Posted by Deepesh Daya | 05 April 2018 | Banking & Finance
Banks often issue “standard form” documents to customers with the conflicting direction to “please be sure to read this and ensure it is accurate and reflects your circumstances” followed by “just keep in mind that these documents are in standard form and not negotiable.”
So, when will Banks amend their documents and is it worth pouring over the fine print?
While Bank documents are often in standard form at the business banking level, Banks are still obliged to ensure that they are correct and do not impose unnecessary restraints on your business. After all, isn’t it in everyone’s best interest for your business to succeed?
If the documents are not correct or will impact your business’ ability to trade, there are ways to ease some of these restrictions and Banks will often consider amending the terms if good reason can be shown … no matter how “standard form”.
Here are some things to look for:
Cross collateralisation is a different concept however similar in many respects. Where security is granted by one entity in the group, depending on the language used it may in fact secure all debts owed by that entity to the lender. These securities are referred to as “all monies” securities. While efforts may be made to quarantine security to only the debt it is intended to secure, a cross default clause together with “all monies” security may override all efforts to quarantine debt and security granted.
I am curious to hear from others what their experiences have been in negotiating their loan and security documents with Banks. Have they been open to negotiation and kept the best interest of your business in mind?
If you have any questions, contact Deepesh Daya by email at dd@nexuslawyers.com.au or telephone +61 (2) 9016 0141 or +61 (3) 9098 0437
This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.
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