учебный год 2023 / Drobnig, Personal Security

Chapter 2: Dependent Personal Security (Suretyship Guarantees)

differentiation, the same results are achieved in GREECE due to the application of the general rules on dependent securities (cf. Georgiades § 3 no. 195).

i.Solidary Dependent Security with Time Limit – Para (1)

a. Immediate Notice

13.According to GERMAN CC § 777 para 1 sent. 2 in connection with sent. 1, the provider of dependent security under a solidary dependent security in relation to an existing obligation is discharged upon expiration of the fixed time, unless the creditor gives immediately after expiration notice to the provider of the dependent security that it will

demand performance from the latter. Although the provision refers to an “existing obligation”, it is common opinion that it can be applied to dependent securities for future obligation(s) as well (Erman/Herrmann § 777 no. 1; M4nchKomm/Habersack § 777 no. 5 referring to the genesis of the provision). The creditor’s notice does not have to comply with any form nor contain the sum demanded by the creditor (M4nchKomm/Habersack § 777 no. 11). The creditor has to give the notice immediately which means without culpable delay (GERMAN CC § 121 para 1 sent. 1). Notice can also be given in the creditor’s action against the debtor by serving a third party notice upon the security provider (CA Koblenz 14 July 2005, WM 2005, 2035 at 2036). However, the creditor’s immediate notice achieves its purpose only if the secured obligation becomes payable before or at the latest at the expiration of the agreed time limit (BGH 29 June 2000, NJW 2000, 3137, 3138; M4nchKomm/Habersack § 777 no. 5). The parties may waive the requirement of notice but it is highly controversial whether such stipulation is allowed in general conditions and terms (Palandt/Sprau § 777 no. 2a).

b. Legal Action within Time Period

14.According to GREEK CC art. 866, the creditor has to take legal action for the satisfaction of its claim within one month after the expiration of the fixed period and has to pursue the legal proceedings without delay. Since in the case of a solidary dependent security the creditor can commence legal proceedings directly against the security provider, the creditor has to do so within an one month period after expiration in case of a dependent security for a fixed time, whereas it is not necessary for the provider of dependent security to turn against the debtor as well (A.P. 133/1956, NoB 4, 617 ss.; Georgiades § 3 no. 195). Legal action may be taken by commencing a civil action, by raising a defence or by submitting the claim in an insolvency or enforcement proceeding; on the other hand, a simple extra-judicial notice does not suffice (Georgiades § 3 no. 195 with further references, cf. fn. 139).

ii.Subsidiary Dependent Security with Time Limit – Para (2)

15.In case of a dependent security with subsidiary liability it is according to GERMAN CC § 777 para 1 sent. 1 not sufficient for the creditor to notify the security provider after expiration of the fixed time that performance will be demanded from it. Rather, the creditor has to proceed immediately after expiration of the fixed time to the collection of the secured claim pursuant to § 772, continue the proceeding without serious delay,

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and, after termination of the proceeding, immediately give notice to the security provider that it demands performance from the latter (GERMAN CC § 777 para 1 sent. 1; for details concerning the proceeding according to § 772, see supra national notes to Art. 2:106 nos. 7-12). The notice must comply with the same requirements as in the case of a dependent security with solidary liability (see supra no. 13).

16.Again, the situation is similar in GREECE: As already said above (cf. supra no. 14), the creditor has to take legal action within one month after expiration of the fixed time period and to pursue these proceedings without delay. But contrary to the preceding case, in the case of a subsidiary dependent security the creditor in accordance with the general rules on dependent securities has to commence legal proceedings against the debtor; commencement of legal action directly against the dependent security provider is not sufficient (Georgiades § 3 no. 195). If, however, the creditor has an enforceable title against the debtor, the existence of the claim is confirmed and the creditor does not have to take legal action against the debtor or the provider of dependent security (A.P. 210/1993, NoB 42, 399, applying CC art. 866 to an independent security). As to the types of possible proceedings, cf. supra no. 14).

