Question

Anggur,s applied for a credit facility from bank kismis BhD for the financing of a new invention of a household utensil ,

due to uncertainties of anggur,s product and other credit consideration ,kismis Bank BHD Decline to grant the

facilities , except at the rate of interest which is more higher than the market rate ,anggur,s accept the facility of these

terms if anggur,s default in payment , can he be alleged that bank kismis BHD has forced or forced on pressured him

to accept the facility at such a high interest rate and therefore the contract is voidable at his option?

Answer 1

Issue : Anggur has reached out to Kismis BhD bank to finance his new product invention. The bank has reviewed his application and offered him a loan at a higher rate of interest than the market value. Anggur has defaulted on his loan payment and wants to sue the bank for forcing a higher rate of interest and to void the contract

Rule : The bank agreed to lend only at the higher rate of interest and not at the market rate. Anggur accepted the contract so this makes the contract valid at the rate written in it and any terms or penalties for defaulting.

Analysis : For loans against inventions, entrepreneurs, new businesses etc. banks can choose their rate of interest usually up to a level that is prescribed by the government. However, banks will usually stay under this limit but likely offer the highest possible for loans that are uncertain as in the case of Anggur. If the bank does not see a firm payback option then they can choose to set the highest possible rate of interest for a business. Anggur does not have to accept this offer and can try his luck at another bank. Anggur might have felt forced as he did not have any other option however this cannot be taken as force from the bank.

Conclusion : The bank did not force Anggur to sign the contract, they just exercised their lawful right to set a higher rate of interest. Anggur had the option to not accept the conditions of the contract but once signed the contract is valid and can be upheld in a court of law. Therefore, in this case Anggur cannot allege that Kismis BhD bank forced him to take on a higher rater of interest, and he cannot seek to void the contract on this basis.