Bank loan agreements

A bank loan agreement is a commercial transaction. Article 302 of the Bulgarian Commerce Act sets a higher standard for the performance of commercial transactions, so it is advisable to seek a lawyer’s assistance. A debtor for whom the transaction is commercial must exercise the care of a prudent merchant. This is a higher standard than the duty of care under the Obligations and Contracts Act. A merchant is, by definition, a professional who conducts commercial activities by way of business. A higher standard therefore applies. It applies to a natural or legal person who enters into and performs commercial transactions professionally. The merchant has specialist knowledge in the relevant field of trade, which raises the standard expected. The care of a prudent merchant is thus more exacting than the ordinary civil-law standard of a prudent person managing their affairs. It is the borrower’s capacity as a merchant that imposes this higher standard when participating in commerce. In a transaction that is commercial for the borrower, the borrower’s rights do not therefore enjoy the enhanced protection the Consumer Protection Act affords the weaker and more vulnerable contracting party.

This article does not provide a legal opinion or advice about any particular person or situation. For legal assistance with an individual case, consult a lawyer practising in civil or commercial law.