Facts
In this case, Bank P granted a loan of CHF 25,000 to W, secured by a painting attributed to Jean Baptiste Oudry, estimated at CHF 90,000. After a delay of three monthly payments, the Bank commissioned a Zurich gallery to sell the pledge by private sale. The gallery estimated the painting at only CHF 8,000 and sold it at this price. The Bank then pursued W for the unpaid balance of the loan. W contested the debt, and the cantonal courts ultimately ruled in favour of W.
Considerations
The Federal Tribunal held that when the pledge contract authorises the creditor to sell the pledge by private sale, the creditor has an obligation, according to the rules of good faith and to the extent of its own interests, to avoid avoidable damage to the pledgor. In particular, it must inform the pledgor in a timely manner of the date of the sale and is liable for the damage if, through its fault, the proceeds of the sale prove to be insufficient.
In the present case, the Bank did not sufficiently inform the gallery about the estimated and insured value of the painting of CHF 90,000. Faced with this significant difference in…