ARTICLE: THE PRICE OF TRUST: AN EXAMINATION OF FIDUCIARY DUTY AND THE LENDER-BORROWER RELATIONSHIP Skip over navigation
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Copyright (c) 1994 Wake Forest Law Review Association, Inc.
Wake Forest Law Review

ARTICLE: THE PRICE OF TRUST: AN EXAMINATION OF FIDUCIARY DUTY AND THE LENDER-BORROWER RELATIONSHIP

FALL, 1994

29 Wake Forest L. Rev. 719

Author

Cecil J. Hunt, II *

Excerpt

Comparing the search for elements which will give rise to a fiduciary relationship between a bank and a borrower to the quest for the elusive holy grail, Professor Hunt proposes that, rather than existing only in special circumstances, the fiduciary relationship is a normal aspect of the bank-borrower relationship. Hunt explains that a fiduciary obligation is part of the parties' assumptive base in the bank-borrower relationship that must by necessity exist before any borrower would entrust private or business information to a bank in return for a loan. While acknowledging that such a relationship might be inapposite in the initial bargaining process of the relation, since the parties are adverse at this time, Professor Hunt demonstrates that there is no such impediment existing when the parties move into the next phase of their relationship -- the servicing and processing of the agreement. Professor Hunt further argues that recognition of a fiduciary relationship at this phase of the bank-borrower relationship would be beneficial not only to the parties involved, but to society as a whole by providing more protection to borrowers, and thus encouraging more participation from the public in the banking industry at a minimum of cost and disruption to the traditional relationship between the parties.


INTRODUCTION


The booming field of lender liability has virtually revolutionized the conventional relationship between borrowers and lenders. 1 In contrast to their traditionally passive role in the debtor-creditor relationship, 2 borrowers have recently become uncharacteristically aggressive and adversarial, bringing suit against ...
 
 
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