Under the terms of a judgment delivered on June 19, 2013, the first civil chamber of the Court of Cassation (appeal no. 12-16.651) ruled that “the conventional interest rate mentioned in writing in the deed of loan granted to a consumer or a non-professional must, like the overall effective rate, under penalty of seeing the legal interest substituted, be calculated on the basis of the  calendar year  ”.

According to this decision, when the interest is calculated over 360 days instead of being calculated over the calendar year, the nullity of the interest clause must be pronounced and the interest at the contractual rate must be replaced by interest at the legal rate. . .

Very many loans are concerned, multiple banks calculating their interest over 360 days in a systematic way.

However, when these files arrive in court, a problem may arise, namely that of prescription, when the loan is more than five years old.
In addition, the problem sometimes arises of whether the mere presence in the loan contract of a provision indicating that interest is calculated over 360 days is sufficient to invalidate the interest clause.

The judgment:-

The judgment rendered on April 2, 2015 by the 16th chamber of the Versailles Court of Appeal (RG N° 13/08484) is particularly interesting since it provides a very favorable response to the borrower in both cases.
In this case, the Bank had made a borrower take out a home loan with the following clause:
“interest accrued between two maturities will be calculated on the basis of 360 days, each month being counted for 30 days carried over to 360 days per year In the event of early redemption, the interest accrued since the last due date will be calculated on the basis of the exact number of days of the period elapsed, deferred to 360 days per year. We specify that the overall effective rate of loans is indicated on the basis of the exact amount of deferred interest 365 days a year”.

The Bank subsequently sued the borrower for repayment of this loan.
The latter had raised the nullity of the interest clause because of the presence of this clause.
The Bank had argued that this request for nullity of the interest clause was time-barred because the loan dated back more than five years.

The Versailles Court of Appeal specifies:-

The Court of Appeal of Versailles specifies, in its decision, that “the litigious real estate loan constitutes a loan devoid of a professional nature and granted by a professional to two undivided consumer purchasers, the limitation period for the action for nullity of the stipulation interest does not run from the conclusion of the contract or the day of acceptance of the offer according to the authentic postmark, but from the date on which the borrower became aware of the irregularity. It is in fact settled case law that for the limitation period to run from the date of the agreement, the non-professional borrower must have been able to ascertain for himself, on reading the act, the error.

However, the contractual clause appearing in point 2 of the general conditions of the loan offer, according to which “All sums due under a loan, in particular any commission or contribution…..interest accrued between two maturities will be calculated on the basis of 360 days, each month being counted for 30 days carried forward on a basis of 360 days in the year .
Note that the overall effective rate of loans is indicated on the basis of the exact amount of interest recorded 365 days a year, does not appear accessible due to the ambiguity of its terms, relating both to the nominal rate and to the overall labor rate. work, to a lay consumer; the latter is not in a position to understand, from reading it, the impact on borrowing costs of this specific stipulation, which operates a distinction which may seem obscure between the nominal rate and the overall effective interest rate .

The Court therefore considers that the claim is not time-barred, since the disputed clause is not accessible, by the ambiguity of its terms, to a lay consumer.
It also recalls that “under Article L 313-1 of the Monetary and Financial Code, the legal rate is set for a calendar year, and that Article R 313-1 of the Consumer Code specifies that ” a calendar year has 365 days or for leap years, 366 days”.
The Court specified that “when an interest rate is not calculated over a calendar year if it is expressly calculated over 360 days, as is the case here, it is apparent by simple application of the texts in force, that the contractual nominal annual interest rate is not validly stipulated in the mortgage loan contract”.
It therefore declares the nullity of the interest clause.
In view of this decision, it appears, on the one hand, that the mere mention of the calculation of interest over 360 days is sufficient to entail the nullity of the interest clause and, on the other hand, that this nullity can be raised, by a non-professional, more than five years after taking out the loan in the presence of an ambiguous clause such as that appearing in the disputed loan agreement.

However, it turns out that an identical clause appears in very many  loan contracts  …

DAMY Law Firm