Date: Jul 9, 2026

Implied Repayment-on-Demand Term for Loans Lacking Repayment Provisions (and Limits of “Indemnity” Expenses Clauses)

1. Introduction

In Samuray v Asanov (Outer House, Court of Session, [2026] CSOH 64, Lord Lake), the pursuer sought repayment of two sums (pleaded as $350,000 and €350,000) said to be advanced to the defender under a “share pledge and loan agreement” (“SPLA”). The transaction sat alongside a share purchase agreement (“SPA”) relating to shares in Monitox Limited, an FCA-regulated electronic money institution, so that any “change in control” required Financial Conduct Authority approval.

The central issues became: (i) whether repayment depended on proving an “Event of Default” or contractual breaches; and (ii) if not, whether Scots law implies a term that such a loan is repayable on demand where the contract is silent as to repayment in the ordinary course. A further issue arose on expenses: whether a clause framed as an “indemnity” entitled the pursuer to an enhanced (agent/client) award.

2. Summary of the Judgment

The pursuer failed to prove the alleged contractual breaches and failed to establish an “Event of Default” under the SPLA.
Nonetheless, because the parties agreed by joint minute that substantial sums were advanced by way of loan, and because the SPLA contained no clear repayment provision in the ordinary course, the court applied the implied term (per Nielsen v Stewart 1991 SC (HL) 22) that a loan in those circumstances is repayable on demand (absent agreement to the contrary).
The court therefore held the pursuer was entitled to repayment in principle, without needing to prove breach/default.
The unjust enrichment (recompense) case did not arise because a contractual repayment obligation provided the legal basis for recovery.
The case was put out By Order because the monetary conclusions (the sums craved) did not reconcile with the admitted loan advances; the court could not competently grant decree for an amount not reflected in the conclusions.
On expenses, the court rejected “indemnity basis” as a Scottish term of art and held the contractual clause did not justify an enhanced award; expenses were intended to be awarded on a party-and-party basis.

3. Analysis

3.1 Precedents Cited

Nielsen v Stewart 1991 SC (HL) 22

The decisive authority was Nielsen v Stewart 1991 SC (HL) 22, where both the Inner House and the House of Lords recognised that, where a contract of loan contains no provisions for repayment, Scots law implies an obligation on the debtor to repay on demand.

The defender emphasised the qualification that the rule operates only “in the absence of agreement to the contrary”. Lord Lake accepted that statement of principle, but found no contractual term displacing the implication. Clause 9.1 addressed enforcement of security on default, but it did not supply—expressly or by necessary implication—a general repayment regime.

In effect, the judgment treats “default/enforcement machinery” as not equivalent to a general bargain that the loan is only repayable on default; absent clear contrary agreement, the implied “repayable on demand” term remains available.

3.2 Legal Reasoning

(a) Failure to prove “Event of Default” or contractual breaches

The pursuer advanced multiple theories: that breach of the SPA constituted an Event of Default under the SPLA (because the SPA was “integral”); that the defender breached clauses concerning share pledging/transfer, regulatory filings, and delivery of documents; and that there was total failure of consideration.

Lord Lake rejected incorporation of the SPA into “this agreement” for Event of Default purposes. The SPLA and SPA were executed contemporaneously, and the court considered that if breach of the SPA were meant to trigger default, it would have been stated directly. The court also construed one alleged obligation (clause 3.1) as an expression of intent rather than an enforceable duty.

Critically, the court found both witnesses unreliable (the defender also not credible) and declined to make factual findings on disputed matters such as what was done to obtain FCA approval, what applications were submitted, what documents were delivered, or whether additional payment was demanded. Without reliable evidence, the pursuer could not discharge the burden of proving breach/default.

(b) The implied repayment-on-demand term as the true route to decision

Having rejected the alleged breaches, the court nevertheless identified a straightforward contractual route: the parties had agreed that loans were made; the SPLA was silent on repayment in the ordinary course; therefore the implied term applied, making the loan repayable on demand. On that approach, breach/default became unnecessary to the merits.

