Prohibited clauses are a problem many borrowers encounter unknowingly. When signing a loan agreement, they may accept provisions that conflict with applicable law. These types of terms, known as abusive clauses or prohibited clauses, can violate consumer rights and render parts of the contract non-binding. In recent years, this issue has gained particular attention in the context of Swiss franc-denominated loans, although prohibited clauses also appear in many other agreements concluded with banks.
In this article, we explain what prohibited (abusive) clauses are, how to identify them, and what steps you can take if you discover them in your loan agreement.
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What Are Abusive Clauses?
According to Art. 385¹ of the Civil Code, abusive clauses are provisions of the contract that:
- have not been individually agreed with the consumer, and
- shape consumers’ rights and obligations in a manner contrary to good practice, grossly violating their interests.
Such provisions are not binding for consumers. This means that even if they have signed the contract, they do not have to comply with them. The agreement shall remain in force as far as it may be performed without these provisions.
| Most common examples of abusive clauses in loan agreements: | – unilateral right of the bank to change the interest rate or exchange rate, – imposing a method of currency conversion (e.g. at the exchange rate set by the bank itself), – limiting the right to early repayment of the loan, – unilateral determination of fees or commissions, – provisions excluding the bank’s liability. |
Abusive clauses occur not only in foreign currency loans. They concern cash, mortgage or credit card loan agreements as well.
How to Check If Your Agreement Contains Prohibited Clauses
In practice, consumers are rarely able to identify prohibited terms on their own. Banks use complex legal language, making it difficult to understand the real effects of the provision. To verify the contract, it is worth to:
- Compare the content of the agreement with the register of prohibited clauses. It is available on the UOKiK website (Office of Competition and Consumer Protection).
- Consult a lawyer specialising in bank disputes. They will help you identify which provisions may be considered abusive.
- Pay attention to the content about currency conversion, margin and additional fees.
- Analyse annexes and banking regulations. They often include provisions that are unfavourable to the borrower.
What Can You Do If Your Agreement Contains Prohibited Clauses?
If there are abusive clauses in your loan agreement, you have several options:
- Complaint to the bank. You can refer to specific provisions and indicate that they are contrary to the law. The bank must respond within 30 days.
- Reporting a case to the Office of Competition and Consumer Protection (UOKiK). The Office handles proceedings concerning infringements of collective consumer interests.
- A lawsuit against a bank. It is the most effective form of protection, especially when abusive clauses influence the amount of the instalment or the total amount of the loan.
In cases of Swiss-franc loans, courts have repeatedly ruled that exchange-rate clauses are abusive. This has resulted in the annulment of the entire contract or conversion of the loan.
Consequences of Recognising a Clause as Abusive
If the court finds that a given clause is abusive:
- this provision is not binding for the consumer,
- the rest of the contract remains valid, if it can be performed without that clause.
- the consumer may demand the return of unduly collected amounts (e.g., overpayments on instalments).
- In the case of foreign currency loans – it is possible to cancel the entire loan agreement.
This means that a person whose contract contains prohibited clauses may recover significant funds or be relieved from further repayment obligations.
Prohibited Clauses – Summary
Prohibited clauses in a loan agreement are not only a legal problem. They are actually a financial issue. They can cause overpayment of instalments or an increase in the total cost of the loan. However, the consumer is not defenceless. They can demand removal of such clauses, refund of over-payments, and in some cases, annulment of the entire contract.
Contact us!
If you have doubts about your loan agreement, it is worth consulting a lawyer specialising in disputes with banks. A professional analysis can allow you to recover large amounts and permanently resolve a dispute with a financial institution. Feel free to contact us!
FAQ – 5 Most Frequently Asked Questions About Prohibited Clauses
1. What are abusive clauses (prohibited clauses)?
These are contract terms contrary to good practices. They violate the interests of the consumer. They are not binding for the consumer.
2. Is every unfavourable clause in the contract prohibited?
No. An abusive clause is one that has been imposed by an entrepreneur and grossly violates the consumer’s interest.
3. Where can one check if a provision in a contract is prohibited?
In the register of prohibited clauses kept by the Office of Competition and Consumer Protection. You can also consult with a lawyer.
4. What can I do if there are abusive clauses in my loan agreement?
You can file a complaint, notify the Office of Competition and Consumer Protection or file a lawsuit against the bank.
5. Can I get my money back if the court deems my contract invalid?
Yes. In the event of annulment of the agreement, the parties must return to each other what they provided. The bank returns the overpayments, and the consumer returns the amount of the loan granted without interest and additional costs.