Eoin O' Dell wrote:

I'm not sure I agree with this. Certainly, as a matter of Irish law, the fact that the loan was unapproved by the lenders internal machinery would be a matter of internal management which would not affect the validity of any external obligation which would arise; an unapproved loan could still generate a contractual liability to repay. So, the question arises: why would the transaction not be saved by the US version of the internal (or indoor) management rule ?

I think the court was not thinking about whether there could be a contract entered into by a bank officer without actual authority, which would be the typical situation the internal management rule is designed to deal with. Rather the court was saying that there should be no implied contract because the bank, as shown by the testimony, never regarded the advances as loans. It is not that the bank did not know of such advances, but instead it was their general banking practice. If the bank consciously does not regard what they do day after day as making contractual loans, then it might be artificial to imply such a contract.

And, second, it seems that the court rejected the view that a contract to repay could arise on the facts having regard to the transaction in question. Well,the court could be wrong in this, but even it isn't, it doesn't answer my argument. I was not arguing that the advances against uncollected cheques would themselves generate (or imply in fact) a contract (which is what the court in Laws v UMB rejected, if I've understood Look correctly), but merely that, as between the banker (UMB) and customer (Laws), there is already an *existing* express contract, into which the court could imply a term regarding the repayment of the advances.

If the court has correctly ruled out an implied contract that could create an instant debt at the point of making advances, with respect, I do not think it would still be consistent to imply a term into an existing contract that could create such same debt. Even on Prof. Birks' view, I think the consent to trigger restitution has to be a real one. It cannot be implied when it has been consciously and consistently disclaimed.

Look