ABSTRACT
This chapter deals with loans advanced by several banks to large enterprises and governmental bodies. A loan contract constitutes one of the simplest forms of commercial contracts: in essence, a lender advances money to a borrower who is then obligated to pay it back, usually with the addition of interest. Loan finance has not been subject to much statutory European private law harmonisation. Loans remain governed by the applicable national law of contract, which may vary considerably from one country to another. However, when it comes to large bank loans the standard documentation of the Loan Market Association (LMA) is used. The chapter also discusses the three commonly used events of default in loan documentation: the cross-default clause, the material adverse change clause and the change of control clause. The clause aims to ensure that if the lenders need to enforce their rights against the borrower, all of the borrower's assets will be shared equally.
