Current State of Credit Card Industry in America Essay

Current State of Credit Card Industry in America - Essay Example This essay offers a thorough analysis of the state of the credit card market in the United states. Since the early eighties, the credit card industry in America have been controlled by the banking and financial associations, namely VISA and Master Card International. Over the years, several merchants have entered the credit markets and have strategically focused on expanding their market share which led to the flooding of credit cards in the US market. Looking at the rapid expansion of the credit card market; there are ominous signs for default in card payments which is the next most likely risk in the US economy after the mortgage crisis. This is due to the fact that the customers repayment capability of the credit card customers have declined after the economic crisis due to loss of jobs, fall of income, foreclosure of their homes, etc. The credit card risk in USA has serious consequences for the credit companies, financial sector and the economy of US. The payment default of the customers would result in the loss of return on investments for the banks and credit card companies. The personal finance schemes would prove to be a failure and the credit card companies would loose huge amounts lent in the US market. This loss would affect the liquidity of the companies and the investors would loose confidence on the company’s performance. The market information on the declining performance of the companies would result in erosion of shareholder’s wealth and the share prices in the market would fall. The overall decline in performance of the credit card industry would affect the market performance and the market index would plunge once more after the global financial crisis (Jickling 88). Proposed Solution The solutions to overcome the next most likely risk in the credit card markets of US have been proposed as follows. The increase in the credit card market risk is due to the intention of the market players to squeeze the borrowers to the fullest and restore their profit margins after receiving a setback from the losses of the mortgage market. The proposed solution includes intervention of the government to cut back the rising interest rates and the deceptive tactics employed by the credit card issues in charging the customers with more amount of repayment. Already the income level of the customers has lowered and a further rise in interest of the credit card companies would extract the entire liquidity from the economy and would raise the subsequent risk of credit card default . Thus government regulations on stabilization of the interest rates and reduction of the hidden costs would help to maintain a position of equilibrium in the credit card market. Secondly, the tightening of the eligibility criteria for credit cards is another solution proposed to avoid the future consequences. The credit cards in the US markets should be issued to worthy borrowers by estimating their income level and repayment capability. Customers like the students who have limitations in repaying the borrowed amounts should not be flooded with credit cards. These policies of the credit card companies are likely to resolve the situation of a likely future crisis in the credit card industry. Consequences of what happens if change is not made The future consequences are grave if changes in the credit card policies and the interest rates are implemented by the market players. The customers who have been facing a constraint in liquidity level would use the credit cards as their last re sort. If the ever rising interests rates initially from 10% to 15% and then to 20% in the subsequent stages are not cut back, this will increase the

Sale of Goods Act 1979 sections 20A & 20B - Passing of Property & Risk Essay

Sale of Goods Act 1979 sections 20A & 20B - Passing of Property & Risk - Essay Example Section 20A is applicable to Contracts of sale where there is a â€Å"specified quantity of unascertained goods.† Section 20B was enacted to supplement the lacuna created by section 20A where there has been deemed consent by the buyer as a co-owner of goods from the bulk and the protection of liquidators from any action in case of insolvency. It means that an act done under Section 20A by one of the co-owners (buyers) binds the other but in case of the seller’s insolvency before passing of property paid for, the buyer is protected. Therefore, the researcher concludes that the legislature never introduced any form of injustice to replace another by enacting Sections 20A and 20B but they cured the mischief in law and strengthened the justice system that could have created endless litigations due to uncertainty of goods, undefined deemed consent and the insolvency of the seller where property had not passed to the buyer. Analysis Sections 20A and 20B Section 20A of the Sal e of Goods Act as amended specifically deals with contracts where the parties traded in â€Å"specified quantity of unascertained goods† in the bulk and gives legal parameters to the effect that property and risk in goods is deemed to have passed upon ascertainment as per the Avory J in Healey v Howlett & Sons (1917). This can either be by identification of goods by the buyer, appropriation by the seller, abatement and or severance of the goods in the bulk by the buyer. In this vein, particular conditions should be fulfilled which includes; that such goods for sale or a sample from the bulk should be clearly identified as forming part of the contract or by any other subsequent contract by parties to that agreement (Burns, 1996, P.268). Secondly, there should be consideration for those goods forming wholly or part of the contract according to Burns, (1996, P.268) and also upheld by the Court in Cohen v Roche (1927). It is an exception to the old rule of thumb that goods pass u pon delivery and payment (Ward (RV) Ltd v Bignall,1967, P.545). In this circumstance, it’s upon ascertainment. Where upon the above conditions are satisfied, property and risk is premafacie passed onto the buyer for those ascertained goods in the bulk as per the Court in Pignataro v Gilroy & Sons (1919) involving the sale of unascertained rice2. The only exception is where there is an agreement to the contrally between the contracting parties (The Sale of Goods Act, 1795, S.20A (2)) or if there are special factors forming part of the essential terms of the contract (Nicole, 1979, P.143). Property further passes in unascertained goods by the buyer’s approval of goods produced by the seller before delivery but the seller should notify the buyer of that production (Wilkins v Bromhead, 1844). This thus means that there has been appropriation of goods hence passing of property and risk (Noblett v Hopkinson, 1905). Furthermore, part payment for the goods being ascertained is in the circumstance treated as consideration and therefore makes the buyer owner of the goods. Property is thus deemed to have passed according to Hendy Lenox Ltd v Grahame Puttick Ltd (1984). However, the terms of the contract must be fulfilled failure of which negatives the passing of property as was the case in Carlos Federspiel & Co SA v Charles Twigg & Co Ltd (1957) involving the sale of bicycles which didn’t pass until they had passed the ship rail. Therefore, sections 20A and 20B were not