(Case Analysis) When the Prestons took out a variable mortgage with the First Ba
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Question
(Case Analysis) When the Prestons took out a variable mortgage with the First Bank of Marietta their interest rate was 9 percent. The agreement allowed First Bank to raise or lower the interest rate at any time, provided that the Prestons received 30 days’ advance notice. When the bank raised the interest rate to 11 percent, the Prestons refused to pay arguing that the agreement was unenforceable, because it set no limit on what interest rate they might be forced to pay. Were the Prestons correct? Explain
Explanation / Answer
Prestons took a variable mortgage @9%
According to Agreement,First Bank can raise or lower the intrest rate at any time provided that the borrower of loan recieves 30days advance notice.
now the bank raised the interest rate to 11%,which prestons refused arguing that the agreement was unenforceable because there is no limit on what interest rate the borrower(prestons might be forced to pay)
According to Interest Laws,Prestons is not correct as there was an agreement to raise or lower the interest rate except untill and unless the regulatory authority of that specific country related to them sets the maximum or minimum limit to which interest rate can be raised or lowered respectively ,PROVIDED in each case (whether limit is set or not) prior 30days advance notice is given to person
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