учебный год 2023 / de la Mata Munoz, Personal Security

74 Chapter 2: The contract ofguarantee

agreed in the future"233. Most contracts include an exhaustive number of banking activities which are to be covered by the guarantee (obligations deriving from the current account, from a credit line, etc.234). The same is true in Spanish banking practice235. In Spain, there is no banking association with the regulatory power as the ABI in Italy, but contracts are de facto parallel to Italian ones.

The contract usually lists the activities which are specifically covered by the guarantee and contains a last general clause which includes all the future claims owed to the bank such as "in general, any operation of com-

mercial or banking nature that the secured party might have agreed with the bank"236 or "every sum owed by the debtor or that he might owe in the

future" or "the guarantee is extensive to answer for every risk that might come out of every kind of banking operation"237.

The establishment in Spain of a maximum liability limit is also common in Spanish practice, although not mandatory as it is the case in Italy: "Hereby I guarantee to the Bank X the payment of any debts that the company Y owes or may owe in the future, for any reason to a maximum quantity of 300.000 pesetas"238.

Out with the sphere of banking practice, the parties may also agree to a universal guarantee for all the future obligations which are owed by the debtor to the creditor for commercial transactions: "guarantee for the transactions that the land worker X may agree with the bank Y, and accordingly we undertake hereby (...) to cover all the sums that the bank Y may request as payment for invoices, interests and charges"239; "guarantee also for all the supplies that the debtor may eventually purchase in the future"240.

233See circulars of the ABI of 11 June 1964 no. 24; 24 January 1966 no. 5 and 17 June 1987 no. 20 for the adoption of uniform general conditions for universal banking guarantees.

234Giusti, 160; Bozzi, voce Fideiussione omnibus, 1993, 1.

235Carrasco, Cordero and Marin , 158.

236See STS 21 July 2003 [RA 2003 no. 5389].

237STS 21 July 2003 [RA 2003 no. 5389]; STS 29 March 1979 [RA 1979 no. 1235].

238STS 17 February 1962 [RA 1962 no. 1094].

239STS 3 March 1947 [RA 1947 no. 338].

240 STS 26 October 1990 [RA 1990 no. 8051 ]; see also STS 31 October 1984 [RA 1084 no. 5153].

3. Validity ofthe universal guarantee

a) In general

Today the universal guarantee is valid and is very commonly used in commercial practice within most European countries241 • It has been accepted within case law242 and in academic theory243 (as a guarantee and not as an atypical personal security right). However, the matter of its admissibility was keenly debated within Italy and many other civil law countries (with the exception of Spain).

b) The problem ofa determinable object

The main problem with regard to the admissibility of universal guarantees was the lack of a "certain object" for the contract. This is one of the essential legal requirements for the constitution of a valid contract according to art. 1346 Italian CC and art. 1261 Spanish CC. Obviously the content of a universal guarantee remains undetermined, as the content of the underlying obligation is not determined at the moment of the contracting of the guarantee. However, this should not result in the nullity of the contract as the object of the guarantee is determinable per relationem; by reference to the underlying obligation244• Vice versa, the guarantee will be void, if the object of the guarantee cannot be determined; not even per relationem245 .

241 Germany: Horn/Staudinger, on § 765 nos. 42 ff; Erman/Sei/er, on § 765 no. 3. France: Simler no. 202. England: Andrews and Millet nos. 6.04- 6.05. Finland: § 5 par. 1 Finnish Law of Guarantees.

242Cass. 25 August 1992 no. 9839, BBTC, 199, 237: "(the universal guarantee) per-

taining the contractual scheme of the guarantee and is not an atypical contract itself' ("che va inquadrata nello schema contrattuale della fideiussione e non e un contratto

atipico a se stante"). See also: Cass. 15 March 1991 no. 2790, FI, 1991, I, 2060.

243De Maria/Franzoni, 1485. See all references in this chapter.

