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The protection of guarantors under French law: what are the differences between the different categories?

By Yasmine EDDAM19 March 2025

Surety bonds are still one of the most widely used forms of security in our economy. This guarantee, under which one person undertakes to pay the debt of another in the event of default, offers various forms of protection depending on the profile of the guarantor. Let's take a look at these protective mechanisms, which have increased in number over the course of the reforms.

I. Protection regimes depending on the nature of the guarantor

Natural persons vs. legal entities: a key distinction

French law gives greater protection to individuals. This difference in treatment is explained by the supposed vulnerability of individuals to credit professionals.

The Order of 15 September 2021 maintained this distinction. Article 2300 of the Civil Code provides that a manifestly disproportionate commitment by an individual guarantor to a professional creditor shall be reduced to the amount that was bearable at the time it was entered into.

This protection does not extend to legal entities, which are considered to be better equipped to assess risks.

Specific schemes for individuals

Several mechanisms that protect only guarantors who are natural persons :

The duty to warn (art. 2299 C. civ.): the professional creditor must alert the guarantor if the principal debtor's commitment is unsuited to his financial capacities.
The obligation to provide annual information (art. 2302 C. civ.): the creditor must disclose the amount of the outstanding debt.
Information in the event of a payment incident (art. 2303 C. civ.): the guarantor must be notified as soon as the first incident is not rectified.
Remainder to live on" (art. 2307 C. civ.): the creditor's action may not deprive the guarantor of a minimum income equal to the RSA.

Informed and uninformed guarantors: a legal distinction

For a long time, case law distinguished between informed and uninformed guarantors. Informed guarantors, who were supposed to have a better understanding of the risks (managers, legal professionals), enjoyed less protection.

The Order of 2021 partially eliminated this distinction. The duty to warn now applies to all guarantors who are natural persons, even "informed" ones. This development illustrates the desire to unify protection regimes.

II. Executive guarantors: a special situation

A presumption of risk awareness

The directors who guarantee their company's debts represent a special category. They are presumed to be familiar with the company's financial situation.

This presumption does not prevent the application of legal protections. Since the ruling of 10 January 2012, the Court of Cassation has stated that the term "natural person guarantor" also includes the executive guarantor.

Limits to disproportion for directors

The proportionality of the commitment is assessed differently for an executive. The courts take into account his involvement in the company and his knowledge of the business.

A ruling on 27 November 2012 clarified that it is up to the creditor to prove that the managing guarantor is informed, i.e. has sufficient knowledge to assess the risks.

Liability of professional creditors towards directors

A creditor's liability towards an executive guarantor is strictly assessed. In 2014, the Court of Cassation ruled that an informed guarantor cannot seek to hold the bank liable for a fault committed when the credit was granted.

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

Tax benefits: a specific system

Executive guarantors benefit from a tax advantage. They can deduct the sums paid under the guarantee from their taxable income.

However, this deduction is subject to restrictions:

The commitment must be linked to the executive's position
The sums are only deductible up to a maximum of three times his annual remuneration
He must not be accused of any personal mismanagement

III. Surety bonds and matrimonial property regimes

Article 1415 of the Civil Code: protection of joint assets

The matrimonial regime influences the scope of the guarantee. Article 1415 of the Civil Code limits the commitment of a spouse without the consent of his or her spouse.

Without this express consent, only the assets and income of the guarantor spouse may be seized. This rule protects the joint assets from the isolated initiatives of one of the spouses.

The Court of Cassation has specified that this protection applies even if the guarantor lies about his or her marital status. The creditor cannot therefore seize a joint account funded by the income of both spouses.

The effects of divorce on guarantees

Article 1387-1 of the Civil Code provides that in the event of divorce, the court may require the spouse who retains the business assets to bear the cost of the guarantee.

This provision has given rise to controversy. Case law seems to consider that it mainly concerns the contribution to the debt, without affecting the obligation towards the creditor.

In other words, the ex-spouse can still be sued by the creditor, but has recourse against the former spouse.

What happens to the guarantee in the event of death

Article 2317 of the Civil Code, enacted in 2021, specifies that the death of the guarantor extinguishes the coverage obligation, but not the settlement obligation.

Heirs are not liable for debts arising after the death of the deceased, but remain liable for debts arising during the lifetime of the deceased. As this rule is a matter of public policy, any clause to the contrary is deemed unwritten.

IV. Recent developments in surety law

The Order of 15 September 2021: a far-reaching reform

La 2021 reform has considerably overhauled the law on guarantees. The legislator has opted to simplify and harmonise the rules.

The main innovations are :

Incorporating previously dispersed provisions into the Civil Code
The elimination of multiple handwritten entries in favour of a single set of formalities
Standardising the system for informing guarantors
Clarification of the effects of guarantees in the event of a merger or restructuring

Harmonisation of protection regimes

The 2021 reform harmonised protection for sureties. It put an end to 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 persons as guarantors to professional creditors.

A better framework for the benefit of subrogation

Article 2314 of the Civil Code has been clarified. It stipulates that the guarantor is discharged when subrogation to the creditor's rights can no longer take place through the creditor's fault.

This rule protects the guarantor against negligence on the part of the creditor, who would lose the security. However, the text now specifies that "the guarantor may not reproach the creditor for his choice of method of realising a security".

Waiver of claims before payment

The reform abolished the pre-payment remedies available to guarantors, which were deemed obsolete. Palliatives have been provided for certain situations.

For example, if the debtor is granted an extension of the term, the guarantor may either pay up or apply for a judicial lien on the debtor's assets.

In light of these developments, a few practical tips are in order. Guarantors should demand full information before committing themselves. Creditors will benefit from precisely documenting their information procedures. And practitioners will need to ensure that deeds comply with the new legal requirements to avoid litigation. For a personalised analysis and legal support, please do not hesitate to consult our lawyers specialising in surety bonds.