Missouri Changes Its No-Oral-Credit Agreement Disclaimer Language Requirements for Lenders

Missouri has once again amended its credit agreement statute of frauds to limit the ability of borrowers and guarantors to assert claims against lenders and the parties’ written credit agreement based upon oral promises or commitments.  Specifically, Senate Bill 100, effective late 2013, extends Missouri’s prohibitions to reach not only oral, but now also unexecuted agreements or commitments to loan money, extend credit, or to forebear from enforcing repayment of a debt if the parties’ credit agreement contains certain disclaimer language as provided in the statute.

Extending the prohibition specifically to unexecuted agreements between the parties became necessary after Mo. Rev. Stat. 432.047 was limited by the Missouri Court of Appeals in its Bailey v. Hawthorne Bank decision.  In that case the Court of Appeals broadly construed several different bank documents, including a bank loan summary which was never delivered to the borrower, to find a “credit agreement” as that term is used in the statute.  Senate Bill 100 was intended to address this situation by making it clear that a credit agreement in Missouri must not only be in writing, set forth relevant terms and conditions, but also must be “executed by the debtor and the lender.”

Due to the recent changes, lenders should incorporate Senate Bill 100’s revised disclaimer language in all future credit agreements in order to protect themselves from situations like that presented in Bailey and to further limit their exposure to potential claims, defenses, or modifications of their lending agreements.