Personal Debts : Recovery of a Cash Loan Without a Contract

Tannahill Lockhart & Clark Law LLP Case Studies

Personal Debts : Recovery of a Cash Loan Without a Contract

Our clients, who we will call the Smiths*, were befriended by a man we will call Sam*. Sam got involved deeply in the Smiths’ lives, seeking to help them in matters of business, real estate, and spiritual matters. Sam gained the Smiths’ trust to point where they considered him a close friend and confidante.

The Loan
As mentioned before, the Smiths trusted Sam deeply. So when Sam asked for a $60,000.00 loan from the Smiths, they did not think twice about it. They gave Sam the cash over approximately a one month period. They did not write a contract or agreement, and they only had records of the cash withdrawals and bank drafts to show the loan. When they asked Sam for the money back, he denied that he borrowed any money and instead said that he was an employee of the Smiths and that they paid him for
the work that he did for their business.

The Result
The Smiths came to our firm to try to recover the money, even though they had no contract. We commenced a lawsuit against Sam for the outstanding money. Sam was obviously a very dishonest person, and so when it came for Examinations for Discoveries, where our lawyers could ask questions of
Sam, we used that dishonesty against him. Eventually, our lawyers caught Sam in a number of lies and his dishonesty shone through. Sam, after speaking with his legal counsel realized that he had no choice but to pay back the loan.

As such, we negotiated a favourable settlement on behalf of the Smiths.

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