17.According to the prevailing FRENCH opinion, if in case of a subsidiary dependent security the beneficium discussionis (see supra national notes on Art. 2:106) is invoked by the security provider, a prior notice to the debtor to pay is necessary. If the debt is not paid by the debtor, the creditor has to proceed against the provider of the dependent security as well. Proceedings against the debtor alone are not sufficient to force the provider of dependent security to pay, regardless of the solidary or subsidiary character of the dependent security (Simler no. 491).

18.Since dependent securities with subsidiary liability in the sense of Art. 2:106 are very rare in ENGLAND and SCOTLAND (cf. supra national notes to Art. 2:105 no. 1), the question whether notice by the creditor to the provider of dependent security of its intention to commence or actual commencement of proceedings against the debtor is necessary in order to preserve the liability of the provider of dependent security after expiration of the agreed time limit, does not seem to be discussed anywhere. Given that in these cases proceedings against the debtor are a condition precedent for the accrual of the security provider’s liability it would then seem to depend upon the wording of each particular dependent security whether, in the absence of timely proceedings against the debtor, the security provider’s liability survives the time limit of the dependent security.

D.Legal Consequences if Expiration has been Avoided

19.In GERMANY, if the creditor has given notice in due time in conformity with the aforementioned rules, the liability of the provider of dependent security is restricted to the amount of the debtor’s obligation at the time of expiration of the fixed period in cases of solidary dependent security or at the time of the termination of the proceedings in cases of subsidiary dependent security, respectively (GERMAN CC § 777 para 2). In FRANCE the provider of dependent security is not released after expiration of the fixed time, unless the parties agree otherwise (Simler nos. 321 ss.); only the extent of the security provider’s liability is limited by the expiration of time.

(Seidel/Hauck)

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Article 2:109: Limiting Security Without Time Limit

(1)Where a security does not have an agreed time limit, the security may be limited by any party giving notice of at least three months to the other party. The preceding sentence does not apply if the security is restricted to cover specific obligations or obligations arising from specific contracts.

(2)By virtue of the notice, the scope of the security is limited to the secured principal obligations which are due at the date at which the limitation becomes effective and any secured ancillary obligations as defined in Article 2:104 paragraphs (1) and (2).

Comments*

A.General Remarks

1.Provisions on time limits. Articles 2:108 and 2:109 deal with dependent securities with (Article 2:108) or without (Article 2:109) time limits (cf. Comments on Article 2:108 nos. 1 s.). Article 2:109 applies to such contracts of personal security that do not have a time limit, i.e. that cover future secured obligations over an indefinite period. In accordance with the general principle contained in PECL Article 6:109, Article 2:109 provides for a possibility to limit the duration of such a security, i.e. to limit the scope of the security to obligations that are due at the time when the limitation becomes effective. An additional provision, Article 4:108, is applicable for consumer security providers only.

2.Limitation of duration of security outside scope of Article 2:109. The duration of a security might be unilaterally limited by any of the parties to the agreement even outside the scope of Article 2:109, e.g. where the parties have provided for such a right to limit the duration of a security in their agreement. In such situations, Article 2:109 may nevertheless be applicable in order to determine details or consequences of such a contractual clause.

*The Comments on Article 2:109 are by Ole Bçger, LL.M.

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B.Security without Agreed Time Limit

3. Time limit restricting scope of security. Article 2:109 provides for a possibility to limit the scope of a security in cases where such a restriction does not already follow from a time limit agreed by parties. Whether a security is unlimited in this way must be determined by interpreting the parties’ agreement. This issue is dealt with in the Comments on Article 2:108 nos. 22 ss. Generally, the existence of any type of time limit for the security leads to the inapplicability of Article 2:109; the only exception are such time limits that do not affect the security as a whole, e.g. time limits that apply to certain secured obligations only (cf. Comments on Article 2:108 no. 24). For consumer security providers, cf. Article 4:108.

