Commercial Law — Financial law — Commercial sureties — The legal nature of a commercial loan

Date Citation Note
28.03.2002 Civ 1. Arr. 723 Pourvoi 97-21.422 D. 2000, 240 JCP E n° 23 of 08.06.00, p. 898 Case UFB Lcabail v. Bermond et al. Nature and enforceability as against a bank of a loan agreement to be performed in the future subject to the fulfilment of conditions.
(1) A loan granted by a professional in the credit industry is not a contract formed by the delivery of the thing lent (“contrat réel”); therefore an undertaking by a bank to lend creates an obligation to produce a result (“obligation de résultat”) which can be enforced by ordering the bank to pay over the funds; (2) the bank’s fault in not completing the security package submitted by the deceased borrower overrides any consideration that it agreed to make the loan exclusively in the light of the creditworthiness of the borrower alone.
02.03.1993 Com. 400 Bull. Civ., n° 89, 61 JCP E n° 24 14.06.01 p. 997 Case SCI 5 rue Ampère v. SDR du Sud-Est Nature of a loan contract in insolvency: in course of performance or not?
A loan contract has traditionally been considered as a “contrat réel”, i.e. a contract which is complete as far as one of the parties at least is concerned by the delivery of the asset which is its object. Thus, the lender completes his contractual obligation by delivering the sum lent to the borrower. This case shows the tension between this doctrine and the rule of bankruptcy law that contracts being performed at the time of a bankruptcy order must be affirmed by the administrator in order validly to continue. It also brings out the potential difficulties of proving in an administration in respect of interest current at the time of the bankruptcy order.
Since the funds had apparently been paid to the lender before the start of the administration, the loan contract was not a contract in course of performance under bankruptcy law.