A bank account closes one day or another. By choice, necessity or legal constraint. This breach of contract has legal consequences that customers are often unaware of. Between imposed notice periods, questionable fees and accounting liquidation, closing an account follows a regulated process.
Causes of closure
Any banking relationship can be terminated. The law and case law distinguish between two main categories: voluntary and involuntary terminations.
Voluntary closure: notice and conditions
Account holders may terminate their accounts at any time. Article L. 312-1-1, III of the French Monetary and Financial Code specifies that individuals only have to give 30 days' notice. The bank, on the other hand, must give two months' notice and justify its decision in writing.
However, the Cour de Cassation (French Supreme Court) recognises that banks have greater contractual freedom with regard to business accounts. In a ruling dated 26 January 2010, it pointed out that a bank does not have to justify the reasons for closing an account, unless there is a clear abuse of the law.
Overdrafts are a special case. If an account is overdrawn, its closure triggers the application of article L. 313-12 of the French Monetary and Financial Code, which requires companies to give 60 days' notice, unless the customer has behaved in a way that is "seriously reprehensible".
Easier banking mobility
Since the Order of 22 December 2016, changing banks has been simpler. The scheme provides for:
- Free closure (art. L. 312-1-7, I)
- The obligation for both banks to cooperate in the transfer of recurring transactions
- Compensation for the customer in the event of non-compliance with these obligations
For private individuals, the incoming bank must now take care of the administrative formalities. This is a service that our customers particularly appreciate when we provide legal advice.
Involuntary closure: when the law comes into its own
Several legal situations lead to automatic closure:
- The death of the holder (except joint account)
- Legal incapacity (even if a legal representative can take over)
- Judicial liquidation (with temporary continuation possible under art. R. 641-37 of the Commercial Code)
However, the legislator has provided for a human exception: despite the closure of the account due to death, the bank may pay funeral expenses (art. L. 312-1-4, I of the French Monetary and Financial Code).
The legal effects of closure
Closing is not just an administrative formality. It triggers a cascade of legal effects.
The liquidation period
After notification of closure, the account enters a "liquidation period". Unlike attachment for payment, which is governed by a special regime (art. L. 211-2 of the Code of Civil Enforcement Procedures), this ordinary liquidation :
- Prohibits all new operations
- Obligation to return means of payment
- Allows processing of previous transactions in progress
Establishing the final balance
The account must be closed by operations review. This decree constitutes a significant legal act, distinct from simple periodic statements.
If the balance is in credit, the bank must return the funds. If the balance is in debit, the interest regime changes radically. The Court of Cassation has ruled in a number of cases (in particular Com. 14 October 1981) that once the loan is closed, only the legal interest rate applies, unless there is an explicit clause to the contrary in the initial contract.
The limitation period for the debtor balance now follows the ordinary law period of five years (art. 2224 of the Civil Code).
Contesting the balance: a regulated exception
Challenging a closed account is not easy. Article 1269 of the Code of Civil Procedure lays down a restrictive principle: "no application for revision of an account shall be admissible unless it is made with a view to rectification of an error, omission or misrepresentation"..
Three cumulative conditions are required by case law:
- The parties discussed the elements of the account
- The account has been approved by both parties
- They had "the intention of definitively fixing their respective situations" (Civ. 25 February 1954).
This last condition is particularly strict. Mere silence on receipt of the closing statement is not always sufficient to characterise this definitive intention.
The question of admissible errors is also divisive. Does it concern only material errors or also errors of law? The Court of Cassation appears to have relaxed its position in a ruling of 15 March 1994, accepting certain errors that are not strictly material.
The limitation period for this action runs from the effective closing date, but the customer can prove that he was not informed in order to delay this starting point (Com. 8 March 2005).
Banking litigation regularly reveals situations where customers are being asked to pay large sums of money several years after a closure that they thought was definitive. These legally complex situations require an in-depth examination of statements and agreements.
Our firm is regularly involved in these disputes. We systematically check the regularity of the closing procedures and the exact calculation of post-closing interest. Substantial errors are frequently identified, particularly on business accounts.
Sources
- Monetary and Financial Code: articles L. 312-1-1, L. 312-1-7, L. 313-12, L. 312-1-4
- French Commercial Code: Article R. 641-37
- Code of civil enforcement procedures: article L. 211-2
- Civil Code: article 2224
- Code of civil procedure: article 1269
- Cour de cassation, Com. 26 January 2010, no. 09-65.086
- Court of Cassation, Com. 14 October 1981, no. 80-12.488
- Cour de cassation, Civ. 25 February 1954, Banque 1955. 312
- Cour de cassation, Com. 15 March 1994, no. 91-21.502
- Court of Cassation, Com. 8 March 2005, no. 01-16.132
- Order no. 2016-1808 of 22 December 2016
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