Consequences of invalidity of loan agreements

Author: Péter Gárdos

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In his article, Péter Gárdos analyses the consequences of invalidity of loan agreements. Although restitutio in integrum may seem as an evident solution, due to the irreversible nature of the service provided by the creditor, it is not possible. Loan agreement inevitably leads to the transfer of ownership of money, but this does not reflect the true nature of the transaction. The purpose of the agreement is not the transfer of ownership, but to provide the debtor the right to use the creditor’s money. As restitutio in integrum is available only in case of contracts for the transfer of ownership, in case of loan agreements the courts shall handle the contracts as if it were valid until the date of the court’s judgment and order the payment of the remaining capital amount. The article is available in Hungarian.