Article

Note: To finance the purchase of 10,000 metric tons of rice from India and its transport and sale to Sierra Leone, a UK businessman, Mr. Mackie-Conteh, borrowed UK£50,000 from Mr. Kinane at a rate of 100% interest with the entire sum payable 120 days from the date of the transaction. It was alleged that Borrower and his spouse agreed to a lien on their house to secure the debt.

The funds were used to obtain issuance of a commercial letter of credit by the First Merchant Bank of Cyprus. Although the credit was amended, the intended beneficiary rejected the credit and the transaction was not consummated. Borrower, however, failed to repay the loan or the interest. Lender then brought this action against the Borrower and his trading company to recover the amount due on the loan and to enforce the lien on the realty.

At trial, the Chancery Division, Kallipetis, QC, found for the Lender. The court did not credit Borrower's claim that many of the documents presented in evidence were forged. Although noting that the 100% interest was harsh, the court observed that the evidence suggested that the Borrower believed that he was sure to make a large sum on the transaction and could easily adhere to the terms.

[JEB/rdhf]

COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE

The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.