83,049
edits
Discharge-for-value defense: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
||
| (2 intermediate revisions by the same user not shown) | |||
| 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 | But the court went further than that. It could find no authority to support the argument that the [[debt]] needed to be immediately ''due'': it just needed to be a bona fide ''debt'': | ||
{{quote|“In sum, the court concludes that the recipient of funds need not show that an outstanding debt was “due” when it received the funds in order to invoke the discharge-for-value defense. Instead, it is sufficient for the party invoking the defense to show that, at the time the funds were received, it was a bonafide creditor. Defendants meet that burden here ...”}} | |||
This, I submit, is on-its-face bonkers. Take 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 interpreted 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, and refuse to let the borrower have any money to pay her bills. That is plainly potty. | |||
In any case, I bet Citi wished they were English. | In any case, I bet Citi wished they were English. | ||
| Line 21: | Line 25: | ||
*{{casenote|Barclays Bank Ltd|WJ Simms}} | *{{casenote|Barclays Bank Ltd|WJ Simms}} | ||
{{ref}} | {{ref}} | ||
{{C|stupid bankers}} | |||