Case law

  • Case Details
    • National ID: Supreme Court, Judgement SKC-20/2021, C33590017
    • Member State: Latvia
    • Common Name:N/A
    • Decision type: Supreme court decision
    • Decision date: 11/05/2021
    • Court: Supreme Court
    • Subject:
    • Plaintiff:
    • Defendant:
    • Keywords: consumer rights, the concept of consumer, unfair contract terms, penalty
  • Directive Articles
    Unfair Contract Terms Directive, Article 2, (b)
  • Headnote

    ECLI:LV:AT:2021:0511.C33590017.28.S

    The loan contract is subject to consumer protection law and, specifically, the regulation of unfair contract terms if the borrower concluded this contract while acting for purposes outside of his economic activity.

  • Facts

    A limited liability company concluded the loan contract with a natural person who, inter alia, indicated that the aim of the use of the loan is to commence and develop commercial activity. The borrower was killed two days after the conclusion of the contract and all the loan money was stolen. These facts were established during the investigation carried out in the criminal case. The lender applied to a court with an application for voluntary sale of immovable property, which was pledged for securing the fulfilment of obligation, by auction through the court. Both heirs submitted a claim to the court requesting, inter alia, to release them from the unfavourable consequences of the default of the loan contract and exempt them from payment of interest, penalty, and late payment interest. By reviewing the case at appeal, the appeal instance court ex officio assessed the penalty clause from the point of view of its compliance with unfair contract terms and recognized it as unfair and not binding on the consumer. Both the co-plaintiffs and the defendant challenged the appeal instance court judgement before the Supreme Court. The defendant specifically disagreed that the borrower had concluded the loan contract as a consumer.

  • Legal issue

    Is a natural person who concluded the loan contract with the purpose of using the loan for commencing and developing his commercial activity be considered a consumer?

  • Decision

    The Supreme Court established that the appeal instance court failed to examine the factual circumstances and the contents of the loan contract concerning possibility to admit the borrower as a consumer. Specifically, the loan contract itself stated that the purpose of receiving the loan is to commence and develop commercial activity of the borrower. In the result, the Supreme Court satisfied the cassation complaint of the defendant and revoked the appeal instance court judgement in this part.

    URL: https://www.at.gov.lv/downloadlawfile/7095

    Full text: Full text

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  • Result

    The Court revoked the appeal instance court judgement in the part relating to exemption of the plaintiffs from the payment of penalty and reversed the case back to the appeal instance court for a repeated review.