Question

Hansen admired a sports car that Sports Motor Sales Ltd. wished to sell. Hansen informed the company salesman that he would buy the automobile if he could obtain a loan from the bank to cover part of the $17,000 asking price. The salesman agreed to hold the car until Hansen could check with his bank. Hansen discussed a loan with his bank manager. the manager stated that he would be prepared to 242 PART 3 The Law of Contract make a $5,000 loan, but, due to the nature of the purchase, he must first get approval from the regional office. He indicated that this was usually just a for- mality, and he did not anticipate any difficulty in obtaining approval for the loan. Hansen then entered into a written agreement with Sports Motor Sales Ltd. to purchase the sports car, with payment to be made in 10 days' time. Both parties signed the agreement, and Hansen paid a $100 deposit. The company retained the sports car pending payment of the balance. A few days later, the bank manager telephoned Hansen to say that he had encountered a problem with the loan approval. The most he could lend would be $4,000. As a result of the reduction in the loan amount, Hansen found himself $1,000 short. Advise Hansen of this position at law. Indicate how the case might be decided if Sports Motor Sales Ltd. wished to enforce the agreement

so you cant do it?

Answer 1

I advise Hansen to arrange for the $1000 which are short for the payment at the earliest, i.e. within 10 days from the date of agreement signed by him, made with Sports Motor Sales Ltd. According to the agreement he has to pay the entire balance amount within 10 days from the date of agreement. He cannot force the bank to lend him the additional $1000 as the bank manager had only verbally confirmed that Hansen could avail loan of $5000 from the bank. The ultimate authority laid with the regional office. This was informed by the bank manager to Hansen. Hence, the bank cannot be held responsible.

On the other hand, if Sports Motor Sales Ltd. decided to enforce the agreement, Hansen may have to return the car or the company may sue Hansen for defaulting the payment. Thus, Hansen has to arrange the entire money at the earliest and abide by the agreement.