учебный год 2023 / Drobnig, Personal Security

Chapter 2: Dependent Personal Security (Suretyship Guarantees)

quirements indicate the legislator’s intention that only goods which can easily and within a short period of time be executed, can be indicated by the security provider (BELGIUM: Van Quickenborne no. 378 at p. 196; Lebon, Borgtocht no. 10; FRANCE: Simler no. 518). A general exception for executions that are obviously difficult or even without a chance does not exist.

15.By contrast, in SWEDEN and FINLAND there is no exception from the creditor’s duty to attempt to obtain satisfaction by execution (SWEDEN: Walin, Borgen 157 ss.; FINNISH LDepGuar § 2 no. 2 and § 21; RP 189/1998 rd 30, 58 ss.).

b.Exception in Case of Debtor’s Move

16.In GERMANY and GREECE the exception of prior proceeding is excluded if the difficulty of bringing an action against the debtor is materially increased due to a change of domicile, place of business, or place of residence occurring after assumption of the security (GERMAN CC § 773 para 1 no. 2; GREEK CC art. 857 no. 2). The reason for this exception is that the creditor in cases of monetary claims is only required to bring executions against the debtor’s assets at its domicile, residence or place of business as at the time of creating the security. In AUSTRIA, subsidiarity cannot be invoked by the security provider if the debtor’s residence at this time is unknown, provided that the creditor did not behave negligently (CC § 1356).

c.Exception in Case of Debtor’s Insolvency

i.Debtor’s Insolvency

17.According to SPANISH CC art. 1831 no. 3 an execution into all of the debtor’s assets is not required in case of bankruptcy or insolvency of the debtor. The wording of this provision does not make clear whether an insolvency proceeding must have been opened or whether an obvious factual insolvency would be enough to exclude the beneficium excussionis. In case of an obvious factual insolvency, the security provider will not find the property of the debtor that can be sold within Spanish territory and which is sufficient to cover the amount of the debt, which according to art. 1832 sent. 2 must be pointed out. Moreover, according to general case law the creditor should not be compelled to bring suit for claims when it is obvious in advance that this will be useless (cf. TS 30 July 1999, RA 1999 no. 5724; Carrasco Perera a.o. 220). As mentioned (supra no. 13) the ITALIAN solution is very similar.

ii.Insolvency Proceedings over Debtor’s Assets

18.GERMAN CC § 773 para 1 no. 3 and GREEK CC art. 857 no. 3 exclude the exception of prior execution against the principal debtor if bankruptcy proceedings have been instituted against the debtor, unless the creditor can satisfy himself from a security right in a movable of the debtor (para 2). In effect the same rule applies in BELGIUM, FRANCE and LUXEMBOURG. In the latter countries it is thought that the requirements spelt out in CC art. 2023 (since 2006: FRENCH CC art. 2300) express that the beneficium discussionis can no longer be invoked if an insolvency or equivalent proceeding has been opened over the debtor’s assets, since this foils easy and fast execution against the

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debtor’s assets (BELGIUM: Dirix and De Corte no. 410 at p. 270; Van Quickenborne no. 378 at p. 193; Lebon, Borgtocht no. 10; FRANCE: Cass.civ. 21 Dec. 1897, DP 1898, 262; Simler no. 511). In ITALY with the opening of bankruptcy proceedings against the debtor the possibility for the individual creditor to execute the debtor’s assets is barred by law (L.fall art. 51) and in this case it is obviously impossible for the security provider to exercise his beneficium excussionis (Giusti 187).

19.In SWEDEN the opening of bankruptcy is not enough for a subsidiary security to become due; on the other hand, the creditor need not wait until the bankruptcy proceeding is closed, if and insofar as he can provide some evidence that the bankruptcy will not give him any dividend (Walin, Borgen 157 s.). Also in FRANCE the security provider cannot invoke its subsidiary liability if it is clear that the creditor will only obtain partial satisfaction from the debtor’s assets (Simler no. 511 fn. 384). In AUSTRIA, the opening of insolvency proceedings over the debtor’s assets cannot be invoked by a creditor if it has acted negligently (CC § 1356), e.g. by failing to file its claim (Schwimann/Mader and Faber § 1356 no. 4).

