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Citigroup v Brigade Capital Management: Difference between revisions
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Citigroup v Brigade Capital Management (view source)
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One might take the court to task for being a little too literal there. Nor does the court seem to have considered what “in discharge of the debt” means, but assumes it means that, mathematically, “has the effect of discharging the debt”. One could apply a ''reductio ad absurdam'' here: ''any'' payment made by a debtor to a creditor, apropos anything, would have the effect of retiring debt. If I have a contract and, for good consideration, have borrowed money for eight years, my accidental ''factual'' repayment of it early, without legal obligation to do so — worse, my dopey ''agent’s'' — surely ''cannot'' unilaterally [[amend]] that [[contract]]. | One might take the court to task for being a little too literal there. Nor does the court seem to have considered what “in discharge of the debt” means, but assumes it means that, mathematically, “has the effect of discharging the debt”. One could apply a ''reductio ad absurdam'' here: ''any'' payment made by a debtor to a creditor, apropos anything, would have the effect of retiring debt. If I have a contract and, for good consideration, have borrowed money for eight years, my accidental ''factual'' repayment of it early, without legal obligation to do so — worse, my dopey ''agent’s'' — surely ''cannot'' unilaterally [[amend]] that [[contract]]. | ||
The finding that it can, | The finding that it can, in the JC’s (literally) unqualified view, rather mounts the pavements — ''sidewalks'', sorry — and runs down peaceable pedestrians perambulating the [[common law]] of [[contract]]. This is something which the law of [[restitution]], being really no more than a life-hack to cover the parts of commercial life that [[tort]] and [[contract]] somehow contrive to miss — really ought not to be able to do. | ||
Surely a contract, being an explicit, detailed, construction of rights and obligations between consenting parties must displace general [[common law]] principles like those of [[tort]] and [[restitution]] that the law has developed to mediate relationships between strangers. The contract ''must'' prevail. It ''cannot'' be right that an action that was neither requested, supported by consideration nor accompanied by any representation, let alone one on which the beneficiary has relied to its detriment, can unilaterally amend a contract. Nor, to our reading, does the ''Restatement'' require it to. The ''Restatement'' is silent on the matter. | Surely a contract, being an explicit, detailed, construction of rights and obligations between consenting parties must displace general [[common law]] principles like those of [[tort]] and [[restitution]] that the law has developed to mediate relationships between strangers. The contract ''must'' prevail. It ''cannot'' be right that an action that was neither requested, supported by consideration nor accompanied by any representation, let alone one on which the beneficiary has not relied to its detriment, can unilaterally amend a contract. Nor, to our reading, does the ''Restatement'' require it to. The ''Restatement'' is silent on the matter. | ||
There is a question as to whether this was a prepayment of principal per the terms of the contract. The contract allowed this, upon the Borrower delivering prior written notice to Citi, about which Citi must “promptly” notify lenders on receipt. Not only did the lenders not receive such a notification — since it wasn’t given, ''but nor did Citi''. That notice seems to be a condition precedent to prepayment under the contract, and was not delivered. Without it, Revlon would not be ''entitled'' to pay down the loan, even if it wanted to. To be sure, it is a low hurdle to cross, but Citi’s appeal team may feel it is a significant one all the same. | |||
==Redux: Citi and Revlon== | ==Redux: Citi and Revlon== | ||