French For Credit Agreement

The first judicial decision challenging the traditional classification of loan contracts as real contracts was the judgment of the Court of Cassation of 27 May 1998. The court decided that loans granted by credit professionals to non-professionals are governed by Article L 311-2 of the French law on consumer protection and are not real contracts. There is therefore a contract as soon as both parties have expressed their willingness to commit. This decision was based on a specific provision of Article L 311-15 of the Consumer Code, which expressly stipulates that such credit agreements exist as soon as the credit offer has been accepted by the non-professional party. However, some types of contracts do not operate according to this principle. Their existence and validity are subject to additional formalities. Credit agreements are such a type of contract. This framework agreement, signed during Immelt`s recent visit with President Fran├žois Hollande, strengthens France`s position at the heart of the global energy market. In this case, the loan was intended for the purchase of agricultural equipment and was subject to the condition that the buyer withdraw a life insurance contract. This condition was met, but the buyer died before the funds were transferred. The bank then refused to execute the loan.

This loan was not governed by the Consumer Code, but by Article 1892 of the French Civil Code, which defines credit agreements. This means that the contract was subject to the theory of the Real Contract. On this basis, the Bank argued that it could not be compelled to transfer the funds, as no credit agreement is in progress. .

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