University of Innsbruck Faculty of Law – Institute of Civil Law Univ.-Prof. Dr. Andreas Schwartze, LL.M. (EUI) – Head of Institute European, Comparative and Private International Law

Innrain 52 | Christoph-Probst-Platz | A-6020 Innsbruck Telefon +43 (0) 512 / 507 - 8130, - 8131 (Sekr.) | Fax +43 (0) 512 / 507 - 2644 E-Mail andreas.schwartze@uibk.ac.at | Internet http://www.uibk.ac.at/zivilrecht /evip/

“Personal guarantees between commercial law and consumer protection” General Report for the XIXth International Congress on Comparative Law 2014, Vienna, Austria – III.A. Commercial Law [ Preliminary and condensed version! Please do not cite without the consent of the author! ] 1. Economic aspects

It seems to be very difficult to estimate the economic importance of personal

guarantees even within one country, because statistic reports – if available – are

usually limited to certain areas of lending and security. In any case personal

guarantees are very relevant in the consumer credit market as well as for business

purposes. For the consumer area this is visible for example in Germany, where a

fairly old study from 1982 has identified about 20% of consumer credits as secured

by a personal security1, or in Austria, where current statistic figures from 2014 show a

quota of nearly 35%2. A study from 1995 has estimated that approximately 10% of

the Danish households were bound as guarantors3. In the field of business

transactions especially small and medium sized enterprises (SMU) are depending on

1 German Report, 2. 2 Austrian Report, 1.

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personal securities, e.g. in Germany between 2007 and 2010 some 30% of these

companies needed this kind of guarantees4. However, in the aftermath of the global

and then European financial crisis risk aversion of guarantors is rising and personal

guarantees seem to be increasingly less attractive5, especially if given by private

persons6. Definitely the legal professions in most jurisdictions are highly occupied

with judicial problems of personal guarantees, if one looks at the numbers of court

decisions7 or at the comprehensive academic literature on this matter8.

2. Legislation

As in other fields of the law of obligations there are three legal sectors where

personal guarantees could be governed by statutory provisions: The main and

central area is that of the general private law applying to all citizens, so that in most

civil law countries at least the suretyship as the traditional form of a dependent

personal guarantee is regulated within the Civil Code, as in Germany (§§ 765 ff

BGB), Austria (§§ 1348 ff ABGB), Switzerland (Art 492 ff OR), Greece (Art 847 ff AK),

Turkey (Art 581 ff BK), Croatia (Art 104 ff COA), Poland (§§ 876 ff KC), Estonia (Art

142 ff LOA), France (Art 2288 ff CdeCiv), Italy (Art 1936 ff CceCiv), Portugal (Art 627

ff CgoCiv), Argentina (Art 1986 ff CgoCiv), Brazil (Art 822 CgoCiv), Quebec (Art 2333

ff QuCivCod), USA (“guarantees”,sometimes without differentiation independent

guaranties)9 Israel (“guarantee”10, EU Art IV.G.-1:101 ff, IV.G.-2:101 DCFR. The legal

situation in Denmark is different, because the private law of the Nordic countries is

based mainly on case law following non-statutory general principles, added recently

by a few scattered statutory rules11, but even Danish law knows a dependent

guarantee like a surety (kaution)12.

3 Danish Report, 4. 4 German Report, 2. 5 German Report, 3. 6 Croatian Report, 2, 3. 7 E.g. Estonian Report, 1; in contrast only few cases on consumer guarantees, Argentine Report, 1. 8 Austrian Report, 2. 9 USA Report, 3. 10 Israeli Report, 3. 11 Danish Report, 4. 12 Danish Report, 2.