(c) Unjust enrichment excluded by the existence of a contractual obligation

The pursuer pled recompense in the alternative. Lord Lake held that once the court recognised an obligation to repay under the loan, the enrichment analysis was unnecessary: the defender’s receipt of money was not “unjust” in the technical sense because the parties’ relationship was governed by contract providing the basis for recovery.

(d) Governing law / share pledge formalities: raised but not reached

The defender argued that the SPLA engaged Cypriot formalities for a valid share pledge. The court did not require to decide the point: the governing law clause referred to the “United Kingdom”, and the relevant clause relied on was framed as a warranty about whether steps were required under Cypriot law for validity/admissibility. Since the judgment turned on repayment of a loan (not enforcement of the share pledge), the share pledge formalities opinion evidence was not determinative.

(e) Competency and pleadings: decree must match conclusions

A notable procedural sting lay in disposal. The sums pled in the conclusions did not align with the admitted loan advances in the joint minute. Even though the parties had agreed a euro-equivalent total, the court held it could not “competently” grant decree for a sum not craved in the conclusions. The case was therefore put out By Order to address the appropriate orders.

(f) Expenses: “indemnity basis” and reasonableness

The pursuer relied on a clause stating that “reasonable legal and other costs and expenses” incurred in negotiating and enforcing the agreement would be “on a full indemnity basis” for the borrower’s account. Lord Lake observed that “indemnity basis” is not a term of art in Scotland (unlike England) and treated the submission as seeking an enhanced “agent/client—client paying” award.

The court refused that: the clause was expressly qualified by reasonableness, and much of the pleaded and evidential material was irrelevant to the ultimate basis of decision (repayment on demand). Party-and-party expenses were therefore indicated as the appropriate order.

3.3 Impact

Practical reaffirmation of repayment-on-demand: The case underscores that, in Scots law, a lender may succeed without proving default where a loan agreement lacks ordinary-course repayment terms; demand is enough, absent clear contrary agreement.
Drafting lesson for secured loans: Default/enforcement clauses (especially those focused on security realisation) may not, by themselves, amount to an “agreement to the contrary” displacing the implied term. If parties intend “repayable only on default” or “repayable at a fixed date/trigger”, they must say so clearly.
Litigation discipline: Where proofs become mired in disputed conduct, an implied-term route may be decisive. Conversely, parties should ensure pleadings and conclusions accurately match the sums that can be proved/admitted; otherwise competency issues can delay decree.
Expenses clauses in Scotland: Even where agreements speak of “indemnity”, Scottish courts may still control the award through “reasonableness” and the distinction between party-and-party and agent/client bases.

4. Complex Concepts Simplified

Event of Default: A contractually defined trigger that typically accelerates obligations or allows security enforcement. Here, the court held that alleged breaches were not proved and, in any event, breach of the SPA was not automatically an Event of Default under the SPLA.
Implied term: “repayable on demand”: A legal rule inserted by law into a loan contract when the contract does not state when repayment is due. Under Nielsen v Stewart, the borrower must repay when the lender demands payment, unless the parties have agreed otherwise.
Unjust enrichment / recompense: A remedy requiring a transfer/benefit that lacks legal justification. If a contract supplies the basis for repayment, courts generally do not resort to unjust enrichment.
Party-and-party vs agent/client expenses: Party-and-party expenses broadly reflect costs reasonably incurred for conducting the litigation. Agent/client (client paying) is more generous. The court treated the contractual “indemnity” wording as limited by “reasonableness” and not automatically warranting the enhanced basis.
Competency (decree and conclusions): A Scottish court’s award must fit within what is formally asked for in the conclusions. Even if the evidence proves a different figure, the court may require amendment or further procedure before granting decree.

5. Conclusion

Lord Lake’s opinion in [2026] CSOH 64 provides a clear, practically important application of Nielsen v Stewart 1991 SC (HL) 22: where a loan agreement contains no ordinary-course repayment provision, repayment is implied to be on demand unless the parties have clearly agreed otherwise. The decision also cautions against overreliance on sprawling breach narratives where the contract’s structure may permit a simpler route to decree, and it reinforces that “indemnity” costs clauses in Scotland remain controlled by reasonableness and do not automatically translate into enhanced expenses awards.