Meaning of unfair loan
(1) A loan to a company is unfair if, and only if: (a) the interest on the loan was extortionate when the loan was made, or has since become extortionate because of a variation; or (b) the charges in relation to the loan were extortionate when the loan was made, or have since become extortionate because of a variation; even if the interest is, or the charges are, no longer extortionate. (2) In determining: (a) whether interest on a loan was or became extortionate at a particular time as mentioned in paragraph (1)(a); or (b) whether charges in relation to a loan were or became extortionate at a particular time as mentioned in paragraph (1)(b); regard is to be had to the following matters as at that time: (c) the risk to which the lender was exposed; and (d) the value of any security in respect of the loan; and (e) the term of the loan; and (f) the schedule for payments of interest and charges and for repayments of principal; and (g) the amount of the loan; and (h) any other relevant matter.
Sourced from the Federal Register of Legislation at 17 May 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au. Verify the current text against the official source before relying on it.
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