When Is A Working Capital Agreement A Loan? It Depends

June 2, 2017

Suppose you’ve entered into a financial arrangement to obtain working capital. The agreement resembles a loan agreement, but it is not formally designated as such, and you think the cost of capital is too high. After negotiations to reduce the cost fail, it becomes clear that litigation is your only potential path out of the agreement. Do you sue for misrepresentation on the grounds that you thought you were getting a loan, or do you sue on the theory that the agreement is, in fact, a loan agreement but is usurious and therefore unlawful?

To continue reading Benjamin Jackson and Muhammad Faridi's article from Law360, please click here.