Can a consumer credit agreement already repaid be annulled?
Cass. civ. 1ere, 5 Nov. 2025, No. 24-16.652
Early Repayment Has No Effect on the Nullity of the Credit Agreement (Cass. civ. 1ere, 5 Nov. 2025, No. 24-16.652)
The ruling delivered by the First Civil Chamber of the Court of Cassation on 5 November 2025, published in the official bulletin, constitutes a major clarification of the civil sanctions attached to non-compliance with the public policy rules governing consumer credit, in particular the prohibition on disbursing funds during the reflection period (delai de reflexion).
Indeed, the Court held that the disbursement of funds before the expiration of the seven-day statutory period, referred to in Article L. 312-25 of the Consumer Code, cannot be cured by the early repayment of the contract by the borrower, and consequently, this circumstance cannot preclude examination of the claim for nullity of the credit agreement.
Consumer credit law, particularly for tied credit agreements (credits affectes) linked to the purchase of goods or services (such as the installation of photovoltaic panels in the case at hand), rests on public policy protections designed to guarantee a reflection and withdrawal period (delai de reflexion et de retractation) for the borrower.
Article L. 312-25 of the Consumer Code provides that no payment may be made by the lender to the borrower (or on his behalf) during the seven-day period following acceptance of the credit offer.
Prior case law had already considered that breach of this prohibition is sanctioned by the nullity of the credit agreement (Cass. civ. 1ere, 22 January 2009, No. 03-11.775. – CA Paris, 21 January 2016, No. 15/00322. – CA Douai, 16 January 2020, No. 17/05515. – CA Paris, 21 April 2022, No. 19/18315).
A controversy had arisen regarding the legal effects of the early repayment of the loan by the borrower. Some courts held that the fact that the borrower had repaid the credit early barred him from invoking the nullity of the credit agreement. The challenged judgment (Court of Appeal of Paris, 15 February 2024, No. 22/07057) had indeed held the purchaser’s claim inadmissible on this ground.
The case involved Mr. [M] and Mrs. [H], purchasers, against Futura international and BNP Paribas Personal Finance, following an off-premises order (commande hors etablissement) for a photovoltaic system in 2017 financed by a tied credit agreement. The purchasers sought the annulment of the sales contract and the tied credit agreement due to irregularities, including the disbursement of funds before the expiration of the seven-day statutory period. The Court of Appeal of Paris had held the claim for annulment of the credit inadmissible on the ground that the purchaser had repaid it early. The Court of Cassation issued a partial cassation of the appeal judgment, holding that the breach of the public policy provisions of Article L. 312-25 of the Consumer Code – sanctioned by the nullity of the credit agreement – cannot be cured by the early repayment made by the borrower, and therefore cannot preclude examination of the claim for nullity.
The Abolition of the 7-Day Period for Consumer Credit from 2026 (Ord. No. 2025-800 of 3 September 2025)
It should be noted that Ordinance No. 2025-880 of 3 September 2025, transposing Directive (EU) 2023/2225, profoundly modifies this regime. Although not applicable to the 2017 dispute, this ordinance, which will enter into force on 20 November 2026, abolishes the prohibition on disbursing funds during the seven days. From that date, disbursement of funds will be possible as soon as the borrower accepts the offer.
Although the applicable law will radically change in 2026, this decision applies to all contracts concluded under the former law where premature disbursement of funds constituted a ground for nullity. The Court thus gives a retroactive protective scope to this interpretation for all pending disputes.
