Mortgage Loan and Unfair Clause: When a 15-Day Period Is Not Enough (CA Paris, Pôle 5 ch. 6, 18 February 2026, No. 24/13463)

CA Paris, Pôle 5 ch. 6, 18 February 2026, No. 24/13463

The Facts and Background of the Dispute

On 24 December 2016, the Brie Picardie regional mutual agricultural credit bank (Caisse régionale de crédit agricole mutuel Brie Picardie) granted Mr [H] [E] a mortgage loan to finance the purchase of a property. This loan, in the amount of €128,548, was repayable in 276 monthly instalments at an annual effective overall rate (taux annuel effectif global) of 1.50%.

From 5 September 2022, the borrower stopped making regular repayments on his loan. In the face of this default, the bank sent two registered letters with acknowledgement of receipt, dated 19 January 2023 and 17 February 2023, formally calling on Mr [H] [E] to make good the unpaid instalments. These formal notices went unheeded.

In these circumstances, the Brie Picardie mutual agricultural credit bank summoned Mr [H] [E] for payment by a document served on him in person on 22 April 2023, with notification of the registration of a provisional judicial mortgage authorised by the enforcement judge (juge de l’exécution) of the Court of First Instance (tribunal judiciaire) of Évry.

Mr [H] [E] did not appoint a lawyer before the court of first instance. By a judgment deemed adversarial (jugement réputé contradictoire) of 26 April 2024, the Court of First Instance of Évry ordered Mr [H] [E] to pay the bank the sum of €102,467.28, together with interest at the contractual rate of 1.5% from 17 February 2023, as well as a fixed termination indemnity of €7,172.70. The court did, however, dismiss the bank’s claim for capitalisation of interest.

It is against this decision that Mr [H] [E] lodged an appeal on 17 July 2024, challenging in particular the unfair nature of the acceleration clause and the amount of the fixed indemnity.

The Unfair Nature of the Acceleration Clause

Developments in European and National Case Law

The central question in this dispute concerns the validity of the acceleration clause (clause de déchéance du terme) inserted in the loan agreement. Before analysing the disputed clause, it is worth recalling the applicable legal framework, which results from a recent and convergent development in case law at European and national level.

Under Article L. 212-1 of the Consumer Code (code de la consommation), in contracts concluded between professionals and consumers, clauses whose object or effect is to create, to the detriment of the consumer, a significant imbalance between the rights and obligations of the parties to the contract are unfair. This provision transposes into French law Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts.

The Court of Justice of the European Union has gradually clarified the criteria for assessing the unfair nature of acceleration clauses in a series of noteworthy judgments. In its judgment of 26 January 2017 (Case C-421/14), the CJEU established that, when assessing the potentially unfair nature of a clause relating to acceleration on account of the debtor’s failure to perform its obligations during a limited period, the national court must examine several cumulative factors:

• whether the professional’s right to declare the whole loan due depended on the consumer’s failure to perform an obligation that was essential in the contractual relationship concerned;
• whether that right was provided for in cases where such failure was sufficiently serious having regard to the term and amount of the loan;
• whether that right derogated from the ordinary rules of law applicable in the matter in the absence of specific contractual provisions;
• whether national law provided adequate and effective means enabling the consumer subject to such a clause to remedy the effects of the loan becoming due.

In a later judgment of 8 December 2022 (Case C-600/21), the CJEU clarified that these criteria are to be understood as neither cumulative nor alternative, but as forming part of the overall circumstances surrounding the conclusion of the contract concerned, which the national court must examine in order to assess the unfair nature of a contractual term.

More recently still, in its judgment of 8 May 2025 (Case C-6/24), the CJEU provided a fundamental clarification concerning the period offered to the consumer. It ruled that, for the purposes of assessing the potentially unfair nature of an acceleration clause contained in a loan agreement, the national court must verify whether the means enabling the consumer to avoid early repayment of the loan or to remedy its effects are adequate and effective, taking into account in particular whether the period offered to the consumer to pay the sums remaining due under the loan is materially sufficient.

The French Supreme Court has aligned itself with this European case law. In a noteworthy judgment of 29 May 2024 (1st Civil Chamber, 29 May 2024, appeal No. 23-12.904, published), it held that a court of appeal infringes Article L. 212-1 of the Consumer Code where, in order to rule out the unfair nature of a clause providing for automatic termination of the loan agreement fifteen days after a simple formal notice sent to the borrower by registered letter with acknowledgement of receipt, in the event of non-payment of all or part of the sums due on their due date, it finds that acceleration was declared after a formal notice that went unheeded and that specified the period the borrowers had to prevent it, whereas a clause providing for automatic termination of the loan agreement after a formal notice to pay one or more unpaid instalments, without notice of a reasonable length, creates a significant imbalance between the rights and obligations of the parties to the detriment of the consumer, who is thus exposed to a sudden worsening of the repayment terms.

In earlier judgments, the French Supreme Court had already struck down acceleration clauses providing for no period at all or for manifestly insufficient periods. It thus held that a court of appeal fails in its duty and infringes Article L. 132-1 of the Consumer Code (now L. 212-1) where it applies a clause in a mortgage loan agreement allowing the bank to demand immediately, without prior formal notice or summons to the borrower and without notice of a reasonable length, all the sums due under that loan in the event of non-payment of an instalment on its due date, without examining of its own motion the unfair nature of such a clause (1st Civil Chamber, 22 March 2023, appeal No. 21-16.476, published).

Likewise, the highest court considered that a clause providing for automatic termination of the loan agreement eight days after a simple formal notice sent to the borrower by registered letter with acknowledgement of receipt or by extrajudicial document, in the event of non-payment of all or part of the instalments on their due date or of any sum advanced by the lender, creates a significant imbalance between the rights and obligations of the parties to the detriment of the consumer, who is exposed to a sudden worsening of the repayment terms (1st Civil Chamber, 22 March 2023, appeal No. 21-16.044, published).

Application to the Case: A 15-Day Period Is Insufficient

On the strength of this now well-established case-law framework, the Paris Court of Appeal examined the acceleration clause contained in the general conditions accepted by Mr [H] [E]. This clause stipulated: “In the event of any of the cases of acceleration referred to below, the lender may rely on the immediate due date of this loan, in principal, interest and ancillary sums, without any judicial formality and after a formal notice that has remained unsuccessful for 15 days: in the event of default in repayment of the sums due under the loan(s) forming part of this financing…”

The Court of Appeal considered that such a clause, which provides for automatic termination of the loan agreement after formal notice but without notice of a reasonable length, creates a significant imbalance between the rights and obligations of the parties to the detriment of the consumer, who is thus exposed to a sudden worsening of the repayment terms.

The Court clarified a fundamental point: the unfair nature of the clause is assessed solely by reference to the criteria derived from the CJEU judgments, irrespective of the conditions in which the clause is implemented. In other words, it makes no difference that the bank, in practice, allowed a longer period than the one provided for in the clause; it is the clause itself, as drafted, that must be examined.

This position is consistent with the judgment of the Second Civil Chamber of the French Supreme Court of 3 October 2024 (appeal No. 21-25.823), which recalled that the unfair nature of a clause is assessed in the abstract (in abstracto), by reference to its wording, and not in the concrete (in concreto), by reference to its actual application in the case at hand.

The Paris Court of Appeal therefore declared the acceleration clause unfair and deemed it unwritten, in accordance with the provisions of Article L. 212-1 of the Consumer Code, which provides that unfair clauses are deemed unwritten.

This solution forms part of a clear case-law trend: French courts, following the CJEU’s guidance, now consider that periods of less than one month do not constitute notice of a reasonable length within the meaning of European case law. While the CJEU mentioned a period of one month as one that could be considered satisfactory, French courts appear to be moving towards that minimum duration.

