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Published on August 26, 2024
The bank demanded repayment within 15 days of the outstanding capital and interest plus penalties from a borrower in default of payment. The Court of Cassation considered this delay to be abusive.
In July 2011, an individual took out a mortgage loan from the Crédit Agricole de Lorraine regional bank for €220,000, repayable in 120 monthly installments at a rate of 4.05% per year. He did not pay several of the installments. Therefore, on March 30, 2018, the financial institution sent him a formal notice to regularize the situation within 15 days. During this period, the client did not make any payments and did not dispute the amount of the debt. As a result, the bank declared “forfeiture of the term” on June 5, 2018. This means that due to the unpaid amounts, it demanded immediate payment of the outstanding capital, the interest on this amount and the penalties, after an unsuccessful formal notice and without the need for any legal formalities.
The bank respects the contract
In a decision dated 5 January 2023, the Metz Court of Appeal declared the bank’s application admissible since the formal notice was regular. It complied with the general terms and conditions of the contract, since the document included the sum of €105,282 to be paid and the regularisation period of 15 days. The borrower’s claims were therefore rejected. He was ordered to pay the outstanding capital, plus the termination indemnity of 7%. Since the borrowing rate of 4.05% was not excessive, the judges considered that there was no need to moderate the contractual penalty.
The notice was unreasonable
The borrower appeals to the Court of Cassation. He criticizes the judges for not having considered the clause allowing the forfeiture of the term after such a short notice period as abusive. His action is crowned with success. The judges of the high court recall that « in contracts concluded between professionals and non-professionals or consumers, clauses which have the object or effect of creer, to the dthe non-professional or consumer, a dandmeaningful balance between the rights and obligations of the parties to the contract » (1). This 15-day period was not reasonable notice, because it created a significant imbalance to the detriment of the customer, which suddenly exposed him to a worsening of his repayment conditions.
(1) Court of Cassation, 1st Civil Chamber, May 29, 2024, appeal no. 23-12.904. Partial cassation.
