The absence of a compelling reason to terminate the credit contract does not mean that the credit contract could not be terminated. This simply means that the bank should be careful to meet a reasonable notice period allowing the borrower to find alternative financing. The length of such a notice may vary from a few months to 12 months or more, depending on the circumstances. We believe that the courts can take these factors into account even if the credit contract was entered into between a bank and another professional party, particularly when a standardized credit contract has been used, for example. B GBC-based agreements. In cases where the parties resort to contractual agreements negotiated and concluded with professional legal advice, these factors are unlikely to be relevant. Credit documents between a bank and a borrower can vary considerably depending on the size of the credit. The syndicated loan includes a facility agent or security guard, as well as long and comprehensive agreements that have been negotiated vehemently by legal advisors. At the other end of the spectrum, there is a basic credit facility provided by a single bank and based on the Bank`s Terms and Conditions (GBC)1.
In any event, in the event of the termination of a credit contract, we advise the bank and the borrower to conduct a constructive dialogue to agree on the terms of termination. Both parties will benefit from the breakdown of the relationship on good terms. The nature of the borrower is critical in determining the extent of a bank`s duty of care. Is it a private consumer or a professional party? These can continue to be subdivided into parties with limited or in-depth experience in financing agreements (e.g. B, from small and medium-sized enterprises to multinational conglomerates with large and complex group financing structures). It is likely that private consumers and less demanding businesses will have a higher duty of care. Whether it is a significant reduction in the borrower`s creditworthiness and/or an increase in the bank`s credit risk; If the borrower`s behaviour and reliability (for example. B if the borrower provided relevant information to the bank); Whether or not the borrower executed under the credit agreement; If the bank`s decision prior to the termination of the credit contract, the way the bank consulted the borrower and whether the bank notified the borrower in advance of the termination; AND if the bank has raised false expectations by its own behaviour (z.B. by allowing the borrower to exceed credit limits).
On 10 October 2014, the Supreme Court of the Netherlands confirmed that a bank could avail itself of a contractual termination clause, unless it was acceptable under the standards of adequacy and fairness (eisen van redelijkheid – billijkheid)4.