Tuesday, October 6, 2015

Lending and the Breach of Contracts

Financial institutions and different lending agencies are facing the same common dilemma.


All people across the world are surviving these everyday situations that reality keeps throwing to lots and lots of people whose purpose is to have a memorable and satisfactory living on this planet on a specific amount of time. And with the necessities of the masses always involves financial matters that really defines of the quote "making the world go round." Thus, people are doing their part just to have some money to spend for them and their families' basic needs.

Time is money. Loans come up with interest. Source: http://the-finances.com/


And here's how lending comes into the story: It all goes into this concept that a person, financially insolvent, will request to another person or financial institution to get money. Then, these lenders give the financial support in a form of a loan, notes, or just simply lending, with the conditions upon the discretion of the lender - with interest or not.


With lending comes a problem. There is no guarantee that the one who gets the financial help will pay their debts in a specific amount of time. Worse, these people will definitely put themselves in a denial that there is no such transactions happen. Furthermore, they will resort to other kinds of action, like escaping to their obligations, or to say that such payments will be payed based on the last transaction that take place, or other possible things that arise in this complicated problem. Thus, it will be lead to breaching of contracts that a lending agency will never let such a thing to happen.


With such problems comes with solutions. One of which is to keep themselves reminded of their obligations. That alone will help them guided without any misunderstandings. Another is a written note or loan with a specific deadline of payment. Such contract is served as a proof that there are obligations to met. If a person who has a debt is insolvent at the time of maturity, then there should be modification of terms that the both sides will agree. With this, the lender and the one who takes the lend will benefit from this kind of agreements.

With lending comes planning. Source: http://tipsmakemoney.com/


Simply speaking, the point of lending is that both sides must be aware of the upcoming responsibilities and accountability among both sides. Furthermore, there is nothing wrong in lending financial resources to the other, as long as that person returns it thereafter. Therefore, there must be mutual benefits in such actions that all sides will be satisfied and there will be no individual or group gets left behind.


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