We must take advantage of the benefits granted by contract when and where they are offered, otherwise, it is already too late!
Most mortgage loans granted by financial institutions allow for an annual repayment of a certain percentage of the borrowed capital, without penalty.
Following the sale of their property and the payment of the balance of their mortgage, some borrowers initiate a class action lawsuit against their financial institution and claim reimbursement of part of the penalty paid. The borrowers argue that their financial institution should have calculated the penalty taking into account the unused portion of the capital that they could repay annually without penalty.
The Court* recalls:
- that every contract must not only be negotiated, but also executed in good faith, and therefore, the contractual fault committed by financial institutions must be sought;
- that the Civil Code of Quebec states that the obligations arising from a contract are not limited to those expressly stipulated and also extend to those derived from the very nature of the contract, equity, custom or law.
The court concludes that good faith must govern the conduct of the parties. The penalty demanded did not have the effect of increasing the obligations of the borrowers, and the advantage obtained by their financial institution had been agreed upon by the parties. Interpreting the contract as the borrowers advocate would mean increasing the obligations of their financial institution in a manner contrary to the intention that emerges from the contracts entered into between the parties, since the borrowers cannot benefit from the advantages granted to them by these contracts, failing to have exercised this opportunity in due time and place.
Do you know the difference between an opportunist and a profiteer? The former seizes the opportunity that presents itself, while the latter seeks to profit from all opportunities, to the detriment of others.
*C.A. 500-09-022992-127 and 500-09-22998-124
