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3 Cards in this Set
- Front
- Back
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What is a loan? Why are banks active in the secondary market?
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An intangible property right - a chose in action. 1. Credit needed no time to set up a syndicated loan agreement bank will need to realise some of its assets- necessary liquidity 2. banks have a duty to their shareholders- loan not performing or it is not economical to keep it on the books. Over exposure- diversification of port (improves attractiveness to other investors)
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What is novation?
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Annulment of contract between borrower and lender- new contract made with new lender and existing borrower- direct nexus- borrower consent needed- problem for confidentiality of port to banks. Supported by consideration- void if not present
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What is assignment?
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Where LA permits- LMA standard t&c permit this method- often consent needed- can be withheld (Hendry v Chartsearch). If LA prohibits assig. any purported assig. void against debtor. (Linden Gardens v Lenesta) Assig only by holder of ben. not burden (Tolhurst v Assoc Portland Cement Manufacturers)
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