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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3497
Experience:  Solicitors 2 years plus PQE
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I signed a business loan agreement at the time the documents

Customer Question

I signed a business loan agreement at the time the documents were presented to me. I had agreed the teams beforehand with the loan arranger. The signed documents didn't relate to the terms we agreed. Due to the lateness of the documents being produced my solicitor and I didn't have time to examine and digest their content. Can we legal enforce the terms of our original agreement.
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Alex J. :

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you.
What are the terms you are looking to enforce? How do they differ from the documents?

JACUSTOMER-l118h3wn- :

The terms are about early settlement. I agreed with finance arranger that there were to be no early repayment penalties. When loan documents were presented they stated redemption could only be on paid on loan anniversary.

JACUSTOMER-l118h3wn- :

We are 5 months into the loan and want to settle. They are now trying to claim 12 months interest.

Alex J. :

Hi, Thank you. Can you give me the exact wording? This is a pretty fundamental term - have you made a complaint to your solicitor?

JACUSTOMER-l118h3wn- :

I intend to but need to try resolve this first.

JACUSTOMER-l118h3wn- :

Derek,



‎1. There are no exit fees.



2. As far as the PG's are concerned, they are for 10% of the loan exposure. Once we have RBS / Lombard on board we will expire them entirely - so that may come much sooner than 6 months. I can't commit to that in writing though (even though I just have!)



Also, you'll note that the covenant of Biocow Ltd is NOT included ‎here.



Regards,



Jonathan

Alex J. :

Hi, Thank you. The problem is you took advice and this is a business loan so you are bound by what you sign.

Alex J. :

Really they can only impose early repayment fees if these are expressly in the agreement. Clearly they cannot charge 12 months - because even with the mistake you can terminate on a loan anniversary.

JACUSTOMER-l118h3wn- :

Last was from Loan arranger

JACUSTOMER-l118h3wn- :

Loan agreemnet states

Alex J. :

If you are 5 months in - then there are 7 months until the anniversary

Alex J. :

so at most surely they can only charge 7 months?

Alex J. :

The loan agreement details early repayment charges?

JACUSTOMER-l118h3wn- :

the first 6 months were defered

Alex J. :

Do you have anything in writing to the bank manager that mentions no early repayment charges?

JACUSTOMER-l118h3wn- :

This was my email to him

JACUSTOMER-l118h3wn- :

Jonathan



I will of course endeavour to read through these later. Before I do there are 2 things I need confirming as we have already agreed beforehand.



· There are no breakage costs throughout life of loans


· The personal guarantees are in place for a defined period of time (6 months)

Alex J. :

Hi, Thank you. What is the value of the loan? Is it less than £2million?

JACUSTOMER-l118h3wn- :

The loan arranger is an agent of the loan provider and a syndicate member

JACUSTOMER-l118h3wn- :

£1.625m

Alex J. :

Thank you. So these are terms you agreed with the loan arranger (the broker)?

JACUSTOMER-l118h3wn- :

yes

Alex J. :

Thank you. And what is the value of the 12 months interest being claimed?

JACUSTOMER-l118h3wn- :

£185405.43

Alex J. :

I am sorry to say I cannot see how the bank are at fault here:

Alex J. :

1. They provided the transaction at arms length;

Alex J. :

2. You are business to business;

Alex J. :

3. They clearly were not made aware of your needs.

Alex J. :

Really I can only see that you have to pay the interest and sue the broker for negligence

JACUSTOMER-l118h3wn- :

I there any redress with our solicitor. They were aware of our needs and allowed documents to be signed

Alex J. :

Once you have paid the interest you have a liquidated loss that can be easily proven.

Alex J. :

The solicitor will be liable for negligence if they just failed to follow your instructions. Who instructed them? The company or you personally?

JACUSTOMER-l118h3wn- :

We did and copied them in on the request for no breakage chargers. They received loan documents and put them in front of us for signing.

Alex J. :

At no point did they expressly say to you "these documents contain breakage charges"?

JACUSTOMER-l118h3wn- :

Never

Alex J. :

I think you have grounds for a negligence claim. Under the Supply of Goods and Services Act 1982 S.13 the contract claim is an obligation to provide the claim with reasonable care and skill.

Alex J. :

What I recommend is do not make any allegations use your advisors to find the best way to wind down the loan. In the mean time try and make a written note of the signing meeting - everything you can remember being said.

Alex J. :

Once you have wound down the loan, go and get another solicitor and make a complaint to the solicitor and broker and see what they propose doing about it. The Solicitors Regulation Authority requires them to initially deal with and respond to your complaint.

Alex J. :

Just to confirm at no point did you have any contact with the bank directly? This was all done through the broker?

JACUSTOMER-l118h3wn- :

none

Alex J. :

Hi, Thank you. I think for that reason a claim against the bank is going to be very difficult.

JACUSTOMER-l118h3wn- :

ok thank you

Alex J. :

No problem - I wish you the best of luck. Please do not hesitate to contact me if I can assist any further. Kind regards AJ

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