University of Arkansas School of Law
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An Agricultural Law Research Article
Lender Liability Under Iowa Law
James C. Wine
Originally published in DRAKE LAW REVIEW
39 DRAKE L. REV. 645 (1990)
LENDER LIABILITY UNDER IOWA LAW
James C. Wine*
TABLE OF CONTENTS
II.	 Tort Theories of Liability
A.	 Fraud/Breach of Fiduciary Duty .
B.	 Negligent Misrepresentation .. .
C.	 Negligence ..
Intentional Interference with Contract or Prospective
E.	 Economic Duress/Undue Influence
III.	 Good Faith: A Bridge Between Contract and Tort?
A.	 Good Faith Under the Uniform Commercial Code
B.	 Tortious Breach of Implied Covenant of Good Faith and
IV.	 Contract Theories of Liability.
A.	 Court Decisions
B.	 Statutory Restrictions on Contract Liability.
V.	 Liability Arising from "Control" of a Borrower
Lender liability. The thought of it, states one banking publication, is
"sending chills down many a banker's spine."
1 Indeed, the size of some of the recent verdicts against financial institutions
in lender liability suits is staggering.2 There is a growing perception among
lenders that they have become the guarantors of their borrower's business
success. As one bank lawyer commented, banks have become "the insurance
• A.B.. Princeton University; J.D. with High Distinction, University of Iowa. Mr. Wine
practices with the firm of Nyemaster. Goode, McLaughin, Voigts, West, Hansell, & O'Brien,
P.C., Des Moines, Iowa.
1. Stuart, Lender Liability, U.S. BANKER, May 1986, at 10.
2. Five of the largest lender liability verdicts nationally in the past two years include:
Penthouse v. Dominion Federal Savings & Loan ($129 million) (New York); Scharenberg v.