The Missouri Credit Agreement Statute of Frauds applicable to commercial transactions, RSMo. § 432.047, has undergone an important change, and in order to be protected by the revised statute, lenders must update the language contained in their form loan documents.
Effective August 28, 2013, any loan or workout documents that meet the definition of a “credit agreement” under the statute, must contain the following language, in at least 10 point boldface type (changes are italicized):
ORAL OR UNEXECUTED AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
This change is in response to the interpretation of the previous version of the statute by the Missouri Court of Appeals in Bailey v. Hawthorn Bank, 382 S.W.3d 84 (Mo.App. W.D. 2012). In Bailey, the Court of Appeals held that a loan commitment letter and an internal written loan summary (which had not been delivered to the debtor prior to the litigation) together constituted a “credit agreement” under the statute, which at the time lacked a delivery requirement. Now, in order for a debtor to maintain an action or defense relating to a credit agreement, the document at issue must have been executed by both the debtor and the lender.