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In contrast the abstract guarantee as the prototype of an independent personal

guarantee is in most of these jurisdictions not covered by specific rules13, but based

on an innominate contract designed by the parties within the scope of freedom of

contract, e.g. in Denmark (garanti)14, however not in Canada15, only sometimes

related to certain contract types like remittance (Poland, §§ 921 ff KC) or third party

undertaking (Turkey, Art 110 ff BK). Rarely there are particular regulations

concerning abstract guarantees, like in France (only a definition in Art 2321

CdeCiv)16, in Estonia (Art 155 LOA), in Croatia for bank guarantees (Art 1039 ff

COA), EU Art IV.G.-3:101 ff DCFR.The co-debt for security purposes is mainly

assigned to the general rules relating to co-debtorship, as in Germany (§§ 421 ff

BGB), Austria (§ 1347 ABGB), Switzerland (Art 143 OR), Poland (Art 366 KC),

Estonia (Art 118 LOA) or Quebec (solidary obligation, Art 1537 QuCvCod). In the EU

pursuant to Art IV.G-1:102 sect 1 lit c DCFR the Part on personal security applies to

co-debtorship for security purposes as well (see – pursuant to Art IV.G.-1:104 DCFR:

subsidiarity – Art III.-4:101 ff DCFR on plurality of debtors [and Art III.-5:201 ff DCFR

on substitution and addition of debtors]).

Furthermore some countries have invented different guarantee mechanisms, based

on other legal concepts, like the French letter of intent (Art 2322 CdeCiv), the

Croatian debenture bonds (Art 214 ff CExecA) or the Polish aval for bills of exchange

(Art 30 ff LBEPN) or the Brazilian promissory notes17.

Sometimes, mostly stemming from older traditions, additional provisions for

commercial or business actors could be found (e.g. Argentina, Art 478 ff CgoComm),

which normally lead to a stricter regime between professionals, e.g. setting aside the

subsidiary liability of surety, like in Germany (§ 349 HGB) – not in Austria anymore

since the enactment of the UGB in 2007 –, in Turkey (Art 7 TCommC), in Croatia (Art

111 COA), Portugal (Art 101 CgoComm), Argentina (Art 480 CgoComm), similar in

Estonia, where the issuing of independent guarantees is restricted to business

13 E.g. Italian Report, 5 f, Portuguese Report, 3. 14 Danish Report, 2. 15 Canadian Report, 13. 16 French Report, 2, 7. 17 Brazilian Report, 2.

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relationships (Art 155 LOA), or abandon formal requirements, like in Germany (§ 350

HGB) – not in Austria anymore since the enactment of the UGB in 2007.

On the other hand the modern development towards consumer protection in some

countries leads to specific provisions favouring the typically weaker contract party,

some all private parties, like in Denmark § 48 Financial Business Act for guarantees

outside a commercial relationship, that is for all private guarantors, or all natural

persons, like in France (Art L 311-11)18 and in Estonia (Art 143 LOA), including even

commercial guarantees not issued by companies. Therefore certain information

duties are foreseen, like in the Austrian Consumer Protection Act since 1997 (§§ 25a

– 25c KSchG) or in the Croatian Credit Institution Act from 2013 (Art 302, 305

CredInstA), in the EU Art IV.G.-4:103, IV.G.-4:106 DCFR, as well as an easement of

the liability of the guarantor either by assuring the subsidiarity relating to the primary

debt (Turkey, Art 4 VI TConsProtA of 2013) or by reducing or eliminating the liability

by court in case of unfair disparity (Austria, § 25d KSchG of 1997; EU Art IV.G.-4:105

DCFR; and form requirement pursuant to IV.G.-4:104 DCFR).

3. Aspects of substantive law

3.1 General

a) Dependent and independent personal guarantees

In most of the jurisdictions there exist two general types of personal guarantees:

Firstly dependent guarantees with a strong accessory relation to the secured debt,

and secondly independent guarantees without any connection to the primary

obligation.

The archetype of a dependent personal guarantee is the suretyship, which is always

only valid, if the secured obligation is valid, and is only valid to the extent the main

debt is valid. This requirement should enable the guarantor to predict the risk of his

promise, therefore the accessoriness is usually strict and mandatory (Germany, §

767 BGB, Austria §§ 1351, 1363 s1 ABGB, Switzerland Artt 114, 499 II, 509 II OR,

Greece Art 850, 851, 853, 864, Turkey Art 591 BK, Croatia Art 104 COA, Poland §

879 KC, Portugal Art 627 n 1, 631 n 1 CgoCiv; Argentina Art 1993, 1995 CgoCiv,

18 French Report, 3.

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Brazil Art 822 f CgoCiv, Quebec Art 2340 QuCivCod). Exceptions are only made if

the secured debt is invalid because the debtor is lacking legal capacity, if the surety

knows this (Greece, Art 850 AK) or even if he is unaware (Austria, § 1352 ABGB,

Croatia Art 107 COA).

