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Lender Liability: A Survey Of Common-Law Theories, Frances E. Freund

Vanderbilt Law Review

Lender liability litigation has increased dramatically over the past several years. The increase in claims is hardly surprising when one considers recent multimillion dollar recoveries.' Such well-publicized verdicts against lenders serve to encourage borrowers to defend even routine collection claims by striking out at the lender.

Most often borrowers bring lender liability suits following commercial loan defaults. These suits are based on a number of common-law theories for liability including: breach of contract, breach of fiduciary duty,' and breach of good faith, as well as fraud, duress, interference, and negligence. Some suits also raise statutory claims under the bankruptcy laws, …