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A loan agreement that does not include a repayment date will be construed as a loan that must be repaid within a reasonable time

March 30, 2021

A company engaged in importing, distributing and investing in real estate transferred funds to a company engaged in operating photocopiers in educational institutions and providing photocopying and printing solutions, with the transfer of funds was made according to loan agreements. The loan was not repaid and the company that received the funds contended that such were not loan agreements but investment agreements.
The Court held that the agreements are indeed loan agreements that should be immediately repaid. The starting point in the interpretation of an agreement made between business people and drafted by lawyers is that the language of the contract is the main interpretation tool and the interpretation will not go beyond the language of the contract. In interpreting the agreement, great importance will be given to the nature of the transaction, its purpose and the commercial rationale behind it while paying attention to its general legal structure and its economic and social goals. Here, the agreement is a business agreement made between businessmen and drafted by lawyers, and which includes most of the terms required in the contract except for the dates of loan repayments and is thus a complete agreement and need not be filled in by external interpretation. Because the agreement is an open loan agreement as it does not contain the loan repayment dates, the loans must be repaid within reasonable time as customary in similar loan agreements.