Independent or abstract guarantees, which the security provider has to fulfil even if

there is no main obligation, are mostly not statutory regulated, but created by

contract practice (in Canada a trend towards independent guarantees is not

visible19). They are in general non-accessory (USA: “suretyship”20; “indemnity”,

Israel21), what is sometimes clarified in specific regulations (Croatia, Art 1039 II

CredInstA; Estonia, Art 155 LOA22). But because of the freedom of the parties to

formulate the guarantee contract the abstraction can be reduced, e.g. by giving the

guarantor after his payment a right to reverse his performance if the secured claim

was invalid or unenforceable, thus creating a hybrid form of personal security like the

German and Austrian “Bürgschaft auf erstes Anfordern” or only formal abstract

guaranty23, in the EU Art IV.G.-3:104 DCFR: “Independent personal security on first

demand”. Likewise not fully independent are co-debtorships for security purposes,

because their connection to the main debt is generally limited to the point the security

is generated – only at that time the secured obligation has to be valid, which could be

called an initial accessoriness, afterwards both obligations can develop in different

ways, if the parties do not agree otherwise24.

b) Subordinated or immediate liability of personal guarantors

Again the traditional form of a dependent personal guarantee, the suretyship, is less

burdensome for the security provider, because in most jurisdictions the surety is only

liable after at least it has been tried to get performance from the main debtor. Hence

the guarantee has merely a subsidiary function – exceptions are Poland and

Estonia25, where there is no subsidiarity for sureties. By way of exception often

19 Canadian Report, 13. 20 USA Report, 24. 21 Israeli Report, 3. 22 Estonian Report, 9. 23 Austrian Report, 5. 24 Austrian Report, 5, 7. 25 Estonian Report, 12.

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sureties are not subsidiary in cases of insolvency or of unknown residence of the

main debtor, like in Austria (§ 1356 ABGB) or Switzerland (Art 495 I OR), in the EU

Art IV.G.-2:106 sect. 3 DCFR.

But with reference to subsidiarity there are remarkable differences concerning the

intensity to force the main debtor to fulfil his obligation: Some countries are asking

simply for an out of court request to pay (Austria, § 1355 ABGB) or a corresponding

written notice (Croatia, Art 111 I COA; Israel, sect 8 Guarantee Act26), while others

demand to sue the main debtor (Germany, § 771 BGB: Switzerland, Art 495 I OR),

exhaust all remedies against him (Turkey, Art 585 BK; Denmark27; similar in

Quebec28, “guarantee of collection” USA29) or try to execute in vain (Greece, § 855

AK; Argentina, Art 2013 CgoCiv).

In contrast to the accessoriness the extent of subsidiarity assigned with sureties is

not mandatory. Therefore the parties can remove the duty to take action against the

main debtor, which is usually the case30, by giving the creditor the right to demand

payment immediately from the surety (Germany, § 773 I Nr.1BGB, Austria § 1357

ABGB, Switzerland Art 496 OR, Denmark selvskyldnerkaution, USA “guarantee of

payment”31), sometimes by stating a joint and several surety (Croatia Art 111 III COA,

Turkey Art 586 BK; Argentina Art 2005 CgoCiv, Quebec32). In the EU Art IV.G.-2:105

DCFR, in contrast, designates solidary liability of security provider unless otherwise

agreed. On the other hand it can be agreed, that the requirements for subsidiarity are

more strict than the statutory rules recommend, e.g. by prescribing an unsuccessful

execution against the main debtor like it is foreseen in Austria (§ 1356 ABGB), in

Estonia (Art 145 I LOA)33 or in Denmark only if there is a loss caused by the main

debtor’s non-performance34, in Argentina for the deficiency after execution35.

26 Israeli Report, 5. 27 Danish Report, 3. 28 Canadian Report, 10. 29 USA Report, 9. 30 Austrian Report 31 USA Report, 10. 32 Canadian Report, 15. 33 Estonian Report, 12. 34 Danish Report, 3. 35 Argentine Report, 29.

