Lma Duty of Care Agreement

The LMA Duty of Care Agreement: What You Need to Know

The Loan Market Association (LMA) is a trade association that represents the loan market in Europe, the Middle East, and Africa. One of the key objectives of the LMA is to promote best practices in the loan market, and one of the ways it does this is by creating standard documents and agreements that can be used by market participants.

One such document is the LMA Duty of Care Agreement. This agreement is designed to clarify the duties and responsibilities of lenders and borrowers in relation to a loan transaction. In particular, it focuses on the duty of care owed by lenders to borrowers.

The LMA Duty of Care Agreement sets out a number of specific duties that lenders owe to borrowers. These duties include:

1. To exercise reasonable skill and care in performing their obligations under the loan agreement;

2. To act in good faith and with integrity in all dealings with the borrower;

3. To ensure that any information provided to the borrower is accurate, complete, and not misleading;

4. To disclose any conflicts of interest that may arise in relation to the loan transaction;

5. To ensure that any advice given to the borrower is appropriate and based on a reasonable assessment of the borrower`s circumstances.

The LMA Duty of Care Agreement also includes provisions that give borrowers the right to seek redress if they believe that a lender has breached its duty of care. For example, if a borrower suffers loss as a result of a lender`s breach of its duty of care, the borrower may be entitled to compensation.

It is worth noting that the LMA Duty of Care Agreement is not a legal requirement. However, it is widely used in the loan market, and many lenders and borrowers choose to include it in their loan agreements. By doing so, they are signaling their commitment to best practice and their desire to create a fair and transparent lending environment.

In conclusion, the LMA Duty of Care Agreement is an important document that helps to promote best practices in the loan market. By clarifying the duties and responsibilities of lenders and borrowers, it helps to create a fair and transparent lending environment. If you are involved in the loan market, it is worth familiarizing yourself with the provisions of this agreement, and considering whether it would be appropriate to include it in your loan agreements.

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