Federal Deposit Insurance Corporation [as Receiver for Community Banks] v. Yale Fisher, 2013CO5 (January 22, 2013)

There is an old saying, “Banks will only lend money to people who don’t need a loan.” Actually, banks normally off-set the risk of non-payment by adding a 36% default interest rate. But in this case, the original agreement did not include 36% default interest. A series of later modifications added a 36% default rate, but without noting it as a changed term. That seemed to make the rate ambiguous. The Supreme Court disagreed, finding the later modifications unambiguously included the 36% rate. The Credit Agreement Statute of Frauds, CRS 38-10-124, allows for extrinsic evidence to be considered to resolve ambiguous credit agreements. Here, extrinsic evidence suggested that the 36% rate was only added later as a computer error. However, as the contract was unambiguous, the statute didn’t apply and the evidence could not be considered. The borrower owed 36% on the defaulted amount.

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1 Comment

Filed under Contracts, Evidence

One response to “Federal Deposit Insurance Corporation [as Receiver for Community Banks] v. Yale Fisher, 2013CO5 (January 22, 2013)

  1. The Colorado Bar Association is offering a CLE event to discuss the Colorado Credit Agreement Statute of Frauds on February 20, 2013: http://www.cobar.org/cle/item.cfm?eventid=BL022013L

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