When a creditor enters into a contractual relationship, there is a risk that the debtor will not honour its commitments. The law of obligations, well aware of this reality, has developed a series of mechanisms designed to protect creditors and secure payment of their debts. In addition to traditional securities such as surety bonds and mortgages, there is a range of so-called 'intrinsic' guarantees, which derive directly from the nature of the legal relationship between the parties. These often little-known tools offer powerful levers for action. The purpose of this article is to give you an overview of these guarantees, with each mechanism described in detail in dedicated articles accessible via the links provided.
Understanding the role of guarantees in securing receivables
For any creditor, the main concern is the insolvency or unwillingness of the debtor. The law offers basic protection, but this quickly reveals its limits, making it necessary to resort to more robust guarantees.
The general right of lien and its weaknesses
In principle, all creditors have a "general lien" on their debtor's assets, as set out in articles 2284 and 2285 of the Civil Code. This means that they can have the debtor's assets seized and be paid from the sale price. However, this fundamental guarantee is often insufficient. On the one hand, it does not confer any preferential rights: if several creditors come forward, they are paid in proportion to their claims, and often only partially. Secondly, it does not offer any right of pursuit: if the debtor has sold his assets before the proceedings, the creditor can no longer seize them. The need for additional guarantees therefore becomes obvious.
Distinguishing between securities and intrinsic guarantees
It is essential to distinguish between two types of protection. Securities, whether personal (such as guarantees) or real (such as pledges), are mechanisms that are added to the initial obligation. Their sole purpose is to guarantee payment. In contrast, intrinsic guarantees derive directly from the system of obligations. Although they are also intended to secure payment, this is not always their exclusive purpose. They are a natural consequence of the legal relationship between the parties.
The guarantees inherent in the bond relationship
The creditor has a number of prerogatives that arise from his or her claim. These mechanisms enable him to react to inaction or non-performance by his debtor. They can be divided into two broad categories: powers of inertia and powers of action.
The creditor's powers of inertia: exception of non-performance and right of retention
Sometimes the best defence is calculated waiting. The creditor can use his own inaction as a means of pressure. The exception of non-performance allows him to refuse to perform his own obligation as long as his co-contractor has not fulfilled his own. The right of retention, on the other hand, is the right to keep something belonging to the debtor until he has paid his debt. These two tools constitute private guarantees of formidable practical effectiveness. For a detailed analysis of these pressure mechanisms, see our article on the exception of non-performance and the right of retention.
The creditor's powers of action: rescission, oblique action and paulian action
The creditor can also take the initiative. He can threaten to destroy the contract through an action for rescission if the non-performance is sufficiently serious. To counter the passivity of a debtor who neglects to assert his own rights (and thus enrich his assets), the creditor can use the action oblique to act in his place. Finally, to counter a debtor who fraudulently organises his insolvency by emptying his assets, the action paulienne can be used to render such acts unenforceable against the creditor. Our article on actions in resolution and oblique actions explores these remedies in depth.
Guarantees inherent in multiple debtors
Another way of securing a debt is to multiply the number of people liable to pay it. The presence of several debtors spreads the risk of insolvency and considerably increases the creditor's chances of being paid. This plurality can arise from the commitment of several people to the same debt or from the coexistence of separate but related debts.
Debtors liable for a single debt: joint and several liability and indivisibility
Passive joint and several liability is a very effective guarantee: it authorises the creditor to demand payment of the entire debt from any of the co-debtors, with the onus on the co-debtor to take action against the others. Indivisibility ensures that the obligation will not be divided between the heirs in the event of the death of a debtor, with each remaining liable for the whole. These two mechanisms are often stipulated together for maximum security. Explore the subtleties of these mechanisms in our article on passive solidarity and indivisibility..
Debtors bound by separate debts: set-off, delegation and direct action
The coexistence of separate debts can also create a guarantee effect. Set-off allows two reciprocal debts to be extinguished up to the amount of the weaker debt, acting as a preferential payment. By simple delegation, a debtor gives his creditor a second debtor who also undertakes to pay. Finally, in certain cases provided for by law, direct action allows a creditor to sue his own debtor directly. There is also the mechanism of the "porte-fort de l'exécution", whereby a person promises that a third party will perform his undertaking. To find out how to use these strategies, see our article on compensation, delegation and direct action.
Choosing the right cover: a matter of legal expertise
The diversity and complexity of these guarantees show that there is no single solution. Each mechanism has its own conditions of implementation, scope and limits. An ill-founded plea of non-performance may be transformed into a contractual fault. A paulian action requires proof of fraud, the contours of which are sometimes subtle. The choice between joint and several liability, delegation or another form of guarantee depends on a detailed analysis of the situation, the nature of the contract and the balance of power between the parties.
The lawyer's role is fundamental here. He does not simply apply a technique, but develops a genuine security strategy. By anticipating the risks and understanding his client's objectives, he can draft tailor-made clauses or advise on the most appropriate action to protect the creditor's rights effectively.
Securing a debt cannot be improvised, and requires a thorough knowledge of the tools offered by the law of obligations. Visit benefit from legal expertise in securities and guarantees and ensure greater protection of your financial interests, contact our firm for a personalised analysis.
Frequently asked questions
What is the difference between a security interest and an intrinsic guarantee?
A security (bond, mortgage) is a contract or accessory right that is added to an obligation to guarantee payment. An intrinsic guarantee, such as the exception of non-performance, derives directly from the very nature of the obligation, without the need to add it.
What is the general right of lien?
This is the right of any creditor to have his debtor's assets seized in order to be paid from the price of their sale. Its main weakness is that it gives no priority over other creditors in the event of competition.
Can I refuse to pay an invoice if my supplier has not delivered?
Yes, this mechanism is called the exception of non-performance. It allows you to suspend your own obligation (payment) if your co-contractor has not performed his obligation (delivery), provided that the non-performance is sufficiently serious.
What does passive solidarity between debtors mean?
This means that when several people owe the same sum together, the creditor can claim the entire debt from just one of them, without having to divide his or her proceedings. This is a very strong guarantee for the creditor.
What is a Paulian share?
This is a legal action that allows a creditor to challenge acts by which his debtor has fraudulently organised his insolvency (for example, by giving away all his assets). If the action is successful, the fraudulent act is declared unenforceable against the creditor, who can then act as if the property had never left the debtor's estate.
Why is the involvement of a lawyer recommended for these guarantees?
Each guarantee is subject to strict conditions, and its effectiveness depends on a precise analysis of the situation. A lawyer can identify the most appropriate mechanism, ensure that the conditions for its implementation are met and thus prevent a misguided action from backfiring on the creditor.
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