Good Faith and Fair Dealing: The K.M.C. Case, Discretionary Loans, and Demand Notes

Freedom to contract is a fundamental part of our country's trade and commerce, as is freedom not to contract. In K.M.C. Co. Inc. versus Irving Trust Co., the parties involved had entered into a demand/discretionary lending arrangement under which the lender could make loans to the borrower, but...

Full description

Saved in:
Bibliographic Details
Published in:Commercial lending review 1988-12, Vol.4 (1), p.3
Main Author: Hanson, Ronald W
Format: Article
Language:English
Subjects:
Contract law
Federal court decisions
Lending institutions
Litigation
State court decisions
Uniform Commercial Code-US
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
cited_by
cites
container_end_page
container_issue 1
container_start_page 3
container_title Commercial lending review
container_volume 4
creator Hanson, Ronald W
description Freedom to contract is a fundamental part of our country's trade and commerce, as is freedom not to contract. In K.M.C. Co. Inc. versus Irving Trust Co., the parties involved had entered into a demand/discretionary lending arrangement under which the lender could make loans to the borrower, but did not commit itself to do so. However, the court created an implied duty of good faith and completely changed the risks obligations to which the borrower and lender had agreed in their contract. The court imposed new duties on the bank and restricted its rights, without any compensation to the lender for the additional risks and duties and at no cost to the borrower. The doctrine of good faith, as interpreted by the court, is inconsistent with the definition of good faith found in the Uniform Commercial Code. This ruling has raised many questions about a lender's ability to enforce contractual rights. Several courts have subsequently rejected the K.M.C. doctrine and reimposed traditional notions of freedom of contract.
format article
fullrecord <record><control><sourceid>proquest</sourceid><recordid>TN_cdi_proquest_reports_229582034</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><sourcerecordid>7474402</sourcerecordid><originalsourceid>FETCH-LOGICAL-p524-7baf81c859c02bdbc8639100df539a6e469fd4410e7b55a10ed6ee93e61778493</originalsourceid><addsrcrecordid>eNqFj71OwzAYRT2ARCm8g9mbyPG_2VBCCyItA9krJ_5Cg0ocbDPw9oTCznTucO-R7hlaEK1lpinhF-gyxjdCiORULdDLxnuH13ZIB2zHUwq4Anscxtdb3BwAP-XbvMxxaSOscDXELkAa_GjDF669HePqtKvg_Qc7nyBeofPeHiNc_3GJmvV9Uz5k9fPmsbyrs0lQnqnW9rrotDAdoa1rOy2ZKQhxvWDGSuDS9I7zgoBqhbAznQQwDGShlOaGLdHNr3YK_uMTYtoHmHxIcU-pEfNXxv_pzPLZ8w0UHFIx</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>229541049</pqid></control><display><type>article</type><title>Good Faith and Fair Dealing: The K.M.C. Case, Discretionary Loans, and Demand Notes</title><source>ABI/INFORM Global</source><creator>Hanson, Ronald W</creator><creatorcontrib>Hanson, Ronald W</creatorcontrib><description>Freedom to contract is a fundamental part of our country's trade and commerce, as is freedom not to contract. In K.M.C. Co. Inc. versus Irving Trust Co., the parties involved had entered into a demand/discretionary lending arrangement under which the lender could make loans to the borrower, but did not commit itself to do so. However, the court created an implied duty of good faith and completely changed the risks obligations to which the borrower and lender had agreed in their contract. The court imposed new duties on the bank and restricted its rights, without any compensation to the lender for the additional risks and duties and at no cost to the borrower. The doctrine of good faith, as interpreted by the court, is inconsistent with the definition of good faith found in the Uniform Commercial Code. This ruling has raised many questions about a lender's ability to enforce contractual rights. Several courts have subsequently rejected the K.M.C. doctrine and reimposed traditional notions of freedom of contract.</description><identifier>ISSN: 0886-8204</identifier><language>eng</language><publisher>Riverwoods: CCH INCORPORATED</publisher><subject>Contract law ; Federal court decisions ; Lending institutions ; Litigation ; State court decisions ; Uniform Commercial Code-US</subject><ispartof>Commercial lending review, 1988-12, Vol.4 (1), p.3</ispartof><rights>Copyright Euromoney Institutional Investor PLC Winter 1988/1989</rights><rights>Copyright CCH INCORPORATED Dec 1988</rights><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,36062</link.rule.ids></links><search><creatorcontrib>Hanson, Ronald W</creatorcontrib><title>Good Faith and Fair Dealing: The K.M.C. Case, Discretionary Loans, and Demand Notes</title><title>Commercial lending review</title><description>Freedom to contract is a fundamental part of our country's trade and commerce, as is freedom not to contract. In K.M.C. Co. Inc. versus Irving Trust Co., the parties involved had entered into a demand/discretionary lending arrangement under