The European Court of Justice ruled on Wednesday 9 November that failure by a lender to include in a credit agreement all the information which, under EU law, must necessarily be included in such an agreement may be penalised by member states by forfeiture of entitlement to interest and charges.
Has a bank committed an error when it gives consumers a credit agreement to sign that omits a number of details annexed in another document that has not been given to the consumer? This is complex under EU law because Directive 2008/48/EC on consumer credit contracts does not require credit contracts to be a single paper document. In this particular case, the key missing elements were the timing and number of payments due, notary charges and the annual effective interest rate.
The Court of Justice concluded that when a contract refers to another document, noting that the second document is part of the contract itself, it must be on paper or another durable medium and must have been given to the consumer before the contract is signed. The directive does not rule out legislation requiring a contract to be signed, including all documents that are key elements of the contract. Therefore when a bank fails to list in a contract all the information that should be included under the directive, it can be penalised by member states by forfeiture of entitlement to interest and charges. (Original version in French by Jan Kordys)