C.Limitation by Giving Notice

4.Declaration by any party sufficient. Any party may limit the security, i.e. limit its scope to secured obligations that are due at the time when the limitation becomes effective (cf. infra no. 6) by simple declaration vis- -vis the other party. An act of the court is not necessary, neither does the party have to show the existence of good reasons. Although Article 2:109 gives both the creditor and the security provider the right to limit the security, in fact it will typically only be the security provider who exercises this right.

5.Notice period. The limitation of the security by giving notice can become effective only after a period of at least three months that has to be set by the party giving notice has expired. This minimum length of the period of notice has been introduced in order to protect the interests of the creditor and the debtor: typically, if the security provider limits a security covering future obligations the creditor will immediately stop granting any further credit to the debtor which might cause short-term illiquidity of the latter. The three months period of notice should give the debtor the opportunity to arrange alternative security or credit from another source. The security provider is protected against any undue increases of the secured obligations agreed between debtor and creditor within this period (if covered at all, cf. Article 2:102 (4)) on the basis of the principle of good faith (cf. PECL Article 1:201).

D.Effect of Limitation of Security – Para (2)

6. Secured principal obligations due at the time the limitation becomes effective. If notice is given, the scope of the security provider’s liability is restricted to secured obligations that are due as of the date at which the limitation becomes effective. The limitation by giving notice in this respect has similar effects to those of an agreed time limit according to which the scope of the security would cover secured obligations that arise or fall due or fulfil other requirements before expiration of the time limit. For the purposes of Article 2:109, it is thought to be preferable to restrict the liability of the security provider to secured principal obligations that are due as of the date at which the limitation becomes effective, since this is the solution that is most favourable to the security provider. More-

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over, the creditor is typically able to protect itself: the fact that a dependent personal security is limited according to Article 2:109 will typically give the creditor the right to accelerate the maturity of obligations secured by this security that have arisen but are not yet due, such as a credit paid out to the debtor that under its original terms was repayable at a date after the three months.

7.Secured ancillary obligations covered even though arising or falling due at a later time.

The requirement that secured obligations must be due as of the date at which the limitation becomes effective does, however, only apply to the secured principal obligations. Ancillary obligations as defined in Article 2:104 (1) and (2) are covered by the scope of the security even if they arise or fall due at a later point of time. These obligations typically arise and fall due later than the principal obligation; in the absence of an agreement to the contrary it would seem unreasonable that a security should cover a secured principal obligation, but not e.g. interest owed by the debtor in respect of that obligation even if accruing only after the limitation of the security became effective, since the source of the obligation to pay interest is the non-payment of the principal obligation.

8.Limitation does not create time limit for resort to security. The limitation of the security according to Article 2:109 does not, however, create a time limit for resort to the security within the meaning of Article 2:108, i.e. the security provider remains liable after the limitation of the security even if the creditor does not take any further action until that date. Should the parties also have agreed on a time limit for resort to the security, then this time limit within the meaning of Article 2:108 is not affected by the fact that a party exercises its right according to Article 2:109.

E.Exceptions – Para (1) Second Sentence

9.Cases outside scope of Article 2:109. Paragraph (1) second sentence sets out situations in which the parties may not unilaterally limit the scope of the security by giving notice. If the security is agreed to cover specific obligations or obligations arising from specific contracts the exercise of the right according to Article 2:109 by the security provider would run counter to the interests of the creditor who may have agreed to contract with the debtor only on the basis of the existence of a dependent security and who may not be able to terminate these agreements. The creditor could, for example, have entered into a contract for the lease of an apartment only on the strength of a security provided in relation to the debtor’s obligations to pay rent. According to Article 2:109 it is not possible to unilaterally limit the duration of a security in such a situation regardless of whether the lease contract itself has a time limit or is concluded for an indefinite period. The main example of a dependent security not covered by these exceptions (and therefore subject to the parties’ right to give notice) is a global security. It is clear that for a security covered by one of these exceptions, recourse to the general principle of PECL Article 6:109 is not possible: lex specialis derogat legi generali.

