Commercial transactions involve a permanent risk: the insolvency of the debtor. The bank del crederethe underestimated guarantee mechanism, offers valuable protection against this risk. But this security is not without conditions and limits.
The concept of insolvency in del credere
Insolvency is at the heart of the banking del credere. Contrary to popular belief, insolvency is more than just a legal bankruptcy.
Case law established this principle a long time ago. A ruling by the Toulouse Court of Appeal on 27 November 1869 already stated that ". the burden of risk encompasses default as well as insolvency "(DP 1870, 2, p. 118).
More recently, the Court of Cassation confirmed this position in two major rulings:
- " The obligation of the del credere agent is not limited to the solvency of the third party, unless otherwise agreed. "(Cass. com., 6 Jan. 1981, no. 1981-700106)
- " In the absence of any stipulation to the contrary, even if implicit, the del credere clause guarantees non-payment on the due date by a third party and not the solvency of the third party. "(Cass. com., 22 Oct. 1996, no. 1996-003944)
In practiceThe parties may contractually define insolvency. In the case of del credere discounting, the implementation of the guarantee is sometimes made conditional on a finding of an impaired financial situation (official statement of default, receivership). In the case of an irrevocable documentary credit, insolvency is defined as the absence of a provision on the account.
Is a banker obliged to pay in all circumstances? No.
The impact of force majeure on the warranty obligation
Does force majeure release the del credere? A controversial question.
Case law tends towards the guarantee obligation even in cases of force majeure. This is demonstrated by several decisions, including Cass. req. 6 March 1935 (S. 1935, 1, p. 210) and Cass. com. 6 Jan. 1981 (JCP G 1982, II, 19829).
The doctrine is divided. Collard, Dutilleut and Delebecque (Contrats civils et commerciaux, 2002) consider that the del credere must guarantee even in the case of force majeure. Others, such as Ripert and Roblot, consider that force majeure exonerates the guarantor.
It should be noted, however, that the parties may contractually stipulate the exclusion of force majeure. A well-drafted clause can effectively protect the del credere banker.
Exemptions from the bank's liability
There are three situations in which the del credere banker is exempt from performing his obligation.
The creditor's fault
The creditor's misconduct is assessed in relation to its relationship with the debtor and the guarantee agreement.
In del credere discounting, if the remitter has not performed his obligations (delivery, service), he loses the benefit of the del credere. " Fixed-rate discounting does not deprive the banker of his rights of recourse against a customer who has given him hollow paper." Ferronnière and de Chillaz (Les opérations de banque, p. 255).
In the case of irrevocable documentary credit, the principle of the autonomy of the bank's commitment is lost if the documents presented are irregular. In the card payment system, failure by the merchant to comply with controls and formalities results in the loss of the guarantee.
Ignorance or neglect of these aspects can turn a supposed guarantee into a costly dispute.
Creditor fraud
Fraud by the beneficiary also releases the del credere banker. A seller who creates fictitious invoices loses the benefit of the guarantee.
In the case of irrevocable documentary credits, fraud may take various forms: falsified documents, issuance by an unqualified person, or tainted goods. In such cases, the principle of autonomy is superseded by the principle of fraud.
In the payment card system, artificially splitting the sale price in order to benefit fully from the guarantee constitutes fraud, which authorises the bank to refuse its guarantee.
Compensation
Set-off is a means of extinguishing reciprocal obligations that releases the del credere. Doctrine and case law agree on this point, as illustrated by the judgment of the Tribunal de commerce de Marseille of 24 March 1904 (DP 1905, 5, p. 12).
However, if the beneficiary can invoke the unenforceability of defences (autonomous banking undertaking), the defence of set-off does not prevent performance of the guarantee.
The question of documentary credit is a divisive one. The Commercial Court of Brussels (18 April 1985) accepted set-off, while the Court of Geneva (3 December 1987) rejected it.
Possible remedies available to the bank
The del credere obligation disappears when the claim is non-existent or extinguished for lack of cause.
In a del credere discounting transaction, the bank regains its recourse against the endorser. In other cases, the bank may refuse performance if possible, or sue for repayment if it has already paid.
However, the judge retains sovereign discretion. In a ruling by the Riom Court of Appeal on 11 July 2012 (no. 11/02342), the judges carefully examined the conditions for termination of the del credere guarantee to determine whether fault had been established.
Sound advice is essential to structure a del credere transaction correctly, both for the banker and the beneficiary. The intertwined technical and legal aspects of a del credere transaction call for expert advice. advanced expertise to avoid the warranty becoming illusory.
The firm is available to analyse your del credere contracts and secure your guaranteed commercial transactions.
Sources
- Monetary and Financial Code, articles L. 313-1, L. 313-23, L. 313-24 and L. 313-29
- Court of Cassation, Commercial Division, 6 January 1981, No. 1981-700106
- Court of Cassation, Commercial Division, 22 October 1996, No. 1996-003944
- Toulouse Court of Appeal, 27 November 1869, DP 1870, 2, p. 118
- Riom Court of Appeal, Commercial Division, 11 July 2012, no. 11/02342
- Ferronnière J. and de Chillaz E., Les opérations de banque, Dalloz, 6th edition, 1980
- Collard Dutilleut F. and Delebecque Ph., Contrats civils et commerciaux, Dalloz, 6th edition, 2002
- Ripert G. and Roblot R., Traité élémentaire de droit commercial, LGDJ, 9th edition, 1981
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