20.According to FINNISH law and DANISH and FRENCH literature the provider of a dependent personal security is liable after e.g. an insolvency proceeding over the debtor’s assets has been completed without satisfying the creditors (FINNISH LDepGuar § 21; RP 189/1998 rd 58 s.; DENMARK: Pedersen, Kaution 33; CFI Herning 6 April 1982, UfR 1983 A 739; FRANCE: in case of insolvency «liquidation judiciaire» Simler no. 511). In effect the same result has been achieved by a decision of the SWEDISH Supreme Court (HD 23 April 1990, NJA 1990, 245).

iii.Failure of Insolvency Proceeding due to Insufficient Assets of the Debtor

21.In DENMARK and FRANCE the security provider under a dependent personal security is liable if the opening of a proceeding has failed due to insufficient assets of the debtor (DENMARK: Pedersen, Kaution 33; CA Søndre Landsret 10 Oct. 1927, UfR 1928 A 194; FRANCE: Cass.com. 8 June 1993, JCP G 1993, II no. 22174; Simler nos. 517 and 725; cf. Ccom art. L 643-11 III). Pursuant to BELGIAN and LUXEMBOURGIAN law the debtor regains full disposition over its assets in case the insolvency procedure has failed due to insufficient assets of the debtor; in this case the procedural impediments to an easy and smooth execution disappear. The security provider regains the possibility to invoke the beneficium discussionis. An exception to this rule exists where the insolvency proceeding has failed due to insufficient assets of the debtor, but where the debtor has nevertheless been discharged of his debts (Lebon, Borgtocht no. 10 a fortiori). According to ITALIAN case law, when contracting the beneficium excussionis the parties may also choose to subordinate the security provider’s liability to a definitive impossibility to pay as certified by the conclusion of the bankruptcy proceeding without the satisfaction of the creditor’s rights (Cass. 17 July 1985 no. 4218, Giur.it.Mass. 1985, 803).

(Dr. Poulsen/Dr. Fiorentini)

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Article 2:107: Creditor’s Obligations of Notification

(1)The creditor must notify without undue delay the security provider in case of a non-perform- ance by or inability to pay of the debtor as well as of an extension of maturity; this notification must include information about the secured amounts of the principal obligation, interest and other ancillary obligations owed by the debtor on the date of the notification. An additional notification of a new event of non-performance need not be given before three months have expired since the previous notification. No notification is required if an event of non-per- formance merely relates to ancillary obligations of the debtor, unless the total amount of all non-performed secured obligations has reached five percent of the outstanding amount of the secured obligation.

(2)In addition, in the case of a global security (Article 1:101 lit. (f)), the creditor must notify the security provider of any agreed increase

(a)whenever such increase, starting from the creation of the security, reaches 20 percent of the amount that was so secured at that time; and

(b)whenever the secured amount is further increased by 20 percent compared with the secured amount at the date when the last information according to this paragraph was or should have been given.

(3)Paragraphs (1) and (2) do not apply, if and in so far as the security provider knows or could reasonably be expected to know the required information.

(4)A creditor who omits or delays any notification required by this Article is liable to the security provider for the damage caused by the omission or delay.

E. Consumer as Security Provider nos. 7-9

A.Information on Debtor’s Default – Para (1)

1.General remark. In accordance with modern trends of the law on personal security, these Rules impose obligations also upon the creditor; especially duties of information (Articles 2:107, 2:108 para (2) (b) and 4:107), vis- -vis consumer providers of security even in the precontractual phase (Article 4:103).

