Protecting Written Loan Terms in an Evolving Environment


The last three years have seen a tremendous increase in defaulted loans and the litigation that typically ensues in the loan enforcement process. In many cases, borrowers and guarantors allege that their lender informally agreed to modify written loan terms and use that alleged modification as a defense to the lender’s enforcement of the loan documents.

Washington lenders have enjoyed protection against these types of claims under Washington’s Credit Agreement Statute of Frauds, which provides that “agreements to lend, forbear or modify a commercial loan are unenforceable unless the agreement is in writing and signed by the creditor.” RCW 19.36.110. But, at a time when the rapid-fire exchange of e-mail has supplanted oral discourse to a substantial degree, questions have arisen concerning the effect of informal e-mail discussions and/or agreements between a borrower and lender.

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