After the case law on term forfeiture clauses deemed to be unwritten (whose exact real consequences are not yet known), the Court of Cassation has once again weakened a contractual and usual practice of banks.
For a long time, case law allowed banks to automatically close an account or to pronounce the forfeiture of the term in the event of collective proceedings against the customer. The logic was simple: if the customer could no longer meet his obligations, it became difficult to imagine that he would be able to repay the bank.
Historical support from the Court of Cassation
The Court of Cassation had validated this practice (**Cass. com 13/12/2016, No. 14-16037**), considering that the opening of a judicial liquidation automatically led to the closure of the current account and made the balance immediately payable. For banks, it was a valuable guarantee to quickly secure their claims, especially with regard to the guarantee.
But a change of course and a return to legal orthodoxy
But the Court decided to return to the strict application of Article L. 641-11-1-1 of the Commercial Code by a judgment of **11 September 2024 (23-12695) **. This article in fact prohibits any termination or resolution of an ongoing contract solely because of the opening of collective proceedings, including judicial liquidation.
What are the consequences for banks ?
Now, if the account was not closed before the start of the collective proceedings, it is considered to be an ongoing contract. The decision to continue or terminate this contract is up to the liquidator.
How should banks adapt to this reversal of case law ?
1 ️ 609 Adapt and apply the agreements: If this has not already been done, insert a clause allowing closure in the event of the client's persistent financial difficulties, with a 60-day notice period and especially apply this clause in the event of a position
2 ️ — Exchanging with the liquidator: If the account has not been closed before the judicial liquidation is pronounced, give formal notice to the liquidator to take a decision concerning the continuation of the contract by recalling his guarantee obligation.
3 ️ 803 Take precautionary measures with respect to the bond: Take measures to protect your interests by assigning the bond within the legal deadlines, while requesting a stay of proceedings pending the decision on the termination of the account.
👉 This reversal of case law requires banking institutions to be particularly vigilant in adapting and applying their agreements and to react quickly to take precautionary measures.
Our office is at your disposal to assist you.
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