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Credit agreement

Credit agreement. Banking Law (4). Concept of the contract. Billateral duties. Freedom of contracting. The Civil Code , art. 353 ( 1)

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Credit agreement

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  1. Credit agreement Banking Law (4) Banking Law. Credit agreement

  2. Concept of the contract Billateralduties Freedom of contracting The CivilCode, art. 353 (1) „ Partiesexecuting a contractmayarrangetheirlegalrelationshipattheirdiscretion as long as the contentorpurpose of thiscontractis not contrary to the natureof the relationship, the law and the principles of community life” Banking Law. Credit agreement

  3. Creditagreementversus cashloan Banking Law. Credit agreement

  4. Terms of credit Banking Law. Credit agreement

  5. Creditagreement.The parties A lender A borrower 1. A natural person 2. A legal person 3. Anentity with no legalpersonality… …. all of themhavingcreditworthiness*. Ifsomeonefails to be deemedcreditworthy, a bank may grant a creditproviding : a specialcollateral* a financialrecoveryprogramme • A bank ( in the meaning of the Banking Law Act) • Creditunionsorotherentitieshavingstatutoryrights to perform banking activities In order to provide a joint creditbanksmayconclude a loanunderwritingagreement. Thesebanksshallbear the riskassociated with grantedcredit in proportion to the amount of fundscontributed to the loan. Banking Law. Credit agreement

  6. Creditprocedures Banking Law. Credit agreement

  7. Costs of credit Banking Law. Credit agreement

  8. Creditceiling Interest Concentration limit The Banking Law Act, art. 71 „The totalamount of a bank’sclaims (…) exposed to a single entityor to entitieslinked by capitalororganisationstructuremay not exceed (…) 25% funds of the bank’sownfunds(…) or the equivalent of EUR 150 million – towardsanotherdomestic bank, creditinstitutionorforeign bank. The CivilCode, art. 359 „The maximum level of interestresulting from a legaldeedcannnot be morethan 4 times the pawncreditrate of the NBP. If the interestresulting from a legaldeedexceed the maximum interest, the maximum interestisdue” Banking Law. Credit agreement

  9. Collaterals: suretyshipcontract Concept of the contract Surety’sliability The CivilCode, art. 879 The scope of the surety’sobligationisdeterminedeachtime by the scope of the debtor’sobligation. However, a legalacttaken by a debtor with a creditorafter the suretyshipisgivencannotincrease the surety’sobligation The CivilCode, Art. 881 In the absence of stipulation to the contrary, the suretyisliable as a joint co –debtor* The CivilCode, art. 876 • By a suretyshipcontract, the surety* commits to the creditor to perform the obligationif the debtordoes not performit. • The surety’sdeclarationshould be made in writing; otherwiseitisinvalid. Banking Law. Credit agreement

  10. Collaterals: bank guarantee Banking Law. Credit agreement

  11. Bank guarantee The Banking Law Act, art. 81 A bank guaranteeconstitutes a unilateralobligation of the guarantor bank, thataftergivenpaymentconditionshavebeen met by the authorisedentity ( the beneficiary of the guarantee), where the conditionsmay be confirmed by specificdocumentsthat the beneficiaryattaches to the payment order and where the order hasbeenprepared in the required form, …. the bank willprovidemoneyconsideration to the guaranteebeneficiary – directlyorthrough the intermediation of another bank. Banking Law. Credit agreement

  12. Collaterals: mortgage and pledge (lien) Similarities Differences • Both mortgage and pledge „follow the property they charge” i.e. every new owner of such property will be a debtor to the original creditor. • They give priority to creditors; whenever they want to satisfy their claims, they will be first to do so, ahead of other creditors. • They give a right to take possession of certain property of a debtor in the event of non-payment of the debt on its due date Banking Law. Credit agreement

  13. Varioustypes of credits Banking Law. Credit agreement

  14. Student’scredit Banking Law. Credit agreement

  15. Vocabulary Banking Law. Credit agreement

  16. Exercise Banking Law. Credit agreement

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