Loan Contract Nullity for Unregistered Company

Extract

[...] Imagine a world where unregistered companies could engage guarantors and creditors without legal protection? That would be Pandora's box. But to be frank, I think an alternative solution would have been to focus more on the 2013 addendum. If the bank had insisted that the addendum took up the terms of the original contract, it might have been able to argue that it created a new legal obligation, a kind of 'renegotiation' with the now-registered EURL. But even this approach is thin: the addendum does not lead to novation, so the judge logically rejected this argument. [...]

[...] - 2 risks: - Whether he does it in reverse to society - From the associate's side, to make sure at all costs that ultimately, there was no interest for the society Correction Plan : I. The nullity of the loan contract concluded by an EURL before its registration A. The reminder of the impossibility of saving a contract concluded by a company lacking legal personality - Article 1128 of the CC: capacity to contract is a condition of validity of the contract. - Before its registration, the company has not yet acquired legal personality. [...]

[...] By signing a loan contract on 20 December 2012 for a company that was not yet registered, the bank took a huge risk. It's like lending to a ghost, because, without legal existence, a company cannot enter into contractual obligations. This is the fundamental irregularity: the lack of moral personality at the time of signing. - First of all, it must be said that Article 1842 is not there by chance: it is fundamental for the protection of third parties, ensuring that when they contract with a company, it has a legal existence and the capacity to respond to its actions. [...]

[...] Some may say that this mistake is minor, but when it comes to legal formalities, especially in company law, there is no such thing as a 'small' oversight. If the contract is poorly drafted from the start, the entire structure collapses. The judge's reasoning: was there another option? Here, one could discuss a possible requalification of the loan to keep it, but honestly, the judge respected the logic and rigor of Article 1842: a company without registration does not exist, period. [...]

[...] The drafting of an insufficient amendment to neutralize the nullity of the contract - There are 2 main arguments: - Absolute nullity: protection of a general interest (everyone can invoke this nullity) - Relative nullity: the profession of a personal interest (only the one whose interest is protected can invoke this nullity) - The Court of Cassation said it was an absolute nullity. - When there is a relative nullity, it can always be confirmed. It can always decide to confirm the act and therefore make it valid. - 2ème argument: question of novation. [...]