Lawyer - Bonding

Guarantees have far-reaching consequences, and are often underestimated when they are signed. Whether it involves an individual making a commitment on behalf of a close relative, or a company director guaranteeing the debts of a company, a guarantee can lead to real financial difficulties if the principal debtor defaults. This commitment, which constitutes a personal surety, often involves the guarantor's personal assets.

Our firm, based in Marseille, is regularly involved in analysing the validity of the guarantee, defending the guarantor or taking legal action against the guarantor. Our practice of French law, focusing on sureties, banking law and civil and commercial procedure, enables us to take a technical but accessible approach to each situation. Whether it is a private deed, a notarial deed or a stand-alone guarantee, each undertaking must be assessed in the light of the formal and substantive conditions imposed by the Civil Code and the Consumer Code.

We believe that the law should precede the signature. That's why we work with our clients upstream, before any commitment is made, but also afterwards, in the event of a dispute. Our editorial watch on personal sureties bears witness to this conviction.

Understanding how surety bonds work

A surety bond is a contract under which a personal guarantor undertakes to repay a debt owed by the debtor if the latter fails to pay. It is an accessory contract, the existence of which depends directly on the principal obligation, often a loan or credit granted by a banking establishment to a borrower. The validity of a guarantee depends on a number of conditions being met: it must be in writing, the guarantor must be informed, the guarantor must have legal capacity, and it must contain explicit details of the amount of the guarantee, its duration and the scope of the commitment.

Since the reform of the law on sureties came into force in 2022, a number of clarifications have been made, particularly for natural persons acting as guarantors: increased requirement for annual information, wider scope of exceptions (e.g. benefit of discussion, benefit of division), and clarification of the disproportion between the undertaking and the income.

Acting as guarantor: risks and precautions to be aware of

Taking out a guarantee, whether simple or joint and several, can expose you to considerable risks. Once the debt has fallen due, the creditor may sue the guarantor in the same way as the principal debtor, particularly in the case of a joint and several guarantee.

A surety bond generally commits the guarantor's own assets, especially if there is no mortgage or other real security to limit exposure. It may be a first demand or open-ended obligation, sometimes without a clear ceiling on the amount due. In this respect, the disproportion between the guarantor's faculties and the sum guaranteed is a frequent area of dispute, particularly under the Consumer Code.

3 common mistakes when signing a guarantee deed :

• Ignoring the scope of the joint and several liability clause.

• Not being informed of the duration of the commitment or the possibility of revocation.

• Believe that in the event of a payment incident or judicial liquidation, the guaranteed debt will be automatically extinguished.

Challenging a bond in court

There are several possible defences to a summons. A defect in consent may result from a lack of information about the risk involved or an error about the scope of the contract. Similarly, a bank's failure to inform the guarantor correctly may result in forfeiture of the right to interest, or even cancellation of the guarantee.

The Court of Cassation regularly accepts that a manifest disproportion between the guarantor's income and the amount guaranteed may justify cancellation or reduction of the undertaking. It is therefore essential to analyse the substance of the deed, its form (e.g. compulsory handwritten wording) and the conditions under which it was signed.

Recovering a debt with a surety in practice

In the event of a first payment incident or default on repayment of the loan, a professional creditor may activate the guarantee without waiting for the debtor to be wound up by the court. However, the guarantee deed must be valid, the debt must be payable, and the information obligations must have been met.

It is also necessary to check whether the commitment covers interest and ancillary costs, whether it includes a duration clause, and whether the beneficiary of the guarantee is acting in accordance with article 2292 of the Civil Code.

Checklist for asserting your rights against a guarantor :

• Is the commitment limited in time and amount?

• Has the benefit of discussion been validly waived?

• Is the guarantor informed each year of the amount due?

• Is the amount actually due or subject to dispute?

Why call on our firm for a surety bond?

Guarantees, whether civil or commercial, raise questions of principle and technique. Assessing whether a commitment is disproportionate, managing ongoing proceedings or seeking a partial repayment strategy all require a rigorous approach.

Our firm defends both the guarantor and the creditor. We draw on our expertise in the Code of Civil Procedure, banking law and guarantees to provide clear analyses, appropriate strategies and solid representation before the relevant courts.

We also act for guarantors affected by insolvency proceedings or a repayment incident, to safeguard their rights throughout the process.