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Clifford Chance

Clifford Chance


Germany – upfront fees in syndicated lending in light of recent Federal Court of Justice judgements

29 April 2015

For German law consumer credits (Verbraucherdarlehen) work fees (Bearbeitungsentgelte) can only be charged upfront if the consumer (Verbraucher) has been given a real choice between paying an upfront work fee or a higher interest rate over the lifetime. Equally, a bank cannot validly through its general business terms require a consumer to reimburse the bank for third party expenses it incurs when performing its contractual or statutory obligations or any other task that it performs predominantly in its own interest.

It is our view that this case law does not restrict typical upfront fees and expense provisions in syndicated loans to corporate borrowers.

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