The payment card has become an everyday tool, a reflex for paying for purchases or withdrawing cash. Behind this trivial gesture, however, lies an often dense and technical contract between the user and his bank. This document, known as the carrier contract, is not just a form. It establishes a precise legal framework that defines the rights and obligations of each party. Ignorance of it is the source of many disputes, particularly when unauthorised transactions or malfunctions occur. Understanding the workings of this contractual relationship is therefore essential for any cardholder wishing to assert their rights. The purpose of this article is to decipher this contract, in addition to our complete legal guide to payment cardsto give you the essential reading keys.
The contract between the issuer and the cardholder
Issuing a payment card is not automatic. It is systematically governed by a contract that formalises the relationship between the bank, referred to as the issuer, and its customer, the cardholder. The purpose of this document is to define the precise conditions of the service offered to the cardholder and the terms and conditions of use of the card. It is an essential prerequisite for issuing this means of payment.
Parties to the contract: issuer, holder (capacity, minors, protected adults)
The payment card contract is concluded between two main parties. On the one hand, there is the issuer, which is a credit institution or an authorised financial institution. On the other, the cardholder, who is the customer holding a bank account with this institution. The validity of this commitment is based on the legal capacity of the holder to carry out acts of disposal. In principle, the card can only be issued to a person of full age and capacity.
There are special situations for people with limited capacity. The issue of a card to an adult under guardianship, for example, requires the authorisation of the guardian. A bank that ignores this rule and issues a card that allows transactions to be carried out alone is liable. Similarly, a card may be given to a minor, but only with the authorisation of the minor's legal representative. These cards are generally systematic authorisation cards or cash withdrawal cards with limited limits, to avoid getting into debt. Managing these delicate situations is a major challenge, as we explain in our article on managing bank accounts for vulnerable people.
Issuing the card: substantive and formal requirements (normal account, joint account, proxy)
Cards are never issued spontaneously; they must be expressly requested by the customer. Forced delivery of an unsolicited card is a prohibited commercial practice. Before the contract is concluded, the credit institution has a duty to provide clear information. It must provide the customer with the general terms and conditions of its banking services and the applicable charges, in particular the cost of the annual card fee.
The case of a joint account raises specific issues. Case law requires the consent of all joint account holders to be obtained before a card is issued to one of them. Failure to do so could result in transactions carried out using the card being deemed unenforceable against the other account holders. The situation is different for a proxy holder. If expressly authorised by a power of attorney on the account, an authorised representative may be issued with a card in his or her name to carry out transactions on the account of the principal. However, the account holder remains responsible for the transactions carried out.
Refusal to issue the card and withdrawal
Unlike its obligation to give reasons for refusing a chequebook, a credit institution may refuse to issue a payment card at its own discretion, without having to justify its decision. This refusal is based on the *intuitu personae* nature of the contract, i.e. it is concluded in consideration of the customer's own person and solvency. Such a refusal can only be penalised in the event of a clear abuse of rights or discrimination.
Similarly, the bank, which retains ownership of the card, can withdraw it at any time or refuse to renew it. At present, framework contracts provide for the option of "blocking" the payment instrument. The Monetary and Financial Code regulates this practice by requiring "objectively justified reasons", such as the security of the card, a presumption of fraudulent use or an increased risk of non-payment by the cardholder.
The legal nature of the contract (membership, synallagmatic, duration)
The carrier contract has several important legal characteristics. First and foremost, it is a contract of adhesion. This means that its clauses are drafted in advance by the bank and that the customer simply accepts them without being able to negotiate them. This nature justifies increased vigilance with regard to the balance of clauses and consumer protection.
It is also a two-way contract, as it creates reciprocal obligations: the bank undertakes to provide a functional payment service, while the cardholder undertakes to comply with the conditions of use and to pay the sums due. Finally, the contract is generally concluded for a fixed period, often one or two years, corresponding to the period of validity of the card itself. It is usually renewable by tacit agreement, unless one of the parties gives notice of termination.
Essential elements of the contract and compulsory information
The regulations, particularly under European impetus, impose a concern for transparency. The contract must be drafted in simple, understandable terms. It must include a certain amount of minimum information to clarify the cardholder's consent. The essential elements include a precise description of the card and its functions, the payment and withdrawal limits, the obligations and responsibilities of each party, the debit periods, the methods for calculating charges and any interest, and the dispute procedures.
In addition, the bank has a continuing obligation to provide information. Periodic account statements must enable customers to clearly identify each transaction carried out, specifying its amount and origin. Customers must be notified in writing of any changes to charges two to three months before they take effect, giving them time to object.
Amending and terminating the contract
The issuing institution generally reserves the right to unilaterally amend the terms and conditions of the contract. This practice is subject to certain restrictions. Any proposed amendment must be communicated to the customer on a durable medium no later than two months before the planned date of application. If the customer remains silent at the end of this period, this constitutes acceptance. If the customer does not accept the new conditions, they have the right to terminate the contract at no cost.
Termination may also be initiated by either party. The cardholder may return the card at any time, but will generally not be entitled to a refund of the pro rata fee. The bank may require the card to be returned, thereby terminating the contract. Lastly, certain events lead to automatic termination, such as the cardholder's death or legal incapacity, or the closure of the account to which the transactions are debited.
