18 March 2011

Of course banks want to lend money!

A rare case of a customer successfully suing a bank for failure to advance a loan! It is sometimes claimed that a person who does not get a loan suffers no loss because he avoids liability to repay the loan.
In Essentially Different Ltd v Bank of Scotland PLC [1] the judge dismissed a rather desperate claim by the bank that there was a condition precedent that everyone had forgotten to put in the facility documents. But the interesting part is that he went on to hold that the bank’s breach of contract caused the loss of an opportunity to pursue a project, so that the bank could be liable in damages for that loss. In a Shakespearian turn of phrase, Burton J. held that failure to supply the loan "really knocked the stuffing out of" the project. Whether the project was in fact valuable was left to another day, but clearly banks cannot withhold loans with impunity.

No comments:

Post a comment

enter your comment or greeting