Civil Code > TITLE XII CONTRACTS IN GENERAL 5

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Chapter 5. Plurality of debtors or creditors

Section 1. Debtors jointly and severally liable

Art. 1896. — Cases of joint and several liability.

Unless otherwise agreed or provided by law, co-debtors shall be jointly and severally liable.

Art. 1897. — Principle of joint and several liability.

(1) The creditor may require all the debtors or one of them to discharge the obligation in whole or in part.

(2) Each debtor shall be liable until the obligation u fully discharged.

Art. 1898. — Res judicata.

Proceeding instituted against one of the debtors shall be no bar to similar proceedings bang instituted against the other debtors.

Art. 1899. —Notice.

Notice placing one debtor in default shall be effective against all the debtors.

Art. 1900. — Nullity of obligation

(1) Any debtor may act up against the creditor defences based on the nullity of the obligation.

(2) Where the obligation, is null owing to a defect in the consent or to the incapacity of the debtor, such nullity may be raised by that debtor only.

Art. 1901. — Payment and limitation.

Any debtor may act up against the creditor defences based on the total or partial payment of the debt or on limitation.

Art. 1902. — Remission of debt.

(1) Where the debt is remitted to one debtor, all co-debtors shall be released.

(2) Notwithstanding the provisions of sub-art. (1), the creditor may specify that the debt is remitted for the exclusive advantage of one debtor.

(3) A remission under sub-art. (2) shall not release the co-debtors unless the debt ultimately rests with the debtor for whose advantage the remission was made

Art. 1903. — Novation.

(1) The provisions of Art. 1902 shall apply when the creditor agrees with one debtor to substitute a new debt for an exiling debt.

(2) The creditor may specify that novation shall only apply to the share of that debtor.

Art. 1904. — Set-off.

Where the creditor owes a debt to one debtor, the co-debtors shall not be released unless the debt ultimately rests with the debtor with whom the set-off was made.

Art. 1905. — Merger.

Where one debtor becomes the creditor, merger shall not release the co-debtors unless the debt would ultimately have rested with the debtor who became the creditor.

Art. 1906. — Liability.

(1) A debtor who is jointly and severally liable may do nothing to increase the liabilities of the co-debtors.

(2) A debtor shall be liable to the co-debtors where he fails to raise defences common to all the co-debtors.

Art. 1907. — Share in the debt.

Unless otherwise agreed provided by law, each debtor shall share equally in payments made to the creditor.

Art. 1908. — Claims as between co-debtors. .

(1) A debtor who pays in excess of his share may claim the amount paid in excess from the co-debtors in proportion to their share.

(2) Any amount which cannot be recovered from one of the debtor shall he repaid by the other debtor in proportion to their share.

Art. 1909. — