Lenders have likely encountered situations where borrowers push back against collection efforts.

Sometimes, they may even accuse you of causing them harm through negligence, breach of contract, or even breach of fiduciary duty. While the typical borrower-lender relationship doesn't create a fiduciary duty, certain actions might inadvertently change that dynamic and expose you to additional liability.

Fortunately, legal defenses exist to protect lenders in these situations. One powerful tool is the Economic Loss Doctrine, which was recently highlighted by the North Carolina Business Court.

In BioGas Corp. v. NC BioGas Dev., a lender provided funding for several biogas projects. When the borrower defaulted, the lender took an unconventional approach: instead of foreclosing immediately, th

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