Termination of a Credit Agreement Subject to a Condition and the Protective Function of Article 75c of the Banking Law – Commentary on the Judgment of the Supreme Court of 16 May 2024, II CSKP 1019/22

Abstract

This commentary is critical in nature. It examines the position adopted by the Supreme Court, according to which a credit agreement may be terminated subject to a condition and the payment demand provided for in Article 75c of the Banking Law may be combined in a single document with a notice of termination. The general admissibility of making the effects of a legal transaction dependent on a potestative condition does not, in itself, establish that such a construction is consistent with the nature of the credit relationship and the protective function of Article 75c of the Banking Law. Combining the two measures may create uncertainty for the borrower as to the amount required to preserve the agreement and may impair the effective possibility of debt restructuring. The payment demand and restructuring procedure should precede termination and should enable the borrower to take steps aimed at preserving the credit relationship without the pressure of an already running notice period. The judgment under review consolidates a practice that reduces the obligations laid down in Article 75c of the Banking Law to a merely formal stage preceding termination.