Bull. Civ. 1995.I, no. 57, p.41
Case Epoux Bourdon v. Banque hypothécaire europenne

In view of article 1134 Code civil;

Given that this text lays down that contracts must be performed and enforced in good faith; that a cancellation clause cannot be effectively invoked in bad faith.

Given that M. and Mme Bourdon bought a dwelling on 3 February 1975 with the aid of a loan of 200,000 francs from the bank, contained in the same notarial deed, repayment to be made over fifteen years; that in October 1983 M. Bourdon, who had lost his job, was granted until 1 February 1984 to pay off the sums due in November and December 1983 and January 1984, but was unable to pay the instalments due in November and December 1983; that by letter of 24 January 1984 the bank notified the borrowers that it felt bound to demand the whole amount outstanding under the loan; that it did not implement this threat immediately, but waited until 2 July 1990, by which time the Bourdons had paid off the whole capital sum, to demand payment of the sum of 91,434 francs, allegedly due as interest and penalties for delay;

Given that the court below agreed to the foreclosure resulting from this demand while appointing an expert to determine the precise amount due to the bank, stating only that since the full sum due had not been cleared by 1 February 1984 the bank was entitled to invoke the cancellation clause;

Given that the court’s decision was without legal basis in that it did not inquire, as requested, whether the creditor bank was acting in good faith, seeing that the Bourdons had repaid the capital sum lent and that although the bank could have made its claim already on 1 February 1984, it delayed until2 July 1990 to make its demand and seek repossession;

For these reasons QUASHES the decision rendered on 17 September 1992 by the Court of Appeal of Douai and remands the matter to the Court of Appeal of Amiens.

Subsequent Developments

This note on subsequent developments reflects the legal situation as of October 2005.

Civ 1, 31 January 1995, Bull no 57 : Two later judgments have confirmed the judge's obligation to verify the good faith of a contracting party implementing a termination clause (the creditor of the obligation) before deciding that it has been established: Civ 1, 16 February 1999, Bull I no 52 and Civ 3, 23 June 2004, Bull III no 132. It should be noted that this solution does not however apply in the case of non-performance of his commitment by the debtor under the obligation, because, on this hypothesis, his good faith has no effect upon the establishment of the termination clause (Civ 3, 24 September 2003, Bull III no 161, repeating a solution already put forward in the past by the same chamber: Civ 3, 10 March 1993). The good faith imposed by article 1134 of the Code civil is directed here at the creditor who implements the termination clause, and not the debtor who hopes to avert the application of this clause.

Translation by Raymond Youngs

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