Defects of consent in the contract of suretyship
In common law of obligations, there are three defects of consent. Article 1109 of the Civil Code sets them out: error, violence, fraud.
What about their application to the contract of suretyship?
What are the necessary conditions for the characterization of a vice for violence in matters of bail?
Article 1111 of the Civil Code provides that violence is a cause of nullity of the contract, whether it was exercised by the co-contracting party or by a third party.
In terms of surety, violence will be able to emanate from the third-party debtor, who is often at the origin of the commitment of the surety, and be expressed for example in the form of excessive and intolerable pressure against the surety. , constituting moral violence (Court of Cassation Com May 28, 1991).
What are the necessary conditions for the characterization of a defect for fraud in matters of suretyship?
Article 1116 of the Civil Code provides in the following terms: "Dolence is a cause of nullity of the agreement when the maneuvers practiced by one of the parties are such that it is obvious that, without these maneuvers, the other party would not have contracted".
“It cannot be presumed and must be proven”.
It is therefore up to the party invoking it to prove its existence. A distinction should therefore be made depending on whether the surety invokes fraud by the principal debtor or fraud by the creditor against him.
The fraud of the creditor against the surety
Fraud is a cause of relative nullity of the contract. This observation is deduced from article 1116 of the Civil Code: “the maneuvers practiced by one of the parties”. The surety, party to the contract of suretyship, is therefore entitled to invoke the creditor's fraud against him as a cause of nullity of his commitment (PLISSON judgment of the 1st civ. of June 27, 1973).
There is fraud when a creditor knowingly misleads his co-contractor. Intention is required in addition to a material element. The latter can result from maneuvers (Court of Cassation. Com July 8, 2003) but can also be retained when the creditor remains silent while he has in his possession information which, if they had been known to his co-contracting party, would have dissuaded from joining. Indeed, fraud is most often retained when the surety manages to establish that the creditor has concealed from him the irremediably compromised or heavily burdened nature of the debtor's situation (Court of Cassation, Com. March 25, 2003).
In the assessment of fraud, it is not required that the surety has made the solvency of the principal debtor a condition of his commitment. Simply, the fraud will not be retained if it is established that the guarantor is committed knowingly. The creditor is therefore charged with a specific obligation to inform the guarantor of the debtor's state of solvency. A credit institution must therefore, if it wishes to prevent any risk of cancellation, demonstrate that the guarantor, at the time it committed, could not be unaware of the debtor's financial situation or certify that the lack of information which is charged was not intended to deceive the surety and induce him to sign the suretyship.
A discussion can then begin as to whether the creditor is aware or not of the compromising financial situation of his debtor. It should nevertheless be remembered that the professional creditor is bound by an obligation to provide information relating to the solvency of the principal debtor. The thesis consisting in absolving the creditor of any obligation to inform by granting him a right to ignorance is difficult to defend. It is obvious that in the event that the creditor would have voluntarily concealed his information from the surety, such as to void the meaning of his commitment, a fraud of the creditor would then be characterized. The surety may then invoke the relative nullity of the suretyship contract.
The fraud of the principal debtor with regard to the surety
Pursuant to Article 1116 of the Civil Code, fraud is a cause of relative nullity of obligations, which can only be invoked by the parties to the contract. In other words, a third party cannot claim fraud vitiating an agreement to which he is not a party.
Since a judgment of the Mixed Chamber of the Court of Cassation of June 8, 2007, the high court, rendering its decision on the basis of articles 2313 and 2289 of the Civil Code, considers that fraud, in that it is intended to protect the consent of the principal debtor, constitutes a purely personal exception to the latter, which cannot be invoked by the surety.
In view of the importance that the Court of Cassation attributes to this judgment, it is obvious that any action by the surety based on the fraud of the principal debtor will inevitably be rejected.
The last defect of consent that should be mentioned now is error.
What are the necessary conditions for the characterization of a defect for error in bonding?
The error is a cause of nullity of the agreements envisaged in article 1110 of the Civil code. This text envisages two types of errors: the error on the substance and the error on the person if the latter was the main cause of the obligation.
Suretyship law takes up these different types of errors and adds the obstacle error, a case in which the surety is mistaken about the very nature of his commitment. In this case, the consent of the surety is non-existent. A judgment of the 1st civil chamber provides an illuminating example: two farmers called upon to take out guarantees for the benefit of third parties simply signed their commitment with a cross. In this case, there is an obstacle error.
The error on the substance can meanwhile be understood as the error on the assessment of the risks incurred or as the error on the solvency of the debtor.
The error in the assessment of the risks incurred is not retained, unless it is manifest and the creditor is at the same time in bad faith. This is the case when a person stands surety to allow a company to obtain new credits (Court of Cassation. Com. February 11, 1986).
With regard to the error on the solvency of the debtor, the Court of Cassation considered, since a decision of October 25, 1977, that the sureties could be released from their obligation for error on the solvency of the principal debtor on the day of their engagement if they brought back the proof of having made this circumstance a condition of the suretyship contract.
By a reversal of October 1, 2002, the Commercial Chamber of the Court of Cassation decides that the sureties can be released from their obligation for error on the solvency of the principal debtor if on the day of their engagement, they had made this circumstance a condition to both tacit and determining of their commitment.
It is therefore no longer required of the surety to provide written proof of this circumstance, for example by introducing a clause by which it makes the solvency of the principal debtor a condition of its commitment.