Loans:

In addition a loan agreement may be the source of bank action and litigation. A loan may be a personal or a business loan. The terms of the loan may give rise to a liability and this may require detailed and careful analysis to understand if a breach has occurred, the damages incurred and the recovery actions that can be taken by the lender. Consultation with a Debt Recovery and Insurance Lawyer may be greatly beneficial in this regard.

A loan agreement is a contract between a borrower and a lender which regulates the mutual promises made by each party. There are many types of loan agreements, including "facilities agreements," "revolvers," "term loans," and "working capital loans." Loan agreements are documented via a compilation of the various mutual promises made by the involved parties.

Prior to entering into a loan agreement, the "borrower" first makes representations about his affairs surrounding his character, creditworthiness, cash flow, and any collateral that he may have available to pledge as security for a loan. These representations are taken into consideration and the lender than determines under what conditions (terms), if any, they are prepared to advance money. Obtaining professional legal advice from a Debt Recovery and Insurance Lawyer may be greatly beneficial if you are implicated by liability or debt from a loan.

Loan agreements, like any contract, reflect an "offer," the "acceptance of the offer," "consideration," and can only involve situations that are "legal" (a term loan agreement involving drug sales is not "legal"). Loan agreements are documented via their commitment letters, agreements that reflect the understandings reached between the involved parties, a promissory note, and a collateral agreement (such as a mortgage or a personal guarantee). Loan agreements offered by regulated banks are different from those that are offered by finance companies in that banks receive a "banking charter" granted as a privilege and involving the "public trust."

Loan agreements are usually in written form, but there is no legal reason why a loan agreement cannot be a purely oral contract (although oral agreements are more difficult to enforce). There are various ways in which a debt can arise from a loan agreement. This may be a failure to make a repayment, failure to make interest repayments or failure to pay the principal amount outstanding by the due date. Many of these ‘Events of default’ give rise to penalties and liquidated damages.  In addition the borrower may act in a manner which causes an ‘Insolvency Event’ to occur, and this may trigger insolvency clauses within the loan agreement which allow the lender to commence bankruptcy proceedings against the borrower. Professional legal advice from a skilled Debt Recovery and Insurance Lawyer may be beneficial to ensure that you do not incur any debt or liability from a loan agreement.

In some loan agreements, the debt may be secured, and this means collateral may be provided by the borrower as well. The lender may take a second ranking mortgage over your property, take a charge (fixed or floating) over your personal assets such as your vehicles, or require a 3^rd person to act as guarantor or to provide indemnity. Sound legal advice from a skilled Debt Recovery and Insurance Lawyer may be advantageous to ensure that any loan liability is properly understood.

If you need further legal advice on your debt related matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au.

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