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Independent guarantees usually have to be paid immediately, either “on first

demand” or “pay first, litigate later”36, so that they are non-subsidiary. But this can be

altered by consensus of the parties, by which they agree on different ways to take

action against the main debtor first. Co-debts are likewise mostly seen as non-

subsidiary (explicitly Switzerland, Art 143 OR; Greece, Art 477 AK).

c) Form requirements for personal guarantees

aa) Dependent personal securities

Sureties mostly have to be made in writing, or more precise: the guarantor’s

declaration of intent has to meet the written form. The reason to insist on a qualified

expression of will is a warning against the risks of the personal guarantee. Therefore

in Germany the written form is prescribed since the enactment of the BGB in 1900 (§

766 s1 BGB), from where it was taken into the Austrian ABGB in 191637 (§ 1346 II

ABGB), and equally in Switzerland (Art 493 I 1hs OR), in Greece (Art 849 AK), in

Turkey (Art 583 BK), in Croatia (Art 105 COA), in Poland38 and in the USA39. In

Estonia the written form is necessary only for consumer guarantees (Art 144 II LOA),

as in Israel40 and in the EU Art IV.G.-4:104 DCFR (textual form on a durable medium

and signed by the security provider), likewise in France (mainly for sureties of natural

persons securing consumer loans, Art L 313-7 CdeCons, and of natural persons for

professional creditors, Art L.341-2 CdeCons)41, where there are generally no form

requirements, like in Quebec42, or in Argentina43, unless there has to be evidence

before the court (Argentina: Art 2006 CgoCiv). In Italy only an express declaration of

the surety is valid (Art 1937)44, the same rule has to be applied in Portugal (Art 628

n1 CgoCiv)45 and Quebec (Art 2335 QuCivCod).

36 Greek Report 37 Austrian Report, 4. 38 Polish Report, 18. 39 USA Report, 14. 40 Israeli Report, 8. 41 French Report, 8 f. 42 Canadian Report, 17. 43 Argentine Report, 19; but the reform proposal to unify Civil and Commercial Code from 2011 recommends a contract in writing, Art 1579 Cgo-Prop, Argentine Report, 12. 44 Italian Report, 8. 45 Portuguese Report, 7.

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Sometimes there are sectoral exceptions from these requirements, like in Germany

for sureties given by merchants (§ 350 HGB), in Austria after setting aside an

identical provision since 2007 only for guarantees issued by banks in the course of

their business (§ 1 VI Austrian Banking Act).

In most jurisdictions “in writing” means at least personally signed by the guarantor

(Austria, § 886 s1, s3 ABGB; Germany, § 126 I alt1 BGB; Switzerland, Art 13 I, 14 I

OR; Art 78 KC), but some require in addition the explicit declaration of responsibility

by the guarantor, like Poland46. Signed declarations sent via fax are only in some

countries seen as sufficient, like recently decided in Austria (OGH 201347; left open in

Swiss court decisions, but analogous application of Art 13 II OR is favoured by the

majority of doctrine48), mostly a fax is hold not adequate, like in Germany (BGH 1993,

1996). Electronic signatures are sometimes excluded, as in Germany (§ 766 s2

BGB), but not in Switzerland (Art 14 IIbis OR), or valid only for certain categories of

guarantors, like in Austria for those acting in the course of their business (§ 4 I, II Z4

Austrian Electronic Signatures Act). Blank forms are usually not regarded as

sufficient, e.g. in Austria49 and Germany.

It can be discussed if the written form is effective enough to warn the surety provider,

especially because some jurisdictions are requiring more demanding formalities. For

instance in Switzerland for the surety of natural persons exceeding 2000 CHF a

public authentication is necessary (Art 493 II OR), in Croatia debenture bonds have

to be issued in form of a notarial deed (Art 214 f CroExecA) and in addition have to

be enlisted in a special registry (Art 216 CroExecA)50. Another way to illustrate the

default risk and let the guarantor think twice is the disclosure of the sum he is liable

for in the surety contract, a necessary statement in Switzerland (Art 493 I alt2 OR) as

well as in Turkey (Art 583 BK), or in Denmark for all private guarantees (Art 48 IV

DkFinBusA), in France for natural persons securing entrepreneurial or professional

risks without subsidiarity (ArtL. 341-5 CdeCons)51, in Estonia only for consumer

46 Polish Report, 18. 47 Austrian Report, 11. 48 HandKomm-Kren Kostkiewicz, OR Art 13 N 8. 49 Austrian Report, 11. 50 Croatian Report, 14. 51 French Report, 11.

