Assignment # 5 Terms of a contract
No. John Hunt went to the McIlory Bank and Trust to see if he could get a long term loan for the S.B.H Farms. He talked to a loan officer about getting a long-term loan for building hog houses, buying livestock, and for expanding the farm operations. The McIlory Bank and Trust agreed to loan him $175,000.00 on short term promissory notes which all the owners of S.B.H. Farms had to sign. While all the owners of S.B.H. Farms were at the bank, they had an oral discussion about the long-term loans for the farm. With no set amount, no interest rates, or how much to pay when the long-term loan is due. When the promissory notes were due the S.B.H. Farms did not make their payment as they said, and the loans went into default. The McIlory Bank and Trust put in a claim to take the collateral away because of default on the loans. S.B.H. Farms did a countersuit against the McIlory Bank and Trust saying that they breached the oral contract and for $750,000.00 in damages. I personally think that the S.B.H. Farms did not think they would default on the loan when they took the loan out. They thought they had a long-term loan to be able to better their farm and make more money. They did as much as they could get the farm expanded, but it was not enough to help them with the loans. I think that the McIlory Bank and Trust and S.B.H. Farms should have had more talk about the long-term loan, and had set an amount with the interest rate and when the loan would be due. S.B.H. Farms would not have lost all the collateral that they had put up for the loan. Now they probably could not get a loan like that again until they got their credit score back up again. In addition, the court stated that there was no way that it could take the general terms discussed between Hunt and the bank and be asked to enforce the contract without supplying the necessary terms essential to the formation of the contract. Accordingly, the trial court’s judgment in favor of the Bank was affirmed. Hunt v.