Publication date: 15.07.2024
Procedure for termination of a banking agreement in Ukraine
Introduction
It may be necessary to terminate a banking agreement for various reasons, such as a change in the client's financial situation, the need to change the terms of service or the desire to switch to another bank. In this article, we will look at the procedure for terminating banking agreements, including the legal basis, types of banking agreements, grounds for termination and practical advice for clients.
Legal framework
The Civil Code of Ukraine
The Civil Code of Ukraine (the "CCU") is the main legal act governing contractual obligations, including banking agreements. The CCU sets out the general provisions on the conclusion, performance and termination of contracts, the rights and obligations of the parties, and the consequences of contractual termination.
Law of Ukraine On Banks and Banking Activities
This law regulates the activities of banks in Ukraine, including the procedure for entering into and terminating banking agreements, the rights and obligations of banks and their customers, and the procedure for resolving disputes.
Regulations of the National Bank of Ukraine (the "NBU")
The National Bank of Ukraine issues regulations governing the opening, maintenance and closing of bank accounts, terms and conditions of loan agreements, deposit agreements and other banking services.
Types of banking agreements
Deposit agreements
Deposit agreements are concluded between a bank and a customer for the storage of funds for a certain period of time with interest accrual. Deposits may be term deposits or demand deposits.
Loan agreements
Loan agreements are entered into between the Bank and a customer to provide funds on terms of repayment, maturity and payment. Loans may be consumer, mortgage, business, etc.
Bank account opening and maintenance agreements
These agreements are concluded between the bank and the client to open and maintain current, card or other accounts used for settlements, storage of funds and other transactions.
Grounds for termination of a banking agreement
By agreement of the parties
A banking agreement may be terminated by mutual agreement of the parties. This means that the bank and the client reach an agreement on the terms of termination of the agreement and record it in writing.
Unilateral termination
Unilateral termination of a banking agreement is possible in cases stipulated by law or the agreement. This may include:
- Breach ofcontract: failure to fulfil or improper fulfilment of obligations under the contract by one of the parties.
- Changes in financial position: significant deterioration in the financial position of the client or the bank, which makes it impossible to fulfil the obligations under the agreement.
- Other grounds: circumstances stipulated by the agreement or legislation that allow for unilateral termination of the agreement.
Termination of the agreement
A banking agreement may be terminated upon expiry of its term. This applies to fixed-term deposit agreements, loan agreements with a fixed term, etc.
Procedure for termination of a banking agreement
1. Contacting the bank
The client must apply to the bank with an application for cancellation of the agreement. The application must contain the necessary data, including the reason for termination of the agreement and the details for the refund (if any).
2. Consideration of the application by the bank
The bank reviews the client's application and makes a decision on the cancellation of the agreement. This may include verification of the existence of grounds for termination of the agreement as defined by law or the agreement.
3. Conclusion of the agreement on termination of the agreement
In the event of termination of the agreement by mutual consent, the bank and the client shall enter into an agreement on termination of the agreement. The agreement shall set out the terms and conditions of termination of the agreement, including the terms and procedure for refunding funds, accrual of interest, payment of fees, etc.
4. Fulfilment of obligations under the agreement
The client and the bank fulfil their obligations arising from the termination of the agreement. This may include repayment of the debt balance, refund of funds on the account, payment of fees and penalties, etc.
5. Closing of accounts (if necessary)
If the termination of the agreement provides for the closure of bank accounts, the bank shall perform all necessary operations to close the accounts, including transferring the balances to other accounts of the client or paying in cash.
Practical advice for clients
Careful study of the terms of the agreement
Before entering into a banking agreement, customers should carefully study its terms and conditions, including the procedure and terms of termination. This will help avoid misunderstandings and possible problems in the future.
Keeping documents
Customers should keep all documents confirming their relationship with the bank, including agreements, receipts, account statements, etc. This can be useful in case of disputes or when it is necessary to confirm their rights.
Consultation with a lawyer
In the event of difficult situations or conflicts with the bank, clients may seek advice from a lawyer or attorney specialising in banking law. A lawyer will help you assess the situation, prepare the necessary documents and represent your interests in court.
Contacting the bank in case of problems
In the event of problems or unclear situations, clients should contact the bank for clarification and conflict resolution. Most issues can be resolved at the stage of internal complaints.
Conclusion.
The termination of a banking agreement is an important process that requires compliance with established procedures and conditions. The procedure for termination depends on the type of agreement, the grounds for termination and the agreements between the parties. Clients should carefully read the terms of their agreements, keep documents, consult with their lawyers if necessary, and contact the bank to resolve any issues. Compliance with these recommendations will help ensure an adequate level of protection of clients' rights and interests in the process of termination of banking agreements.
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Conclusion
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