Judicial Termination of the Loan Agreement

The Conditions for Judicial Termination

Once the acceleration clause had been declared unfair and unwritten, the question arose whether the bank could nevertheless obtain termination of the loan agreement (résolution) and repayment of the sums due. The disappearance of the acceleration clause does not mean that the defaulting borrower can escape its obligations.

The Paris Court of Appeal recalled that, in accordance with Article 1227 of the Civil Code (code civil), termination may in any event be sought from the court. This provision, which stems from the reform of contract law that came into force on 1 October 2016, enshrines the principle that judicial termination always remains available, even in the absence of a termination clause or where that clause is set aside.

Article 1229 of the Civil Code sets out the effects of termination: “Termination brings the contract to an end. Termination takes effect, as the case may be, either under the conditions laid down in the termination clause, or on the date the debtor receives the notification given by the creditor, or on the date fixed by the judge or, failing that, on the day of the summons. Where the performances exchanged could only be of use through full performance of the terminated contract, the parties must return in full what they have obtained from each other. Where the performances exchanged were of use as the contract was performed reciprocally, there is no restitution for the period prior to the last performance that did not receive its counterpart; in that case, termination is described as cancellation (résiliation).”

In this case, the Court of Appeal found that the borrower had failed to comply with his essential obligation of repaying the instalments on the agreed terms. No instalment had been paid since 5 September 2022, more than three years before the Court of Appeal’s decision. This persistent breach, despite the various formal notices sent by the bank, constituted a serious breach justifying termination of the contract.

It is important to stress that judicial termination, unlike acceleration by operation of law, offers procedural safeguards to the borrower. It requires an application to the judge, adversarial argument, and the judge’s sovereign assessment of the seriousness of the breach and of whether termination is justified. The judge may also, where appropriate, grant payment extensions under the conditions laid down in Article 1343-5 of the Civil Code.

The Bank’s Options in the Face of Default

The borrower argued that judicial termination of the contract should not be ordered since the contract favoured the solution of a borrower default without acceleration. Indeed, on page 7 the contract contained a clause entitled “borrower default without acceleration”.

The Paris Court of Appeal dismissed this argument, specifying that although the contract did indeed provide for the bank’s option, in the event of borrower default, of not demanding immediate repayment of the outstanding principal but charging increased interest instead, this was merely an option and in no way an obligation.

This clarification is important: it means that the bank has a choice in the face of the borrower’s default. It may either opt for a less drastic solution (keeping the loan in place with increased interest) or seek termination of the contract. This option left to the bank takes nothing away from its right to seek judicial termination in the event of a serious and persistent breach by the borrower.

The existence of a clause providing for an alternative to termination cannot therefore be interpreted as a waiver by the bank of its right to seek judicial termination of the contract in the event of a sufficiently serious breach. The judge assesses sovereignly, in light of the circumstances of the case and the seriousness of the breach, whether termination should be ordered.

Retention of the 7% Fixed Indemnity

Beyond the question of the acceleration clause, the borrower also challenged the amount of the 7% fixed indemnity stipulated in the contract. He argued that this indemnity applied only in the event of acceleration and that, in any event, it was manifestly excessive in light of the loss actually suffered by Crédit Agricole and should accordingly be reduced to a symbolic euro.

The contract did indeed contain a clause entitled “borrower default with acceleration”, which stipulated: “In the event of acceleration, the lender may demand immediate repayment of the outstanding principal plus accrued but unpaid interest. Until the date of actual payment, the sums remaining due shall bear default interest at a rate equal to that of the loan. In addition, an indemnity equal to 7% of the sums due (in principal and accrued interest) shall be claimed by the lender from the borrower.”

The Paris Court of Appeal analysed this clause as a penalty clause (clause pénale), that is, a clause by which the parties assess in advance and at a fixed amount the damages due in the event of non-performance of the contract. It considered that this clause applied by reason of the acceleration resulting from the judicial termination of the contract.

