How do you spell Lenders' Liability?
The US public allows an ex-community organizer, and ex-driver of a Chrysler 300 to seize General Motors, trample stockholders rights, bond holders rights, contract rights and they hardly bleat a bah-effing-bah.
Personally I think the chosen one steps into the biggest case of lender's liability in history. What is lender's liability you ask?
A loan agreement is like any other contract. If the agreement was fraudulently induced or there was an absence of mutual consent, the agreement cannot be enforced. If the loan contract was breached, the lender can be sued if it was the breaching party.
In Siegner v. Interstate Production Credit Association of Spokane, PCA convinced the plaintiffs, two couples who operated a cattle ranch, to do business with it by making a series of promises about funding. The PCA loan officer assured the plaintiffs that PCA understood the cattle industry and knew it was cyclical and that plaintiffs could take 10 to 20 years to pay off a capital loan. PCA also induced the plaintiffs to purchase a second cattle ranch.Library Find Law.
When the time came to sign the loan papers, the plaintiffs noticed that the documents contained new provisions to which they had not agreed and that the document structured the real estate loan for only one year. The PCA loan officer assured them that these provisions were mere formalities and they had nothing to worry about. Based on the officer's assurances, the plaintiffs signed the documents.
When PCA failed to honor its oral promises and made unreasonable demands regarding the real estate loan, the plaintiffs sued. PCA defended itself based on the parol evidence rule. The plaintiffs prevailed at trial and PCA appealed. The appellate court applied the parol evidence rule and found that the oral agreements were not inconsistent with the written agreement and were the type of agreements that might have been made separately. The court found that it would have been highly unlikely for the plaintiffs to have agreed to repay the loan in a year as reflected in the loan documents; if so, the plaintiffs would have purchased the ranch knowing with virtual certainty that they would lose it, as well as other assets, at the end of one year. A one-year loan would also mean that PCA had made the loan knowing it would be required to foreclose on it in one year. As a result, there was nothing inconsistent with loan documents prepared on a yearly basis, with a separate oral agreement to renew over a long period.