LEGAL NEWSFLASH Nr. 12, September 2011 Nemoianu Attorneys at Law – the correspondent law firm of KPMG in Romania Loan contracts in the New Civil Code KPMG in Romania The New Civil Code brings amendments to loan contracts in terms of risks attached to, transfer and return of items lent, and also introduces a new regulation governing loan promises. Such amendments will have an impact on the extent and outcome of private and business relationships between contracting parties, which will give rise to rights and obligations to come into effect after 1 October 2011. As a general remark, borrowers’ rights have been broadened in terms of transfer to third parties of the item borrowed, borrowers’ quick access to favourable court rulings, and the extent of security interests offered by the borrower. By contrast, borrowers’ obligations in the event of destruction and early return of the item borrowed have been tightened. also for the first time, the new code provides a possible solution for consecutive enforcement of obligations: an emergency legal action. The party refusing to keep the promise and enter into a contract at the term agreed will be obliged to conclude the contract and even to pay damages; under gratuitous loan agreements (also known as commodate or free use agreements) borrowers (beneficiaries) may now transfer their right of use to a third party if they have the lender’s (owner’s) consent; if the beneficiary uses the leased item for a purpose other than the one stated under the contract or extends the use of the item beyond the term established, the beneficiary shall be liable for the loss or deterioration of the item even if such loss or deterioration has been caused by a force majeure event; another novelty for commodate agreements is the owner’s liability for defects of the leased item while in use by the beneficiary, an obligation similar to a seller’s guarantee for an object sold; Some of the issues arousing interest are: it is for the first time that loan promises have been regulated. However, such promises allow for the conclusion of consecutive agreements over the same item, in consideration of a promise previously made. The major risk posed by such agreements is the enforcement of the obligation strictly at the term established; About us under certain conditions, a loan agreement may be deemed as a writ of execution; where an interest-free loan agreement is concluded over fungibles, the deadline for the return of such items may now be deemed to be set only in favour of the borrower. In light of the above, our lawyers can provide assistance in connection with: drafting and ensuring assistance during contract negotiations; ensuring that the legal provisions are properly transposed in agreements; reviewing conformity of ongoing contracts with the provisions of the New Civil Code; drafting contract clauses on timely or early return of borrowed items; ensuring enforceability of contracts without preliminary court intervention; ensuring assistance and representation in disputes arising out of loan agreements; identifying optimum solutions pertaining to type and nature of loan contracts concluded between parties having a distinct/mixed legal capacity, such as between legal entities and individuals, between entities belonging or not to the same group, so as to meet the group’s/company’s interests. Our lawyers are business-oriented advisors with legal and financial background, with strong negotiation skills and a result-driven approach. Having a thorough understanding of the specifics of various industries, our professionals offer uniform quality, observe tight deadlines, anticipate clients’ needs and meet their requirements with professionalism and proficiency. Over the last 17 years, we have gained a strong track record of large transactions brought to a successful completion, advising our clients and delivering clear, pragmatic advice on various matters such as financial services, mergers & acquisitions, public sector, restructuring, energy and employment. We actively assist our clients, tailoring our services to help investors develop investment strategies, seeking cost-effective solutions and protecting their interests. Contact details: Servicii Impozitul pe profit Daniela Nemoianu Executive Partner [email protected] Services Impozitare internaţională Corporate and Commercial Sebastian Olteanu Manager [email protected] Banking, Finance & Insurance M&A Private Equity & Capital market Public sector & Infrastructure Energy & Utilities Employment Restructuring & Insolvency Real estate Competition Intellectual Property Rights Communications &Technology E-business Dispute Resolution Nemoianu Attorneys at Law The correspondent law firm of KPMG in Romania Victoria Business Park DN1 Bucuresti Ploiesti nr. 69-71 Sector 1, Bucuresti 013685, Romania P.O. Box 18 – 191 Tel: i+40 372 377 800 Fax: +40 372 377 700 E-mail:[email protected] Internet: www.kpmg.ro The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG, the KPMG logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. © 2011 KPMG Romania S.R.L., a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Romania.
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