Article 3(1) of Directive 93/13/EEC provides that “contract terms which have not been individually negotiated shall be regarded as unfair if, despite the requirements of good faith, they result in a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”.

In turn, Article 82(1) of the TRLCU provides that “terms shall be deemed unfair if they have not been individually negotiated and if they are not expressly consented to, which, contrary to the requirements of good faith, cause, to the detriment of the consumer and user, a significant imbalance in the parties’ rights and obligations arising under the contract”.

In this regard, the Supreme Court is particularly interested in the statement that “to decide on the unfairness of a particular term imposed in a particular contract, the judge must take into account all the circumstances prevailing on the date on which the contract was signed, including, of course, the foreseeable evolution of the circumstances if they were taken into account or should have been taken into account with the data available to a diligent businessman, at least in the short or medium term.

Ground clause in the mortgage deeds.

In the case of most of the mortgage loans signed in recent years, the asymmetry in the assumption of risk that the inclusion of the floor-to-ceiling clause entails for both parties is evident. The Supreme Court itself in a ruling of 9 May 2013 recognizes that “the offer of floor and ceiling clauses when made in the same section of the contract, is a factor of distortion of the information provided to the consumer, since the ceiling operates as a consideration or factor of balance of the floor. This is a distortion that occurs in many cases, taking advantage of the evident asymmetry in the knowledge of these complex products to introduce terms that cause an unfair distribution of risks, without consumers being aware of it.

“In deciding whether a particular term imposed in a particular contract is unfair, the court must take into account all the circumstances prevailing at the time when the contract was concluded, including, of course, foreseeable developments in the circumstances if they were taken into account or should have been taken into account with the information available to a diligent businessman, at least in the short or medium term.”

The Supreme Court says that the introduction of this type of clause causes confusion in the consumer, that “they give coverage exclusively to the risks that the credit entity could have with the downward oscillations and frustrate the consumer’s expectations of lowering the credit as a result of the reduction of the interest rate agreed as “variable”. When a clause that is predictable for the entrepreneur comes into play, it converts the nominally variable rate upwards and downwards into a variable rate that is exclusively upwards’.

Therefore, there is an evident imbalance in the charges to be borne by the parties, converting the floor-ceiling clauses into clauses that play exclusively in favour of the lender, which has set the limits on the basis of predictable information known only to itself, causing that decreases in the EURIBOR hardly translate into a decrease in the instalment despite the consumer’s perception that this will be the case because he is signing a loan contract at a supposedly variable interest rate.

This is the case with Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, Article 6(1) of which provides that “Member States shall lay down that unfair terms contained in a contract concluded between a consumer and a seller or supplier shall not be binding on the consumer, under the conditions provided for by their national law, and shall require that the contract remains binding on the parties under the same terms if it can be performed without the unfair terms”.

This provision, as indicated by the SC itself in its judgment of 9 May 2013, “has been interpreted by the case-law of the ECJ as a mandatory provision which, taking into account the inferiority of one of the parties to the contract, seeks to replace the formal balance which the contract establishes between the rights and obligations of the parties with a real balance which can restore equality between them”.

If your mortgage has a floor clause or you think you might have one, please contact us and we will be happy to advise you. The first consultation is free of charge.

(Martín de la Herrán)