10.Other bases of protection of security provider. In certain situations, the exclusion of the right to limit a security by giving notice might cause hardship to the security provider.

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It is assumed, however, that in appropriate circumstances protection for the security provider against an unreasonable duration of a security could be offered on other legal bases: Apart from the possible application of the principles on the change of circumstances (cf. PECL Article 6:111), the creditor might in certain cases be prohibited from relying on a security running over an excessively lengthy period of time on the basis of the principle of good faith (cf. PECL Article 1:201); in other situations it is not inconceivable that the right to relief (Article 2:111) might include a right to demand that the debtor terminates the contract from which the secured obligations arise in order to prevent the creation of new secured obligations which would increase the security provider’s liability.

F.Consumer as Security Provider

11. Applicability to all types of consumer security providers. Article 2:109 is directly applicable to consumer providers of dependent security and allows them to limit securities given for an unlimited time, subject to the exceptions provided for in para (1) sent. 2. The protection of consumer security providers is supplemented by Article 4:108, which allows the security provider to limit securities with an agreed limit under the conditions set out in that provision. These principles also apply to consumer providers of independent security (cf. Article 4:106 (c)) and to consumer security providers in a co-debtorship for security purposes (cf. Article 4:102 (1)). The application of Article 2:109 to these types of security providers includes the exceptions provided for in para (1) sent. 2 (cf. supra nos. 9 s.).

12. Mandatory character. By virtue of Article 4:102 (2), Article 2:109 may not be deviated from to the detriment of a consumer security provider in any type of security.

I. Limiting Security Without Time Limit for Secured Obligations

A.Limitation of Principal Obligation Extended to Security

1.As a general rule, in all countries even a security whose scope is not specifically restricted to obligations arising within a specified time limit will be interpreted as being limited to the duration of the secured obligation (BELGIUM: T’ Kint no. 771; ENG-

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LAND: Andrews and Millett no. 4-019; FRANCE: Simler no. 270; GERMANY: Palandt/ Sprau § 765 no. 13; ITALY: Cass. 8 Feb. 1989 no. 786, Giur.it. 1989 I 1 1517; Giusti 251 ss.; SPAIN: Dı´ez-Picazo 431). Securities in SWEDEN will not often set out a separate validity time, but the security will be tied to the underlying contract. In relations where a private person is a security provider in relation to a commercial entity there seems to be developing a rule that the security provider’s undertaking is limited in time in the above-mentioned sense (although there is not yet any clear and general rule to such effect) (Gorton, Suretyship 591).

B.Limitation by the Security Provider

a.Reason for Termination of Security

2.In AUSTRIA, any dependent personal security given for an unlimited time, i.e. with a scope that does not only cover obligations arising within an agreed time limit, may be terminated by the security provider giving notice to the creditor (OGH 22 June 1993,

BA 1994, 239 (240 requiring a reasonable duration of the security; without this requirement OGH 8 Nov. 1970, JBl, 1971, 257 (258)). Even an “irrevocable” security may be terminated if there is an “important reason” (OGH 28 April 1971, JZ 1971, 522

(523) no. 281).

