Greenclose v National Westminster Bank plc: Difference between revisions

Let me say that again, in case you missed it: in the eyes of the  current [[common law]] '''[[email]] does not count as an “[[electronic messaging system]]”'''.

Mr. Leach, of [[Greenclose]], was the proverbial little old lady of the law. He was also, the court found, the sophisticated owner of a successful family business running small luxury hotels around Wales. But not sophisticated enough to avoid being the wrong end of the [[interest rate swap mis-selling scandal]], wherein banks lent to unwitting merchants on condition that they hedge their interest rate risk with [[derivatives]]. In this case it was NatWest, and they required Greenclose to buy an interest rate collar for five years with an option to extend it for a further seven.

Greenclose therefore entered an extendable collar transaction under a 1992 {{isdama}} — the edition is important — which would expire on 30 December 2012 unless NatWest gave proper notice of its extension before that time.

Of course, come 2012, NatWest wanted to extend its collar — not because of any particular risk that Greenclose might default (since the start of the loan rates had headed ever lower, and still have not recovered) — but because they would make a ton of money. (Marginal note: This is what banks like to do, first and foremost.)

Error no.1 — a bit of a schoolboy error, frankly — was to have notice deadline which expired during the Christmas holidays. But that’s as may be. (In fairness, it’s not ''that'' outlandish to expect a hotel to be open in the Christmas holidays.) But  as a rule of thumb it’s best not to have your options expire at Christmas. Anyway, the learning here is this: ''Don’t set options that expire in when everyone’s likely to be out of the office.''