French court rules on lease termination case

A French judicial court in Toulouse ruled on April 28, 2026, in case N°RG 25/03946, concerning the validity of a lease with an option to buy (LOA) termination and related consumer loan issues. The case involved Mr. D, who signed a lease agreement for a Renault Captur valued at 20,000 euros, with 61 monthly installments.

Court validates electronic signature

The court examined the validity of the electronic signature used by Mr. D, noting that under Article 1366 of the Civil Code, electronic signatures carry the same probative force as written signatures if the signatory can be properly identified and the signature's integrity is ensured. The credit institution provided an LSTI certificate from DocuSign and a copy of Mr. D's identity card, which the court deemed sufficient to establish the signature's validity.

Admissibility of payment action confirmed

The court also assessed the admissibility of the payment action under Article R312-35 of the Consumer Code, determining that the first non-regularized payment incident occurred in August 2024, making the action admissible within the two-year forclusion period.

Lease termination clause found abusive

Regarding the validity of the lease termination, the court referenced European case law, including the Court of Justice of the European Union (CJUE) ruling that national judges must examine the abusive nature of contractual clauses ex officio. The lease agreement contained a clause allowing termination after a notice to settle unpaid installments, but the court found this clause abusive due to the lack of a specified reasonable period for the borrower to regularize the situation. The court ruled that the termination was not validly declared due to the clause's abusive nature.

Judicial termination of the lease upheld

The court also considered the subsidiary request for judicial termination of the lease. Under Article 1217 of the Civil Code, the court may declare the resolution of the contract if the non-performance is sufficiently serious. The court found that Mr. D's failure to pay installments since August 2024 constituted sufficiently serious non-performance, justifying judicial termination.

Credit institution lacks proper documentation

The court addressed the payment request, noting that the credit institution must comply with the information formalism under the Consumer Code. The institution failed to provide sufficient proof of pre-contractual information, including the FIPEN (pre-contractual information sheet) and insurance notice, which are required under the Consumer Code. This failure resulted in the credit institution being deprived of the right to interest from the loan's inception.

Court orders repayment and sets interest terms

The court ruled that Mr. D must repay the remaining principal of 6,276.21 euros, less amounts already paid and the resale price of the vehicle. The credit institution is entitled to interest at the legal rate on the remaining principal from the notice date, but the court excluded an additional increase in the legal interest rate to ensure the effectiveness of the sanction under European law.

Ruling emphasizes consumer protection

This ruling highlights the importance of assessing the abusive nature of contractual clauses and the necessity for lenders to comply with information formalism requirements under consumer protection laws. The decision applies to various types of contracts, including mortgage loans, consumer loans, and lease agreements, emphasizing the need for fair and balanced contractual terms.