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guarantees (Art 144 II LOA)52, whereby in addition the risk is always limited to the

stated maximum amount.

bb) Independent securities

While sureties are designated by a qualified, mostly written form stemming from their

statutory regulation, independent contractual guarantees enjoy the fundamental

freedom of form as any unregulated contract. Therefore in many countries abstract

guarantees as contracts sui generis do not have to observe any formal standards,

like in Germany (BGH 1962, 1967) or in Switzerland53. More modern regulations are

treating all kinds of personal guarantees equal, either by applying the traditional form

requirements concerning sureties in an analogous way, like in Austria (OGH 2000)54,

or by extending them to all other guarantees, like in Turkey since 2012 if the

guarantor is a natural person (Art 603 BK), in the EU for personal security of

consumers, Art IV.G.-4:104 DCFR, in Denmark for all guarantees of private parties (§

48 DkFinBusA – in writing), or even to certain kinds of guarantees, like in Croatia for

bank guarantees (Art 1039 COA). In Quebec the Statute of Frauds requires the

guarantee evidenced in writing55.

The same is true for co-debtorships, which either need no special form, again e.g. in

Germany (BGH 1993, 1998) and in Switzerland, fall under an analogy to sureties,

again e.g. in Austria (OGH 2010)56 or may be in future in Croatia57, or are treated

alike sureties, again e.g. in Turkey (Art 603 BK), and in Quebec (express declaration,

Art 1525 QuCivCod).

d) Personal guarantees constituting mutual obligations

Personal guarantees are mostly seen as bilateral in the sense that they are contracts

based on declarations of will from both parties, e.g. in Germany, Austria58,

52 Estonian Report, 15. 53 Swiss Report, 6. 54 Austran Report, 11. 55 Canadian Report, 16. 56 Austrian Report, 11. 57 Croatian Report, 14/15. 58 Austrian Report, 7.

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Switzerland59, France60, prevailing opinion in Portugal61, Canada/common law62 –

only in Poland63 and Crotia64 bank guarantees are qualified as unilateral acts of the

guarantor, in Italy any guarantee can be created by an unilateral act65. In contrast

related to the rights and duties personal guarantees are widely treated as unilateral

because there are no mutual obligations created by those guarantees but only the

guarantor has to effect performance, e.g. in Germany, Greece66, Turkey67, Poland68,

Denmark69, France70, Portugal71. On the other hand in Austria guarantees are hold as

containing mutual obligations in a wider sense stemming from the relationship

between the main debtor and the creditor, which leads to an interpretation contra

proferentem (§ 915 s2 ABGB; similar in Canada72), that means against the creditor if

he has formulated the agreement73. This argument assures in Canada/common law

the necessary consideration, otherwise the guarantee have to be given under seal74.

In Croatia the same argument is used in the literature to avoid the application of Art

320 II COA, namely that the guarantee is interpreted to the less cumbersome burden

in favour of the guarantor75. In contrast in Denmark (following the minimum rule)76

and Turkey guarantees are interpreted in favour of the debtor / guarantor, the same

in Portugal, if there is no remuneration (Art 237 CgoCiv)77, so in case of doubt the

agreement is considered to be a less burdensome surety78 or at least a dependent

59 Swiss Report, 4. 60 French Report, 8. 61 Portuguese Report, 5 f. 62 Canadian Report, 16. 63 Polish Report, 12. 64 Croatian Report, 13 – the same for debenture bonds. 65 Italian Report, 7. 66 Greek Report, 7. 67 Turkish Report, 3. 68 Polish Report, bank guarantee 12, surety 14. 69 Danish Report, 2. 70 French Report, 7. 71 Portuguese Report, 5. 72 Canadian Report, 24. 73 Austrian Report, 8. 74 Canadian Report, 16. 75 Croatian Report, 13. 76 Danish Report, 2. 77 Portuguese Report, 6. 78 Turkish Report, 9.

