The rules dictated regarding the evaluation of creditworthiness are configured not as rules of validity, but rather as rules of conduct: the effects of their violation, therefore, will only be relevant from the point of view of compensation and not, however, from the different point of view of nullity of the contract.
Court of Padua, 19 November 2024
With the ruling in question, the Court of Padua returns to the topic of the abusive granting of credit, consolidating its orientation.
The case concerns, in particular, a credit lodged by a bank deriving from unsecured loans with state guarantee, which was excluded by the Delegated Judge due to alleged nullity pursuant to art. 1418 cc of contracts. This nullity, in particular, would have been based on the incorrect assessment of creditworthiness by the credit institution, guilty of not having carried out an adequate investigation.
The bank proposed an opposition to the statement of liabilities against this exclusion, which was accepted by the Court of Padua for both procedural and substantive reasons.
As regards the first aspect, the Padua Panel asserts that, since the loan contracts were not declared null and void in a previous and different judicial proceeding, it was up to the Bankruptcy to demonstrate the existence of the conditions for ascertaining their nullity: this demonstration, however , would not have been achieved.
As for the reasons of a substantial nature, the Court resumes the distinction between rules of validity and rules of conduct, recalling how only the violation of the former can lead to nullity: the rules of conduct, in fact, do not relate to the objective profile of the contract, instead prescribing , rules of conduct for contractors. The violation of the latter, therefore, does not affect the validity of the contract, only obliging the transgressor to pay damages to the injured party.
After this premise, the judges proceed to qualify the art. 5 TUB (relating to the assessment of creditworthiness) as a rule of conduct, supporting various reasons:
(a) firstly, there could be no textual nullity, given the lack of existence of a rule which expressly sanctions with nullity the consequences of the incorrect assessment of creditworthiness;
(b) secondly, it would not even be possible to create a virtual nullity due to violation of the mandatory rules aimed at protecting public economic order, as the fact that the rules regarding the verification of creditworthiness are not sufficient for this purpose placed to protect general and mandatory interests.
Indeed, in fact, the national and supranational regulations that provide for these verification obligations define the activities that one of the two contractors is called upon to carry out, without, however, affecting the structural elements of the loan contract. The latter, in fact, even in the event that these checks were not carried out, would remain validly perfected and, therefore, suitable for producing its typical effects and fulfilling its economic-social function.
The Court of Padua, in addition to recalling the recent ruling of the Court of Cassation n. 26.248/2024 states, finally, that the violation of the rules on the evaluation of creditworthiness cannot therefore lead to the nullity of the loan contracts, constituting, at most, a prerequisite for condemning the bank to compensation for damages “according to the common law referred to in articles. 1218/2043 cc.” (Cass. n. 18.610/2021).
**How might the Padua Court’s distinction between “rules of validity” and “rules of conduct” impact the future development of legislation or regulatory frameworks concerning creditworthiness evaluation in Italy?**
## Interview on the Padua Court Ruling and Creditworthiness Evaluation
**Guests:**
* **Dr. Elena Rossi:** Professor of Banking Law, University of Milan
* **Signor Marco Bianchi:** Consumer Rights Advocate and President of “Fair Finance Italia”
**Interviewer:** Welcome to World Today News. Today, we discuss a landmark ruling by the Court of Padua concerning the evaluation of creditworthiness in lending practices. Joining us are Professor Elena Rossi, a leading expert in banking law, and Signor Marco Bianchi, a dedicated advocate for consumer rights.
**Section 1: Understanding the Ruling**
**Interviewer:** Professor Rossi, could you please provide a brief overview of the Padua Court’s ruling for our viewers? What are the key takeaways from this decision?
**Professor Rossi:** Certainly. The Court of Padua has clarified that rules concerning creditworthiness evaluation should be understood as “rules of conduct” rather than “rules of validity.” This distinction is crucial, as violating a rule of conduct, while potentially grounds for damages, does not automatically render a loan contract void.
**Interviewer:** Signor Bianchi, how significant is this ruling in the context of consumer protection?
**Signor Bianchi:** This ruling has profound implications for consumers. For years, we’ve argued that banks must diligently assess borrowers’ financial capacity. While the ruling acknowledges the importance of this assessment, it sends a somewhat concerning message: that even if a bank fails to properly evaluate creditworthiness, the consumer might still be held liable for the loan.
**Section 2: Rules of Validity vs. Rules of Conduct**
**Interviewer:** Professor Rossi, the court specifically highlighted the difference between “rules of validity” and “rules of conduct.” Could you elaborate on this distinction and its implications for this case?
**Professor Rossi:** Imagine a contract stipulation that explicitly forbids a lender from charging interest. This would be a “rule of validity,” as violating it would make the entire contract null and void. In contrast, a rule that mandates a specific creditworthiness assessment process is a “rule of conduct.” Its violation might lead to legal repercussions, including damage claims, but not necessarily to the contract’s nullification.
**Interviewer:** Signor Bianchi, how does this distinction impact the balance of power between financial institutions and borrowers?
**Signor Bianchi:** This distinction appears to favor financial institutions. It suggests that even if a bank’s negligence leads to a loan a borrower cannot realistically repay, the borrower still bears the burden. Doesn’t this leave consumers particularly vulnerable?
**Section 3: Implications for the Future**
**Interviewer:** Professor Rossi, how might this ruling influence future legal proceedings related to credit evaluation practices?
**Professor Rossi:** This ruling sets a precedent, likely encouraging other courts to adopt a similar interpretation of creditworthiness assessment rules. This could potentially lead to a rise in litigation focused on damages claims rather than outright contract nullification.
**Interviewer**: Signor Bianchi, what steps can consumers take to protect themselves in light of this ruling?
**Signor Bianchi:** Consumers must be meticulous about reviewing loan agreements and understanding the lending institution’s creditworthiness evaluation process. Documentation and transparency are crucial. Furthermore, I urge organizations like ours to continue advocating for stricter regulations that effectively safeguard borrowers’ interests.
**Interviewer:** Thank you both for your insightful analysis and perspectives.
This interview will shed light on the complexities of the Padua Court ruling and spark crucial discussions
