- Bank owes no general duty of skill and care after expiry of loan agreement (Morley v RBS)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: The Court of Appeal dismissed Morley’s appeal, rejecting his claim for damages against Royal Bank of Scotland (RBS) for alleged breach of duty and alleged intimidation and economic duress. Morley alleged RBS had breached its duty of reasonable skill and care in negotiating a consensual resolution where a £75m loan had expired which Morley was unable to repay in full. The Court of Appeal held that RBS owed no such duty and its only duty was the limited duty owed as mortgagee, which had not been breached. Moreover, the Court of Appeal rejected Morley’s claim that he could set aside the agreement which had been reached with RBS on grounds of intimidation and duress as Morley could not prove coercion. The case is a reminder of the difficulty of establishing claims of economic duress in commercial contexts and emphasises the limited scope of a bank’s duty once the lending contract has come to an end. Written by Paul Sinclair QC, barrister, at Fountain Court Chambers.
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