3.In BELGIUM, DENMARK, FINLAND, FRANCE, ITALY and the NETHERLANDS if a security given for an unlimited time in the above-mentioned sense secures future debts or in case of a global dependent security without time limit, the security provider can also unilaterally terminate the security by giving notice to the creditor (BELGIUM: T’ Kint no. 771; DENMARK: for future debts, Pedersen, Kaution 53; DUTCH CC art. 7:681 para 1 lit. a with effect for future obligations (art. 7:861 para 2); FINLAND: HD 18 March 1997, KKO 1997:31; LDepGuar § 6 para 1 for a global dependent security, including for a current account; FRANCE for all undetermined obligations: cf. Grimaldi Commission’s proposed art. 2302 para 3 sent. 2; Cass.com. 3 Dec. 1979, JCP G 1980, IV no. 67; Simler no. 282; ITALY: according to the general rule of CC art. 1373 para 2 on unilateral withdrawal from the contract; Cass. 15 March 1999 no. 2284, Giust.Civ.Mass. 1999, 565; Cass. 2 July 1998 no. 6473, BBTC 1999 II 657; CFI Milano 15 July 1993, BBTC 1994 II 548; Petti 154; moreover, the limitations of CC art. 1957 are not applicable: cf. supra national notes to Art. 2:108 no. 11). In BELGIUM the sole requirement is a notice of reasonable length to the other party (CA Bergen 4 Feb. 1986, Pas belge 1986 II 61; T’ Kint no. 771). However, in LUXEMBOURG, the provider of a dependent security cannot unilaterally terminate a security without such a time limit, if a time limit is fixed in the underlying contract (e.g. caution re´elle CA Luxembourg 14 May 2003, BankFin 2004 169). In FRANCE the parties can agree on a notice of reasonable length (Simler no. 284). If the security provider is a consumer, the creditor of professional claims must remind the consumer security provider annually that it has a right of termination

(Madelin Act of 11 Feb. 1994, art. 47 II para 2 juncto MonC art. 313-22). Since Law no. 2003-721 of 1 Aug. 2003 this obligation has also to be fulfilled for consumer debts (ConsC art. L 341-6 sent 2). But the scope of these provisions is reduced, since it is forbidden for private persons to contract global dependent securities both if they acted as consumers (ConsC art. L 313-7) and if they acted as professionals (ConsC art. L 341-2 introduced by Law no. 2003-721 of 1 Aug. 2003).

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4.The security provider’s right to terminate a security whose scope is not limited to obligations arising within an agreed time limit by giving notice depends in ENGLISH law on the consideration for the security provider’s promise to secure: if the consideration is divisible, the security provider can at any time terminate the security (Re Crace, Balfour v. Crace [1902] 1 Ch 733 (CFI)) by giving notice; if the consideration is indivisible, it cannot do so. Thus, a security for the balance of a current account is terminable because the security provider’s promise is “divisible as to each advance” and only after the advance is made to the debtor the promise becomes irrevocable (cf. Coulthart v. Clementson (1879) 5 QBD 42 (CFI); Andrews and Millett no. 8-003). This is achieved by treating the security given for a divisible consideration as a standing offer which is pro tanto accepted when a fresh advance is made, since as a general rule every offer may be revoked before it is accepted (Halsbury/Salter para 290; Goode, Commercial Law 821; cf. also PECL, note 4 on Art. 2:202). The divisibility of the consideration is sometimes difficult to determine; as a rough guide it seems appropriate to examine the nature of the transaction the creditor has entered into in reliance on the security: if that transaction is terminable it is reasonable not to deprive the security provider of its right to revoke the security; if, on the other hand, a transaction is binding on the parties without being terminable for a certain period, it would prejudice the creditor if the security provider could revoke the security and thereby deprive the creditor of its security (Chitty/Whittaker no. 44-017). Similarly in SCOTLAND: continuing securities are regarded as containing offers of securities for future advances which then can be revoked before acceptance of each particular offer (Gloag and Irvine 857). The security provider can therefore withdraw from the security with effect for a future advance by giving notice to the creditor (Stair/Clark no. 980; Gloag and Irvine 857). There is no such right, however, where the security is given in respect of the debtor’s liability arising in a specific transaction (Stair/Clark no. 980).

5.In PORTUGAL the security provider with beneficium discussionis (see supra national notes on Art. 2:106) may demand that the creditor, once the principal obligation has fallen due, tries to obtain satisfaction from the debtor within two months after the moment the secured obligation fell due (however, this time limit does not run out before one month after the notice to the creditor). The security provider is released from its liability if the creditor does not follow this demand. If the principal debt becomes due only after the creditor has given notice to the debtor, a security provider with beneficium discussionis may one year after having assumed the security demand that the creditor takes action against the debtor. Again, the security provider is released if the creditor does not comply with this demand (CC art. 652; Almeida Costa 784). It has been held that a contract of dependent personal security is also terminated if the credit is transferred without the security provider’s approval (STJ 2 July 1996, 165/96 www.dgsi.pt).

