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Trusts and credit risk: the Quistclose trust and lenders’ risks in loan finance

Lloyd Brown

Trusts & Trustees, Volume: 29, Issue: 5, Pages: 402 - 409

Swansea University Author: Lloyd Brown

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DOI (Published version): 10.1093/tandt/ttad017

Abstract

The article evaluates the case of Barclays Bank Ltd v Quistclose Investments Ltd (1970) in the light of the lenders’ risks when providing loan finance to their commercial customers. A “risk profile” is established which identifies the main risks that may occur during the lending process. Significant...

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Published in: Trusts & Trustees
ISSN: 1363-1780 1752-2110
Published: Oxford University Press (OUP) 2023
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa63108
Abstract: The article evaluates the case of Barclays Bank Ltd v Quistclose Investments Ltd (1970) in the light of the lenders’ risks when providing loan finance to their commercial customers. A “risk profile” is established which identifies the main risks that may occur during the lending process. Significantly, the article shows that the trust identified by Lord Wilberforce in Quistclose is most important for managing and mitigating the “credit” risk that can often occur on a loan because of the borrower’s default. Quistclose changes the usual “at arm’s length” nature of lending and provides obligations that are of a fiduciary character.
College: Faculty of Humanities and Social Sciences
Funders: Swansea University
Issue: 5
Start Page: 402
End Page: 409