The last word in security
The English law of security over cashdeposits has finally been clarified to the Financial Law Panel's satisfaction - this has important consequences for documentation. By Christopher Stoakes.
At the end of October last year the House of Lords gave judgment in Morris vs Agrichemicals Ltd, laying to rest the doubt over a bank's ability to take a charge over cash deposited with it by a borrower. The decision was applauded but lawyers were still uncertain as to the implications for loan documentation (see Financial Lawyer, Euromoney December 1997).
Now, however, the Financial Law Panel has sounded the all-clear in its bulletin entitled "Security over cash deposits - a valediction" (April 1998). What makes the bulletin a must-read for all banking lawyers is the intellectual power behind it. The four lawyers singled out for mention by the FLP as members of the working group represent the best legal banking brains in English law (apart from Lord Hoffmann, who gave the House of Lords judgment): Michael Crystal QC; Professor Roy Goode QC; Francis Neate, formerly of Slaughter & May and now at Schroders; and Philip Wood, Allen & Overy's capital markets king.
"As a result of the decision of the House of Lords in Morris," they say, "a legal debate, which has been conducted for over a decade, has been drawn to a conclusion.