Template:Simplecontract

“Simple contract” is not defined, but the context of a Limitation Act puts it in contrast to:

• Insurance contracts: payment claims under insurance contracts — perhaps not simple because of the duty of utmost good faith implied in them — who knows? —
• Contract of loans: any “contract of loan” which:

(a) does not provide for repayment of the debt on or before a fixed or determinable date; and

(b) does not effectively (whether or not it purports to do so) make the obligation to repay the debt conditional on a demand for repayment made by or on behalf of the creditor or on any other matter;

except where in connection with taking the loan the debtor enters into any collateral obligation to pay the amount of the debt or any part of it (as, for example, by delivering a promissory note as security for the debt) on terms which would exclude the application of this section to the contract of loan if they applied directly to repayment of the debt.

Now for a short piece of text this is bloody hard to decipher. There are no explanatory notes to the Limitation Act 1980 — in the good old days, you were just meant to figure it out — but for help we do have that Law Commission bunker buster which says “section 6 does not apply where the debtor enters into a collateral obligation to pay the amount of the debt or any part of it on a fixed or determinable date or conditional on a demand for repayment (or other condition).” So if the promissory note itself is a demand loan, but it is pledged as collateral for another debt which isn’t, then it counts as having a payment date. That's the best I can do.

“Contract of loan”? I think we can safely assume this applies to any monetary transaction having that effect regardless of form, the handing over of money instantly creating a liability as it does — so including deposits, debt securities and so on. But what of the loan of property, the transfer of which doesn’t confer title? If I lend you my car and forget to ask you for it back, does it become yours after six years? No, because you never own it in the first place. But my ability to sue you for rental income on it might.

And what about things that we call loans, but which economically don’t resemble loans? Stock loans for example? here title is automatically transferred, and there is no obligation to return, absent a demand. It could seem odd if these would suddenly by extinguished if undemanded after six years. On the other hand, liabilities may arise under a stock loan contract — to manufacture a dividend for example — which are payable on a fixed or determinable date. are these not time barred either, simply because the stock loan repayment itself is time barred?