A recent decision, National Asset Loan Management Limited v
Michael Barker and Others [2014] IEHC 216, confirmed
that as part of a summary judgment application, depending on the
facts, terms and conditions of lending can be incorporated and
apply to a bank / client relationship in circumstances where it is
contended those terms and conditions were never actually given to
the borrower. Although the decision relates to a bank /
client relationship, it is of broader interest in terms of the
incorporation of contractual terms generally. It also sets out a
useful summary of the summary judgment jurisdiction, which is
typically used for debt claims (which we have not reviewed for the
purposes of this article).
By way of background, the plaintiff was the national agency which
took over defaulting loans from the State’s banks. The
defendant was involved in a property investment transaction for
which money was loaned by one such bank. The defaulting loan
was transferred to the plaintiff who sought summary judgment
against the defendant for over €1.25 million.
The relevant facility letter from July 2008 offered an overdraft of
€30,000 and a loan of €957,000 continuing a prior
facility relating to the purchase of a bar. The defendant claimed
that the general terms and conditions were not notified to him and
that he had not been given a copy of the applicable terms and
conditions when the loan and overdraft facilities were initially
provided.
However, Charleton J noted that they were in fact mentioned in the
first paragraph of the Facility Letter. He referred specifically
to AIB v Galvin Developments and Others [2011] IEHC
314 in considering circumstances which determine whether
or not general terms and conditions are incorporated into a
contract. In that case, Finlay Geoghegan J had found
that the bank’s terms and conditions had not been enclosed
with the facility letters. However, she found
that:
“there is an express and clear reference to the
incorporation of those terms in the offer [letter]… which
was accepted… in writing. [The defendants] could have sought
a copy of the Terms if they so wished. They did not do so. It is a
well-established principle of contract law that terms may be
incorporated into a written agreement signed by the parties by
express reference. The failure to enclose a copy of the conditions
does not preclude their incorporation by express reference…
the agreement…included, by express reference, AIB's
General Terms and Conditions Governing Business
Lending."
The defendant also contended that the ultimate repayment of the
loan was tied to the success of the venture. In this regard, the
defendant sought to rely in particular on a memo to the effect that
the bank had agreed that there would be no repayment of capital
until the bar was sold. However, since this dated from 2009, the
court noted that it post-dated the contract. It observed that
"a written contract which incorporates all the relevant
terms and conditions is hard to quarrel with and is even more
difficult to challenge on the basis of subsequent
conduct". Ultimately, it concluded that there was nothing
in this claim by the defendant to establish a defence.
While there were a number of legal points considered in this
judgment, it confirms that terms can be incorporated by reference
even where they are not actually provided. While each case
would turn on its own facts, a failure by a plaintiff to provide
terms and conditions that are referenced in another document will
not necessarily be fatal to their incorporation in the contract
itself.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.