6.In GERMANY and SPAIN there are no statutory provisions on termination of dependent personal securities. Consequently, they are regarded, as a rule, as not terminable (GERMANY: Staudinger/Horn § 765 no. 229; Palandt/Sprau § 765 no. 16; SPAIN: Carrasco Perera a.o. 227). However, some important exceptions are accepted for dependent personal securities securing future obligations without time limit. In GERMANY, the security provider has, based upon the principle of bona fides (CC § 242), a right of termination if a dependent personal security has been assumed for future obligations without time limit and if a reasonable time after the assumption of the security has

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passed (BGH 10 June 1985, NJW 1986, 252, 253; BGH 22 May 1986, NJW 1986, 2308, 2309; approved in BGH 21 Jan. 1993, NJW-RR 1993, 944, 944 s.; Erman/Herrmann § 765 no. 8; M4nchKomm/Habersack § 765 no. 55; contra: Derleder, NJW 1986, 102), since long-term relations (Dauerschuldverha¨ltnisse) must be terminable to re-establish freedom of contract (cf. CA D4sseldorf 24 Nov. 1998, ZMR 2000, 89; Reinicke and Tiedtke, B4rgschaftsrecht no. 130). For the German Supreme Court a minimum period of at least three years seems to be sufficient (BGH 4 July 1985, NJW 1985, 3007, 3008; cf. Bu¨low, Kreditsicherheiten no. 807; Schimansky/Bunte/Lwowski/Lwowski appendix to § 91 no. 10). Also in SPAIN a court has invoked the principle of bona fides in order to allow termination of a security without time limit (CA C+rdoba 12 June 2000, RAJ 2000 no. 2070, cited by Carrasco Perera a.o. 228).

7.In GERMANY, apart from expiration of a reasonable period of time, a second ground for termination is recognised: dependent personal securities for future obligations without time limit may also be terminated by the security provider on the basis of the principle of bona fides (CC § 242) for grave reason (see only BGH 10 June 1985, NJW 1986, 252, 253; BGH 4 July 1985, NJW 1985, 3007, 3008; Erman/Herrmann § 765 no. 8; M4nchKomm/Habersack § 765 no. 56). In 2002, this case law has been codified in a generalised form for all long-term contracts by CC § 314. Termination is effective immediately (para 1), but it must be exercised within a reasonable period after the security provider received information on the critical event (para 3). A grave reason has been assumed e.g. if the debtor’s financial situation had seriously worsened (BGH 21 Jan. 1993, NJW- RR 1993, 944, 945), if there were no obligations to secure for a longer period (BGH 22 May 1986, NJW 1986, 2308, 2309) and if a manager or shareholder of a company who in consideration of this had secured the company’s obligations leaves the company (BGH 10 June 1985, NJW 1986, 252, 253; CA Celle 5 Oct. 1988, NJW-RR 1989, 548, 548; Reinicke and Tiedtke, B4rgschaftsrecht no. 131). The right of termination for grave reason is extended by some authors to dependent personal securities with time limit (M4nchKomm/Habersack § 765 no. 56; Staudinger/Horn § 765 no. 235). Similarly, according to DUTCH CC art. 7:861 para 1 lit. b) a dependent security that secures a future obligation may be terminated after five years even if it is given for a limited time.

8.Also in GREECE, there is no general right of the security provider to terminate a security for an unlimited period. According to GREEK literature, a right of termination is exceptionally admitted on the ground of good faith for securities without a maximum amount securing the outstanding balance of a current account and only if there is a grave reason (Georgiades § 4 no. 49; Chelidonis, EllDik 1998, 39, 1034, 1036). GREEK CC arts. 867, 868 allow, however, the security provider to set time limits to its unlimited liability. According to art. 867, a security provider who obliged itself for an unlimited period may upon maturity of the secured debt request the creditor to take legal action within one month for the satisfaction of its claim and to pursue the legal proceedings diligently. If the secured debt becomes due and payable only upon notice by the creditor, then according to CC art. 868 the security provider may, at the lapse of one year after he issued the security, demand from the creditor to give notice to the debtor and take legal action within one month as well as to pursue the legal proceedings diligently. In both cases, if the creditor does not comply with the security provider’s demand, the latter shall be discharged (Georgiades § 3 no. 199).

