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universul juridic magazin

Law regarding the giving in payment: does it divide the risks in an equitable manner or does it state the supremacy of the consumer’s right?

Law no. 77/2016 on the giving in payment of immovable property in order to discharge the obligations undertaken by credits aimed to resolve the cases where the credit institutions’ debtors are “unable to pay”. The phrase “inability to pay” was misused in the explanatory memorandum, as, in fact, the law aimed to provide solutions to the debtors having become over-indebted. Although (undoubtedly) well-intentioned, the Law on the giving in payment “ignores” the fact that the benefits of the investment activities carried out by the borrowers fully belong to the borrowers, and proposes a so-called risk “division”, in fact, a separation of risks from benefits, where the benefits belong to the borrowers and the risks are borne by the creditors. Initially, the Romanian Constitutional Court seemed to validate the opinion on the risks derived from the investment activity (which should not be borne by the financing entities), and then (after the publication of the decision) the opinion expressed by the constitutional court became slightly more nuanced. The Constitutional Court however validated the view that the law should not apply to persons who no longer want to honour their payment obligations, but only to those who are no longer able to pay, also confirming, in our opinion, the idea that consumer rights must not be absolutely protected.