Supreme Court clears up termination terms for loan contracts
MOSCOW, May 24 (RAPSI) - The death of a guarantor and terms of early termination of loan contracts which are not specified in the legislation are not considered sufficient grounds for terminating loan guarantees and demanding early repayment, the Supreme Court said in a review of loan disputes.
The court stated that the borrower (a private individual) is the economically weak party, whose rights need to be protected. If a loan contract includes standard terms which the borrower cannot influence, the addition of new terms which allow the lender to demand early repayment but which are not specified in the Civil Code will infringe on the borrower's rights as a consumer.
The Supreme Court also said that the death of the guarantor is not a legal circumstance allowing the termination of guarantees. A loan collection dispute can only be dismissed if the legal relations in dispute do not permit legal succession, while this is admissible in the event of the guarantor's death.
In the event of the death of the guarantor the inheritors, provided they accept the legacy, shall be jointly and severally responsible for the other person's compliance with obligations to creditors, but only within the financial limits of the legacy they accept.
Furthermore, the termination of one form of collateral (pledge, guarantee) shall not entail similar consequences in relation to other forms of collateral since they are independent of each other, the court said.