Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 1. Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 4., (e)

(1) A court can automatically raise illegality of a loan contract, which did not comply with domestic legislation. A court can automatically apply provisions of domestic consumer legislation in disputes involving its enforcement.

(2) The contractual clause in which a consumer acknowledges that mandatory formal requirements are complied with, cannot make up for the legal obligation to effectively comply with such requirements.

According to a French legislation, a consumer loan contract has to be accompanied by a detachable withdrawal form.

The defendants signed a loan contract that included a provision saying that they acknowledge being in a possession of an offer that included a detachable withdrawal form.

The defendants did not pay back the loan.

The plaintiff requested a payment, and produced its copy of the loan contract. However, the copy did not include the withdrawal form.

The defendants did not contest the loan offer or its elements.

(1) Can a judge automatically raise illegality of a loan contract, which did not include a mandatory detachable withdrawal form and thus did not comply with domestic legislation?

(2) Is a consumer's signature under a printed statement in which he acknowledges being in possession of a contract with a withdrawal form sufficient to prove that the trader complied with the requirement to provide the contract with the withdrawal form?

(1) In a short reasoning the court established that, pursuant to Section L. 141-4 of the French Consumer Code, it can automatically apply the provisions of the French Consumer Code in disputes involving its enforcement. Therefore, when these provisions were not complied with, it can automatically raise the illegality of a disputed loan.

(2) Pursuant to Sections L. 311-8, L. 311-13, R. 311-7 and L. 311-33 of the French Consumer Code (transposing article 7.4 (e) of the UCP Directive), a trader who grants a loan to a consumer based on a loan offer provided without any detachable withdrawal form, performs a misleading commercial practice and is therefore deprived of its right to receive interest payments.

The clause in which a consumer acknowledges that he received a copy of the contract with attached withdrawal form cannot make up for the legal obligation to effectively provide the debtor with such withdrawal form.

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Lower court's decision was confirmed and the plaintiff's appeal dismissed.