Dispose of finance in a bank deposit
Alena Pauličková
Abstract:
The paper deals with dispose of
finance in a bank deposit within the legal regulations in force in the Slovak
Republic. It is concerned a special features of a contract from which some
specific determinations result for its owner within a relationship between a
bank and the bank owner. Interests from the bank deposit are always higher
because fixing the term enables the bank also time use of obtained finance
mainly for granting credits. It is possible to agree the time deposit in the
contract.
Key words: finance,
bank deposit, contractual relationship, interest, time deposit, date of deposit
From a special nature of
a bank deposit contract some time restrictions result from it for its owner as
he left finance for its use in bank on a base of conditions agreed in the
contract.
In terms of provision of
S. 717 par. 1 of the Act No 513/1991 Coll. of Laws on Commercial Code
(“Commercial Code”), if the owner disposes of finance before a term agreed in
the contract, or if there is no term agreed in the contract, before expiry of a
notice period, claim on interests extinct or it decreases in a way determined
in the contract. If there is no operation of the notice period the notice is in
operation after three months from a day when the owner of the account delivered
bank the written notice. It is also possible to denunciate a part of the
deposit. The effects of extinction or reduction of claim on interests are
related only to a sum by which the notice period was not kept.
In a case that the bank
deposit contract excludes a possibility to dispose of finance in a bank deposit
before a due date a bank will not pay off finance sooner.
Issued from a fact that
it is concerned a contractual relationship between a bank and the owner of the
account it is definite that the owner of the account undertook that he will not
dispose with finance in a bank account during a whole term of a contract
duration. However, if establishing bank deposit contract does not say that the
owner is not entitled to dispose of finance paid in the account, it means that
the owner does not looses a possibility to dispose finance during a validity of
the bank deposit account. In such a way
it comes to duty-breaking of the owner of the account from the contractual
relationship. For such a case the parties to contract determine a sanction, or
they agree a way how to determine the sanction. Following kinds of the
sanctions are applied:
·
Expiry
of the claim to an agreed interest,
·
Reduction
of an income by a contractually agreed way,
·
Contractual
fine.
The first two sanctions are
characterised by a fact that the agreement about their determination comes by
origin of the contractual relationship and the contractual fine is most often agreed
during the bank deposit contractual relationship.
By
expiration of the claim of the deposit account owner on the agreed interest
also the claim on aliquot interest revenue expires, so the revenue for a period
of an origin of the contractual relationship until a moment of its infraction. The
second applied principle of the sanction is a reduction of the interest by a
contractually agreed way, which in a common practice applies a principle of
“passing time”. Most often it is a principle of keeping or non-keeping the
contractually agreed time. The contractual fine is a special modified
consequence of breach of duties; the claim to make amends does not origin to
the bank.
It
is possible to agree a time bank deposit in the contract for such periods:
·
Definite
time,
·
Indefinite
time with the agreed length of the notice period,
·
Indefinite
time without any contractually agreed notice period (on a base of the legal
notice period).
From the facts mentioned
above it is possible to state that the bank deposit contract agreed by the
parties to contract for the indefinite time period discharges after expiry of a
period. In a case that the parties to contract did not use non mandatory legal
regulation and they did not agreed contractually for this case a length of the
notice period then the 3-months notice period is legally in force.
There is a certain
contradiction in par.1. A first sentence binds dissolution or reduction of the
claim to interests as dispose of finance in the account before a period
determined in the bank deposit contract with expiry of the notice period. On
the other hand the second sentence says only about non-keeping the notice
period. We affirm that it is necessary to relate to the case a limitation of expiry
effects or reduction of a claim to the interests according to the second
sentence when it was partially disposed of finance put in on a base of the
awarded contract for a definite time period where a fix term of the deposit was
agreed.
