Conventional purpose loan: new legal principles laid down by the Court of Cassation
In a recent judgment of 25 January 2021, the Court of Cassation returned to the subject of conventional special purpose loans and, in particular, to the issue of the destination clause.
As is well known, the special purpose loan is the most common type of financing agreement, i.e., a credit agreement aimed at creating the availability of capital for a certain activity with restrictions connected to the destination of such capital. Consequently, the contractual type of purpose conventional loan cannot be reduced to the sole loan agreement governed by Article 1813 of the Civil Code.
Indeed, previously the Supreme Court has already underlined that, when the borrower has expressly assumed an obligation towards the lender, by reason of the latter’s interest – direct or indirect – in a specific way of using the sums for a certain purpose, there is a deviation from the contractual scheme set out in Article 1813 of the Civil Code, and the failure to comply with the destination of the sums indicated in the loan is relevant, in such cases, for the purposes of the validity or otherwise of the contract itself (Cass., no. 24699/2017).
In view of these particularities of the conventional purpose loan agreement, the Supreme Court in its judgment no. 1517/21 stated the following principle of law: “The mere statement, in the contractual text, that the borrower will use the sum for the performance of a given activity or to pursuit a given result is not itself capable of constituting a loan for a specific purpose, for which it is necessary, on the other hand, that the performance of the activity in question or the result pursued should in fact correspond to a specific and direct interest, including the lender’s own, which binds the use of the sums disbursed to their intended purpose“.
The Court also pointed out that in the case of a conventional purpose loan, the point of necessary compliance with the allocation of the sums disbursed to the actual achievement of the prefixed purpose is ensured at the level of the performance of the functional synallagma of the relationship, with the consequence that the borrower’s breach will be followed by the termination of the relevant contract.