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guarantee with accessory to the main debt79; similarly in the EU there is a

presumption of a dependent guarantee pursuant to Art IV.G.-2:101 sect 1 DCFR.

e) Possible extent of personal guarantees

Most of the jurisdictions allow unlimited liability, like Germany or Greece (Art 848

AK)80, Denmark (only within commercial relationships81) even universal guarantees

(not Croatia82; in Denmark the soft law ban concerning consumer guarantees is

executed by § 36 Formation of Contract Act83; similar in the EU Art IV.G.-4:105 lit a

DCFR for consumer guarantees) if the amount is determinable (Austria, then no

maximum amount necessary, OGH 196984; Portugal85) or, like in Italy86, the

maximum amount is expressly agreed. In these countries future debts can be usually

included (Argentina, Art 198887, Brazil Art 821 CgoCiv88), in the EU out of an

argumentum e contrario from Art IV.G.-2:102 sect 3 DCFR, but sometimes not via

standard terms (Austria, § 864a, 879 III ABGB)89 or only explicitly (Greece)90. Some

other jurisdictions generally only permit limited guarantees with a certain maximum

amount, like Switzerland regarding sureties (Art 499 I OR)91 and similarly Turkey.

Accessories and costs of legal remedies are in some countries not covered by

sureties, if this was not agreed by the parties, like in Austria92, in Denmark93 or in

Greece (Art 852 AK, unless the guarantor was aware of the emergence of certain

costs when the surety was issued)94. In others the surety is generally liable for these

costs, e.g. in France (Art 2293 CdeCiv), in Italy (Art 1942 II CceCiv), in Portugal (Art

79 Danish Report, 3. 80 Greek Report, 17. 81 Danish Report, 12. 82 Croatian Report, 15. 83 Danish Report, 12. 84 Austrian Report, 13. 85 Portuguese Report, 7. 86 Italian Report, 7, 9. 87 Argentine Report, 31 f. 88 Brazilian Report, 6. 89 Austrian Report, 14. 90 Greek Report, 14. 91 Swiss Report, 6. 92 Austrian Report, 15. 93 Danish Report, 12. 94 Greek Report, 15.

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634 CgoCiv), in Argentina (Art 2038 CgoCiv), in Croatia (Art 109 COA), Estonia (Art

145 II LOA)95, in the EU (Art IV.G.-2:104 DCFR), sometimes for damages or

penalties only by agreement, e.g. in Switzerland (Art 499 II OR) or Turkey (Art 589

BK) as long as the maximum amount is not reached.

3.2 Consumer Protection

The definition of a consumer is not even uniform within the Member States of the

European Union, because still several directives in this matter are only minimum

harmonising. So in some countries legal persons are excluded from consumer

protection (which is the EU-standard), e.g. in Croatia (Art 5 CConsProtA)96, in Italy

(Art 3 V CceCons)97, in the EU (Art I.-1:105 sect. 1 DCFR; see in particular Art IV.G.-

4:101 sect. 2 lett b DCFR), in others even legal persons can act as a consumer, like

in Austria98, in Greece99, in Turkey (Art 3k TConsProtA)100 or in Argentina101. A very

relevant problem for personal guarantees within firms is the question, under what

conditions managers or shareholders of companies could be qualified as consumers,

much debated for instance in Austria102, rather refused in Greece103, Estonia104,

Italy105, Brazil106. If the concept of protection is extended to natural persons, than

managers and members of companies may be included, like in France107. On the

whole the scope of personal guarantees issued by consumers is very diverse in all

jurisdictions.

Likewise pre-contractual duties to inform the guarantor are very different, too, in

Canada/common law there are no such duties108. Some countries rely on the general

95 Estonian Report, 6. 96 Croatian Report, 20. 97 Italian Report, 12. 98 Austrian Report, 19. 99 Greek Report, 21 f. 100 Turkish Report, 10. 101 Argentine Report, 34. 102 Austrian Report, 20 f. 103 Greek Report, 26 f. 104 Estonian Report, 3 f. 105 Italian Report, 13. 106 Brazilian Report, 8. 107 French Report, 4. 108 Canadian Report, 26.

