BBVA convicted of a swap contract

Lawyers swap

The Court of First Instance and Instruction No. 1 Benavente has declared void a Swap contract, ordering the restitution of the amounts paid, together with costs to the bank, in sentence 17 May 2013.

The plaintiff, is a company that claims that the Swap contract was imposed by the bank to sign a estate leasing contract. It was informed incorrectly that not explained the negative consequences that could be lowered or function types and form of Product cancellation. When the client found that he was losing lots of money, tried the product cancellation, not admitting the bank, since only the latter reserves the right to cancel. If the customer who wants to cancel has to pay a cancellation fee so high that is roughly equivalent to pay fees that were missing up to the time. Considers that there has been a lack of pre-contractual information. No signed a Framework Agreement on financial transactions. It has undergone a substantial error in the contract.

Besides the lack of a cancellation clause and the disproportionate benefits to the bank, point to the existence even of fraud.

The bank claims that it applies the securities laws as a product and investment banking. He argues that the Swap contract were recruited by phone, (and provides the transcript of the conversation) and therefore, was concluded validly.

The contractor is a member of several private limited companies and therefore the bank, Error can not claim. He also says the bank had no connection whatsoever with the previous property leasing.

After rejecting the argument of "no linkage" with the real estate leasing, Judge discusses the nature of Swap contract. He claims that it is not a simple contract and has high risk and speculative and complex.

Also, it is a contract of adhesion banking, regulated through the general contracting conditions.

The contract has been in 2008 should implement MIFID, adapted by law 47/2007 and RD 217/08. They apply all information and transparency requirements established by the Securities Market Law in Articles 63, 78,79 and 80.

It also provides the criteria suggested by the Claims Service of the Bank of Spain in their resolutions 3/6/2009, 23/6/2009 and 24/6/2009 highlighting the complexity of the product, the need for a financial formation higher than the overall average clientele, the requirement of detailed prior information facilitating information document indicating the main features and mainly, the risk of adverse settlements costing and Cancellation.

The RD 217/2008 in his article 64 establishes the obligation to provide their customers with information about the risks of financial instrument.

For the plaintiff, had sold a insurance contract. In this case, not signed the contract with financial transactions.

On the question of the "imposition" of Swap contract, no agreement. The bank says they offer in fulfillment of the provisions of the law 36/2003 that undertakes to inform customers with variable rate loans on at least one instrument cover such risks. However Swap contract not fulfill this function coverage, downs as provide a profit for the bank.

The burden of proof of proper information about the financial professional weighs (Judgment of the Provincial Court of Valencia 26 April 2006).

Also, explanation of the risks involved, according to Judge, "Completely incomprehensible, without onerous explain to the customer involved in the case of occurrence of a drop in interest rates ".

For analysis of the existence of an error in the consent, for the Judge, The bank defines the contract as a hedge of interest rate, being sold as insurance that the client hires to prevent the effects of a rate hike.

It starts contracting as an insurance contract with an information "certainly grim" and add the framework contract and its annexes (never accepted), becomes a high risk operation and complexity, that the rate cut has generated great customer losses.

In conclusion: has been a vice of consent clear error because the object. The error is essential, affects the principal obligation of the contract, this is substantial (ST. AP. Valencia 13 November 2008) and excusable for the client for its complexity and dark.

This statement also highlights the following argument:

If both parties agree that the purpose and rationale of the contract was covered with an upward trend in the interest rate, and shared forecast was wrong, has been destroyed because of the contract or its purpose, This would also be grounds for invalidity.

And in this sense the STS quote 20-4-94: "It is argued in its defense that the lease was to gravel extraction of the leased property; that the expert evidence is clear that when the contract was signed were good prospects for exploitation, and then disappeared completely; that it did not reach the normal end of the contract, frustrated hopes and legitimate expectations of the tenant and therefore the contract should be resolved. It can be argued that the case should not only be present at the initial time of the formation of the contract but must also accompany him during implementation and thus the occurrence of the cause absence allows the contractor concerned request the amendment of the contract or resolution, what happens especially when two contracts are linked, because the failure of one of them authorizes the contractor concerned to obtain the termination of another contract, since gone sobrevenidamente their cause ".

If Euribor behavior "causalizó in the contract and did not behave as expected by both parties, cause disappear, leading inevitably to the invalidity.

The bank did simulations on Euribor downs, when by their office should have better information about the customer.

And ends the Judge: "Can not be that the client (…) just give consent, and ciegas, relied on the good faith of the Bank, to conditions effective future consequences which can not rate with provided rationale for lack of information while the bank itself possesses, not forgetting the offer came from the bank and the customer should sign the contract without possibility of negotiating its terms ".

The contract was declared void on the grounds on the consent, ordering the recovery of the amounts and for costs to the bank.

If you are affected by a Swap contract, or swap malpractice or any other bank, can get solve your problem.

Consult your case by clicking here.

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