- Banker-customer contract — Remedies for lenders’ breaches — Lending and credit
This introductory chapter examines general matters of contract law that are particularly relevant to loan transactions governed by English law. It first provides an overview of the elements of a valid contract. It then considers the key principles of English contract law that shape the background necessary to understand English law governed lending documentation. First, the approach of the courts to the interpretation of contracts and the implication of terms is explained in detail. The limited scope for appeals to notions such as good faith or fairness is also emphasised. Next the approach of the courts to contractual discretions is considered in detail as loan agreements often vest significant discretion in the lenders. Strict liability and its mitigation through best or reasonable endeavours standards and force majeure clauses are also explained. The impact of the doctrine of illegality on loan transactions is considered in some detail. Finally, a discussion of enforcement and the remedies available following a breach of contract round off the discussion of the general background principles.
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