Not surprisingly, borrowers often view certain terms in loan and
credit agreements as harsh, over-reaching or unusually generous for
the lender. But at what point does a specific term cross the line?
When does it reach the stage of being considered
unconscionable?
In Phoenix1 , the Ontario Court of Appeal
was called upon to interpret the calculation of a bonus payable to
a subordinated lender [Alterinvest] under a loan
agreement upon the occurrence of several different triggering
events, one of which was a sale of any of the
borrowers.2
At issue were, among other things, (1) the base amount upon
which the 1% bonus would be calculated, and (2) whether the
provisions of the Loan Agreement were unenforceable due to
unconscionability, or as contravening the criminal interest rate
provisions in Section 347 of the Criminal Code.
