Variance in Terms of the Contract in Banking

A variance in the terms of a contract in banking is a change to the original terms of the contract that is made without the consent of all parties to the contract.

Types of Variance in Banking Contracts

There are two main types of variance in banking contracts:

  • Unilateral variance: This is a change to the terms of the contract that is made by one party to the contract without the consent of the other party.
  • Mutual variance: This is a change to the terms of the contract that is made by both parties to the contract.

Effect of Variance in Banking Contracts

The effect of a variance in a banking contract will depend on the type of variance and the terms of the contract. In general, a unilateral variance is not binding on the other party to the contract. However, a mutual variance is binding on both parties to the contract.

Enforceability of Variance in Banking Contracts

The enforceability of a variance in a banking contract will depend on the law of the country where the contract was made. In some countries, variances are not enforceable unless they are in writing and signed by all parties to the contract. In other countries, variances may be enforceable even if they are not in writing.

MCQs on Variance in Terms of the Contract in Banking

  1. Which of the following is not a type of variance in banking contracts?
    • Unilateral variance
    • Mutual variance
    • Implied variance
    • Express variance
    • Answer: Implied variance. A variance in a banking contract must be either unilateral or mutual. It cannot be implied.
  2. A unilateral variance is binding on the other party to the contract. Is this always true?
    • No, this is not always true. A unilateral variance is not binding on the other party to the contract unless the other party has accepted the variance.
  3. A mutual variance is enforceable even if it is not in writing. Is this always true?
    • No, this is not always true. A mutual variance may not be enforceable if it is not in writing if the law of the country where the contract was made requires variances to be in writing.
  4. A variance in a banking contract can only be made by the parties to the contract. Is this always true?
    • No, this is not always true. A variance in a banking contract can also be made by a court of law if the parties to the contract cannot agree on the terms of the variance.
  5. A variance in a banking contract can only be made before the contract is signed. Is this always true?
    • No, this is not always true. A variance in a banking contract can also be made after the contract is signed, but only if all parties to the contract agree to the variance.