2.According to para (1) the creditor is obliged to inform the provider of a dependent security as soon as any critical situation arises with respect to the secured obligation which may lead to demands upon the security provider. The creditor must, in order to allow the security provider to evaluate its possible risk and take steps against the debtor

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according to Article 2:111, inform the security provider about a non-performance or inability to pay of the debtor or an extension of maturity of the secured obligation. In this notification the creditor must indicate the outstanding amounts of principal, interest and other ancillaries (cf. Article 2:104) as of the date at which the information is given. If the default continues, the information must be renewed every three months after the preceding information.

3. According to the third sentence of Article 2:107 (1), a notification is as a rule not required if merely an ancillary obligation has not been performed. The duty of information, however, is revived, if the total of all unperformed secured obligations which are due amounts to five percent or more of the outstanding total of the secured obligations. In other words, while a certain percentage of due, but unpaid ancillary obligations does not call for a reaction by the creditor, the percentage of five percent triggers the duty to report according to para (1).

B.Information by Creditor of Global Security – Para (2)

4. The provider of a global dependent security (cf. Article 1:101 (f)) is not protected by the Rules of Article 2:102 (4) against any increase of the secured amounts or aggravation of other terms of the secured obligation because this would run counter to the essence of a global dependent security. However, the security provider’s legitimate interest in knowing the approximate extent of its risk must be satisfied by information about any major increases of the total amount of potential obligations agreed by the creditor. Since information about the actual amount of indebtedness which may change daily is too burdensome, only major increases must be notified. The first “major” increase is fixed at 20 % over the amount of the secured obligations that were secured by the global security at the time of its creation (lit. (a)). Correspondingly, subsequent “major” increases require notification to the security provider if they amount to an additional 20 percent over the secured amount at the time when the preceding information was given or should have been given.

C. Exception for Informed Provider of Dependent Security – Para (3)

5. The duties of information imposed upon the creditor by paras (1) and (2) are unnecessary if and insofar as the security provider is already informed, or can easily inform himself, e.g. as the director of the debtor company. The burden of proof for this exception must be borne by the creditor.

D.Sanction – Para (4)

6. The sanction for delaying or omitting altogether the information required under paras (1) and (2) is spelt out in para (4): The creditor must compensate the security provider for any damage that may have been caused to it. Such damage may arise if due to the omitted information the security provider will be unable to obtain relief or satisfac-

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tion from the debtor because the latter has in the meantime become insolvent (cf. Articles 2:111 and 2:113). The conditions and details of a claim for damages are laid down in PECL Article 9:501 ss.

E.Consumer as Security Provider

7.Article 2:107 is a provision for the protection of the security provider; as such, it is applicable not only to a dependent security assumed by a consumer security provider but also to a consumer’s purported assumption of an independent personal security (cf. Article 4:106 (c)) as well as to a consumer’s co-debtorship for security purposes (cf. Article 4:102 (1)).

8.Although there is a specific rule limiting global securities assumed by consumer security providers (Article 4:106 (a)), the additional protection provided for by para (2) fulfils an important role also in the consumer context: The creditor is obliged to inform the consumer security provider of any increase of the secured obligation, even if this does not exceed the maximum limit which in the consumer context a global security must have according to Article 4:106 (a).

9.According to Article 4:102 (2), the rules of Article 2:107 are mandatory in favour of the consumer. And in the context of a consumer security provider’s co-debtorship for security purposes the term “debtor” in Article 2:107 means the debtor whose obligation is secured.

National Notes

I. General Attitude on Duties of Information

1.Pursuant to the opinion of many FRENCH authors, post-contractual information duties of the creditor vis- -vis the provider of dependent security seem to be contrary to the unilateral character of the dependent security (cf. Delebecque 256; Simler nos. 416 ss.). In GERMAN law and in other legal systems such duties are denied by courts and almost all authors (CA Bamberg 13 Dec. 1999, WM 2000, 1582, 1584; M4nchKomm/Habersack

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§ 765 nos. 85, 91; Schimansky/Bunte/Lwowski/Siol § 44 nos. 57, 61; Lwowski no. 406). Additionally it is argued that the imposition of duties of information would weaken the dependent personal security as a security (CA Kçln 7 Feb. 1995, WM 1995, 1965; Staudinger/Horn § 765 no. 119). But because of their restricted scope they are tolerated in BELGIUM, DENMARK, FRANCE, ITALY, the NETHERLANDS and SWEDEN.

