A entered into a contract of loan with a bank. They stipulated that if there will be a law or BSP circular that will allow the increase in the interest rate, the bank will increase it. Is the stipulation valid?
A)Yes, because of the principle of liberty of contracts.
B)Yes, because of the principle of mutuality of contracts.
C)No, considering that there is no corresponding de-escalation clause.
D)Yes, because the increase is not unilateral.

Question

Quizplus · Accepted Answer

The stipulation is not valid because it lacks a corresponding de-escalation clause, which would allow for a decrease in the interest rate under similar circumstances. This creates an imbalance and could be considered unfair or one-sided.

A Entered into a Contract of Loan with a Bank