In light of a recent discussion: Under what circumstances can a loan be open-ended and “callable,” meaning that its term is of no fixed-length, and that the lender may ask for redemption at any time? In practice, banks are extremely reluctant to refuse demands on open-ended lines of credit, as a result of treble damages awarded, if it can be shown that failure to honor a demand was proximate cause of financial distress to the debtor. Does the same doctrine hold true insofar as “calling” these individuals loans is concerned? The best I can come up with, in theory, is that a “callable” loan would have a call-option penalty; which would discourage the lender from maliciously bankrupting his debtor – AND – that the call-option would require the passage of some amount … Read entire article »