2.By contrast, FINLAND imposes upon the creditor firstly a general duty of information whenever any provider of dependent security so requests (LDepGuar § 14 para 1). In addition, the creditor must inform consumer providers of dependent security upon request about the debtor’s obligations and any circumstances which are relevant for appreciating the debtor’s ability to pay, provided the creditor knows these facts, or can easily obtain information (§ 14 para 2). Any violation of these duties which causes damage to the provider of dependent security is sanctioned by a reduction of the security provider’s obligation (para 3).

3.In GREECE there is a “soft law” provision in the Hellenic Banker’s Code of Conduct of March 1997 of the Hellenic Bank Association. This Code is regarded by writers as general business condition, which can be invoked by third parties, especially consumers. They apply according to one opinion if they were incorporated into the contract or were made accessible to clients (Karakostas 23), according to another view in any case, since they were published and a disregard would constitute a misleading advertisement (Georgakopoulos, DEE 4, 774). According to the Bankers’ Code of Conduct art. 42 para 1, the banks are obliged to inform the provider of dependent security of the contracting parties’ rights and obligations under the law and to provide it with all relevant information which is rendered to the debtor (the banks are obliged by law to render the debtor copies of the credit contracts and a detailed report of the debt within 90 days after the latter’s request, cf. art. 47 para 3 Law 2873/2000 as replaced by art. 42 Law 2912/2001). Hence, the provider of dependent security is able to request from the bank this aforementioned information (cf. Bankers’ Code of Conduct art. 39) and should receive any further information.

4.BELGIAN ConsCredA provides for creditor’s specific obligations of notification towards the provider of personal security securing a consumer credit – whithout distinguishing between consumer and other security providers: the creditor has to inform this security provider of the respites of payment granted to the debtor as well as of any modification of the credit contract (ConsCredA art. 35 sent. 2). In FRANCE the creditor of professional claims must remind a consumer provider of dependent security of its right to terminate at any time a dependent security without time limit (Madelin Act art. 47 II para 2 juncto MonC art. 313-22). According to Law Dutreuil no. 2003-721 of 1 Aug. 2003 this obligation also applies to creditors of consumer debts (ConsC art. L 341- 6 sent. 2). Moreover, according to FRENCH CC art. 2016 para 2 (since 2006: FRENCH CC art. 2293 para 2) information on the changes in the amount (any increase or decrease) of the secured debt including its collateral obligations should be made to a private provider of dependent security at least once every year. Although the provision applies according to its wording only to indefinite dependent securities, the courts have extended it also to definite dependent securities (Cass.civ. 16 March 1999, D. 1999 I.R. 99). It is irrelevant whether the secured debt is owed by a consumer or a professional, as long as the provider of the dependent security is a consumer. However, in the case of a professional debt of an individual entrepreneur, the consumer provider of dependent security has to be given exact information about the amounts of principal and interest

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and not only about the changes in the amount of the debt (Madelin Act art. 47 II para 2 juncto MonC art. 313-22). The Law Dutreuil no. 2003-721 of 1 Aug. 2003 has extended this protection by a duty of detailed information to the consumer provider of dependent security, whether or not the secured debt has a professional character (ConsC art. L 341- 6 sent. 1). The Grimaldi Commission had proposed to merge these three provisions on a regular duty of information (CC art. 2016 para 2 (since 2006: CC art. 2293 para 2), Madelin Act art. 47 II para 2 juncto MonC art. L 313-22 and ConsC art. L 341-6 sent. 1) into one provision of the Civil Code (new art. 2307), similar to the existing ConsC art. L 341-6 sent. 1; however, this proposal was not adopted in the revision of 2006.

