The cautionnement (personal guarantee or suretyship) remains one of the most widely used securities in the French economy. This guarantee, by which a person undertakes to pay another’s debt in the event of default, is subject to varying protective regimes depending on the profile of the guarantor. Let us examine these protective mechanisms, which have multiplied through successive reforms.

I. Protective Regimes According to the Nature of the Guarantor

Natural Persons vs Legal Entities: A Key Distinction

French law grants enhanced protection to natural persons (individuals). This difference in treatment is explained by the presumed vulnerability of individuals when dealing with credit professionals.

The Ordinance of 15 September 2021 maintained this distinction. Article 2300 of the Civil Code provides that a manifestly disproportionate commitment by a natural person guarantor towards a professional creditor is reduced to the amount that was bearable at the time of its conclusion.

This protection does not extend to legal entities (companies, associations), which are considered better equipped to assess risks.

Specific Protections for Natural Persons

Several mechanisms protect natural person guarantors exclusively:

  • The duty to warn (devoir de mise en garde, Art. 2299 Civil Code): the professional creditor must alert the guarantor if the principal debtor’s commitment is unsuited to their financial capacity.
  • The obligation of annual information (Art. 2302 Civil Code): the creditor must communicate the amount of outstanding debt.
  • Information in the event of payment default (Art. 2303 Civil Code): the guarantor must be notified as soon as the first unremedied default occurs.
  • The « survival minimum » (reste a vivre, Art. 2307 Civil Code): the creditor’s action cannot deprive the guarantor of a minimum level of resources equal to the RSA (the French minimum welfare benefit, currently approximately EUR 607 per month for a single person).

Informed and Lay Guarantors: A Case Law Distinction

Case law long distinguished between informed guarantors (cautions averties) and lay guarantors (cautions profanes). The former, presumed to better understand the risks (company directors, legal professionals), benefited from lesser protection.

The 2021 Ordinance partially erased this distinction. The duty to warn now applies to all natural person guarantors, even « informed » ones. This evolution illustrates the desire to unify protective regimes.

II. Company Directors as Guarantors: A Particular Situation

A Presumption of Knowledge of Risks

Directors who guarantee their company’s debts represent a particular category. They are presumed to know the company’s financial situation.

This presumption does not prevent the application of statutory protections. Since the judgment of 10 January 2012, the Cour de cassation has affirmed that the expression « natural person guarantor » also encompasses the director-guarantor.

Limits on Disproportionality for Directors

The proportionality of the commitment is assessed differently for a director. Courts take into account their involvement in the company and their knowledge of business affairs.

A judgment of 27 November 2012 specified that it is for the creditor to prove that the director-guarantor is informed, i.e. that they possess sufficient knowledge to assess the risks.

The Professional Creditor’s Liability Towards the Director

The creditor’s liability towards a director-guarantor is assessed strictly. The Cour de cassation held in 2014 that an informed guarantor cannot seek liability against the bank on the basis of a fault committed when granting the credit.

This position is explained by the absence of a causal link. The director, having access to information about the company, contributed to their own loss.

Tax Benefits: A Specific Regime

The director-guarantor benefits from a tax advantage. They may deduct from their taxable income the sums paid in performance of their guarantee.

This deduction is, however, limited:

  • The commitment must be linked to their directorial role
  • The sums are only deductible up to three times their annual remuneration
  • No personal management fault must be attributable to them

III. Suretyship and Matrimonial Property Regimes

Article 1415 of the Civil Code: Protection of Community Property

The matrimonial property regime influences the scope of the guarantee. Article 1415 of the Civil Code limits the commitment of a spouse who acts without the consent of the other spouse.

Without this express consent, only the guarantor-spouse’s separate property (biens propres) and income may be seized. This rule protects community property (patrimoine commun) against the unilateral initiatives of one spouse.

The Cour de cassation has specified that this protection applies even if the guarantor lies about their marital status. The creditor therefore cannot seize a joint account funded by both spouses’ income.

The Effects of Divorce on the Guarantee

Article 1387-1 of the Civil Code provides that in the event of divorce, the court may allocate the burden of the guarantee exclusively to the spouse who retains the professional assets.

This provision has generated controversy. Case law appears to consider that it primarily concerns the contribution to the debt (contribution a la dette) between spouses, without affecting the obligation towards the creditor.

In other words, the former spouse may still be pursued by the creditor, but has a right of recourse against their ex-spouse.

The Fate of the Guarantee upon Death

Article 2317 of the Civil Code, introduced by the 2021 Ordinance, specifies that the guarantor’s death extinguishes the obligation of coverage (obligation de couverture) but not the obligation of payment (obligation de reglement).

Heirs do not guarantee debts arising after the death, but remain liable for those arising during the guarantor’s lifetime. This rule being a matter of public policy (ordre public), any clause to the contrary is deemed unwritten.

IV. Recent Developments in Suretyship Law

The Ordinance of 15 September 2021: A Major Reform

The 2021 reform considerably overhauled French suretyship law. The legislature opted for simplification and harmonisation of the rules.

The main innovations are:

  • Integration into the Civil Code of provisions previously scattered across various statutes
  • Abolition of multiple manuscript requirements (mentions manuscrites) in favour of a single formality
  • Standardisation of the guarantor information regime
  • Clarification of the effects of suretyship in cases of merger or restructuring

Harmonisation of Protective Regimes

The 2021 reform harmonised protections for guarantors. It ended the multiplicity of regimes resulting from successive legislative interventions.

For example, the proportionality requirement, previously limited to certain guarantees, now applies to all commitments by natural person guarantors towards professional creditors.

Better Regulation of the Benefit of Subrogation

Article 2314 of the Civil Code has been clarified. It provides that the guarantor is discharged when subrogation to the creditor’s rights can no longer operate due to the creditor’s fault.

This rule protects the guarantor against the creditor’s negligence in losing securities. However, the text now specifies that « the guarantor cannot reproach the creditor for their choice of method of realising a security. »

Abolition of Pre-Payment Remedies

The reform abolished the pre-payment remedies (recours avant paiement) previously available to the guarantor, which were considered obsolete. Palliatives have been provided for certain situations.

For example, in the event of an extension of the deadline granted to the debtor, the guarantor may either pay or request a judicial security over the debtor’s assets.

In light of these developments, some practical advice is warranted. Guarantors should demand complete information before committing. Creditors would benefit from precisely documenting their information efforts. And practitioners must ensure that instruments comply with the new statutory requirements to avoid litigation. For a personalised analysis and legal support, do not hesitate to consult our lawyers.

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