PARIS, FRANCE – June 13, 2016 – GE (NYSE:GE) today announced an agreement under which COFACE will provide an additional line of credit for combined gas turbine projects that require export financing in countries such as Saudi Arabia, Mexico and Brazil. That`s why GE will invest 35 million euros in the expansion of the capacity to build 60 Hertz installations for heavy gas turbines in Belfort, France. However, some types of contracts do not operate on this principle. Their existence and validity are subject to additional formalities. Loan contracts are such a type of contract. This framework agreement, signed during Immelt`s recent visit with President François Hollande, strengthens France`s position at the heart of the global energy market. The development of GE`s world-leading gas turbines, with Alstom`s combined equipment and projected capacity in France, supports this positioning. However, the Court of Cassation extended this finding to all loans granted by credit professionals, in accordance with its decision of 28 March 2000, without referring to a specific statute. In this case, the loan was intended for the purchase of agricultural equipment and was conditional on the expiry of a life insurance contract by the purchaser. This condition was met, but the buyer died before the money was transferred. The bank then refused to execute the loan.
This loan was not governed by the consumer protection code, but by Article 1892 of the French Civil Code, which sets out loan contracts. This means that the contract was subject to the real contract theory. On this basis, the bank stated that it could not be forced to transfer the funds because of a lack of a credit contract. However, the Court of Cassation rejected this argument and, without referring to a particular statute, found that loans granted by credit professionals were not a consideration. The Tribunal therefore decided that the bank was required to transfer the funds under the mutual agreement between the parties. Under this decision, credit contracts will be in place as soon as they are concluded and the lender will be required to transfer funds to the borrower. If the lender does not do so, the borrower now has the right to obtain the transfer of the funds instead of simply receiving damages. Article 1892 of the French Civil Code defines loan contracts. This section has always been interpreted as requiring the removal of the purpose of the contract as a condition of its existence and validity. Like deposit contracts, loan contracts are therefore considered agreements on things (in progress). Therefore, the transfer of funds by the lender to the borrower is not a contractual obligation. Until funds are transferred, a bank`s formal obligation to lend money to one of its clients is only a promise to enter into a loan agreement.