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principles of culpa in contrahendo, like Germany, Switzerland109 or Turkey110, or

Portugal111, or on general consumer provisions (Italy, Art 2, 5 CceCons)112, while

others have intensely regulated this matter, e.g. Quebec for all guarantees (Art 2345

QuCivCod113), Austria only for consumer guarantees with two separate information

duties (§§ 25a, 25c KSchG)114, in the EU similar in favour of consumers Art IV.G.-

4:103 DCFR, Greece not only for consumers via a public law regulation (Bank of

Greece Governor’s Act)115 and similar Croatia with the Credit Institution Act (Art 302

V CCIA)116, Denmark via § 22 II Executive Order117, France related to “uninformed

sureties”118, and Estonia for dependent guarantees of natural persons119.

Nearly the same holds true for duties to inform during the guarantee period, where

again in Austria (§ 25b KSchG), Greece and Croatia (Art 305 I CCIA) resp Denmark

(§ 48 DkFinBudA), France (both annual information and a risk warning in case of

default of the debtor, e.g. Art L 341-6, 313-9 CdeCons) and Estonia (Art 146 I LOA)

specific provisions are in existence; in the EU extensive generally Art IV.G.-2:107, Art

IV.G.-2:112, Art IV.G.-3:102 DCFR, for consumer guarantees in addition Art IV.G.-

4:106 DCFR.

Specific limitations in terms of amount or duration of personal guarantees provided

by consumers seem to be rare, but see in the EU in particular Art IV.G.-4:105 DCFR.

In Denmark the guarantees of private parties lapse after 10 years in maximum (§ 48

VI DkFinBusA)120, in the EU Art IV.G.-2:109, Art IV.G.-3:107 sect. 2, Art IV.G.-4:107

DCFR. Loosely related may seem the new Turkish provision (Art 4 VI TConsProtA),

that guarantees securing consumer transactions, not necessarily issued by

consumers, have to be treated as ordinary suretyship, whereby accessoriness and

subsidiarity is ensured. Even more strict in Estonia, where independent personal

109 Swiss Report, 11. 110 Turkish Report, 11. 111 Potuguese Report, 11 f. 112 Italian Report, 13 f. 113 Canadian Report, 25. 114 Austrian Report, 21 f. 115 Greek Report, 27 f. 116 Croatian Report, 21. 117 Danish Report, 8. 118 French Report, 21. 119 Estonian Report, 16. 120 Danish Report, 11.

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guarantees without accessory and subsidiarity can be issued only within business or

professional relations (Art 155 LOA); similar in France, where independent

guarantees for consumer loans are forbidden (Art L. 313-10-1 CdeCons).

There are mostly no specific provisions regulating personal guarantees visible in the

areas of withdrawal from the guarantee (exception: France in cases of natural

persons securing property loans granted to consumers, Art 312-10 CdeCons121) and

of control of standard terms122.

Finally in few countries the problem of guarantees provided by family members of or

closely related persons to the debtor is regulated, e.g. not in Italy123. To request a

written consent of the spouse of the guarantor, like in Switzerland (Art 494 OR) and

similar in Turkey (Art 584 BK) and Brazil (Art 1647 III CgoCiv), or to inform the

spouse about the consequences of a guarantee issued by the other partner, like in

Austria (§ 25a KSchG), does not solve the above mentioned problem, because that

is not meant to protect the guarantor. There is some case law based on the violation

of morality, e.g. in Germany, Austria124, Greece125 and Denmark (based on § 36

DkFormContrA)126, even in Canada/common law based on the doctrine of undue

influence127, it could be similar in Argentina128. Recently in Austria § 25d KSchG as a

specific bonos mores provision directed at consumer guarantees is applied, similar in

France Art 341-4 CdeCons in cases of manifestly disproportion129.

121 French Report, 24. 122 E.g. Estonian Report, 17, Danish Report, 8. 123 Italian Report, 16. 124 Austrian Report, 27. 125 Greek Report, 32. 126 Danish Report, 7. 127 Canadian Report, 29. 128 Argentine Report, 41. 129 French Report, 23.