Broad Brush Agreement Definition
Clauses that give lenders a broad opportunity to vary contracts without the agreement of the small business borrower run a high risk of being unfair, as they create a significant imbalance in the rights of the lender and the borrower for small businesses (to the benefit of the lender) and are probably not reasonably necessary to protect the legitimate interests of the lender when used in many circumstances: can reach a wide range of circumstances variations of the contract. The main adverse changes in default – clauses that allow lenders to treat a loan as overdue due to an unspecified „significant adverse change“ are likely unfair. These clauses gave banks a very wide margin of appreciation to declare a default to the borrower, without giving the borrower details of the types of changes likely to result in default. Banks have confirmed that these clauses have been removed or will no longer apply to their small business credit agreements. Specific events of a non-monetary default – The wording of these specific events may still be broad enough for an event to trigger a disproportionate enforcement action by the lender. For example, while „misrepresentation“ is mentioned in small business credit agreements as a specific default event where a small misrepresentation of the borrower, such as a false date of birth, resulted in default and performance under the loan agreement, it could be a disproportionate enforcement measure. An overly general summary of a problem that lacks detail or nuance is an example of something that would be described as a summary with a broad brush. The Post-Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry proposes or is already undergoing a major regulatory change. One system of consumer protection regulation, which may be underestimated during this transition, is the Unfair Contract Terms (TSE) system. The UCT system has a broad sectoral application, since it applies to „a contract that is a financial product“ or „a contract for the supply or possible supply of financial services“ (a „financial or credit agreement“). .