Cass. com., 12 June 2024, No. 22-13226
The termination of a deposit account agreement, often perceived as a unilateral act by the credit institution, is governed by strict rules. These rules, derived from the Monetary and Financial Code as well as case law, aim to protect the rights of clients while respecting the contractual freedom of banks. This article details the obligations of banking institutions regarding notice periods and explores the consequences of non-compliance with these obligations, through the study of a recent decision of the Court of Cassation.
The legal framework for bank-initiated termination
1. The intuitu personae relationship between the bank and its client
Banking operations are based on a relationship of mutual trust between the bank and its client. This intuitu personae nature justifies the fact that indefinite-term deposit account agreements may be terminated by either party. However, this contractual freedom is counterbalanced by obligations, notably the requirement to comply with a notice period provided for in Article L. 312-1-1, V, paragraph 3 of the Monetary and Financial Code.
2. Conditions for termination
Pursuant to the aforementioned article, a bank may terminate an indefinite-term bank account by observing a minimum notice period of two months. This period allows the client to reorganise their finances or find an alternative solution. No specific justification is required from the bank in this context, except in particular situations provided for by law or case law.
Case law example: Cass. com., 12 June 2024, No. 22-13226
The facts
In the case opposing HSBC and Ms N., the bank had sent a first termination notification on 18 July 2017 by registered letter, followed by a second notification on 10 August 2017, after the first letter had not been collected by the client. The bank had however blocked the use of the bank card and the transfers associated with the account as early as 29 September 2017, i.e. before the full expiry of the second notice period ending on 10 October 2017.
The Court of Cassation’s decision
Upholding the judgment of the Paris Court of Appeal (13 January 2022), the Court of Cassation held that the bank’s conduct constituted a fault due to the failure to comply with the notice period. As a result, the bank was ordered to pay Ms N. damages in the amount of 2,000 euros.
Key takeaways
- Compliance with the notice period: The bank must maintain the contractual terms until the expiry of the two-month period, failing which it incurs liability.
- Proper notification: Actual receipt by the client is not a condition of validity of the notification (Cass. 1re civ., 20 Jan. 2021, No. 19-20680).
- Damages: The harm suffered by the client must be proven to establish the bank’s liability. In this case, Ms X argued that the bank’s fault had caused her harm because she had been unable to organise herself during the notice period to find another bank and that the unjustified termination of her contract had been experienced as humiliation. Ms X requested the Court to order HSBC France to pay her the sum of 5,000 euros on this basis. However, she obtained less than half. This could be explained by the fact that in French law, the award of damages is guided by the principle of full compensation, according to which any person who has suffered harm must be compensated fully, but without excess or insufficiency. As a result, to obtain satisfactory compensation, the claim for damages must be particularly well-reasoned, detailed and documented, to the extent possible.
