Lending Money? It Pays to Invest in a Professionally Drafted Agreement

4th July 2022 By

When lending money to friends, acquaintances or anyone else, the terms on which sums are advanced may be entirely clear to you in your own mind. However, as a High Court ruling showed, the absence of a professionally drafted loan agreement is a positive invitation to subsequent dispute.

The case concerned a couple who agreed to advance £50,000 in order to assist friends whose business was encountering financial difficulties. When the friends failed to repay the money, the couple issued a statutory demand against them. The friends, however, argued that the loan had not been made to them personally but to a company which was by then in administration.

The loan agreement, which was not the work of a professional, was in the form of a private letter and stated that the money was repayable when the company had the ability to do so or at a requested date. A number of emails were sent and received which the friends cited in support of their case. Following a hearing, however, a judge found that the friends, not the company, were the borrowers and refused to set aside the statutory demand.

Challenging that outcome, the friends pointed out that the money was paid into the company’s account. They said that references to the company in the loan agreement indicated that the company was the borrower. In reliance on the email traffic, they contended that the loan agreement did not in any event reflect all sides’ true intention that the company should have the benefit of the loan.

In dismissing the appeal, however, the Court found that the loan agreement was as clear as it possibly could be that the money was being advanced to the friends personally. There was nothing in the email correspondence to undermine the conclusion that the loan agreement was a self-contained and complete contract and that the money was repayable by the friends on demand.

Source: Concious

Latest News

Relationship Status Put Under Spotlight in Divorce Case

26th February, 2024 By

Divorce proceedings are rarely cut and dry, especially where the passage of time adds complexity to matters. This was certainly so in a recent case that required a Family Court judge to rule on the validity of a decree nisi. The case centred on the divorce proceedings of a couple in their fifties and focused on a decree nisi that had been pronounced in 2012, following an application by the husband. Now seeking to finalise the divorce with a decree absolute, the husband asserted that the decree nisi had been properly...

Will Execution – Remote Witnessing Legislation Expires

22nd February, 2024 By

A legal amendment that was made during the COVID-19 pandemic allowing the witnessing of wills to take place via videoconferencing has officially expired. As of 31 January 2024, the Wills Act 1837 (Electronic Communications) (Amendment) (Coronavirus) Order 2020 is no longer active. It was introduced in response to the pandemic, as a means of facilitating the valid execution of wills via remote witnessing. The Order applied to wills made between 31 January 2020 and 31 January 2022, but was later extended to 31 January 2024. Section 9 of the Wills Act...

Psychotherapy Condition Leads to Contact Order Appeal

20th February, 2024 By

Wherever possible, the courts will do what they can to support contact between parents and children but, in some instances, that contact comes with conditions attached. The nature of such conditions was the cause of contention in recent appeal proceedings brought by the father of two young boys. The man appealed against a High Court order that allowed for contact periods with his children, which would progress from supervised to unsupervised and increase in length but were dependent upon him engaging in psychotherapy. This condition had been imposed following a...

Beware of Builders Offering Cut-Price Work – Court of Appeal Cautionary Tale

16th February, 2024 By

Every householder should understand the dire risks involved in opening their doors to those promising to carry out cut-price building work. A Court of Appeal decision provided distressing examples of almost the worst that can happen. A householder approaching retirement age was taken in by a workman who knocked on his door, offering to paint the front of his home for £1,000. He was introduced to another man – the offender – whom the workman described as his business partner. The pair proceeded, over a period of months, to carry...