82,891
edits
Discharge-for-value defense: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 13: | Line 13: | ||
In that case, say a debtor owes a creditor £100, and then pays such a payment, again, sensible practice and custom would be to allow the creditor to treat that amount as satisfying that debt. This is not, really, a defense to an action in restitution so much as the operation of basic principles of [[set-off]]. It would be perverse indeed, and frivolous, for a debtor to try to claw back funds it was going to have to pay in the next week or so anyway. | In that case, say a debtor owes a creditor £100, and then pays such a payment, again, sensible practice and custom would be to allow the creditor to treat that amount as satisfying that debt. This is not, really, a defense to an action in restitution so much as the operation of basic principles of [[set-off]]. It would be perverse indeed, and frivolous, for a debtor to try to claw back funds it was going to have to pay in the next week or so anyway. | ||
This is quite different to the scenario where the [[creditor]] and [[debtor]] have an agreed [[term loan]] payable in | This is quite different to the scenario where the [[creditor]] and [[debtor]] have an agreed [[term loan]] payable in, say, 25 years. You know, like a mortgage. Often it will be a condition of the mortgage that the borrower’s salary is paid into an account at the same bank. If the discharge-for-value defense operates as interprested in {{casenote|Citigroup|Brigade Capital Management}}, the bank could apply the borrower’s total salary in retirement of the principal on the loan, notwithstanding the principal amortisation schedule in the mortgage loan. That is plainly potty. The lender is being ''compensated'' for taking a 25-year risk. Here, a mistaken payment after a month destroys the value of that term funding, and will in the short term provide the borrower with a severe [[Cashflow insolvency|cash-flow problem]], in that ''it won’t have any cash at all''. | ||
I bet Citi wished they were English. | In any case, I bet Citi wished they were English. | ||
{{sa}} | {{sa}} | ||
*[[Restitution]] | *[[Restitution]] | ||