7 Maggio 2026
The ruling of the Italian Supreme Court provides an opportunity to confirm the aim of the prohibition of theso called ‘patto commissorio’and the criteria for identifying its existence, even in atypical contracts.
In its recent ruling n. 2023 of 30th January 2026, the Italian Supreme Court of Cassazione, Civil Section II, states that the invalidity provided for under Article 2744 of the Italian Civil Code, concerning the ’patto commissorio’, does not apply exclusively to the agreement expressly described therein, but extends to any agreement that achieves its substantive purpose. This prohibited purpose consists in subjecting the debtor to the will of the creditor through a prior agreement that provides for the transfer of ownership of an asset belonging to the debtor in the event of a failure to fulfill a payment obligation.
A brief framework
Article 2744 of the Italian Civil Code states the invalidity of agreements whereby the parties agree that, in the event of an unpaid debt, the ownership of a debtor’s asset, which has been constituted as guarantee, is transferred to the creditor.
The conceptual basis of the invalidity of the ’patto commissorio’ is debated: it should be related to the protection of the debtor’s contractual freedom—who, due to a position of weakness, might accept an unfair agreement where the value of the collateral significantly exceeds the secured debt—or to the protection of the rights of the creditors, given that the secured asset is entirely removed from the enforcement actions of other creditors.
The facts and the Courts’ decisions
The plaintiff filed a lawsuit in first instance, asking the Court to declaire null and void the mandate given to creditor to sell a real estate unit in his property in case of the unfulfillment of a payment. According to the claimant, the mandate entails a ‘patto commissorio’.
To support the claim, the plaintiff argued that he was indebted vis-à-vis the defendant and that the sale of his asset—carried out by the creditor acting under a special power of attorney in favour of his mother who was acting as a fictitious intermediary — was in fact a mechanism to extinguish the pre-existing debt.
At the conclusion of the lawsuit, the Court of first instance upheld the claimant’s arguments and declared the sale contract null and void due to a violation of the patto commissorio prohibition.
However, the Court of Appeal reversed this decision, because the alleged debt had not been proven. Consequently, the existence of a ’patto commissorio’ could not be established.
The second degree ruling was appealed before the Supreme Court on several grounds and in particular on this points:
- failure to examine key facts relevant to the decision, specifically the provision of a loan accompanied by a simultaneous obligation to grant an irrevocable special power of attorney to sell in favour of the creditor, exercisable in the event of default in repayment of the loan;
- misapplication of Article 2744 of the Civil Code and several other legal provisions, as the Court of Appeal failed to find that the requirements of a ‘patto commissorio’ had been met.
The ruling of the Supreme Court
The Supreme Court upheld the above-mentioned grounds of appeal for the following reasons.
The Supreme Court stated that the circumstances proved in the proceeding clearly indicated the existence of a credit relationship and the simultaneous granting of the power of attorney for the purpose of securing possible non-performance.
Regarding the interpretation and application of Article 2744 of the Civil Code, the Court stated that it must be construed functionally. Accordingly, the prohibition applies not only to the arrangement expressly described therein, but also to any type of agreement intended to achieve the unlawful purpose prohibited by the legal system, namely the coercion of the debtor into submitting to the creditor’s will through the pre-agreement of the transfer of ownership of an asset as a consequence of, and security for, non-performance of the obligation.
This implies that complex transactions structured through multiple interconnected legal acts must be assessed as a whole, in light of their overall purpose, rather than in a fragmented manner, in order to determine whether they are intended to circumvent the prohibition of ‘patto commissorio’.
The Court further clarified that ‘patto commissorio’, prohibited under Article 2744 of the Civil Code, is established where the debtor is compelled to transfer an asset to fulfil the obligation. However, this configuration is excluded when the transfer is the result of a voluntary decision, such as when it is agreed as a datio in solutum under Article 1197 of the Civil Code, or when it constitutes the exercise of a right reserved at the time the obligation was created under Article 1286 of the Civil Code.”
Principle stated by the Court
“In matters concerning the ‘patto commissorio’, Article 2744 of the Civil Code must be interpreted functionally, such that its aim it is not only the agreement expressly described therein, but also any type of agreement, regardless of its content, that is used to achieve the result that is prohibited by the legal system, namely the unlawful coercion of the debtor into submitting to the creditor’s will by pre-agreeing to the transfer of ownership of an asset as a consequence of the failure to extinguish the debt.”
Based on this, the Supreme Court quashed the appealed judgment and remitted the case to the Court of Appeal, sitting in a different composition, for reconsideration in light of the above principles.
Practical conclusion
The ruling incomment is part of a trend of case law which, referring to the invalidity of contracts for fraud against the law (Article 1344 of the Civil Code), has held invalid the following arrangements, as they are aimed at achieving the practical purpose of a ‘patto commissorio’:
- a sale subject to a suspensive condition linked to the debtor’s default, allowing the creditor to acquire ownership of the asset by offsetting the price with the outstanding debt;
- a sale with a right of redemption or repurchase option where the payment of the price by the buyer is in fact the disbursement of a financing arrangement;
- a sale-and-leaseback transaction when used as a security device;
- a power of attorney to sell granted without any duty to account to the creditor, enabling the creditor, in case of default, to sell the asset and retain the proceeds in satisfaction of the claim.
By contrast, there are legal constructs similar to the ‘patto commissorio’but considered lawful, such as:
- datio in solutum: an agreement whereby—after a default has already occurred—the parties agree to transfer an asset of the debtor in satisfaction of an outstanding debt, even where there is an economic imbalance to the detriment of the debtor;
- the so-called ’patto marciano’, under which a debtor’s asset is transferred upon default of a secured obligation, but at a value determined by an independent third party at the time of transfer, with payment to the debtor of any difference between the value of the asset and the amount of the outstanding debt.
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