Summary
It is common for loans particularly between family and friends
to contain no term as to repayment. This may lead people to
believe that the money only becomes payable when the other party
demands its return. That is incorrect. A loan of money
which contains no agreed repayment term becomes continuously
recoverable at all times. Therefore any cause of action
arises the instant the money is advanced. This has
implications when determining:
- if the collection of a debt is statute barred;
- whether a company is insolvent; and
- the calculation of pre-judgment statutory interest.
Statute Barred
In VL Finance Pty Ltd v Legudi [2003] VSC 57 loans owed
by directors were created by book entries. No formal
agreements existed. The only documentary evidence of the
loans were in the company's financial statements. The
loans were created in 1992. The Plaintiff sought to sue in
respect of them in 2000. The Defendants claimed that the
debts were statute
