Authentic Loan: Legal Security and Contractual Balance

Extract

[...] - Introduction In France, household debt is part of the economic landscape and affects a large part of the population. Nearly one in two households has at least one outstanding loan, and the average debt ratio has followed an upward trend over the past few decades. In 2022, household debt reached 66% of GDP, a higher level than in other major European economies, although lower than that of the United Kingdom or the United States. Since the 1990s, individual debt has experienced significant growth on a global scale.1 In some cases, this increase has led to major financial crises, such as the one in 2007-2008, illustrating the risks of excessive use of credit. [...]

[...] Does it allow for the effective prevention of disputes, the assurance of contractual balance and the securing of loan execution, or is its formalism sometimes a constraint that could be avoided? We will first see in what way the authentic act constitutes an essential guarantee at the stage of the conclusion of the loan contract, offering increased legal security to the parties and preventing potential contractual imbalances We will then analyze its interest during the execution of the loan and in case of recovery, emphasizing its role in protecting creditors and borrowers and the enforceability that follows (II). [...]

[...] On the other hand, payment incidents had increased by 10% in a year. These figures testify to growing economic fragility, but also highlight the importance of legal mechanisms designed to protect both borrowers and lenders. They remind us that access to credit must be accompanied by safeguards to avoid situations of over-indebtedness with serious consequences.2 Among these mechanisms, the authentic loan stands out as a particularly protective legal instrument. However, before delving into the subject, it is essential to clarify the meaning of the key terms that structure the thinking, namely authenticity and loan contract. [...]

[...] In the matter of authentic loans, their intervention is of paramount importance, both to ensure the formal validity of the act and to protect the interests of the parties involved.9 In this context, the notary exercises a mission of impartial advice, explaining to borrowers and lenders the scope of their commitments and verifying the regularity of the clauses of the contract. The authenticity of a notarial act is based on a rigorous legal framework, dictated by legislation and the deontological rules specific to the notarial profession. In accordance with the principles established by the ordinance of 2 November 1945 and the current deontological standards, the notary is required to exercise his functions with impartiality, integrity and diligence. [...]

[...] The Civil Code distinguishes several types of loans according to their nature and execution modalities. The loan for use, formerly designated under the term of commodatum before the 2009 reform, is characterized by the provision of a good that the borrower must return in kind after use, without acquiring ownership or disposing of it freely. On the other hand, the consumption loan concerns fungible goods, particularly money, which the borrower can use freely subject to returning an equivalent quantity of the same good. [...]