244For instance, those cases in which the guarantee covers all liabilities arising from a certain legal relationship. See: Cass. 24 July 1993, no. 8291, Arch. Civ., 1993, 1270; Cass. 18 March 1991 no. 2890, GC, 1992, I, 512 and in BBTC, 1992, II, 13; Cass. 8 August 1988, no. 4871, GC, 1989, I, 2159; Cass. 5 January 1981, no. 23, FI, 1981, I, 704; Cass. 27 January 1979, no. 615, FI, 1979, I, 1, 1504, or in BBTC, 1981, II, 266; Cass. 10 November, 1971, no. 3214, FI, Rep. 1971 , voce Fideiussione, no. 15. Also minor case law: App. Milano, 23 December 1986, BBTC, 1987, II, 591; Trib. Milano, 20 March 1986, BBTC, 1987, II, 591; Trib. Busto Arsizio, 11 October 1985, BBTC, 1986, II, 598; Trib. Milano, 16 September 1985, BBTC, 1986, II, 171; Trib. Milano, 25 July 1985, BBTC, 1986, II, 170; Trib. Milano, 18 June 1985, BBTC; App. Catania, 21 June 1983, BBTC, 1984, II, 498. In theory: Rescigno, 11 problema, 1972, II, 25 f.; Ravazzoni, La fideiussione generale, 1980, 257; Molle/Cicu and Messineo, I contratti bancari, 1981, 245, nota 107; Alcaro, Fideiussione e garanzie, 1983, 612 f.; Alcaro, Il soggetto-banca,

1981, II, 1 f.; Viale, Fideiussione omnibus, 1990, 276 f.; Barbiera, lnefficacia parziale, 223 f.; Terranova, 148 f.; Tucci, 118.

76 Chapter 2: The contract ofguarantee

The principal obligation to which the guarantee refers does not need to be certain at the moment of contracting the guarantee but there must be a basic and fundamental relationship between creditor and debtor that gives origin to all future obligations which are to be secured by the universal guarantee246. The content of the guarantee needs to be identifiable on the basis of the real link between the secured debtor and the contract of guarantee. The basis of this requirement is to ensure that it is possible to objectively determine the object. It is not designed to protect the guarantor by making him aware of the extent and possible consequences of the guarantee. Accordingly, the guarantor does not need to know or anticipate the possible content of the debt. It may be impossible to know at the moment of contracting but the contract will be valid if this content can be determined according to an objective criterion which is agreed by the parties in the contract247. Such objective criteria can be of a very general nature. For example the Italian courts have traditionally accepted a universal guarantee over "all debts owed by the debtor to the bank" ("quanto dovuto alla banca")248. In this case the objective criterion is the legal relationship between two parties ("rapporti tra la banca stessa e l' obbligato principale").

In order to avoid possible problems in relation to the validity of universal guarantees banks in Italy include a maximum amount for which it is possible for the guarantor to be liable. This was prompted by a recommendation of the ABI and in 1992 the agreement of such a maximum amount

There is also case law that holds that the universal guarantee is void because of the failure of a certain object. However this is minor case law which contradicts the Italian Supreme Court: Trib. Milano, 14 December, 1993, BBTC, 1994, II, 61.;. Trib. Avezzano, 14 December 1988, GC, 1989, I, 1445; App. Milano, 4 October 1988, BBTC, 1989, II, 607; App. Milano, 14 June 1988, BBTC, 1989, II, 48; Trib. Ferrara, 4 November 1987, BBTC, 1989, II, 607; Trib. Piacenza, 4 May 1985, BBTC, 1986, II, 171; Trib. Milano, 6 March 1985, BBTC, 1986, II, 170; Trib. Milano, 12 July 1984, BBTC, 1986, II, 95; Trib. Milano, 19 July 1982, BBTC, 1983, II, 219.

Some scholars have considered that the guarantee for future debts is void because the object is undeterminable. See: Stolfi, In tema di fideiussione generale, 1972, 529 f. ; Lan- z illo, 341 f.

245Cass. 15 March 1991, no. 2790, FI, 1991, I, 2060; Cass. 7 July 1989, no. 3228, GC, 1990, I, 1069.

246Cass. 10 November 1971 no. 3214 FI, Rep. 1971, Fideiussione, no. 15; Cass. 5 December 1970 no. 2575, FI, Rep. 1971, Fideiussione, no. 24.

247Trib. Milano 16 January 1994, BBTC, 1996, 233: "[...] deve essere riferito soltanto alla previsione di un criterio di determinazione preventivamente convenuto tra le parti e alla sua capacita di individuare in modo rigorosamente oggettivo il rapporto obbligatorio principale". Also: Trib. Milano 20 July 1987, BBTC, 1988, 354.

