EU court ruling: Consumer credit contracts without proper solvency assessment are null and void

man about to sign a contract

In a recent landmark ruling, the European Court of Justice (ECJ) addressed the crucial question of whether a consumer credit contract, granted without a sufficient assessment of the consumer’s solvency, can be considered null and void. 

The case in question involved a consumer who entered into a consumer credit contract for 50,000 Czech crowns, and the lender failed to adequately evaluate the consumer’s solvency before the contract was signed. 

Despite repaying the full amount of the loan, the consumer did not object to the credit contract during the repayment period. The dispute arises from a company the consumer assigned the loan to, alleging the contract’s nullity due to the lender’s failure to assess the consumer’s solvency.

Key Takeaways

Applicability of Consumer Protection Directive

The ECJ clarified that the dispute, although involving only professionals, is still subject to the provisions of the Consumer Credit Directive (Directive 2008/48). This is because the directive’s scope is determined by the parties’ roles in the credit contract, not their identity.

Obligation to Assess Consumer Solvency

The ECJ emphasized that under Article 8.1 of Directive 2008/48, a lender is obligated to assess a consumer’s solvency before entering into a credit contract. This obligation is inherently pre-contractual.

Consequences of Inadequate Solvency Assessment

The ECJ highlighted that the lender’s obligation to evaluate solvency aims to prevent the risk of over-indebtedness or insolvency due to insufficient scrutiny of the consumer’s ability to repay the credit. Importantly, these financial consequences can materialize even after the credit has been fully repaid.

Contract Fulfillment vs. Solvency Assessment

The ECJ distinguished between the fulfillment of a credit contract and the assessment of solvency. It stated that the execution of a credit contract does not negate the lender’s obligation to assess solvency under Directive 2008/48. A consumer’s failure to object to the contract during repayment is irrelevant in this context.

National Sanctions and Proportionality

The ECJ noted that it is the responsibility of EU Member States to consider the importance of the harm caused by a lender’s non-compliance when imposing sanctions. They should choose the least burdensome measures while ensuring they are proportionate to the objectives of Directive 2008/48.


In summary, the ECJ’s ruling clarifies that a lender may be penalized, even with the nullity of the consumer credit contract and the loss of the right to interest payments, for failing to assess a consumer’s solvency as required by Directive 2008/48. 

This decision reinforces consumer protection measures and promotes responsible lending practices in the European Union.

If you have any legal questions or concerns related to consumer credit contracts or any other legal matters, don’t hesitate to contact Costaluz Lawyers, your trusted legal partner. Our experienced team is here to provide you with expert guidance and support.

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