The limitation period for recovering loans repayable 'on demand' is a matter often overlooked by creditors and insolvency practitioners. This issue frequently arises in circumstances where it is an express term that the loan is repayable 'on demand' or where the loan is undocumented.
For example, insolvency practitioners often encounter loans recorded in the accounts of a company for which there is no corresponding documentation setting out the express terms of the loan agreement.
In circumstances where there are no precise terms for repayment of the loan, the following questions arise:
- Is the loan repayable on demand?
- When does the cause of action to recover the loan arise (i.e. when does time start to run)?
- What is the limitation period for actions to recover loans repayable on demand?
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This article was published in the ARITA Journal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.