Issuer's contractual obligations and liability
The bearer contract does not just impose obligations on the customer. The bank, as a professional, is bound by strict duties, the breach of which may give rise to liability. These obligations concern both the technical execution of transactions and the security of the system.
Cashiering obligations and execution of transactions
The issuer's fundamental obligation is to honour the payment order given by the holder. This order, whether validated by entering the PIN or by signature, is irrevocable. The cardholder's bank receives the payment advice from the merchant's bank and must make the payment. Before doing so, it must check that the order is formally in order. While this check is now automated using the secret code, checking the signature on invoices has long been a crucial stage, and failure to do so could render the acceptor (the merchant) liable and, by extension, the issuer.
Proof of transactions: burden and means (electronic, signature)
If a transaction is disputed by the holder, it is up to the issuer to prove that the transaction has been recorded and accounted for correctly. The burden of proof lies with the bank. Historically, this proof was based on the receipt signed by the customer. With the widespread use of microchips, proof has become electronic. Case law, enshrined in the Act of 13 March 2000, recognises the probative value of computer records attesting to the composition of the confidential code. Unless a technical failure can be demonstrated, proof that a transaction has been validated by the cardholder's PIN is generally sufficient to establish its authenticity.
Issuer liability: non-performance, malfunction, duty of care
The bank is responsible for the smooth operation of the payment system it provides. It may be held contractually liable in the event of non-execution or faulty execution of a transaction, such as debiting the wrong amount or an abnormal delay in processing. It is also liable for direct losses caused by a technical malfunction of the system, such as an ATM failure or a defect in the card chip.
Over and above these technical aspects, case law has imposed a duty of vigilance on banks. Although it has no business interfering in its customers' affairs, the bank cannot remain passive in the face of transactions presenting an apparent and serious anomaly. For example, allowing daily withdrawals up to the limit to accumulate over several days, leading to an overdraft well in excess of the authorisation, may constitute misconduct. These principles form part of the wider framework of general basis of the banker's liabilitywhich requires it to act as a prudent and informed professional.
Obligations and civil liability of the cardholder
The cardholder contract is a reciprocal commitment. Cardholders are not simply consumers of the service; they are required to comply with a number of strict obligations designed to ensure the security of transactions and the long-term future of the system.
Personal use and prohibition on lending the card
Payment cards are strictly personal. The cardholder must sign the card as soon as he/she receives it and keep his/her confidential code secret. This code must never be communicated to a third party, nor kept with the card. Lending the card, even to a close relative, is strictly forbidden under all carrier contracts. Failure to comply with this rule constitutes a contractual fault for which the cardholder is liable. In the event of fraudulent transactions carried out by a person to whom the card has been voluntarily lent, the Cardholder will bear all losses, without being able to benefit from the deductible ceilings provided for in the event of theft.
Use to purchase goods and services (sufficient balance, order to pay)
Each payment made by card constitutes an irrevocable mandate given to the bank to pay the merchant. The cardholder's main obligation is to ensure that, on the day the card is debited, there is a sufficient balance available to cover the transaction. Using a card without sufficient funds is not in itself a criminal offence, unlike issuing a cheque without sufficient funds. It is, however, a contractual breach for which the cardholder is civilly liable. The bank is then entitled to demand repayment of the sums owed, plus the agios and charges stipulated in the contract.
Use for cash withdrawals
The same principles apply to cash withdrawals from ATMs. The holder must ensure that there are sufficient funds in the account. Making a withdrawal that results in an unauthorised overdraft is a simple breach of contractual obligations. Jurisprudence has ruled out criminal charges such as theft or breach of trust. In fact, depositing funds in an automatic teller machine programmed by the bank does not constitute "fraudulent misappropriation". The transaction remains subject to contractual civil liability.
Legal advice on contractual disputes involving payment cards
Disputes arising from the use of a payment card are frequent and can involve large sums of money. Customers may find themselves at a loss when a bank refuses to reimburse them for fraudulent transactions, claiming negligence on their part. Conversely, a bank may have difficulty recovering sums owed by a customer acting in bad faith. In these situations, the intervention of a lawyer with expertise in banking law is often decisive.
The lawyer's role is manifold. He or she begins with a rigorous analysis of the underlying contract in order to identify the clauses applicable to the dispute and to verify their legality, particularly with regard to the regulations on unfair terms. He then examines the facts, such as the computer records of the transactions or the conditions under which an objection was lodged, to assess the responsibilities of each party. On this basis, he can enter into negotiations with the credit institution to find an amicable solution. If this approach fails, he assists and represents his client in court to assert his rights, whether to obtain repayment of unjustified debits or to dispute a wrongly attributed liability. He ensures that the burden of proof, which often falls on the credit institution, has been met and that the bank's obligations of vigilance and security have been properly discharged.
Given the complexity of the rules and the technical nature of the arguments, the assistance of a professional is a major asset in rebalancing the balance of power between the consumer and the financial institution. If you have any questions about a dispute of this nature, you can contact our expertise in banking fraud law.
Sources
- Monetary and Financial Code
- Civil Code
- Consumer Code
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