5.By contrast in GERMANY even a creditor bank is not obliged to inform the provider of dependent security at the end of a year about the remaining balance of the secured debt (Staudinger/Horn § 765 no. 121 referring to BGH 26 April 1976, WM 1976, 709, 711).

II. Information on Debtor’s Default or Inability to Pay – cf. Para (1)

A.Legal Systems with a Special Information Duty

6.A general obligation to inform about default within one month is established by FINNISH LDepGuar § 4 para 2 (RP 189/1998 rd 35 s.). In the NETHERLANDS, if the creditor gives notice to the debtor to pay, it has to inform the provider of dependent security at the same time (CC art. 7:855 para 2). No deviation from this provision to the disadvantage of a non-professional provider of dependent security is possible (art. 7: 862 lit. a)).

7.In several countries, creditors are bound to inform consumer providers of dependent security about the debtor’s default. In AUSTRIA, ENGLAND and FRANCE, a consumer provider of dependent security must be informed about the debtor’s default (AUSTRIA: ConsC § 25 b para 2; ENGLAND: ConsCredA sec. 111; FRANCE: ConsC art. L 313-9 sent. 1, Law no. 94-126 of 11 Feb. 1994 (Loi Madelin) art. 47 II para 3, and ConsC art. L 341-1 sent. 1). There is a duty of information, irrespective of any breach of the bank’s duty of confidentiality, if this information permits the consumer provider of dependent security to exercise its right to recourse before payment according to FRENCH CC art. 2032 (since 2006: FRENCH CC art. 2309) and also to take judicial protective measures (cf. infra national notes to art. 2:111). If the secured obligation arises from a consumer credit, the information has to be given in case of a qualified inability of the debtor to pay (incident de paiement caracte´rise´, ConsC art. L 313-9 sent. 1). This implies at least a delay of three months after the debt becomes due (JO d bats Assembl e Nationale 8 Dec. 1989, 6153 ss.). By contrast, if the secured obligation arises from any professional contract, the creditor has to inform the consumer provider of dependent security about the default within one month after delay (ConsC art. L 341-1 sent. 1 and Law no. 94-126 of 11 Feb. 1994 (Loi Madelin) art. 47 II para 3 sent. 1).

8.In BELGIUM the creditor has to inform the provider of a personal security for a consumer credit if the debtor has defaulted on two payments or at least one fifth of the total sum due (ConsCredA art. 35 sent. 2). Pursuant to the DANISH Consumer Council and the Financial Councils agreement (in force since 1 Jan. 2002), creditor’s obligation to inform providers of dependent security within six months in case of a debtor’s default of payment will eventually be reduced to three months.

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9.Under SWEDISH law the creditor has an obligation to make sure that the right of the provider of dependent security to take recourse is not lost (or loses its value) (cf. HD 16 June 1992, NJA 1992, 351). Therefore, the provider of dependent security must be informed of circumstances which are of importance in this respect (e.g. initial doubts about inability to pay, delays), when it cannot be assumed that the provider of a dependent security keeps himself informed. The requirements on banks and other similar creditors are higher than on private creditors (Walin, Borgen 53 ss.).

B.Legal Systems without a Special Information Duty

10.No information is required to be given under GREEK, GERMAN, ENGLISH, LUXEMBOURGIAN, PORTUGUESE and SPANISH law.

