In a case recently decided by the U.S. 7th Circuit Court of Appeals, the Court upheld that a bank was not liable for breach of contract or fraud for pointing out that the note was payable on demand to the borrower. In this case, a development company obtained a line of credit. The line of credit was a demand note, meaning that the bank could demand payment in full at any time of the outstanding balance. Although the note was not in default, the Bank asked the Borrower to term out a portion of the note with a loan to a related entity and to reduce the remaining availability on the line of credit. The Borrower was not expecting this request and asked about the consequences if it did not make these changes. The Bank responded by pointing out to the Borrower that this was a demand note and that it was possible that the Bank could demand payment in full at any time. (more…)