The interest and discharge of the contractual relationship
The aim of the
contractual relationship from the bank deposit contract is a duty of the bank
to pay the agreed interest to the owner of the account for his finance put
there. The bank can not exclude the
duty to pay interests by concluding the contract even with an agreement of the
second party to contract, because this duty is a significant part of the bank
deposit contract ex lege, and according to a provision of S. 263 par. 2 of the Commercial
Code it is prohibited for the parties to contract to divert the basic
provisions for certain type-bound commercial contracts. The bank is obliged to
pay he interest in a sum determined in the contract, or if it is not agreed
then in a sum determined by the law or on the basis of the law; otherwise in a
common sum taking to account a length of time deposit.
The
interests start to count from a day of put in finance to bank deposit account
and they finish by a day which anticipates the day of withdraw or transfer of
finance. According to S. 497 it is not possible to conclude the bank deposit
contract as the interest-free one.
Some
authors are consistent in their opinions of the sum of interests from the bank
deposit account – they think that they are higher than the common account
contract interests. However, the bank deposit account interests are always
higher because the time deposit enables bank also time-period use of finance
gained mainly for providing credits.[1]
On a base of practical experience we can not totally agree with the author most
of all in a statement “they are always higher”.
It
is truth that the interests are mainly higher, but we do not agree that much
more higher. In a current bank practice
there is not a big different of interest rates.[2]
It is not rare in some cases that because of a movement of finance in financial
markets the deposit accounts for longer time deposit have the interest rates in
some cases lower as it is in a case of deposit accounts for shorter time
deposit.
The
sum of the interest is different in a practice; it depends on a length of time
deposit of finance. Nowadays there is no legal regulation which would determine
a sum of the interest, it works on a base of contractual freedom and its high
depends can be influenced by different matters of fact (mainly by a money-market).
Only in a case that the parties to contract did not either agreed a concrete
sum of the interest in the contract or also a way of its determination, the
interest established by law or on a base of law (see the Central Bank
provision) is applicable, on the other hand the interest in a common high is
applicable. To take into account a fact that there has not been determined a
high of the interest by any legal regulation or by the Central Bank, the
principle of a common sum would be applicable.
According
to a provision of par. 2 of S. 718 of the Commercial Code the interests are
payable after expiry of a period during which finance is bound in a deposit or
after expiry of effectiveness of abrogation according to a provision of S. 717
of par. 1 of the Commercial Code. If the bank deposit account was not agreed
for the definite time period or it was agreed for a time period longer than 1
year and the parties to contract did not agree in other way, the interests are
payable no later than at the end of each calendar year.
However,
the provision mentioned above is only of a non mandatory character and it is
fully on the parties to contract how they agree on a time period and a way of
the interest paying off. Maturity of the interests is always by finishing the
bank deposit contract, whether it finishes by expiration of the time period or
by expiration of the notice period. In this place it is necessary to point out
the provision of par. 2 of S. 718 of the Commercial Code. It is the truth that
in a practice most often is used the interest pay off by the account maturity
by its capitalisation, but it is not fully applicable. The parties to contract
can also agree on other contractual way of pay off the interest e.g. by
establishing the bank deposit account (interests in advance). Such types of the
deposit bank account contractual relationships were concluded by the Slovak
banks before implementation of the common EUR currency. On a base of the
contract the interest can be paid off also in another currency as the bank
deposit account was established.
If
finance is put in for a time period longer than one year (and the parties to
contract did not agree other way) the bank is obliged to pay off the interest
after the calendar year by request of the owner.
References:
1. Zákon č. 513/1991 Zb. Obchodný zákonník
2. Ovečková, O. a kol.: Obchodný zákonník, komentár, druhé prepracované vydanie, IURA EDITION 2008
3. Suchoža, J. a kol.: Obchodný zákonník a súvisiace predpisy, komentár, Eurounion spol. s r.o. Bratislava 2007
Contact:
Doc. JUDr. Alena Pauličková, PhD.
School in Sladkovicovo
Janko Jesensky Faculty of Law
Richterova Str.
925 21 Sladkovicovo
Tel./fax: +421 33 5446536
e-mail: alena.paulickova@vssladovicovo.sk