Bull. Civ. 2001.IV, no. 113, p.104
Case Epoux Etzol et Sagecc v. Banque nationale de Paris

Given that by notarial act dated 3 and 15 November 1983, according to the decision under attack (Basse-Terre, 4 May 1998), the bank (Banque nationale de Paris) opened a credit facility in favour of Sageec (la société anonyme de gestion et d’exploitation de la clinique Saint-Christophe), guaranteed in full by M. Marcel Etzol, its director, and his wife; that the sums due under the credit had not been fully repaid by the time M. Marcel Etzol died on 8 March 1985; that when liquidation proceedings were started against Sageec by judicial decision of 25 March 1994, the bank brought suit for the sums allegedly still due to it, as well as for a declaration of its entitlement, against Mme Etzol, the heirs of M. Marcel Etzol and Sageec (represented finally on behalf of the creditors by the Etzols and Sageec); that the latter raised the defence that the term of the contract which stipulated the amount of interest due without specifying the effective total rate was unlawful, and claimed that the bank was liable for failing to see that M. Etzol was covered by the insurance policy referred to in the contract; that on the question of interest the court held that although the defence of relative nullity could have been raised earlier it was now barred by the prescriptive period of five years dating from the signing of the contract;

Given that the Etzols and Sageec criticise the decision below for holding that in the proceedings against Sageec the bank was entitled to claim 938,112 francs, a sum including the contractual interest, whereas, according to them, the defence of nullity is never barred by lapse of time, and that the sum which the bank was claiming included interest disallowed by the terms of the Law of 28 December 1966, so that the debtor was entitled to resist the bank’s claim for execution on the ground of the nullity, even the relative nullity, of the term as regards interest, and that accordingly the court had failed to draw the correct legal conclusions from its own findings and thus violated article 1304 Code civil as well as the maxim quae temporalia ad agendum perpetua sunt ad excipiendum (time bars applicable to claims do not apply to defences).

But given that the defence of nullity can operate only so as to prevent execution of a legal act not already executed, that the claim was for sums still due under a credit facility where the contractual interest had already been met by deduction from the current account of the principal debtor, and that the period of prescription had already run when the defence based on the nullity of the clause regarding contractual interest was raised, the court of appeal was entitled to declare that the Etzols and Sageec could not invoke its nullity;

For these reasons DISMISSES the application for review.

Subsequent Developments

This note on subsequent developments reflects the legal situation as of October 2005.

Com 6 June 2001, Bull no 113 : This judgment reaffirms a solution already advanced by the Cour de cassation (Civ 1, 10 December 1998, Bull no 338) - concerning the most common of loan contracts - and which is found again in other judgments delivered later by the first civil chamber (9 November 1999, Bull no 298, 13 March 2001, Bull no 70, 3 July 2001, Bull no 201, 6 November 2001, Bull no 268, 5 March 2002, Bull no 76, 25 March 2003, Bull no 88), the third civil chamber (30 January 2002, Bull no 24, 14 May 2003, Bull no 103) or the second civil chamber (3 April 2003, Bull no 92, which mentions moreover the permanent nature of the exception of nullity, whilst reaffirming that it "can only be put forward to prevent a demand for execution of a legal act (acte juridique) which has not yet been executed"). This solution is nevertheless disputed by a school of legal writers, for whom "only a contract which remained as a complete dead letter countenances the permanence of the exception" (Laurent Aynes, Dalloz 2002, sommaires commentes, p 2837/38, regarding Civ 3, 30 January 2002, op cit).

Translation by Raymond Youngs

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