Mr. Carlsen was sued by Financial Collection Services for outstanding principal and interest on a student loan. He claimed he had no recollection of receiving money from a student loan or signing loan agreements and that he has been mentally unstable for most of his life. A letter from a psychiatrist indicated that Carlsen had severe mental problems for a long time. Is the loan agreement enforceable? What are the implications for the lending policies of those who grant student loans?
This situation is based on Financial Collection Services Ltd. v. Carlsen (1995), 166 A.R. 78 (Q.B.) and provides a serviceable summary of the basic facts.