The Problem Of The Lender Essay

760 Words Oct 31st, 2015 4 Pages
This attitude of the lender creates many problems to a Borrower. A Borrower has to be vigilant at all the time so as to ensure that no situation arises which may result in any kind of suspicion to the lender. Knowingly or unknowingly he may not commit any act which may constitute a default according to the conditions of the loan agreement, for it may have disastrous consequences for him.
A Default means the occurrence of a situation when the Borrower is likely to commit default in the discharge of his financial obligation. i.e. the payment of interest or other dues or repayment of the loan amount to the lender as and when due in accordance with the terms and conditions of the loan agreement. Generally, the word “default” is not defined in the loan agreements. According to Oxford Dictionary, “default” means failure to act, failure to pay, not meet money calls, etc. However, a “default means any Event of Default or any event which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default” (UNITAR Doc.) An Event of Default is generally defined in most of the loan agreements. It is an actual or likely occurrence of any of those events set out in the “Events of Default” clause in the loan agreement. An event of default may occur in a variety of ways depending on the status of the Borrower and the purpose for which money has been borrowed.
There are two types or kinds of events of…

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