AGO 1989-019.

• Case Date: February 21, 1989
• Court: Kansas

Kansas Attorney General Opinions 1989. AGO 1989-019. February 21, 1989ATTORNEY GENERAL OPINION NO. 89-19W. Newton Male Commissioner Banking Department 700 Jackson Suite 300 Topeka, Kansas 66603-3714 Re: Contracts and Promises--General Provisions--Credit Agreements; Required Notice Synopsis: Promissory notes, security agreements and mortgages are not "credit agreements" within the meaning of L.1988, ch. 55. However, the document creating the interest may become a credit agreement if, by the terms of the document, there is included a promise to lend or delay repayment of money or make some other financial accommodation. The failure to include the notice prescribed in section 2 of the act does not render a credit agreement unenforceable. However, parol evidence may be used to show that fraudulent misrepresentations were made during contract negotiations. Cited herein: K.S.A. 16-117; 16-118; 84-1-201; 84-3-104; K.S.A.1988 Supp. 84-9-105. * * * Dear Commissioner Male: You have requested our opinion concerning several issues involving credit agreements, as defined by L.1988, ch. 55, § 1 (codified at K.S.A. 16-117) and as applied in § 2 (codified at K.S.A. 16-118). Specifically, you ask whether security agreements, mortgages and promissory notes are credit agreements within the meaning of the act, and whether a credit agreement must include the notice specified in section 2(b) of the act to make the agreement enforceable. Chapter 55 of the 1988 Session Laws regulates credit agreements to which a financial institution is a party. For purposes of the act, a credit agreement is defined as:

"[A]n agreement by a financial institution to lend or delay repayment of money, goods or things in action, to otherwise extend credit or to make any other financial accommodation." L.1988, ch. 55, § 1(a).

Section 2 of the act requires that all credit agreements contain a notice that the written agreement is the final expression of the agreement, and that the agreement may not be contradicted by evidence of an oral agreement between the parties. Your first question is partially resolved by applying the definition of credit agreement to the nature of a promissory note, security agreement, or mortgage. A promissory note is "a written promise made by one or more to pay another, or order, or bearer, at a specified time, a specific amount of money, or...