STANDARD CONTRACTUAL CLAUSES IN ADHESION CONTRACTS – ANALYSIS OF THE SUPREME COURT DECISION NO. 2/2016 (RULING FOR HARMONISATION OF CASE LAW OF NOVEMBER 13, 2015)
One of the founding principles of private law is the contractual freedom, being recognised to the parties the right to freely determine, within legal limits, the content of contracts, to enter into innominate contracts and also to include in such contracts the clauses that they appropriated (article 405.1 of the Portuguese Civil Code).
However, the freedom of parties to freely model the content of contracts is not absolute or unlimited, since there are important restrictions in the Portuguese legal system. For what is important here, we are particularly referring to the legal regime of the standard contractual causes (SCC) (Decree-Law 446/85, of October 25, subsequently amended in order to its harmonisation with Council Directive 93/13/EC of April 5, 1993) (SCCL), which is applicable to the so-called “adhesion contracts”.
The referred decree-law is applicable to contracts in which one of the contractual parties, not taking part in the preparation and drafting of the contract, merely endorses or accepts, without (or possibility of) any individualised negotiation, the contract that is prior and unilaterally drawn up by the other party, whether they are offered to unspecified tenderers or signatories, whether they are inserted into contracts that are individually negotiated.
Although these contracts do not limit the freedom of the parties to adhere to them or not, in practice this restriction occurs, since they are generally proposed by entities with a strong negotiation power, whether deriving from monopolistic or quasi-monopolistic positions or from the fact that competitors adopt substantially identical terms, therefore leaving the counterparty with no alternatives other than to adhere or otherwise forego the type of services provided or to the goods supplied.
The risks of these contracts and clauses, particularly by offering to the proposers an opportunity for abuse of their dominant position and by considerably increasing the risk of the adhering party being unaware of all the implications of the contractual clauses that will be part of the contract, led both the Portuguese and the Community legislature to introduce limits and restrictions on their content.
In order to promote effective knowledge of the contractual clauses by adhering parties, legislature establishes the proposer’s obligation to communicate, to inform and to explain the SCC to the adhering parties, under the penalty of exclusion of the clauses regarding to which these obligations have not been observed.
Furthermore, to safeguard the contractual position of adhering parties, the legislature established, as a general principle, the prohibition of contractual clauses contrary to good faith. Also, the SCCL specifies the clauses that are considered strictly or relatively prohibited in contracts entered into, on one hand, between business owners and professionals, or between both of them, when they appear and act in the context of their specific activity, and on the other hand between proposers and consumers, who benefit from stronger protection. If strictly prohibited clauses or contractual clauses that considering the contractual framework are prohibited (relatively prohibited clauses), are incorporated into a contract, such clauses are null and void, being any interested person able to invoke this nullity at any time.
On the other hand, and to strengthen the protection of the adhering party, the legislature established an injunction, for preventive purposes, pursuant to which SCC drawn up for future use that are, in the light of the above law, strictly or relatively prohibited, or contrary to the principle of good faith, can be prohibited by judicial decision, independently of their effective inclusion in individual contracts.
The subject of the Ruling for Harmonization of Case Law, rendered by the plenary session of the civil sections of the Supreme Court of Justice (SCJ) in November 13, 2015, published in Diário da República on January 7, 2016, concerning case no. 2475/10.0YXLSB, is precisely about an injunction, in which the Public Prosecution Service applied for a declaration of nullity of certain SCC contained in a credit facility agreement, with the consequent refraining from their use in future contracts. The following harmonising segments resulted from such ruling:
- It is null and void, pursuant to article 15 of the SCCL, for being contrary to good faith, the SCC under the terms of which the adherent to a joint account contract with joint and several liability authorises the proposing banking institution to offset his credit balance, irrespective of its origin, with the balance of a joint account, of which the adhering party is or will be a holder, without the clause having been individually negotiated in advance and understood its contours and risks by every adhering parties.
The SCJ noted that the option for the joint and several liability regime does not have as purpose to make it easier for financial institutions to collect their receivables, but only to pursuit the exclusive interest of account holders. The adhering parties, given the relationship of trust existing among themselves, opt for joint and several liability, in order to more easily operate the account, without the authorisation of the other holders of the account. Nothing therefore suggests that they accept that the Bank can offset the credit balance of one of the holders with the balance in a joint account, of which they are also holders, thus turning them into debtors, under joint and several liability rules.
The regime established for joint account contracts is the joint and several liability of creditors and not of the joint and several liability of debtors.
- It is strictly prohibited and null, under the terms of Article 18(a) of the SCCL, a SCC that authorises the proposing bank to transfer his contractual position to other entities of its Group, headquartered in Portugal or abroad, if the identification of the assignee is not specified in the initial contract.
The SCJ was of the opinion that the generic indication, as possible assignees, of all the entities in the Group to which the bank belongs with registered office or representation in Portugal or abroad, does not prevent the risk that, by assigning the contract, the banks transfer their position to an entity that does not have sufficient asset coverage, thus precluding their responsibility, since it is not known which entities are in the Group to which the banks belong, how many are they, and whether or not the Group will suffer changes during the term of the contract.
- The nullity of a contractual clause attributing territorial jurisdiction can be appreciated in an injunction, according to the standard contractual framework (in abstract), and not just in the context of specific contracts. In fact, pursuant article 19(c) of the SCCL, there are prohibited, according to the standard contractual framework, the SCC that establishe as territorially competent a jurisdiction that involves serious disadvantages for one of the parties, without this being justified by the interests of the other party.
The SCJ was of the opinion that, provided the type of contract and the type adherents into consideration, the court does not need to analyse the specific circumstances of the contract. Since this case is about a credit facility agreement and the type of adhering parties was very diverse, necessarily including people for whom such a jurisdiction could cause serious losses, the nullity of the clause could be evaluated in an injunction, its evaluation not depending therefore on an analysis of each of the specific contracts.
It should be noted that, concerning this matter, a losing vote was issued, based on the understanding that such clause can only be assessed after its inclusion in a specific contract, there being no other way to evaluate if the determination of the jurisdiction involves or not serious disadvantages for one of the parties, without this being justified by the interests of the other party.