Multiservice Bookinding Ltd v Marden [1979]

Facts

  • A mortgage over business premises was granted by the claimants to the defendant in return for a £36,000 loan
  • The agreement linked the mortgage’s interest rate with the exchange rate between the pound sterling and the swiss franc
  • A dramatic change in the exchange rate caused a significant increase in the rate of interest charged

Issue

  • Could the interest rate link term be avoided as is destroyed the equity of redemption possessed by the claimants?

Decision

  • No

Reasoning

  • For a term to destroy the mortgagor’s equity of redemption, it would have to be unconscionable or contrary to public policy
  • It was not enough that the term was merely unreasonable as both parties were of equal bargaining power
RELATED CASE  First Middlesbrough Trading and Mortgage Co v Cunningham [1973]

Posted in Land Law Revision Notes.

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