248Cass. 6 February 1975 no. 438, FI, I, 1976, 2474.

was included as a requirement for the validity of future (and therefore also universal) guarantees249 in art. 1958 Italian CC250 •

A similar rule is not present in the Spanish legal system. According to Spanish case law, the universal guarantee does not breach the essential requirement of "certain object" for the validity of a contract (art. 1261 Spanish CC). This is the case provided that the content of the universal guarantee can be determined251 . In Spain, case law has been especially flexible with regard to the elements required for the validity of a universal guarantee. A court decision in 1924252 required that there must be the previous existence of a contractual legal relationship between the debtor and the creditor to which the guarantee refers. But much of the later case law does not make any reference to specific requirements for the validity of universal guarantees253• Sometimes the court has made reference to the need for there to be a previous obligation. This is usually not in relation to the validity of the contract but with regard to other matters such as the need for there to be an existent due and payable debt in order to request the guarantor for performance254, or for the lack of coverage by the guarantee of the debts which still exist after the death of the debtor255 . Even in these cases, the need for there to be a previous relationship in order to consider the universal guarantee valid, has been regarded in very general terms. It therefore seems that a mere commercial relationship shall be sufficient to satisfy this demand256 .

249See under Chapter 2, C., IV., 3., a) The maximum amount, 70.

250With regard to the ratio of this provision see: Valcavi, Sulla nullita "ope legis" 1992, c. 791 f; Valcalvi, Sulla fideiussione bancaria, 1990, 558 f.

251STS 23 February 2000 [RA 2000 no. 1242]. According to this decision it is only necessary to determine the content in a general fashion. This is to be achieved by means of the identification of the contracting parties and an objective limitation of the maxi-

mum liability assumed by the guarantor. This last requirement is commented upon twice in the same decision but only in the form of obiter dictum. The limitation of liability with a maximum amount cannot be considered to be a general requirement of validity under Spanish Law. This can be said to be the case even if this is a general feature of banking practice.

252STS 21 November 1924 [RGLJ t. 164 no. 94] cited by Carrasco, Cordero and

Marin, 158.

253STS 17 February 1962 [RA 1979 no. 1094]; STS 1 June 1964 [RA 1964 no. 3090]; STS 6 February 1976 [RA 1976 no. 320]; STS 29 March 1979 [RA 1979 no. 1235]; STS 31October1984 [RA 1984 no. 5153]; STS 20 February 1987 [RA 1987 no. 701].

254STS 17 February 1962 [RA 1962 no. 1094].

255STS 29 April 1992 [RA 1992 no. 4470 commented by Carrasco, CCJC 28 [1992] §

753.

256STS 29 March 1979 [RA 1979 no. 1235]. In Germany it is sufficient to refer to the obligations which result from a certain business relationship: BGH 16 January 1992, NJW, 1992, 897.

c) The principle ofgoodfaith in specifying the guarantee 's object

The principle of good faith plays a very important role regarding the determination of the guaranteed object257 and the development of the relationship between the parties. For instance, it is important to inform the guarantor of any special circumstances that may alter the balance of the previous dealing. Further, if there is a case of clear lack of proportion, the concept of unconscionable contracts may be applicable.

d) A universal guarantee included in general terms and conditions and the matter ofsurprising clauses

The constitution of a universal guarantee as a clause included in the general terms and conditions of a contract has explicitly been hold as valid and non-abusive by the Spanish Supreme Court258• In Germany by contrast, these clauses have generally been regarded in recent case law as surprising clauses259 • The adherent/mandatory is not supposed to anticipate that such a clause will form part of this agreement. Hence in this case the clause (not the contract) is declared void260•

Spanish Law on general terms and conditions261 does not make any reference to the "surprising clauses" and there is no case law specifically on

257On the principle of good faith in relation to the validity of the universal guarantee see: Grana, 749f. ; Di Majo!Munari, 41; Valignani, 1137 f. See also: Valcavi, Sulla ineguatezza 1990, 1, 622 f.

258STS 23 February 2000 [RA 2000 no. 1242].

