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There is no equivalent under the English law of [[restitution]], where an enriched lender has to return the money: {{casenote|Barclays Bank Ltd|WJ Simms}}. This darkened cranny of the common law was exposed to harsh daylight when [[Citigroup v Brigade Capital Management|Citigroup tripped over it]] while trying to reclaim half a [[yard]] they’d accidentally shelled out to some distressed debt lenders to Revlon in 2020. | There is no equivalent under the English law of [[restitution]], where an enriched lender has to return the money: {{casenote|Barclays Bank Ltd|WJ Simms}}. This darkened cranny of the common law was exposed to harsh daylight when [[Citigroup v Brigade Capital Management|Citigroup tripped over it]] while trying to reclaim half a [[yard]] they’d accidentally shelled out to some distressed debt lenders to Revlon in 2020. | ||
It seems to me — for the little that is worth; I am but a traveler in the modern lands — t hat this discharge for value defense needs to be understood where the payer has a general obligation to pay to the receiver: a trade-creditor relationship; for example. Here the receiver expects payment soon; perhaps not necessarily ''today'', but within 30 days, and this period is not so much an agreed term of finance but a practical, customary indulgence that merchants allow each other to recognise that account payments go on a cycle, in batches, and it is no enormous deal if one is not paid the instant one delivers a service. | |||
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 5 years. Here the [[borrower]] is not just paying [[interest]] on the [[loan]], but that [[Interest rate|interest rate]] is struck at a rate and spread implying a 5 year exposure. The lender is being ''compensated'' for taking a 5-year risk. Here, a mistaken payment after a month destroys the value of that term funding, and may in the short term provide the borrower with a severe [[Cashflow insolvency|cash-flow problem]]. | |||
I bet Citi wished they were English. | I bet Citi wished they were English. |