The Supreme Court of Justice (STJ) in its capacity to uniformize jurisprudence previously issued by STJ itself or by lower courts on the same points of law, adjudicated a judgment on 13 November 2015 that relates to the interpretation of some provisions of Decree-Law No. 446/85, dated 25 October. This statute comprises the legal regime in Portugal regarding so-called standard contract terms and conditions.

In sum, the highest court was asked to pronounce on the question of whether a bank may, or may not, set off its claim against a client with the balance of a client’s account existing in the bank.

The STJ said that a set-off operation like this goes against good faith and is thus illegal under section 15 of Decree-Law No. 446/85. *

Another point that the STJ dealt with in the same judgement was whether a bank (in cases concerning the same bank) may, or may not, transfer in full, or in part, a contract with a client to another financial institution owned by that bank’s group.

The STJ said that the bank, although authorised on the basis of a clause in the contract entered into with its client to proceed in that way, is not authorised to undertake such a transfer of contract because such a clause is illegal under section 18 (a) of the same statute.