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Habib Bank v Tailor

[1982] 3 All ER 561

Case summary last updated at 09/01/2020 17:30 by the Oxbridge Notes in-house law team.

Judgement for the case Habib Bank v Tailor

 P gave D an overdraft facility of £6000 which was to be set as a charge against his house. There was a term in the overdraft agreement that the loan was repayable on demand. When D exceeded his overdraft, P demanded repayment, and upon failure to do so it sued D for possession of his house. D contended that the loan was really an indefinite one so that a clause allowing repayment on demand was really a default clause (i.e. clause demanding early repayment). Therefore the court should consider that he only had to repay what he would have done normally and under s.8 AJA he should be given a reasonable period in which to pay off the debt. CA rejected this and found for P, saying that s.8 didn’t apply to this type of loan. The phrase “permitted to defer payment” under s.8 referred to the date which the mortgage envisioned the loan being repaid. Since there was no such date, nor could it be deferred and s.8 did not apply. The only question was whether under s.36 D could repay in a reasonable period, which he could not. Therefore P was entitled to possession. 

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