Q&As

If an ‘overdraft’ is stated to be repayable on demand, but includes either events of default or a scheduled termination date (or both) in the documentation, will this prejudice the on demand nature of the facility?

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Produced in partnership with Richard Hanke of 3 Verulam Buildings (3VB)
Published on LexisPSL on 08/02/2017

The following Banking & Finance Q&A Produced in partnership with Richard Hanke of 3 Verulam Buildings (3VB) provides comprehensive and up to date legal information covering:

  • If an ‘overdraft’ is stated to be repayable on demand, but includes either events of default or a scheduled termination date (or both) in the documentation, will this prejudice the on demand nature of the facility?

The effect of specifying events of default or a scheduled termination date in a facility that is otherwise stated to be repayable on demand will depend upon the precise language used. None of these terms has an automatic or invariable effect upon a loan facility.

Where a facility includes reference to being both repayable on demand and upon a scheduled termination date it is possible that the facility is repayable in one of two situations:

  1. only upon the specified termination date, or

  2. when demanded by the lender and, in any event, by the termination date

Facilities containing both of these terms have been considered in a number of authorities. In Titford Property Co Ltd v Cannon Street Acceptances (unreported, 22 May 1975), Goff J concluded that the reference to a fixed term and

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