Judgment 570/2025 of the Supreme Court of 9 April (Judge Sancho Gargallo) addresses the issue of the confirmation of financial contracts (specifically, swaps) that could initially be voidable due to defects in consent. The analysis focuses on determining under what circumstances post-contractual acts can be interpreted as tacit confirmation of the contract, thereby remedying the initial defect.
In the case analysed, Colegio Villamadrid Sociedad Cooperativa Madrileña sought the annulment of financial swap contracts on the grounds that there was a defect in consent at the time the contracts were entered into. The entity argued that it had not been provided with adequate information about the risks of the financial product.
The Supreme Court, in ruling on the appeal lodged by Caixabank, S.A., focused on whether the novations of the credit agreement in 2010, 2012 and 2013 could be interpreted as tacit confirmation of the swap agreement.
Case law requirements for the confirmation of a voidable contract
The Supreme Court’s ruling reiterates existing case law on the confirmation of voidable contracts, particularly in the context of complex financial products. The key points of this case law are:
- Express and tacit confirmation: Article 1311 of the Civil Code allows for both express and tacit confirmation. Express confirmation is a unilateral declaration of intent by the entitled party to contest the contract, expressing their intention to give it definitive effect (Article 1312 CC). Tacit confirmation occurs when, knowing the cause of nullity and that it has ceased to exist, the entitled party performs an act that necessarily implies the intention to waive the action for nullity.
- Unequivocal intention to confirm: Case law requires that the intention to confirm the contract be unequivocal. In cases of financial contracts with defects in consent due to lack of information, the mere fact of receiving settlements, not protesting immediately, or even cancelling the contract in advance in order to sign a new one on apparently more favourable terms is not considered tacit confirmation.
- Purpose of subsequent acts: The Supreme Court analyses the purpose of the acts performed by the person entitled to challenge the contract. If these acts are aimed at mitigating an imminent economic risk (such as avoiding the ‘economic drain’ of negative settlements), they are not interpreted as confirmation of the defective contract, but as a financial protection measure.
Critical analysis
The Supreme Court’s ruling correctly applies established case law on the confirmation of voidable contracts. In the specific case, the novations of the credit agreement do not reveal an unequivocal intention to validate the defect of consent affecting the swaps. Rather, these novations are interpreted as a requirement of the financial institution to continue with the financing and a measure taken by the cooperative to ensure its economic viability.
However, the ruling could have gone further in its analysis of the information provided to the cooperative at the time of the novations. Although it is mentioned that there was no unequivocal validation, it would be relevant to examine whether the initial lack of information on the risks of the swap was remedied in those novations. In other words, if the cooperative was adequately informed about the nature and risks of the product in the novations, this could have had implications for the assessment of tacit confirmation.
Furthermore, the judgment reaffirms the importance of protecting retail investors when contracting complex financial products. This approach is crucial in the Spanish context, where case law has evolved significantly in recent years to ensure transparency and adequate information in the marketing of these products.
Supreme Court Judgment 570/2025 provides a clear statement of the case law requirements for the confirmation of contracts that are voidable due to defects in consent, particularly in the field of complex financial products. The judgment highlights the need for an unequivocal intention to confirm the contract and the importance of analysing the purpose of post-contractual acts.
Although the ruling adequately resolves the specific case, it could have explored in greater detail whether the novations of the contract remedied the initial information defect. In any case, the ruling reinforces the protection of retail investors and the requirement for transparency in the contracting of complex financial products in Spain.