How have courts dealt with a promissory note in real estate transactions?
British Columbia, Canada
The following excerpt is from Donaldson v. MacInnis, 1999 CanLII 1264 (BC SC):
And again, the issue surfaced in Mostfavi-Naeini v. Hanson[7]. In this case, A was promoting a real estate project. He enlisted the assistance of B, an experienced real estate developer who carried out his activities through a corporation he controlled. A also solicited loans from others, including the plaintiff. A and B made a promissory note in favour of the plaintiff to secure repayment of a loan made by the plaintiff to the corporation controlled by B. The proceeds of that loan were paid to that corporation. The project failed. The plaintiff's loan went unpaid. One of the defendant's pleas to the plaintiff's claim on the note was "no consideration". It was held that there was consideration, namely, the plaintiff's agreement to loan money to the corporation which was sufficient to support the defendant's promise to pay.
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