259From 1994 German case law radically limited the valid constitution of universal guarantees within the general terms and conditions of a contract (based on § 3 and § 9 AGBG (German Law on general terms and conditions). The German Supreme Court had not considered a clause where a universal guarantee was agreed as a "surprising clause" (uberraschende Klausel) of the general terms and conditions of the guarantee contract

(Allgemeine Geschaftsbedingungen) (see BGH 17 March 1994, WM 1994, 784 and

Horn/Staudinger, on § 765, no. 48 ff.) but it considered that the universal guarantee clause is generally "surprising" according to § 3 AGBG in case it has not been specifically marked (BGH 18 May 1995, BGHZ 130, 19) and even if a maximum liability limit has been agreed (BGH 7 March 1996, NJW 1996, 1470; OLG Rostock 8 June 1995, WM 1995, 1533). See Horn/Staudinger, Vorbem zu § 765 ff. no. 44 and on§ 765, no. 50 and Drobnig/Sagel-Grande/Snijders, 3). On the application of § 9 AGBG to the universal guarantee see BGH 18 May 1995, BGHZ 130, 19 and BGH 18 January 1996, BGHZ 132,

6.

260 See§ 308 and 309 BGB; BGH 18 May 1995, BGHZ, 130, 19; BGH 13 November 1997, BGHZ 137, 135; Erman/Seiler, on § 765 no. 3; Horn/Staudinger, vorbem zu § 765 ff. no. 45 and on § 765 no. 48 ff; Drobnig/Sagel-Grande/Snijders, 5. The surprising clauses as stated in § 3 AGBG are not part of the guarantee contract and those which cause the unadaquate or unreasonable lost (unangemessen benachteiligt) as stated in § 9 AGBG are void(§ 6 AGBG). See Drobnig/Sagel-Grande/Snijders, 5.

261 Ley 7/ 1998, sobre condiciones generales de la contrataci6n.

this topic as it is the case in Italy. Contracts which contain surprising clauses can however be rendered void by reason of essential mistake262 .

4. Extent ofthe universal guarantee

a) In general

The universal guarantee has a very extensive coverage which comprises different obligations. As previously stated, some of these guarantees are agreed in very general terms, such as guarantees for all liabilities arising from a certain commercial relationship. However, all the liabilities that are included must directly derive from the underlying contractual relationship. Non-contractual liabilities are not covered by the guarantee unless the parties have specifically agreed such coverage.

In accordance with the contra proferentem rule, those debts which are owed by the debtor to other creditors and which have been assigned to the main creditor are not covered by the guarantee. A clause, which includes these debts with regard to a non-professional guarantor, is void by virtue of the application of the principle of good faith. For the same reason, the parties cannot use novation to include within the secured obligations those debts which were already due and payable but from which the guarantor was discharged by reason of art. 1955 Italian CC/ art. 1852 Spanish CC (i.e. because the guarantor's subrogation in the rights of the debtor has been hindered by the latter)263 .

b) Universal guarantees with time limit or without time limit

aa) Guarantees with time limit

The universal guarantee can be agreed to cover a precise period of time (universal guarantee agreed with time limit). In such a case the guarantor cannot request to be discharged before that time. The same arrangement holds true if the contract is agreed for an undetermined period of time but regular enforcement intervals have been agreed. The guarantor cannot be discharged until the end of one of the specified intervals. Another similar case is that in which a universal guarantee has been agreed for an undetermined period (without time limit) but the guarantor has waived his right to ask for discharge within a certain period. This guarantee must end within a reasonable timeframe.

If a time limit has been agreed by the parties, the guarantor's liability is limited to the debts which arose within that period. Clearly, if the period is too long the guarantor is not protected by this time limit. In the Nether-

262See Carrasco, Cordero and Marin, 163.

263STS 3 March 1947 [RA 1947 no. 338], Carrasco, Cordero and Marin, 164.

lands and in Belgium, the guarantor may in any case request a discharge within a 5 years period (art. 7: 861 Dutch CC and art. 34 par. 3 Consumer

264

Protection Act ), regardless of whether the guarantee was originally agreed to have a particular time limit beyond 5 years.

bb) Guarantee without time limit

If the guarantee is agreed without a specified time limit, the guarantor may request to be discharged by giving notice within a reasonable period of time or if special circumstances have arisen265 . This right is a consequence of the analogical application of art. 1705 Spanish CC266 but it is also normally explicitly included in most contracts267 •

5.Protection ofthe universal guarantor

a)Needfor protection

The universal guarantee implies a high level of risk for the guarantor. The contracting terms are usually so broad that the obligation of the guarantor can become enormous. In fact this obligation is usually inestimable at the moment of contracting. A compulsory protective regulation is therefore beneficial for the universal guarantor.

b) Limitation ofthe guarantor's liability

In Italy the contracting parties must establish a maximum limit in relation to the guarantor's liability for guarantees provided for future debts (art.