which the lender could make loans to the borrower, but did not commit itself to do so. However, the court created an implied duty of good faith and completely changed the risks obligations to which the borrower and lender had agreed in their contract. The court imposed new duties on the bank and restricted its rights, without any compensation to the lender for the additional risks and duties and at no cost to the borrower. The doctrine of good faith, as interpreted by the court, is inconsistent with the definition of good faith found in the Uniform Commercial Code. This ruling has raised many questions about a lender's ability to enforce contractual rights. Several courts have subsequently rejected the K.M.C. doctrine and reimposed traditional notions of freedom of contract.</description><subject>Contract law</subject><subject>Federal court decisions</subject><subject>Lending institutions</subject><subject>Litigation</subject><subject>State court decisions</subject><subject>Uniform Commercial Code-US</subject><issn>0886-8204</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1988</creationdate><recordtype>article</recordtype><sourceid/><recordid>eNqFj71OwzAYRT2ARCm8g9mbyPG_2VBCCyItA9krJ_5Cg0ocbDPw9oTCznTucO-R7hlaEK1lpinhF-gyxjdCiORULdDLxnuH13ZIB2zHUwq4Anscxtdb3BwAP-XbvMxxaSOscDXELkAa_GjDF669HePqtKvg_Qc7nyBeofPeHiNc_3GJmvV9Uz5k9fPmsbyrs0lQnqnW9rrotDAdoa1rOy2ZKQhxvWDGSuDS9I7zgoBqhbAznQQwDGShlOaGLdHNr3YK_uMTYtoHmHxIcU-pEfNXxv_pzPLZ8w0UHFIx</recordid><startdate>19881201</startdate><enddate>19881201</enddate><creator>Hanson, Ronald W</creator><general>CCH INCORPORATED</general><scope/></search><sort><creationdate>19881201</creationdate><title>Good Faith and Fair Dealing: The K.M.C. Case, Discretionary Loans, and Demand Notes</title><author>Hanson, Ronald W</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-p524-7baf81c859c02bdbc8639100df539a6e469fd4410e7b55a10ed6ee93e61778493</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1988</creationdate><topic>Contract law</topic><topic>Federal court decisions</topic><topic>Lending institutions</topic><topic>Litigation</topic><topic>State court decisions</topic><topic>Uniform Commercial Code-US</topic><toplevel>online_resources</toplevel><creatorcontrib>Hanson, Ronald W</creatorcontrib><jtitle>Commercial lending review</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Hanson, Ronald W</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Good Faith and Fair Dealing: The K.M.C. Case, Discretionary Loans, and Demand Notes</atitle><jtitle>Commercial lending review</jtitle><date>1988-12-01</date><risdate>1988</risdate><volume>4</volume><issue>1</issue><spage>3</spage><pages>3-</pages><issn>0886-8204</issn><abstract>Freedom to contract is a fundamental part of our country's trade and commerce, as is freedom not to contract. In K.M.C. Co. Inc. versus Irving Trust Co., the parties involved had entered into a demand/discretionary lending arrangement under which the lender could make loans to the borrower, but did not commit itself to do so. However, the court created an implied duty of good faith and completely changed the risks obligations to which the borrower and lender had agreed in their contract. The court imposed new duties on the bank and restricted its rights, without any compensation to the lender for the additional risks and duties and at no cost to the borrower. The doctrine of good faith, as interpreted by the court, is inconsistent with the definition of good faith found in the Uniform Commercial Code. This ruling has raised many questions about a lender's ability to enforce contractual rights. Several courts have subsequently rejected the K.M.C. doctrine and reimposed traditional notions of freedom of contract.</abstract><cop>Riverwoods</cop><pub>CCH INCORPORATED</pub></addata></record>
fulltext fulltext
identifier ISSN: 0886-8204
ispartof Commercial lending review, 1988-12, Vol.4 (1), p.3
issn 0886-8204
language eng
recordid cdi_proquest_reports_229582034
source ABI/INFORM Global
subjects Contract law
Federal court decisions
Lending institutions
Litigation
State court decisions
Uniform Commercial Code-US
title Good Faith and Fair Dealing: The K.M.C. Case, Discretionary Loans, and Demand Notes
url http://sfxeu10.hosted.exlibrisgroup.com/loughborough?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2024-12-29T12%3A58%3A21IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Good%20Faith%20and%20Fair%20Dealing:%20The%20K.M.C.%20Case,%20Discretionary%20Loans,%20and%20Demand%20Notes&rft.jtitle=Commercial%20lending%20review&rft.au=Hanson,%20Ronald%20W&rft.date=1988-12-01&rft.volume=4&rft.issue=1&rft.spage=3&rft.pages=3-&rft.issn=0886-8204&rft_id=info:doi/&rft_dat=%3Cproquest%3E7474402%3C/proquest%3E%3Cgrp_id%3Ecdi_FETCH-LOGICAL-p524-7baf81c859c02bdbc8639100df539a6e469fd4410e7b55a10ed6ee93e61778493%3C/grp_id%3E%3Coa%3E%3C/oa%3E%3Curl%3E%3C/url%3E&rft_id=info:oai/&rft_pqid=229541049&rft_id=info:pmid/&rfr_iscdi=true