Usurious contracts, Usury Law

Category: Obligations and Contracts

Article  1961.    Usurious  contracts  shall  be  governed  by  the Usury  Law  and  other  special  laws,  so  far  as  they  are  not inconsistent with this Code.

WHY  SHOULD  THERE  BE  A  PROVISION  ON  THE  PURPOSE WHEN IT IS ONLY THE CONCERN OF THE BORROWER?  

     It is the risk-management tool  of the lender.  The lender wants  control.  They want it to  go the  business or  stated purpose.  This is one way of ensuring payment.
 

WHAT IS A COMMITMENT FEE?  

     The bank being part of the syndicate, you have to pay the fee.  This is similar with the participation fee.  
 

WHAT  IS  THE  CLAUSE  WHEREIN  THE  BORROWER  WOULD SHOULDER  ALL  FEES?    AN  EXAMPLE  OF  THIS  IS  FUNDING AND YIELD PROTECTION.  

     This is to ensure that the banks would profit from the loan agreement.    

DRAWDOWN DATE

     Date  of  giving  of  the  money.

WHY IS  THE  TREASURY BILL  RATE  DENOMINATED  AS 91-DAY, 182-DAY…? 

     It is because it is divisible by 7 and in a public auction, it would  fall  on  a  business  day.    Another  trivia,  if  it  is  for more  than  one  year,  it  is  called  Treasury  Bonds.    If  it  is longer  than  that,  it  is  called  Cash  Management  Bonds.