268

1938 Italian CC ). This provision was included in the civil code by the reform introduced by the Law 17 February 1992 no. 154, art. 10 par. 1. It is part of a general European trend to set up a minimum level of protection for these particularly exposed guarantors269 • The universal guarantor usual-

264Act of 12 June 1991 as amended the 1st January 2004.

265The same is also valid in Germany on the basis of§ 242 German CC. See BGH 17

March 1993, ZIP 1994, 697, 698. Horn/Staudinger, on§ 765, no. 47.

266STS 3 July 1999 [RA 1999 no. 4901].

267STS 29 April 1992 [RA 1992 no. 4470].

268A legal precedent with regard to art. 1938 Italian CC is to be found in art. 493 Swiss Code of Obligations.

269This tendency usually only exists in relation to non-professional guarantors. In the Netherlands and in France the liability of non-professional guarantors is limited to a maximum amount (art. 7: 858 par. 1 Dutch CC and art. 313-7 Consumption Code). By virtue of art. 34 Belgian Consumer Credit Act of 12 June 1991 as amended the 1st of January 2004, guarantees securing consumer credit must be limited to a specific amount. In Finland, universal guarantees must be limited in terms of amount and time, independently of the guarantor being professional or not (§ 5 par. 1 Finnish law of guarantees). No legal provision establishes in Germany the need to establish a maximum amount for

ly lacks information about the risk which he is assuming and the changes that might occur until the extinction of his obligation. The extension of the guarantor's obligation may ultimately be vast and have fatal consequences for the guarantor. Limiting this liability is a clear, simple and practical way to provide him with a certain level of protection.

The need to set a maximum agreed liability for universal guarantees is not legally established in Spain270. However there is an increasing trend to include such a limiting clause in the contracts. The Spanish Supreme Court established in one decision271 the need to fix the maximum liability assumed by the guarantor in the contract. This maximum limit was seen as the way to identify the object of the contract. As the determination of the object is a requirement of contractual validity, the agreement of a maximum liability could be considered to be a necessary element for the valid constitution of a universal guarantee. Despite the importance of this court decision, it remains an isolated case and cannot be considered as proper "case law". Moreover, the decision is dealing with a contract which already included a maximum amount. The statement was made as obiter dictum and was not decisive for the solution of the case. The Supreme Court does not directly refer to the need to provide protection to the guarantor but only regards the need of having a certain object for the guarantee. In any case, the STS of 23 February 2000 is a first breaking point, which has been highly praised by some legal authors272• Irrespective of whether the court sought to create such far-reaching consequences, this decision has stimulated the discussion among legal scholars and has initiated a new approach to the treatment of the guarantor's protection. Nevertheless the decision itself is insufficient to have changed the formal requirements for validity of universal guarantees in Spanish case law. A change in Spanish regulation in the sense of granting a higher level of protection to the universal guarantor through the limitation of the guaranteed amount is desirable.

universal guarantees. Case law has changed from an extremely flexible view where maximum amounts where not required for the constitution of universal guarantees to more restrictive construal in recent times. See Horn/Staudinger, on § 765 nos. 45, 46, 47, 50.

270STS 21 July 2003 [RA 2003 no. 5389].

271STS 23 February 2000 [RA 2000 no. 1242], commented on by Infante, RDP, June, 2001, 201 f. and by Fernandez, CCJC no.53, 2000, § 1451.

272See Fernandez, Comment to the STS February 2000, CCJC 53 [2000] § 1451. See also Carrasco, Cordero and Marin, 162.

c) Is the agreement ofa maximum amount a sufficient protection for the universal guarantor?

The agreement of a maximum amount in the contract of a universal guarantee provides a certain level of protection for the guarantor but it might be considered insufficient. The maximum amount is not determined with regard to objective parameters. It is an absolute, predetermined and freely agreed amount and can therefore be disproportionate273 . If this is the case, it can be questioned whether the guarantor is anyhow protected.

