Loan Recovery Process and Legal Action

The assignment discusses the loan recovery process, which involves two steps: debt collection and legal action. If a borrower fails to pay their loan, a debt recovery agent is appointed to recover the amount. However, if this process fails, legal action can be taken against the borrower, including seizing their assets and property. The case study of George highlights the importance of understanding the terms and conditions of a loan and seeking legal advice when necessary.

Business Law

INTRODUCTION...........................................................................................................................1
PART A : Contract law....................................................................................................................1
Issues:.....................................................................................................................................1
Rule:.......................................................................................................................................1
Application:............................................................................................................................2
Conclusion:.............................................................................................................................3
REFERENCES................................................................................................................................3
PART B : Cooperation Law.............................................................................................................5
Issues:.....................................................................................................................................5
Rule:.......................................................................................................................................5
Application:............................................................................................................................6
Conclusion:.............................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Law is one of the effective system of rules and regulation which is formed and enforced by
social and legal bodies for regulating behaviour of individual as well as society. It consists of set
of rules decided by an particular country for the purpose of keeping the regulation and security of
the human beings. This project report is divided into two parts. The part A is associated with
contract law whereas on the other hand, part B of the report is related with corporation law.
PART A : Contract law
Issues:
As per the given case of “Steve, Pat , Road and their nursery business” , it has bbeen
founded that Steve and pat want to establish their business but because of their business nature
and economic climate, they couldn't find any financial institution with whom they get loan. Then
after, Road who is friend of Steve agree to give him loan but he said that their will be no
expressed or implied partnership agreement between them. As well there is an loan agreement
which stated that Road have a share of profit and losses, can access the partnership financial
records and loan will not to be repayable after the dissolution of the partnership. Due to owing to
the lack of business acumen, Steve and pat were eventually declared bankrupt. Then road made a
claim as an creditor and its application was rejected by the trustees of the company on the basis
of Rod's partners (McKendrick, 2014). Thus, main issue is that Rad claim as an creditor for
regaining the amount of loan paid by him but trustees of nursery business refuse his application
of claiming.
Rule:
Partnership deed is an written agreement within the partners which clearly define all the
rules and regulations which is signed by all the partners as well as stamp according to the stamp
act. Main aim behind this is to prevent all the possible disputes and disagreement within the
partners in future. The major benefits of a partnership deed is that it include direct distributions
of profits, shared liabilities and contributions to capital. Along with is there is Some
disadvantages of the same include joint and, in some States, several liability for partnership
debts. Apart from this, there can be some tax advantages and disadvantages which totally reckon
on the nature of the partnership business. Moreover, Partnerships are governed by Partnership
Acts of each State and Territory. While those Acts are similar, there are differences (Partnership
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Agreement, 2018). Below mention are some points which is included in partnership deed or
agreement :-
 Definition
 Formation of the partnerships
 Loans made by partner to the partnership
 Duties of partners
 Dissolution to the partnerships
 Sales of business and so on.
As per the given case of Rod he is enjoying all the rights which is mentioned in
partnership deed on the basis of loan agreement. But according to the As per the section 29(1) of
the partnerships Act 1891(SA) right such as sharing profit and loss, access to the partnership
financial records is only given to the partner of the company (Ayres, I. and Schwartz, 2014).
Application:
According to the partnership deed, sharing of profit and loss as well as access to the
partnership financial records is authority or right is only given to the partner of the company.
Thus, in the case of Rod trustees of the company is taking right decision because he is taking
benefits of partnership in the nursing business but at the time when steve and Pat get bankrupted
Road claim is loan money as an creditor. Thus, as per the rules and regulation mention in
partnership deed Rod is cannot claim as an creditor because he was enjoying benefits of partner
in the business.
Case Examples: Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd
[1971] 2 QB 711
As per the mention case, the company secretary leased a new car for his own private use
and told to third party this was done on behalf of the organisation. He had no any legal
authorization of doing such things, but had certain unreal restrictions by the nature of their
situation. Due to this, he occupied a momentous administrative position in the administration and
there were few reasons assume to have certain power in their hands.
Held: One of the higher authority Queen’s Bench held responsible the company secretary
is an significant officer of the organization which is having extensive duties and roles in
accordance to their daily basis matters. he has all the right or authority of taking any type of
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particular decision on behalf of other staff members. This case shows that Rod is not right in the
situation of nursing business because he was enjoying benefits of creditor and cannot claim as an
creditor in future for his loan money (Fitzpatrick and et. al., 2017).
Conclusion:
From the given case study it has been identified that Rod cannot claim his loan money as an
creditor in the company because he was enjoying all the right of partners such as sharing of
