Head of Sofiya Law Firm's finance law practice analyses the Supreme Court's judgments in cases involving loans, interest, sureties, and mortgages

Interest can be paid monthly during a loan period agreed by the parties. After such period expires, the lender's right to charge contractual interest on the loan is terminated.

Head of Sofiya Law Firm's finance law practice Viktor Rudyi brought attention to that legal opinion of the Supreme Court's Grand Chamber as set out in the resolution of 28 March 2018 issued in case No. 444/9519/12 as part of the online seminar entitled 'New Approaches to the Administration of Law in the Supreme Court's Decisions,' which was recently held by ICC VAKS.

The expert reminded that in this case the Supreme Court pointed out that the rights and interests of the lender should be secured by Article 625(2) of the Civil Code, specifying implications of a failure to timely perform a monetary obligation. Accordingly, no interest can be charged in the case of early repayment of a loan either.

In addition, no interest should be charged on the loan if the early repayment is challenged in court. Indeed, a claim filed changes the procedures, terms and conditions and term of the loan agreement. The issue was raised and analysed by the Grand Chamber in cases Nos. 202/33292/13-ts and №310/11534/13-s. Relevant legal opinions were set out in its resolutions of 15 May and 4 July 2018. It is recognised that any amounts due under the agreement mature in their entirety at the time of filing of such a claim. The lender's right to charge contractual interest on the loan is therefore terminated. The lender is entitled to a guaranteed proper performance of the obligation in accordance with Article 625(2) of the Civil Code rather than recovery of any interest or penalty.

The expert analysed in detail a number of other decisions the Supreme Court's Grand Chamber delivered in disputes arising from loan legal relations and judgments issued by cassation courts in relation to credit unions. In particular, the expert examined legal aspects of sureties, mortgages, limitation periods, charging of interest after a deposit agreement expiry, and civil law liability for failure to perform a monetary obligation.

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