The maximum amount helps the guarantor being aware of the levels of liability assumed, especially in relation to his own patrimony. The importance of this psychological aspect should not be undervalued in terms of protection. However it is also true that plenty of guarantors, especially those non-professionals, do not read the contract before signing. Moreover, most of these guarantors are willing to help the debtor irrespective of such contractual issues, and at the moment of signing they do not really pay attention to any clauses or conditions. The problems and difficulties arise at the moment of performance, when it is too late for the guarantor to protect his own patrimony. In the case of an extremely high maximum amount, the guarantor could adduce lack of good faith in contrahendo but this will depend on the facts and circumstances of each individual case and it will be very difficult to determine to what extent the amount was outwit a justified proportion.

A solution to this problem was given in France, where non-professional guarantors must write by hand the actual maximum amount of liability (art. 313-7 Consumption Code)274•

d) Duty to inform the guarantor ofthe debtor's financial difficulties and to request authorisation in order to grant further credit

In Italy the guarantor for a future obligation is discharged if the creditor has granted credit to the third party without the special authorisation of the

273Italian legal authors have discussed whether the requirement of art. 1958 Italian CC shall be considered to have been fulfilled with the establishment of a maximum amount in the contract or if this amount must also be "reasonable" in respect to the general situation. See: Rivolta, 675; Giusti, 169.

274Art. 313- 7 Code de la Consommation: "La personne physique qui s'engage par acte sous seing prive en qualite de caution pour l'une des operations relevant des

chapitres ler ou II du present titre doit, a peine de nullite de son engagement, faire preceder sa signature de la mention manuscrite suivante, et uniquement de celle-ci: En me portant caution de X , dans la limite de la somme de .. . couvrant le paiement du principal, des interets et, le cas echeant, des penalites ou interets de retard et pour la duree de ... , je m'engage a rembourser au preteur les sommes dues sur mes revenus et mes biens si X... n'y satisfait pas lui-meme" .

guarantor (art. 1956 CC275). This discharge occurs if the creditor was aware that the financial situation of the debtor was such as would clearly reduce the possibilities of performance. This is a mandatory provision (art. 1956 par. 2 Italian CC). Consequently, in these cases there is a duty for the creditor to provide information vis-a-vis the guarantor.

Such a rule does not exist in Spain276 • However, a certain degree of protection can be achieved by the application of the principle of good faith. Therefore, before new credit is granted, the creditor is compelled to inform the guarantor about the significant changes that enlarge the guarantor's risk. These changes may regard the financial situation of the debtor (loss of patrimony, new unpaid debts, etc.), or his personal situation as far as it affects also the relation with the guarantor (for instance if the debtor's wife applies for a decree of divorce) and he was not aware of them.

The creditor is not supposed to incur much cost in order to attain the relevant information. But if he has notice of the information or is able to obtain it easily, and the guarantor cannot be reasonably expected to be aware of the information277, then the creditor is compelled to inform the guarantor before granting new credit. If this action is not accomplished then the creditor is in breach of the principle of good faith.

The guarantor bears the burden of proof with regard to the creditor's lack of good faith. It is not always easy to prove that the creditor knew about the guarantor's financial situation or that he could have known about it without extreme difficulties. Therefore this form of protection is very much dependent upon the assessment of the merits of the case by the relevant court.

e) Italian protective regulation. An example for Spain?

Art. 10 of the law 17 February 1992 no. 154 introduced significant changes in Italian CC, which resulted in the development of a modern regulation on the protection of the guarantor for future obligations. This initiative is part of the general European trend to grant a higher and better structured protection to the guarantor. Most countries, have achieved this protection by means of extensive case law. This was the method favoured in Germany. In other countries, such as France and the Netherlands, statutory protection

275This provision was also included by the reform of 1992 (art. 10 Law 17 February 1992 no. 154).

276German case law has exceptionally also established the creditor's duty not to extend credit when, in this case not the creditor but the guarantor was in a weak financial position (OLG Milnchen NJW, 1976, 1096); Horn/Staudinger, on§ 765 no. 47.

277In the opinion of Carrasco, the guarantor must have required the information in order for it to be held that the creditor was compelled to give it. Carrasco, Cordero and

Marin, 163.