International Referral the global network of business lawyers, is delighted to publish another article from one of our law firm members. To find a lawyer or receive further information; please contact [email protected]
Tarragona court upholds a ruling nullifying an abusive interest rate loan agreement term
Although the provincial court ruling may be considered case-law with a limited reach, its content, opinion and repercussion are of great importance because they provide an updated decision on a situation which was often seen in the courts years ago: abusive interest rates.
At issue is a loan agreement between an individual and a financial institution with an annual late interest rate of 20%. The Court greatly reduced it to 2. 5%. The loan agreement was signed in 2007and was to be repaid in 60 instalments with an annual interest rate of 7%.
The Court applied the principle of customer defence and considered the aforementioned 20% rate to be a disproportionate penalty. The borrowed money was deemed not intended for “business operations”, and therefore should be treated more as a civil contract and relationship – although the contract contained a clause which characterized it as commercial agreement and which may be declared null as contrary to Law.
For further information, please contact Alex Ensesa: [email protected]