The D’Oench Duhme doctrine is a legal principle that prohibits borrowers from making claims or defences against a new bank if they are based on undisclosed agreements or promises. To have a valid claim, the agreement or promise must be written, signed by both parties, approved by the bank’s board of directors, and maintained as a permanent record by the bank. This doctrine was established in a court case in 1942 and continues to be partially applicable today.
The D’Oench Duhme doctrine is a legal principle that bars a borrower from raising a claim or defence against a federal successor to a failed financial institution if the claim or defence is based on an undisclosed or secret agreement or representation. This principle applies unless the agreements or representations have been: put into writing, executed by both the financial institution and borrower at the time of the loan issuance, approved by the financial institution’s board of directors or loan committee, and made a permanent part of the financial institution’s records. For instance, if a borrower had an agreement with a failed bank stating that they would be exempt from repaying their loan in the event of job loss, they cannot use this as a defence against a federal successor to the bank unless the agreement satisfies the four requirements mentioned above. The D’Oench Duhme doctrine was established in the 1942 case of D’Oench, Duhme & Co. v. FDIC and is now partially codified at 12 USCA ยง 1823(e). However, its validity has been questioned in light of the 1994 O’Melveny & Myers v. FDIC case.
The D’Oench Duhme Doctrine is a legal principle that prevents parties from using secret agreements or side deals to avoid their obligations to a bank.
The doctrine protects banks by preventing borrowers from using secret agreements to avoid their obligations, and it also protects the FDIC when it takes over failed banks.
The doctrine covers any agreements, whether written or oral, that are intended to deceive a bank or the FDIC.
Yes, the doctrine can be used as a defence by banks to prevent borrowers from using secret agreements to avoid their obligations.
There are limited exceptions to the doctrine, such as when a party can prove that the bank had actual knowledge of the secret agreement.
The doctrine requires parties to be transparent and honest in their loan transactions, and it prevents borrowers from using secret agreements to avoid their obligations.
The doctrine originated from a U.S. Supreme Court case in 1942 involving a failed bank and a borrower who had made a secret agreement with the bank.
Yes, the doctrine can be applied in both federal and state court cases involving banks and borrowers.
Borrowers and banks should ensure that all loan agreements and transactions are transparent and fully disclosed to avoid potential issues related to the doctrine.
A lawyer can provide guidance and representation for parties involved in disputes related to the D’Oench Duhme Doctrine, and can help ensure that their rights and obligations are protected.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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