Wednesday, April 1, 2015

Elemental Principles of Contract Law

Elemental Principles of Contract Law

      Last week, the Kentucky Court of Appeals issued a generally uninteresting decision with respect to a foreclosure. Of interest, however, are the elemental rules of contract formation and interpretation which the court relied upon in making that determination. Dimitrov v. PBI Bank, Inc., No. 2013-CA-002087-MR (Ky. App. March 27, 2015).
      One allegation that the Court rejected was that the bank had violated its obligation of good faith and fair dealing by failing to provide Dimitrov with information as to the outstanding balances on the subject loans. Initially noting that the information had actually been provided, the Court focused as well on the fact that those terms had been set forth in loan modification agreements. With respect thereto, the Court wrote that:
One who signs a contract is presumed to know its contents, and if he had an opportunity to read the contract he signed, he is bound by its provisions.

Slip op. at 5. In connection therewith, the court cited Hathaway v. Eckerle, 336 S.W.3d 83, 89 (Ky. 2011).
      Dimitrov also claimed that PBI had violated a duty by failing to afford him until a certain date to move the loan to another bank or work out a payment plan with PBI. Rejecting this assertion, the Court noted that:
Dimitrov has not pointed to any evidence in the record which indicates that PBI or any of its agents offered Dimitrov an extension. The only mention of this extension through October 2012 is in an email from Dimitrov to PBI’s loan officer, Joe Varner, in which Dimitrov requests an extension. Dimitrov produces no reply to indicate that an extension would be granted. This one-cited proffer is obviously insufficient.

Slip op. at 6, emphasis added.

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