The relationship between customer and bank is based on bank accountThis is the central instrument of our economic life. Behind its apparent simplicity lies a legally sophisticated mechanism. By understanding how it works, you can better protect your rights.
Entry of receivables in the account
A little-known legal mechanism
The entry of a receivable in an account constitutes a payment. Customers are often unaware of this fundamental concept. Article L.133-3 of the French Monetary and Financial Code sets out the procedures for initiating payment transactions, in particular via "the payee giving a payment order to the payer's payment service provider".
The entry in the accounts is not sufficient to define the entry in the accounts. Case law makes a clear distinction between these two concepts. In a ruling dated 10 May 1989, the Court of Cassation clearly established that "entry in the accounts necessarily precedes entry in the accounts".
Settlement effect
When a claim is taken into accountIt is extinguished by immediate merger into the balance. The Court of Cassation, in a ruling dated 13 November 2014, confirmed that the settlement effect applies to both current and deposit accounts.
However, there are important limits to this rule. For consumers, the Court of Cassation ruled in 2017 that "the rules of public policy relating to the determination of the starting point of the two-year time limit for foreclosure, specific to consumer credit, cannot be defeated by the entry of the due date of a loan as a debit on a current account where the balance is insufficient to cover the amount of the loan".
Interest and bank charges
The interest agreement
Under article 1907 of the Civil Code, the interest rate must be stipulated in writing. This requirement has been reinforced by case law. In two landmark rulings of 9 February and 12 April 1988, the Cour de cassation put an end to the custom of exempting current account overdrafts from this requirement.
The total effective rate (TEG) must be stated in accordance with article L.313-2 of the French Consumer Code. It may be mentioned after the transactions have taken place, in particular on the periodic statements, in accordance with the established case law of the Court of Cassation (ruling of 23 October 1990).
Value dates
This banking mechanism has been widely regulated. In a ruling handed down on 6 April 1993, the French Supreme Court (Cour de Cassation) limited banking practices by distinguishing between legitimate and abusive transactions. Article L.133-14 of the French Monetary and Financial Code now prohibits value dates, except in the case of cash deposits by professionals.
Value dates can be qualified as unfair terms for consumers, creating "a significant imbalance" under the terms of article L.132-1 of the French Consumer Code.
Fee caps
The law has capped intervention fees to promote inclusive banking. Article L.312-1-3 of the French Monetary and Financial Code establishes two categories of ceilings:
- 8 euros per transaction and 80 euros per month for individuals
- 4 per transaction and €20 per month for people in financial difficulty
Banking mobility is encouraged by the ban on charges when closing an account (article L.312-1-7 of the French Monetary and Financial Code).
Multiple accounts
Independence and compensation
Each account opened by a customer is legally independent. This independence has concrete effects:
- The respective balances do not automatically offset each other
- The amount of funds in a cheque is assessed solely on the account concerned
- Interest is calculated per account
This rule can be overridden by a netting agreement or a letter of amalgamation. These contracts, validated by case law, allow the bank to offset credit and debit balances.
These agreements have their limits. In the case of a co-ownership trustee, the Commercial Chamber ruled on 14 May 1991 that "the netting agreement cannot be enforced against the principals when the bank knows the origin of the funds".
In the event of insolvency proceedings, these agreements remain valid if they were entered into before the cessation of payments. The Court of Cassation confirmed this in a ruling dated 16 October 2007.
Bank account seizure
A regulated procedure
The seizure of a bank account is governed by specific rules set out in the Code of Civil Enforcement Procedures (articles L.161-1, L.161-2 et seq.). It affects "all of the debtor's accounts that represent sums of money", according to article R.211-19.
The seizure-attribution deed immediately transfers ownership of the balance to the seizing creditor (article L.211-2). The account becomes unavailable to allow ongoing transactions to be settled.
Liquidation and protection
The balance entered can be modified for fifteen working days, in particular by :
- Cheques cashed before seizure
- Reversing unpaid bills of exchange
- Card payments if the beneficiary has been credited prior to entry
Sums that are exempt from seizure remain exempt once they have been entered in the account. Article L.162-2 of the Code des procédures civiles d'exécution requires the banker to leave a sum equal to the RSA available to the customer.
The joint accounts pose specific problems. According to case law, only the seized debtor's share is affected, but the account is often blocked in its entirety, leaving it up to the other account holders to apply for segregation.
Understanding these mechanisms can save you a lot of trouble. When fees seem excessive or a seizure seems irregular, don't wait. Personalised legal advice can save you a lot more than it costs. Our is at your disposal to analyse your banking situation and defend your interests.
Sources
- Monetary and Financial Code: articles L.133-3, L.133-14, L.312-1-3, L.312-1-7
- Civil Code: article 1907
- Consumer Code: articles L.132-1, L.313-2
- Code of civil enforcement procedures: articles L.161-1, L.161-2, L.211-2, L.162-2, R.211-19
- Court of Cassation, Commercial Division, 10 May 1989, no. 87-16.236
- Court of Cassation, Commercial Chamber, 13 November 2014, no. 13-24.606
- Court of Cassation, Commercial Division, 25 January 2017, no. 15-21.453
- Cour de cassation, 9 February 1988 and 12 April 1988 (leading cases on interest)
- Court of Cassation, Commercial Division, 23 October 1990, no. 88-19.244
- Cour de cassation, Commercial Chamber, 6 April 1993 (ruling on value dates)
- Court of Cassation, Commercial Division, 14 May 1991, no. 89-14.287
- Court of Cassation, Commercial Division, 16 October 2007, no. 06-14.574
- Deposit and bank account, Régine Bonhomme, Répertoire de droit commercial, 2017
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