Class 10: Remedies for Borrower and Lender Breach of Loan Commitment - Feb. 12

Question 1

What happened in Lincoln National Life Insurance Co. v. NCR Corp. (1985)? (Q/TB)

Answer 1

Lender suing for breach when borrower decides to not take the loan must show breach and damages (with certainty). Where damages were mitigated by loan funds to others damages are difficult to calculate. Lenders should have commitment fees if they want to be able to sue for damages.

Question 2

What are benefit of the bargain or actual damages? (Bender)

Answer 2

Expectation damages.

Question 3

Woodbridge Place Apartments v. Washington Square Capital (1992)? (Q/TB)

Answer 3

Borrower failure to satisfy a condition (min occupancy) is not breach of contract unless there is bad faith. If a loan condition is not met, a deposit provision within the loan agreement that fails to specify whether the deposit is consideration for an option contract or to lock in an interest rate is invalid.

Question 4

What happened in Pipkin v. Thomas & Hill, Inc. (1979)? (Q)

Answer 4

If a lender breaches a contract to provide a loan, the borrower may recover as damages the additional amount required to refinance the loan at a higher interest rate. Mitigation + expectation damages.

Question 5

What happened in Great Western Bank v. LJC Development, LLC (2015)? (Q/TB)

Answer 5

If a lender breaches a contract to provide a loan, the borrower may recover lost profits as damages.