Under Article 1231-5 of the Civil Code, the judge may, even of his own motion, moderate a contractual penalty clause if it is manifestly excessive. This provision prevents one of the parties from being penalised disproportionately in relation to the loss actually suffered.

However, the Court of Appeal noted that Mr [E] merely asserted that the penalty clause was excessive, without showing how it would be manifestly excessive in light of the loss actually suffered by the bank as a result of his default. In other words, the borrower did not demonstrate that the 7% amount was disproportionate to the bank’s real loss.

In the absence of such a demonstration, the request to reduce the penalty clause was rejected. The Court of Appeal therefore upheld the application of the 7% fixed indemnity, amounting to €6,941.29.

This solution is consistent with the settled case law of the French Supreme Court (Cour de cassation), which regularly recalls that the power of moderation under Article 1231-5 of the Civil Code presupposes that the manifestly excessive nature of the penalty clause is established. The judge cannot reduce a penalty clause of his own motion unless that manifestly excessive nature is demonstrated, whether by the party relying on it or by the evidence on file.

It should be noted that the 7% percentage applied to the sums due in principal and accrued interest may, depending on the circumstances, be regarded as reasonable in light of the loss suffered by a bank in the event of borrower default. That loss includes in particular the cost of handling the contentious file, the immobilisation of funds, the risk of non-recovery, and any costs of enforcing security.

Rejection of the Request for Payment Extensions

In the alternative, Mr [H] [E] sought payment extensions, proposing to pay €550 per month (the original amount of the monthly loan instalments) for 23 months, then the balance at the 24th instalment. He produced an employment contract and a salary which, in his view, enabled him to meet the proposed instalments.

Article 1343-5 of the Civil Code provides that the judge may, taking into account the debtor’s situation and having regard to the creditor’s needs, defer or spread payment of the sums due, within a limit of two years. By special and reasoned decision, the judge may order that the sums corresponding to the deferred instalments bear interest at a reduced rate at least equal to the statutory rate, or that payments be applied first to the principal.

This provision allows the judge to grant payment extensions to a debtor acting in good faith who is in a temporarily difficult situation, in order to enable the debtor to discharge the debt without being immediately subjected to enforcement measures. However, the granting of such extensions requires several conditions: a debtor’s situation justifying such an arrangement, a realistic prospect of clearing the debt, and consideration of the creditor’s needs.

The Paris Court of Appeal rejected this request, noting two essential points. First, the absence of any prospect of Mr [H] [E] clearing the debt. The total sum due amounted to €103,263.04, and the proposed payment plan (23 monthly payments of €550, i.e. €12,650, then the balance of more than €90,000 at the 24th instalment) was manifestly unrealistic.

Second, the Court of Appeal noted the period of nearly three years the debtor had de facto benefited from since the formal notice. The first formal notice dated from 19 January 2023, and the judgment was delivered on 18 February 2026, more than three years later. Throughout that time, the borrower had paid nothing and had shown no willingness to regularise his situation.

In light of these factors, the Court of Appeal considered that there was no reason to grant the request for payment extensions. This solution is consistent with case law recalling that the payment extensions provided for in Article 1343-5 of the Civil Code are not available as of right and must be justified by a particular situation of the debtor and a realistic prospect of clearing the debt.

It should be made clear that while Article 1343-5 of the Civil Code limits payment extensions to two years, this maximum duration applies only where the judge actually grants such extensions. Here, given the absence of any prospect of clearing the debt and the time already elapsed, the Court of Appeal simply granted no payment extensions, considering that the conditions were not met.

The Practical Consequences of This Judgment

The Paris Court of Appeal’s judgment of 18 February 2026 has several important practical consequences, both for banks and for borrowers.

