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Ask JGM Your Own Question

JGM, Solicitor
Category: Scots Law
Satisfied Customers: 9973
Experience:  30 years as a practising solicitor.
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I have another question-Bank Error- took out loan from Bank

Customer Question

I have another question-Bank Error, took out loan from Bank on a 15 years term loan with 3 years interest only and then 12 years capital repayment to repay the loan at 144 payments of x amount, after having paid the interest for 3 years, the bank wants me to make higher payments of y amount ? they admit they made a mistake, a clause 4.2 says 'All notifications, determinations and calculations given or made by the Bank will be binding except in case of manifest error ' the difference is huge? they forgot to charge me interest on the capital amount, are they right as I accepted in good faith ? and it's supposed to be a binding contract.

Submitted: 3 years ago.
Category: Scots Law
Expert:  JGM replied 3 years ago.
Thank you for your question.

What exactly is the mistake the bank has admitted to?
Customer: replied 3 years ago.
The bank has admitted it made an error by putting in the wrong amount for repayment of loan In the facility letter
Expert:  JGM replied 3 years ago.
So did they lend the wrong amount? You'll have to explain in detail.
Customer: replied 3 years ago.
They lend right amount. They got repayments wrong
Term loan letter ( facility letter) says ' repay loan by 144 payments of
X amount. However when you multiply 144 times X equals the principal
amount , instead of calculating the repayments over 12 years they calculated over 15 years. They admit to this and accept they have made
an error and have apologised. But they insist they have right to rectify
this mistake coz of clause 4.2.
Expert:  JGM replied 3 years ago.
Nonsense. They have made a manifest error. Three years worth. If they won't negotiate a solution with you report it to the Financial service ombudsman.

Customer: replied 3 years ago.
Thanks. I will get back to you tomorrow.
Customer: replied 3 years ago.
clause 4.2 says .....except in case of manifest error
Does this mean
1) if bank makes manifest error then nothing is binding which
mean the contract is null and void in that case what happens?

2) it allows the bank to rectify the error

Or should I get Counsel's opinion before going to FOS

if I have to email you a couple of pages of the contract how can
I do this ?
Expert:  JGM replied 3 years ago.
It means that the bank's calculation is final unless they have made a manifest error. It doesn't make the contract null and void. It just means that the bank can't rely on their calculation in assessing what you owe.

If you need to let me see the contract you can [email protected] to forward it to me. You should not need to take Counsel's Opinion.
Customer: replied 3 years ago.
Just to make sure i understand you correctly, you said the Bank has made a manifest error by mis-calculating the repayments on facility letter. If that is the case will this allow the bank to re-calculate the repayments to rectify that error?
I should point out that the payments in the original facility letter are lower than what the bank are now wanting me to pay. Therefore it is in my interests that the calculations in the facility letter are binding. Should I technically be arguing that these mis-calculations are NOT a manifest error and hence binding??
Expert:  JGM replied 3 years ago.
No, my point is that the bank's current calculation is not in accordance with the facility letter therefore that is manifest error. You are entitled to rely on the original facility letter in demonstrating that the bank's current stance is manifest error.
Customer: replied 3 years ago.
Does this mean the bank can't change the calculation and has to stick
to terms of the facility letter, in other words clause 4.2 does NOT allow them to rectify their mistake
Expert:  JGM replied 3 years ago.
That would be my argument, yes.
Customer: replied 3 years ago.
I will come back to you tomorrow in case I want forward to some pages
of the contract
Expert:  JGM replied 3 years ago.
Customer: replied 3 years ago.

Hi. Before I come back to you tomorrow
Can you tell me what ' manifest error' means in this
context and show or give some example. Thanks
Expert:  JGM replied 3 years ago.
It means what it says.

The dictionary meaning is:

clearly revealed to the mind or the senses or judgment
SYNONYMS: apparent, unmistakable, patent, plain, evident
◇ manifest error"
Customer: replied 3 years ago.

Do the mis-calculation amount to a manifest error?

if YES, does this allow the Bank to rectify that error by re-calculating repayments and serving a new facility letter ?

If NO, does the mis-calculation on the facility letter amount to material fact which is binding

If YES what steps should we take ?

If NO, where does this leave me?


is it possible to get another opinion from a member of the panel?

Expert:  JGM replied 3 years ago.
In my opinion the miscalculation is a manifest error therefore the bank can't cure this by changing the contract unilaterally.

The steps you take are that you insist that the bank stick to the agreement and if they refuse to do so you go to the ombudsman.

If you want a second opinion on this site you can accept my answer and post your question again under UK law where there are other contract and banking experts available.
Customer: replied 3 years ago.

I seem to be getting confused, and your answer seems contradictory, if we accept this is a manifest error then the clause comes into effect and allows the bank to rectify the error

this error was not noticed for 3 years and it is not obvious so we are trying to argue this is not a 'manifest error'

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