Uncertainty about the creditor’s right to unilaterally amend loan contracts in Hungary

Dr Gárdos Péter and Gubik Gabriella, Gárdos Füredi Mosonyi Tomori Law Office, Hungary.

Introduction

Due to the special nature of financial services, financial service providers were almost without exception granted with the right to unilaterally amend their contracts. During the credit crisis this right of financial institutions has increasingly been challenged, which drew attention to the broad discretion that such right grants to the creditor. Consequently, the creditors’ right to unilaterally amend loan contracts was significantly limited in Hungary in the past couple of years: the legislator amended the laws applicable to unilateral amendments in case of loan agreements, and most of the banks signed a code of conduct on retail lending activities with a major focus on the banks’ right to unilaterally amend such contracts. Still, a recent decision of an appeal court and its revision by the Supreme Court causes uncertainty about the extent of the creditor’s right to amend loan contracts. The present article summarises the legislative changes and recent judgements.