For credit institutions, this decision confirms a now well-established case-law trend: acceleration clauses providing for periods of less than one month are systematically struck down by the courts. Banks must therefore urgently review their general loan conditions to bring them into line with this case law. Failing that, they risk having their acceleration clauses declared unfair and unwritten, which obliges them to go down the route of judicial termination, which is longer and more costly.

Banks are likely to adapt their contracts by now providing for a period of one month, or even more, after formal notice before acceleration can be declared. This development forms part of a logic of enhanced consumer protection, in line with the objectives of the 1993 European directive on unfair terms.

For borrowers in difficulty, this judgment provides important protection against overly harsh measures by banks. Striking down acceleration clauses providing for insufficient periods allows borrowers enough time to look for solutions (renegotiation, rescheduling, sale of the property, etc.) before being asked to repay the entire outstanding principal.

However, this judgment also recalls that this protection does not release the borrower from its contractual obligations. If the acceleration clause is set aside, the bank retains the possibility of seeking judicial termination of the contract in the event of a serious and persistent breach. A borrower who stops repaying the loan altogether for several years cannot rely on the invalidity of the acceleration clause to escape its obligations.

The judgment also illustrates the importance of an active defence in a dispute with one’s bank. Mr [H] [E], who had not appointed a lawyer at first instance, was able to obtain on appeal the striking down of the acceleration clause. However, this partial victory did not prevent judicial termination of the contract and an order to repay all sums due, since the borrower had failed to show a willingness to regularise his situation or a real capacity to clear the debt.

In addition, this judgment underlines the importance of carefully preparing a request for payment extensions. To obtain a spreading of the debt, it is not enough to propose a theoretical repayment plan; you must demonstrate concretely, with supporting documents, that this plan is realistic and that the borrower has sufficient resources to honour it. A manifestly unrealistic payment plan, as in this case, will systematically be rejected by the courts.

Finally, as regards penalty clauses, the judgment recalls that their reduction by the judge is not automatic. It is for the party relying on it to demonstrate that the clause is manifestly excessive in relation to the loss actually suffered by the creditor. This demonstration requires a well-supported argument, with points of comparison and, where appropriate, expert reports or witness evidence.

Conclusion

The Paris Court of Appeal’s judgment of 18 February 2026 forms part of a major development in case law concerning acceleration clauses in mortgage loan agreements. By declaring unfair and unwritten a clause providing for a period of only 15 days after formal notice, the Court of Appeal confirms that borrowers must be given notice of a reasonable length, which case law now tends to set at a minimum of one month.

This enhanced consumer protection, inspired by the case law of the Court of Justice of the European Union and enshrined by the French Supreme Court, requires banks to review their contractual practices and to provide sufficient periods enabling borrowers in difficulty to look for solutions before being asked to repay the entire outstanding principal.

However, the judgment also recalls that this protection does not release the borrower from its contractual obligations. In the event of a serious and persistent breach, the bank retains the possibility of seeking judicial termination of the contract, which produces the same effects as acceleration but with the procedural safeguards of judicial review.

Ultimately, this judgment illustrates the search for a balance between, on the one hand, protecting the consumer against unfair clauses creating a significant imbalance and, on the other, preserving the legitimate rights of the creditor in the face of a defaulting debtor. Reconciling the interests at stake requires a case-by-case examination of the borrower’s situation, the seriousness of the breach, and the prospects of clearing the debt.

For borrowers facing financial difficulties, it is essential not to remain passive when faced with formal notices from their bank. A quick reaction, the search for an amicable solution and, where appropriate, recourse to legal advice can help avoid long and costly litigation. Case law now offers effective tools to challenge unfair clauses, but this protection is no substitute for dialogue and good faith in the performance of the contract.

For banking law practitioners, this judgment confirms the need for careful monitoring of case law and constant adaptation of practices to developments in consumer law. For individuals, it recalls the importance of properly understanding the clauses of their loan agreement and of asserting their rights in the event of an unfair clause, while bearing in mind that the best protection remains the faithful and good-faith performance of their contractual commitments.

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