The nullity of a banking contract is a relevant issue in banking law, as it can affect thousands of consumers who have signed contracts with unfair terms or with vices in the consent. If a bank contract contains unfair terms or does not comply with current regulations, it is possible to request its nullity and claim the restitution of the amounts unduly paid.
In this article, as lawyers specialising in banking law in Barcelona, we explain what the nullity of a banking contract is, what its main causes are, what effects it has and how you can apply for it to protect your rights and recover your money.
What is the nullity of a banking contract?
The nullity of a banking contract refers to the legal invalidity of a contract due to the fact that it does not comply with the essential requirements established by law. According to the Civil Code, a contract is valid when there is consent between the parties, a lawful object and a valid cause. If any of these elements is missing or flawed, the contract may be declared null and void.
In banking law, the nullity of the contract can occur when financial institutions do not comply with their duties of information, imposing unfair terms or misleading the consumer about the conditions of the contract.
When can I apply for a bank contract to be null and void?
There are several reasons for which the nullity of a banking contract can be requested, which are divided into absolute nullity and relative nullity or voidability. Absolute nullity occurs when the contract violates essential rules of the legal system, while relative nullity occurs when there is a defect in consent or in the capacity of one of the parties.
Below, we explain the main causes that can give rise to the cancellation of a contract with a bank:
1. Lack of consent
For a contract to be valid, both parties must freely accept its terms. However, customers often sign bank contracts without fully understanding their implications due to the following reasons:
- Error: When the consumer accepts the contract on the basis of incorrect or incomplete information.
- Fraud: If the bank induces the customer to sign by means of deception or biased information.
- Intimidation or violence: If the signatory is coerced by threats or undue pressure.
In such cases, the contract may be declared null and void, as the consumer’s will was not free and fully informed.
2. Unlawful or non-existent object
For a banking contract to be valid, its content must comply with the law. It is considered null and void when:
- Its object is contrary to law or public policy.
- It contains conditions that make compliance impossible.
For example, a contract that includes a clause allowing the financial institution to act contrary to the law could be declared null and void.
3. Lack of lawful cause
A contract must have a lawful purpose and must not be contrary to morality or public policy. If a banking contract is used for a fraudulent purpose, such as to cover up illegal transactions or to deceive consumers, it may be declared void.
4. Abusive clauses
Unfair terms are one of the main causes of nullity of bank contracts. Unfair terms are those that generate an unjustified imbalance to the detriment of the consumer and exclusively benefit the bank. Some common examples are:
- Floor clauses: These limit the lowering of interest rates in variable mortgages, preventing customers from benefiting from reductions in the Euribor.
- Mortgage expenses: These obliged the consumer to assume all the costs of the formalisation of the loan (notary, registry, agency, etc.).
- Usurious interest: In some credit or revolving card contracts, the interest charged may be considered abusive if it exceeds certain limits established by the Supreme Court.
- Early repayment: Some mortgages include clauses that allow the bank to demand full repayment of the loan after a small default, which has been declared illegal in many cases.
If a contract contains unfair terms, the consumer can demand their elimination and even ask for the refund of the amounts unduly paid.
If you have been affected by a floor clause, we recommend you to read our detailed article about floor clauses where you will find complete information about your rights and the claim process.
5. Failure to comply with the duty to inform
The duty of transparency is paramount in banking contracts. Financial institutions are obliged to provide clear and comprehensible information about:
- The terms of the contract
- The risks associated with the financial product
- The actual calculation of interest and fees
If the bank does not provide this information adequately, the contract could be considered void. A frequent case is the marketing of complex financial products (such as multicurrency mortgages or preferred stock) without properly explaining their risks to customers.
6. Lack of capacity of the parties
For a contract to be valid, both parties must have legal capacity to contract. A bank contract can be annulled if:
- One of the parties is a minor and does not have legal authorisation.
- The signatory suffers from a judicially recognised legal incapacity.
In such cases, it is presumed that the person did not have full capacity to understand the consequences of the contract, which may result in the nullity of the contract.
What are the effects of the nullity of a banking contract?
When a banking contract is declared null and void, the parties must return to the situation prior to the signing of the contract. The main effects of the nullity of a banking contract are as follows:
If you wish to initiate the process of nullity of a bank contract, it is advisable to have the support of lawyers specialising in banking law in Barcelona, such as our team at BUFET GÓMEZ FERRÉ. We can analyse your case and advise you on the steps to follow to recover your rights and avoid future legal problems.
Frequently Asked Questions related to the nullity of bank contracts
Nullity means that the contract was never valid, whereas voidability allows the contract to remain in force until it is declared invalid by a court of law. In addition, a nullity action is not time-barred, but a nullity action is (usually within 4 years).
Yes, but it depends on the type of nullity. Absolute nullity can be claimed at any time as it does not have a statute of limitations, while nullity has a 4-year statute of limitations period that starts to run from the time the contract was signed or from the time the defect in consent was discovered (for example, when the customer realises that there was deception or lack of transparency on the part of the bank).
In order to initiate the process of nullity of a bank contract, it is essential to collect all relevant documentation demonstrating irregularities or vices of consent. Necessary documents include:
- Complete copy of the bank contract: Including all signed clauses and conditions.
- Proof of payments made: Receipts, bank statements or proof of payments made under the contract, such as mortgage payments or interest.
- Communications with the bank: Emails, letters or any written communication with the bank that could demonstrate lack of information, deception or intimidation.
- Any document that proves the defect in consent: such as misleading advertising, incorrect advice or expert reports that support the existence of abusive clauses.
Lawyers specialising in the nullity of bank contracts in Barcelona – Free initial consultation
At BUFET GÓMEZ FERRÉ, we are expert lawyers in the nullity of bank contracts in Barcelona and we work against results, with more than 25 years of experience in Banking Law, Claiming Unpaid Debts and Claiming Credits from Administrators, among other legal areas.
Request your free, no-obligation consultation now and obtain personalised legal advice on the nullity of bank contracts. With our team of litigation lawyers in Barcelona we will analyse your case in detail and facilitate the collection of documents, the analysis of the contract and the presentation of the claim, maximising the chances of success in the process of nullity of a bank contract.
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