Loan Contracts: Unenforceable or Voidable?

New Zealand flagLoans for residential investment purposes and franchising seem to be very different at first but they are not. Both are about trying to get two parties to commit to do something over a long time period.

Individual contracts exist in relation to an entire body of common law and legal theory within sovereign states such as New Zealand. While I am not a lawyer, I have studied the people that write laws: politicians.

Who Cares?

Some contracts are unenforceable (valid but the Court will not enforce) or voidable (certain conditions present or absent: fraud, material misrepresentation, etc.) and may trigger anticipatory repudiation (declaration of intention not to live up to obligation).

If you borrowed money and you believe these issues relate, you have several practical alternatives:

  1. do nothing (accept what you get),
  2. make payments hoping someone can get you x% via insolvency, etc (ignore unjust enrichment doctrine).,
  3. join together in a legal action assuming the fraudsters are morons (achieve x% minus $y fees 2 to 3 years hence),
  4. join together to pursue other actions efficiently (chip in a few $, get truly unbiased advice, “Who has the unclean hands?”),
  5. beg you government (who may have created a fraud incubator) to underwrite a payment clemency program, or
  6. tell “them” where they can put their loan (repudiate loan).

While every alternative has some costs and benefits, it is my experience that the fates favour (groups of) the bold.

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