11.According to GREEK literature, in addition to the obligation of the creditor to refrain from actions, which hinder the debtor from satisfying the creditor or endanger the right of the provider of dependent security to be reimbursed after paying (GREEK CC arts. 862, 863), the principle of bona fides (GREEK CC arts. 200, 288) sometimes creates an obligation of the creditor to take positive action, e.g. by informing the provider of dependent security of events which worsen the financial situation of the debtor, in order to achieve the same results (Markou, DEE 8, 366, 367). Furthermore, according to Banker’s Code of Conduct art. 42 § 2 (cf. supra no. 3), the banks as creditors must inform the provider of dependent security in case of a realisation of the assumed risks in the future. In GERMANY there may exceptionally be a duty of information derived from the principle of bona fides (CC § 242; cf. CA Bamberg 13 Dec. 1999, WM 2000, 1582, 1584; CA Kçln 7 Feb. 1995, WM 1996, 1965; Graf Lambsdorff and Skora no. 246; Bu¨low, Kreditsicherheiten no. 864 with further references). The requirements are very high since there must be an extremely severe offence against the interests of the provider of dependent security (cf. CA Bamberg 13 Dec. 1999 and CA Kçln 7 Feb. 1995). Similarly under ENGLISH law, such a duty to disclose unusual facts is limited to exceptional cases such as fidelity bonds (cf. Andrews and Millett nos. 5-018 ss.). In general, however, the creditor has to inform the security provider e.g. about the debtor’s default only if such a notification is required by the terms of the security (O’Donovan and Phillips no. 10-101). Also in LUXEMBOURG some minor duties are imposed upon the creditor, which are based on good faith (Ravarani, Jurisprudence r cente 916). The creditor may not unnecessarily increase the burden of the security provider. This general guideline can to some extent be specified by a couple of specific duties for the creditor, e.g. a duty of information. In PORTUGAL, the creditor must inform any providers of dependent security in case of the debtor’s default to pay in order to prevent an increase of their liability according to the principle of bona fides (CC art. 762 para 2; cf. STJ 20 April 1999, 162/99 www.dgsi.pt). However, a duty of information does not, in principle, exist in relation to a mere delay of the debtor in payment or any other increase of the risk of the provider of dependent security; at least a violation of such a duty could not lead to a release of the security provider but only to damages, if at all (PORTUGAL: STJ 5 March 2002, 3971/01 www.dgsi.pt; STJ 6 May 1997, 88428 www.dgsi.pt).

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C.Sanctions – cf. Para (4)

a.Partial Release of Provider of Dependent Security

12.In AUSTRIA, FINLAND and FRANCE, if the creditor does not give the required information, the consumer provider of dependent security is discharged from certain collateral obligations, e.g. penalties or default interest (AUSTRIA: ConsC § 25 b para 2; FINLAND: LDepGuar § 4 para 2; FRANCE: ConsC arts. L 313-9 sent. 2, L 341-1 sent. 2 and Madelin Act art. 47 II para 3). But in FINLAND and FRANCE the creditor loses its ancillary rights only for a limited time, namely until it makes its notification (FINNISH LDepGuar. § 4 para 2 sent. 2; FRENCH ConsC arts. L 313-9 sent. 2, L 341-1 sent. 2 and Madelin Act art. 47 II para 3 sent. 2). According to the FINNISH LDepGuar § 4 para 2 sent. 3 the provider of dependent security is also liable in relation to certain ancillary obligations, e.g. default interest, if the creditor can prove that the security provider is partly to blame for the delayed payment. The provider of dependent security must cover the aforementioned ancillary obligations from the time it became informed about the delay (RP 189/1998 rd 36). Pursuant to DANISH and SWEDISH law, if a creditor omits what reasonably could have been done by him, the provider of dependent security is relieved/discharged insofar as the omission has reduced the possibility of the provider of dependent security to take recourse against the debtor (DENMARK: H 14 Jan. 1975, UfR 1975 A 168; Pedersen, Kaution 67 s.; SWEDEN: the creditor must prove that his omission has not caused such a loss; HD 16 June 1992, NJA 1992, 351; HD 22 April 1993, NJA 1993, 163; HD 13 June 1994, NJA 1994, 381; HD 22 Dec. 1998, NJA 1998, 852).

b.Damages

13.The BELGIAN Consumer Credit Act 1991 and the GREEK Bankers’ Code of Conduct do not provide any special sanction. The general rules on contractual liability apply (Van Quickenborne no. 432). A breach of the provisions of the GREEK Bankers’ Code of Conduct due to fault of the bank is regarded as a contractual fault and the bank is obliged to compensate the damage caused thereby (Georgakopoulos 775).

