A loan agreement is a contract entered into between which regulates the terms of a loan. Loan agreements usually relate to loans of cash, but market specific contracts are also used to regulate securities lending. Loan agreements are usually in written form, but there is no legal reason why a loan agreement cannot be a purely oral contract (although in some countries this may be limited by the Statute of frauds or equivalent legislation).
Loan agreements are usually characterised either of two different ways: by the type of lender, or by the type of facility. Categorising loan agreements by lender usually simply sub-divides loans into:
Categorising loan agreements by type of facility, usually results in two primary categories:
Term loans, which are repaid in set instalments over the term, or revolving loans (or overdrafts) where up to a maximum amount can be withdrawn at any time, and interest is paid from month to month on the drawn amount.
Within these two categories though, there are various subdivisions such as interest-only loans, and balloon payment loans. It is also possible to subcategorise on whether the loan is a secured loan or an unsecured loan, and whether the rate of interest is fixed or floating.
Delaware has one of the few remaining Courts of Chancery in the nation, which has jurisdiction over equity cases, the vast majority of which are corporate disputes, many relating to mergers and acquisitions. The Court of Chancery and the Supreme Court have developed a worldwide reputation for rendering concise opinions concerning corporate law which generally (but not always) grant broad discretion to corporate boards of directors and officers. In addition, the Delaware General Corporation Law, which forms the basis of the Courts’ opinions, is widely regarded as giving great flexibility to corporations to manage their affairs. For these reasons, Delaware is considered to have the most business-friendly legal system in the United States; therefore a great number of companies are incorporated in Delaware, including 60% of the companies listed on the New York Stock Exchange. Delaware was the last US state to use judicial corporal punishment, in 1952.