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b.Period of Notice to the Creditor

9.In GERMANY a security provider who has a right of termination (see supra nos. 6 s.) must in general set a reasonable period for the notice to take effect, since the security provider has to show consideration for the legitimate interests of both creditor and debtor to enable them to adapt their relationship to the changed situation (BGH 10 June 1985, NJW 1986, 252, 253; BGH 4 July 1985, NJW 1985, 3007, 3008; CA Celle 5 Oct. 1988, NJW-RR 1989, 548, 548). However, the reason for termination has also to be considered (Schimansky/Bunte/Lwowski/Schmitz § 91 no. 113; Staudinger/Horn § 765 no. 232): in cases of termination due to expiry of time for dependent personal securities securing a loan, reference is especially made to GERMAN CC § 489 para 2 concerning the termination of a loan with variable interest; consequently, a period of notice of three months is regularly accepted (CA Celle 5 Oct. 1988, NJW-RR 1989, 548, 548; M4nchKomm/Habersack § 765 no. 55; cf. also Derleder, NJW 1986, 102). In cases of termination for a grave reason, however, a shorter period of notice (CA Celle 5 Oct. 1988, NJW- RR 1989, 548, 548: 4 to 6 weeks) or even immediate termination (BGH 4 July 1985, NJW 1985, 3007, 3008: no opposing interests of debtor and creditor and various reasons for termination; M4nchKomm/Habersack § 765 no. 56; Derleder, NJW 1986, 102) have been accepted due to special circumstances. The new general legislative provision of CC § 314 allows termination with immediate effect (supra no. 7).

10.According to GREEK literature, the period of notice must be reasonable, according to the circumstances of each particular case (Georgiades § 4 no. 51).

C.Demand of Security Provider against Debtor for Early Recourse

11.For details, cf. infra national notes to Art. 2:111.

II. Amount of the Security upon Termination

12.In FRANCE, GERMANY, GREECE, ITALY, the NETHERLANDS and SCOTLAND a security for future or conditional (and global) obligations is limited to those obligations that exist at the time of termination of the security (FRANCE: Simler nos. 780 ss.; GERMANY: BGH 10 June 1985, NJW 1986, 252, 253; BGH 22 May 1986, NJW 1986, 2308, 2309; GREECE: Chelidonis, EllDik 1998, 39, 1034; ITALY: Cass. 19 June 2001 no. 8324, Giust.civ.Mass. 2001, 1217; Cass. 6 Aug. 1992 no. 9349, Giur.it 1993 I 1, 1255; NETHERLANDS: CC art. 7:861 para 2 – mandatory rule for non-professionals (CC art. 7:862 lit. a), but also applicable to professional providers of security (Blomkwist no. 16 at p. 30); SCOTLAND: Stair/Clark no. 980; Gloag and Irvine 858). In FRANCE and GERMANY, obligations that are created after termination has become effective are

not covered, unless these obligations are only ancillary obligations or costs (FRANCE: Cass.civ. 10 May 1988, Bull.civ. 1988 I no. 134 p. 93; GERMANY: CC § 767 para 1 sent. 2 or para 2; M4nchKomm/Habersack § 765 no. 57). However, in GERMANY the security provider is liable for those obligations that are created after the notice reaches the creditor but before it becomes effective, provided these obligations are not extraordinary (cf. Schimansky/Bunte/Lwowski/Schmitz § 91 no. 114; contra: Derleder, NJW 1986, 97, 102). GERMAN CC § 777 is not applicable so that the creditor has not to demand

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