What is the test for invoking equitable principles in the context of a loan agreement?
Alberta, Canada
The following excerpt is from Canadian Imperial Bank of Commerce v. 3L Trucking Ltd., 1995 CanLII 9226 (AB QB):
In Royal Bank v. Brattberg, supra, at pp. 143-44, MacKenzie J. states that the test for invoking equitable principles is that of equality of bargaining power: The test I suggest is the equality of bargaining power. No one is forced to borrow from a particular bank. Similarly no bank is required to lend to a particular person. As long as the customer has the normal understanding of his or her legal rights and obligations then surely a bank does not have impressed upon it a special fiduciary duty. Of course if it was apparent to a banker that a particular customer was truly a "babe in the woods" when it came to financial matters, equity might well intervene and prevent any unconscionable acts by that banker.
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