When a creditor grants credit or enters into a contractual relationship, the main concern is to ensure that the debt is paid. The risk of debtor insolvency is an economic reality that can jeopardise the financial equilibrium of any business. Among the range of intrinsic guarantees available to creditors, as detailed in our a complete guide to creditors' guarantees in the law of obligationsThese seemingly complex mechanisms are in fact powerful legal tools. These apparently complex mechanisms are in fact powerful legal tools which, by adding several debtors, considerably increase the chances of recovery.
Passive solidarity: pooling the risks of insolvency
Passive joint and several liability is a legal technique that strengthens the creditor's position by enabling him to claim his entire debt from any of his co-debtors. It acts as a genuine personal guarantee, spreading the risk of non-payment over several assets. Its flexibility and effectiveness make it a preferred alternative to surety bonds. It also differs from other personal guarantees such as the promise to executewhich is based on a commitment to do and not directly to pay.
Definition and principle of passive solidarity
The mechanism is clearly defined by article 1313 of the Civil Code: "Solidarity between debtors obliges each of them to the whole debt. Payment by one of them discharges them all towards the creditor".. The principle is simple, but the consequences are powerful. For the creditor, it means that he does not have to divide his proceedings. He can choose to take action against the most solvent debtor and claim 100 % of the amount owed. Once paid, the creditor is discharged and the obligation is extinguished for everyone.
However, this rule only applies to the creditor, i.e. in the relationship of obligation. Between the co-obligors, in what is known as the contribution relationship, the debt is divided. The person who has paid the debt in full has recourse against the other co-obligors for their share and portion. If one of the co-debtors is insolvent, his share is divided between the other solvent co-debtors, including the one who made the payment. Solidarity therefore transfers the risk of insolvency from the creditor to the solvent co-debtors.
Main effects of passive solidarity
For the creditor, the advantage is immediate and tangible. The indivisible right of action allows him to choose freely the debtor he will summon for payment, without having to comply with a precise order. Joint and several debtors may not invoke either the benefit of division, which would allow them to request that the action be divided between them, or the benefit of discussion, which would oblige the creditor to sue the principal debtor first.
This structure is based on a dual vision of the joint and several obligation: a single debt, but a plurality of obligatory links. This plurality of links explains why the commitments of the different co-debtors may be affected by different terms and conditions. One may be committed purely and simply, while another may benefit from a term. The creditor will have to respect these individual terms and conditions, but will always be able to claim the entire debt from those whose liability is due.
Side effects of passive solidarity and how they evolve
Traditionally, passive solidarity produced so-called "secondary" effects, based on a fiction of mutual representation between co-debtors. An act performed by or against one of them was deemed to produce effects in respect of all. The 2016 reform of the law of obligations maintained some of these effects while eliminating others. For example, a claim for interest made against a single debtor causes interest to accrue for all of them. Similarly, the interruption of prescription in respect of a single co-obligor applies to all the others, in accordance with article 2245 of the Civil Code.
On the other hand, the reform abandoned the idea that a formal notice sent to one person is valid for all. Case law had also extended this logic. As a result, the res judicata effect of a judgment against one debtor is enforceable against the others. A transaction entered into by one may also benefit the others. These effects, although practical for the creditor, are increasingly criticised because they may prejudice the rights of defence of co-debtors who were not party to the proceedings. The trend is therefore away from this theory of mutual representation towards an analysis that is more respectful of individual rights.
The obligation in solidum: a solidarity of praetorian origin
Alongside legal or contractual solidarity, case law has developed the concept of an obligation in solidum. This is a judicial creation, mainly in the area of civil liability, for co-perpetrators of the same damage. When several people have contributed to a single loss, without it being possible to determine the share of each, the court will order them to pay damages. in solidum to pay full compensation for the damage. As in the case of joint and several liability, the victim can then claim full compensation from any of the parties liable.
The classic distinction lies in the side effects: the obligation in solidumIf they were not based on mutual representation, they would not be produced. However, this distinction is becoming blurred. The Cour de cassation is increasingly tending to bring the two regimes closer together, applying, for example, the rules of contribution of solidarity to the obligation in solidum. The draft reform of civil liability also envisages the inclusion of an obligation to in solidum into the fold of legal solidarity, thereby establishing the functional unity of these two guarantee mechanisms.
Indivisibility: a guarantee against the division of an estate
Indivisibility is another form of obligation which, although distinct from joint and several liability, pursues a similar guarantee objective. Its main advantage is that it prevents the debt from being divided, particularly in the event of the death of one of the debtors. It is added to other guarantee mechanisms that organise payments in the presence of several parties, such as compensation, delegation or direct action.
Definition and sources of indivisibility
Article 1320 of the Civil Code provides that an obligation is indivisible either by its nature or by contract. Indivisibility is 'material' or 'by nature' where its subject-matter cannot be divided, such as an obligation to deliver a live animal. It is 'intellectual' or 'contractual' when the parties decide that the obligation, although divisible by nature (such as the payment of a sum of money), can only be performed as a whole. It is this conventional indivisibility that is an instrument of guarantee. The parties stipulate that the debt cannot be divided into instalments, thus obliging each debtor to ensure payment in full.
Indivisibility and solidarity: complementary guarantees
At first glance, indivisibility and joint and several liability are very similar: in both cases, each debtor is liable for the whole. However, there is a fundamental difference between them, which justifies their cumulative stipulation in contracts. Joint and several liability does not survive the death of a debtor. If a joint and several debtor dies, his debt is divided between his heirs. The creditor must then sue each heir for their respective share of the estate.
Indivisibility, on the other hand, is transmissible to the heirs. If the debt is stipulated to be indivisible, each heir of the deceased debtor will be liable for the entire debt, and not just for his or her share. This is the virtue and major advantage of indivisibility. By stipulating a 'joint and several and indivisible' obligation, the creditor protects himself not only against the insolvency of one of the debtors during his lifetime, but also against the consequences of his death and the division of his estate. In this way, the creditor combines the power of joint and several liability with the durability of indivisibility, thereby obtaining maximum security.
Mastering these mechanisms is essential for securing a claim. Passive joint and several liability and indivisibility offer robust solutions for pooling risks and guaranteeing payment. Given the complexity of their implementation and application, it is essential to rely on the expertise of thelegal support for setting up and applying sureties and guarantees effective, adapted to the nature of the commitment and the risks involved.
Sources
- Civil Code, articles 1309 to 1320 (Joint and several obligations and indivisible performance)
- Civil Code, article 2245 (Interruption of prescription)
- Civil liability reform project
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