Banking law, current account, compensation, professional purpose, consumer credit, judicial reorganization, banking relationship, credit balance
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Abstract
Court ruling on current account banking law, discussing compensation of claims and professional purpose of the account.
Extract
[...] COM - 3 JULY 2012 - N°11-19476 - CURRENT ACCOUNT - GENERAL PRINCIPLE OF AFFECTION OF CREDITS : On the occasion of a judgment of annulment rendered on 3 July 2012, the commercial chamber of the Court of Cassation pronounces on the principle of general affection. FACTS : in this case, a bank agrees to lend a company 220,000 euros, the same loan that is subsequently subject to a guarantee of 286,000 euros. This same company already has a current account in the bank's books. [...]
[...] - It has sparked debates in doctrine as to the legal security of the debtor, on the rigor of information in statements and on the balance between banking transparency and contractual freedom. - Certain authors temper this position by strongly emphasizing the need that the statements provide all the information for silent receipt to be valid (effective annual rate, calculation methods, etc.). - Finally, the ruling illustrates the judicial trend to recognize certain subtleties in the banking account regime, in relation to the 'classical' rules of the law of obligations. [...]
[...] - She invokes the articles 1134 and 1147 of the Civil Code (obligation of good faith, contractual fault) to support the argument that the unmotivated and unilateral termination constitutes a fault. QUESTION OF LAW: Can a bank unilaterally terminate a current account agreement without motivation? And, in this case, can it be held liable for abuse? SOLUTION: The Court of Cassation rejects the appeal and approves the Court of Appeal. She recalls that in the absence of a special legal provision, any party to an indefinite-term contract may, without having to justify its decision, unilaterally terminate it, except to engage its liability in case of abuse. [...]
[...] SOLUTION : The Court of Appeal overturned the decision of the appellate court but only insofar as it condemned the bank to repay the disputed fees and commissions. It thus justified : - On the condition of proof of the client's knowledge of the tariff, the judges of the law recall that Article 1134 of the Civil Code (in its previous draft prior to the ordinance of 10 February 2016) applies to agreements between parties. It also cites Article R. 312-1 of the Monetary and Financial Code (in its previous version prior to the decree of 30 March 2018) which requires the bank to make its general terms and its tariff accessible to the client (via display, delivery, etc.). [...]
[...] SCOPE: Reference point frequently cited to define the current account. For banking practice and the security of credit institutions: the ruling specifies that the opening of a 'special account' for the realization of a loan does not constitute a current account if the conditions of the current account are not met. As a result, for the establishment that wants to invoke prescription, the (more favorable) current account regime does not apply automatically. - For prescription: the qualification of a current account is important because, in banking law, prescription can be interrupted or suspended differently depending on whether one is in a simple credit agreement or in a current account. [...]
