La Trobe University
School of Law
Take Home Examination 2013
There are detailed instructions about this examination (including due date, how to submit, word limit, etc) posted on the FLA subject site on the LMS.
Students must answer all questions.
Amelia is an engineer and wants to set up her own engineering business. There is a small bank that has just opened up in her area – No Red Tape Bank (‘NRT Bank’). On 31 August she sees the managing director of NRT Bank, Madison, and discusses with Madison the amount of borrowed funds Amelia thinks she will need for her business. They discuss different types of loans and Madison says that a simple loan of $200,000 repayable in 3 years would be the best type of loan for what Amelia wants to do. Amelia says that she doesn’t want to pay high fees for the loan. Madison says ‘I’ll see what we can do’. Later that day Madison telephones Amelia and leaves a message on Amelia’s answering machine. Madison says ‘I just wanted to update you and let you know that I’ve had discussions with our lending team and it seems the bank can provide you with a current account and a loan of $200,000 repayable at the expiration of three years. What do you think about that proposal?’.
Amelia thinks she can get a better deal elsewhere but she finds that in fact no one else will lend to her. So two weeks later on 14 September Amelia emails Madison and states ‘I accept your offer of 31 August’. Amelia used to bank at Big Bank and on 12 September the branch manager of Big Bank had told Madison that Amelia was always writing cheques to pay the local casino. After hearing this Madison decided that the bank would not lend to Amelia. She does not tell Amelia this. Amelia comes down to see Madison on 15 September to discuss when the loan will be available. At this point Madison tells Amelia that the bank has decided not to lend to Amelia but the bank is happy to open a current account for her.
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