoverable as a result of that section is-
 
 
    (a) the amount agreed by the parties; or
 
    (b) on the application of either party, the amount determined by the court.
      (3) If the court is satisfied that the enforcement conditions are met, it may allow-
 
 
    (a) the agreement to be enforced; or
 
    (b) money and property paid or transferred under the agreement to be retained.
      (4) The enforcement conditions are that it is just and equitable for the agreement to be enforced or (as the case may be) for the money or property paid or transferred under the agreement to be retained and-
 
 
    (a) in a section 24 case, that the person carrying on the regulated activity concerned reasonably believed that he was not contravening the general prohibition by making the agreement; or
 
    (b) in a section 25 case, that the provider did not know that the third party was (in carrying on the regulated activity) contravening the general prohibition.
      (5) If the purchaser-
 
 
    (a) elects not to perform the agreement, or
 
    (b) as a result of this section, recovers money paid or other property transferred by him under the agreement,
  he must repay any money and return any other property received by him under the agreement.
 
      (6) If property transferred under the agreement has passed to a third party, a reference in section 24 or 25 or this section to that property is to be read as a reference to its value at the time of its transfer under the agreement.
 
      (7) The commission of an authorisation offence does not make the agreement concerned illegal or invalid to any greater extent than is provided by section 24 or 25.
 
Deposit-taking in breach of general prohibition.     27. - (1) This section applies to an agreement between a person ("the depositor") and another person ("the deposit-taker") in the course of carrying on by the deposit-taker of deposit-taking in contravention of the general prohibition.
 
      (2) If the depositor is not entitled under the agreement to recover without delay any money deposited by him, he may apply to the court for an order directing the deposit-taker to return the money to him.
 
      (3) The court need not make such an order if it is satisfied that-
 
 
    (a) it would not be just and equitable for the money deposited to be returned; and
 
    (b) the deposit-taker reasonably believed that he was not contravening the general prohibition by making the agreement.
      (4) "Agreement" means an agreement-
 
 
    (a) made after this section comes into force; and
 
    (b) the making or performance of which constitutes, or is part of, deposit-taking.
      (5) "Court" means-
 
 
    (a) the High Court, or
 
    (b) in Scotland, the Court of Session.
Enforceability of agreements resulting from unlawful communications.     28. - (1) In this section-
 
 
    "unlawful communication" means a communication in relation to which there has been a contravention of section 19(1); and
 
    "controlled agreement" means an agreement the making or performance of which by either party constitutes a controlled activity for the purposes of that section.
      (2) If in consequence of an unlawful communication a person enters as a customer into a controlled agreement, it is unenforceable against him and he is entitled to recover-
 
 
    (a) any money or other property paid or transferred by him under the agreement; and
 
    (b) compensation for any loss sustained by him as a result of having parted with it.
      (3) If in consequence of an unlawful communication a person exercises any rights conferred by an investment, no obligation to which he is subject as a result of exercising them is enforceable against him and he is entitled to recover-
 
 
    (a) any money or other property paid or transferred by him under the obligation; and
 
    (b) compensation for any loss sustained by him as a result of having parted with it.
      (4) But the court may allow-
 
 
    (a) the agreement or obligation to be enforced, or
 
    (b) money or property paid or transferred under the agreement or obligation to be retained,
  if it is satisfied that the enforcement conditions are met.
 
      (5) The enforcement conditions are that it is just and equitable for the agreement or obligation to be enforced or (as the case may be) for the money or property paid or transferred under the agreement to be retained and-
 
 
    (a) if the applicant made the unlawful communication, that he reasonably believed that he was not making such a communication; or
 
    (b) if the applicant did not make the unlawful communication, that he did not know that the agreement was entered into in consequence of such a communication.
      (6) "Applicant" means the person seeking to enforce the agreement or obligation or retain the money or property paid or transferred.
 
      (7) Any reference to making a communication includes causing a communication to be made.
 
      (8) The amount of compensation recoverable as a result of subsection (2) or (3) is-
 
 
    (a) the amount agreed between the parties; or
 
    (b) on the application of either party, the amount determined by the court.
      (9) If a person elects not to perform an agreement or an obligation which (by virtue of subsection (2) or (3)) is unenforceable against him, he must repay any money and return any other property received by him under the agreement.
 
      (10) If (by virtue of subsection (2) or (3)) a person recovers money paid or property transferred by him under an agreement or obligation, he must repay any money and return any other property received by him as a result of exercising the rights in question.
 
      (11) If any property required to be returned under this section has passed to a third party, references to that property are to be read as references to its value at the time of its receipt by the person required to return it.
 
 
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