Court rulings on the annulment of contractual interest clauses and substitution of statutory interest rates due to incorrect TEG mentions in loan contracts.
Extract
[...] =Anatocism is therefore a an instrument of financial return legitimate, but framed A LEGAL PROTECTION OF THE DEBTOR The temporal restriction (one year) and the need for an express stipulation aim to to avoid abuses. In the context of the right of the consumer, l'anatocisme is, in fact rarely applied, because the legislator prioritizes the transparency of the TAEG and the protection of the consumer (art. L. 312-1 and C. consom.). AN ARTICULATION WITH OTHER DEVICES - Article 1343-2 articulates with article 1343-1, here prohibits unilateral modification of the interest rate without agreement of the parties. - It also completes the rules related to interest rate legal (art. L. 313-2 C. [...]
[...] In other words, as soon as the client's behavior is gravely contrary to probity or susceptible of compromising the trust relationship, the bank may break off immediately credit, without having to observe the legal notice period of 60 days provided for in Article L. 313-12 CMF. VALUE: The judgment reaffirms the constant jurisprudence of the Court of Cassation on theexception to the principle of prior notice in case of serious fault of the client : - Com June 2001, No. 98-22,495: possibility of immediate termination in case of seriously reprehensible behavior. - Com Nov No. 12-25,315: the client's fault justifies the suppression of the legal notice period. [...]
[...] - It shows that the the criterion of 'detectability' of the error is central, and the Court does not adopt a systematic presumption in favor of the non-professional borrower. - It can also be read as a turning point towards moderation of sanctions in the case of erroneous TEG (although here it is prescription that is at issue) - what confirms more broadly the judicial and legislative evolution (notably the ordinance n° 2019-740 of 17 July 2019). =At long term, this solution mayto limit the period during which a borrower can contest a contract, what reinforces stability for credit institutions. [...]
[...] The interests must be expired for at least one full year ; 2. And their capitalization must be as provided for in the contract or authorized by a court decision. II) CONDITION OF CAPITALIZATION OF INTERESTS TEMPORARY CONDITIONS - ONE YEAR OF EXPIRED INTERESTS The article requires that the interests be due since at least one year. This means that anatocism cannot intervene neither in advance, neither for periods of interest less than twelve months. CONDITION OF FORM - A CONTRACTUAL CLAUSE OR JUDICIAL DECISION Two sources can found anatocism THE CONTRACT THE JUDICIAL DECISION If a express clause of capitalization is included in the loan agreement, it must be clear and comply with the formalism of banking law (often verified by the compliance of the effective global rate - APR/TEG). [...]
[...] The error is equivalent to a absence of interest rate, and must therefore lead to the substitution of the legal interest rate. - The Court of Appeal having noted that the TEG appearing in the notarial deed was erroneous, she would have had to drawing the legal consequences from this observation and pronouncing the nullity of the clause of interest, not a simple partial loss of rights. - By deciding the opposite, the court of appeal would have violated the aforementioned articles (1907 C. civ. ; L. 313-1 and L. [...]