III. Duty of Information in Case of Global Guarantee – cf. Para (2)

A.Existence of a Regular Duty of Information

14.In FINLAND the security provider under a global guarantee must be informed by the creditor every six months about the amount of the debtor’s secured obligation (LDepGuar § 13 para 1). In FRANCE a regular, annual information must be given by the creditor to the consumer provider of security of an indefinite dependent security, i.e. a global guarantee (CC art. 2016 para 2 (since 2006: CC art. 2293 para 2) or Madelin Act art. 47 II para 2 juncto MonC art. 313-22). But the scope of these provisions is very reduced, since private persons are prohibited from assuming a security under a global guarantee in relation to consumer credits (ConsC art. L 313-7) as well as professional debts (ConsC art. L 341-2 as introduced by Law Dutreuil no. 2003-721 of 1 Aug. 2003). According to the Grimaldi Commission’s proposal all these rules on information duty in

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case of indefinite securities (CC art. 2016 para 2 (since 2006: CC art. 2293 para 2), Madelin Act art. 47 II para 2 juncto MonC art. 313-22) should be replaced by only one provision in the Civil Code (proposed CC new art. 2307) that establishes a permanent information duty in favour of a security provider requiring special protection, irrespective of the definite or indefinite character of the dependent security. Contrary to former solutions, the Grimaldi Commission also would have allowed a natural person requiring special protection to assume a dependent security without time limit (cf. CC new art. 2300). However, none of these proposals was adopted by the reform of 2006. In ITALY a duty of information must be implied since the provider of dependent security in relation to a future obligation is discharged if the creditor has given credit without the authorisation of the security provider although he knew that the financial situation of the debtor had worsened to the point that performance by the debtor had become clearly more difficult (CC art. 1956 – a mandatory provision, cf. para 2). Further, the ITALIAN Banking Law contains general provisions on banking contracts, applicable whether or not the contracting party is a person requiring protection like a consumer according to which the bank has to inform the client clearly and completely once a year about the course of the relationship (DLgs 1 Sept. 1993 no. 385 art. 119 para 1). This Law is held applicable to dependent personal securities (Chine`, I contratti di garanzia 327). It is to be noted that in ITALIAN banking practice this rule is usually applied to a global guarantee and that this is the type of dependent personal security mainly requested by banks as creditors.

B.Sanctions – cf. Para (4)

a.Partial Release of Provider of Dependent Security

15.If the creditor omits or delays required information, the consumer provider of dependent security is definitely released from any liability in relation to ancillary obligations (FRENCH CC art. 2016 para 2 (since 2006: CC art. 2293 para 2)). This sanction is very harsh in situations where the creditor is not a professional (FRANCE: Legeais no. 14; Piedelie`vre, Cautionnement et lutte contre l’exclusion no. 8). For this reason, the FRENCH Senate had (unsuccessfully) opposed this provision (JO d bats S nat 8 July 1998, 3718). However, for professional debtors (Madelin Act art. 47 II para 2 juncto MonC art. L 313-22) the sanction is not so hard since the creditor loses only provisionally the benefit of ancillary rights until it accomplishes its information duty. The Grimaldi Commission’s proposal to merge these different provisions into one general rule (CC proposed new art. 2307) was not adopted in 2006 (cf. supra no. 14).

16.Pursuant to FINNISH LDepGuar § 13 para 2 the liability of a provider of dependent security can be reduced if the creditor neglects his duty of information (RP 189/1998 rd 49).

b.Full Release

17.According to ITALIAN CC art. 1956 para 1 the provider of dependent security for a future obligation will be discharged if the creditor grants credit without specific authorization of the security provider, although he knew that the financial situation of the debtor was such that performance by the debtor had become clearly more difficult. On

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