Essay on Finance Law Example | Topics and Well Written Essays - 1000 words

On Finance Law - Essay Example As in the case of Salomon Vs Salomon, the court held that the two were separate entities. Walter therefore has the fiduciary duty to negotiate on behalf of the company while putting the interest of the company first. 1b. (i) According to the signed document that constituted the contract, the interest rate on the loan is 8%. Eight percent is therefore the appropriate interest rate that should be legally charged on SE Pty Ltd. Charging any rate lower or higher than the agreed rate as per the contract constitute a breach of contract and is therefore unacceptable and illegal. The company can as a result sue the bank for breaching the term of the contract and demand damages or refund for any loss that might have been attributed to the breach (Keenan & Riches, 2007). SE Pty Ltd can thus legally insist that the interest be calculated at 8% rate. (II) There would be legal ground for the company to obtain compensation if it could not insist on the loan calculation at 8%. In the legal suit aga inst the bank, the company would contend that the calculation of interest at 11% interest made them incur additional cost and this hindered their operations. The bank would then be faced with the duty of determining the amount of compensation to award for the losses caused to the company. Moreover, SE Pty Ltd could argue that a cardinal term of the contract was breached whose impact can be determined financially. 1c. According to the banking law, the bank has a right to combine accounts without permission of the customer so long as the accounts are held in the same capacity. It was therefore in order for the bank to combine the loan account and current account because they all belong to the same company. In addition, the customer (SE Pty Ltd) owes the bank some debt. This verdict will be similar to the previous case of Garnet Vs McKewan 1872 in which the bank combined the accounts without customers permission (Hudson, 2009). On the other hand, it would be illegal for the bank to com bine the personal saving account of Walter with those of the company because the accounts belong to different owners. The saving account of Walter is completely separate from that of the company and can therefore not be combined. A similar case was in Salomon Vs Salomon in which the separate identity was ruled (Salomon, 1961). 1d. The bank promise to accept only seven installments is unenforceable as they are inconsistent with the terms of the contract signed by the parties. Despite the promise, the bank could still claim that SE Pty Ltd pays the full amount of the loan and interest charges. The promise is only admissible at the goodwill of the bank and is not; legally binding. Moreover, the promise was oral hence; it cannot bar the bank from executing the original contract agreement. Q2a. Walter cannot be forced by the bank to sell his land in Bundoora to pay the loan of $ 1 million. This is because the loan was not Walter’s personal loan but was for the company. Moreover, t he land in Bundoora is not the property of the company. The case of Salomon vs Salomon in which the separation of the property to that of the owners was determined. However, the land at Bundoora can only be sold if Walter has some financial debt to the company. The amount will however be limited to the extent of the debt Walter owes the company (Proctor, 2010). Q2b. The