Due to tight financial circumstances, Ms Moneypenny decided to conclude a credit agreement with Bond Bank for a sum of €5,000. According to the terms of the contract, she would pay back this sum in 30 monthly rates of €250. Moreover, the last rate would be equal to the loaned amount. This meant that in total Ms Moneypenny would have to pay a sum of about €12,000 to the Bank. After paying 19 monthly rates, Ms Moneypenny found herself in such debt that she was no longer able to continue paying back the loan to Bond Bank. The Bank is now suing for the remaining amount of the loan. Can Ms Moneypenny challenge this claim?

Case Reference: CJEU C-453/10, Pereničová and Perenič v. SOS finance spol. s.r.o., ECLI:EU:C:2012:144.

AUSTRIA

OPERATIVE RULES

Ms Moneypenny can challenge the claim.

DESCRIPTIVE FORMANTS

Art. 879(2)(4) CC and Art. 1 Usurious Contracts Act, using identical wording, declare usurious contracts void. The rule's requirements can be characterised as follows: first, there must be a clear disproportion between the values of performance and counter-performance, which is evidently fulfilled in the present case (€5,000 versus €12,500). Second, the disadvantaged party's free will must be in some way impaired upon the conclusion of the contract; the law mentions, as examples: plight (Zwangslage), a narrow mind (Verstandesschwäche), lack of experience, and emotional excitement. Ms Moneypenny's tight financial circumstances will fall within the first of these criteria. Third, as a subjective element on the creditor's side, the latter must take advantage of the disadvantaged party's situation. The statutory language, referring to “exploitation”, appears to be rather strict in this respect, but the commonly accepted interpretation mitigates this and holds that already negligent ignorance of the other party's situation and of the disproportion in value suffices. The facts of Case 11 do not provide much information in this respect, but it is rather obvious that no one would enter into a credit contract like this voluntarily without any impairment of free will, and that this must at least be assumed by the creditor.

Art. 7(2) Usurious Contracts Act provides a special rule on the consequences of usurious credit contracts: the disadvantaged party can use the full credit period for repaying its debt (i.e. the nominal credit amount of €5,000), and interest is reduced to the double “basic interest rate” (Basiszinssatz) applying at the time of the conclusion of the contract.