Daniel has a construction project in G-North, Gaborone. He is putting up a four bedroomed house. Of late, the prices of building materials have increased
significantly. The increase has begun to derail his budget plans for the project. For
many years, Daniel has been a loyal customer of BNM Bank. He approaches BNM
Bank for financial credit. He applies for an unsecured loan of One Hundred
Thousand Pula (P100 000.00). He arranges for a meeting with Tshepo, the branch
manager for fast facilitation of the application.
Tshepo informs Daniel that a key requirement in the granting of the loan is that he
must sign a written agreement that contains the amount of monthly instalment and
other terms. In addition, an applicant who is married in community of property must
submit written consent of their spouse. Daniel is married in community of property.
Tshepo takes one (1) hour to consider the application. She informs Daniel that the
bank is willing to lend him the money. He informs Tshepo that he is under extreme
pressure to pay Best Deals Contractors (Pty) Ltd immediately. The two parties had
agreed that any amount owed to the contractor would attract a daily ‘inconvenience
charge’ of Five Hundred Pula (P500.00) in addition to the amount outstanding.
Processing unsecured loans usually takes ten (10) working days. Because of the
pressure Daniel is in and considering the good relationship he enjoys with the bank,
Tshepo immediately credits Daniel’s account with the One Hundred Thousand Pula
(P100 000.00). Nothing else happens.
After seven (7) months, Daniel receives a letter from the bank demanding payment
of monthly instalments as explained to him by Tshepo. He sends a letter indicating
that he does not owe the bank any money and dares the bank to produce any
agreement between them.
Required:
Critically examine the legal issues in the scenario and advise the bank
whether it should take legal action against Daniel. 30 marks
(About 1200 words)