profit and loss as well as access to the financial decision of partnership. Thus, in this case
decision of trustees is right of rejecting claim application of Rod. Because in the eyes of
Australian law it is mentioned that the individual who is taking benefits in the business as an
partner in the future at the time of dissolution due to any reason he/she will cannot claim as an
creditor. Hence, decision of trustees is right in the case of Rod.
REFERENCES
Books and Journals:
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Ayres, I. and Schwartz, A., 2014. The no-reading problem in consumer contract law. Stan. L.
Rev. 66. p.545.
Fitzpatrick J, Symes C, Veljanovski A & Parker D, Business and Corporations Law 3rd ed.
(2017), LexisNexis Butterworths Australia.
Online
Partnership Agreement, 2018.[Online].Available through<https://lawlive.com.au/australian-
deed-of-partnership-agreement-template/>
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PART B : Cooperation Law
Issues:
In this case study, major issue which was raising that George is an old person who is threatened
by the Easy finance because he gets failed in paying loan amount neither principal nor interest.
In fact, daughter of George is liable for whole case because she said that she will pay the
monthly premium but unfortunately she failed in doing so and denoted as default member.
Basically, initially George does not know about the entire situation that his house is mortgage as
a security for borrowing loan from Easy finance. Although his daughter is totally aware about all
this thing as well as result of the unpaid loan. But still she didn’t tell his father about the entire
situation because she wants only money for her business. Thus, because of all this problem Easy
finance is threatened the George for recovering the amount. Whereas, George is not having that
much amount as his pension is also less than monthly loan payment which is around 2000 dollar
per month. As a result, he gets failed in fulfilling any terms and conditions of company due to
which he is facing this issue. However, her daughter is responsible for all these activities
because she is just avoiding the entire situation and even not helping her father which is really
irresponsible behaviour. But most prominent which is raised in this case is that; Easy finance
don’t have the authority of threatening George without any prior notice or any no dues because
he even doesn’t know the entire situation. In fact, he is fully unaware about the necessary terms
and conditions which was written in the document of loan process. Along with this, he hasn’t
consult any solicitor also because of his daughter trust or belief. Thus, he just accidently gets
involved in this case and facing all these legal issues. But there are some laws and regulations
which are designed by legitimate bodies for these type of cases (Allen, 2017).
Rule:
According to legitimate bodies of Australia, none of the bank or finance company is having
authority of threatening old age person without any prior notice or no dues because it is
illegal in nature. In fact, in the given case George is a dementia patient as per his medical
report due to which creditors will not harm him. Initially, company needs to sent letter of
demand via e-mail, call, notice or either visit from one of field agent and broker in order to
inform the person about the non-payment of amount. In fact, at prior level company needs to
try to solve the case at outside of the court. But, as per the law company needs to follow
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each or every steps which was set by legal bodies for recovering the loan from any person.
For example; auction is also taken in these kind of cases but in a formal manner that means
you can’t harm the person or neither threaten them. In fact, legal agent was involved in this
case for making sure that all the procedure will take properly without much more problem.
Although, George is a senior person but still company have the authority to take step against
him but in a legal manner by doing formal auction with the consult of other legitimate
members. Along with this, petition is also given in justice court for conducting all the
activities in ethical manner. As a result, it aids in controlling probabilities of mistakes and
errors (Means, 2016).
Application:
There is proper process of loan recovery which must be followed by the banks while recovering
loan. In the loan recovering procedure there is mainly two steps description of these are mention
below :-
 Step1: Debt collection – If amount of loan is not paid by the person then debt recovery
agent will be appointed by the financial institution for recovering process. In this process
if agent will not get successful then there will be no charges given to him/her. Once the
debt is placed with Recoverer, they will attempt to gather the debt under a “no win-no
fee” basis. This means there is no charge if he/she will not succeed. If they will
successful, there is an small amount charged by the recovering person as commission
(Fitzpatrick and et. al., 2017). This has proven a highly effective business model for
credit managers to recover debts that may seem unrecoverable.
 Step2: legal action – As per the given case study legal action will be its solution for
recovering loan. Legal action will be the last resort action then assets and living location
of the debtor will be identified as well against them legal action will be taken through
legal arms of ADC legal Litigation Lawyers (Legal Debt Recovery in Australia, 2018).
Hence, as per the case of George legal process of loan recovering will be the suitable because
by him interest and principle both the amount will not be paid.
Conclusion:
From the above mention case it has been concluded that George is liable for paying the
amount of loan along with the interest. If he will not been able to pay it then legal action will be
taken of ceasing his property and recovering amount of loan i.e., principle with interest. . In fact,
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he is fully not aware about the required terms and conditions which were written in the document
of loan procedure. Along with this, he hasn’t consulted any lawyer also because of his daughter
trust or faith. Thus, he just coincidently gets mixed up in this case and facing all these legal
problems. But there are some laws and regulations which are formed by legitimate bodies for
these kinds of cases.
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REFERENCES
Books and Journals
Allen, W.T., 2017. Our schizophrenic conception of the business corporation. In Corporate
Governance (pp. 79-99). Gower.
Means, R.C., 2016. Underdevelopment and the development of law: corporations and
corporation law in nineteenth-century Colombia. UNC Press Books.
Fitzpatrick J, Symes C, Veljanovski A & Parker D, Business and Corporations Law 3rd ed.
(2017), LexisNexis Butterworths Australia.
Online
Legal Debt Recovery in Australia, 2018.[Online].Available through<
https://debtrecoveries.com.au/legal-debt-recovery-australia-whats-process/>
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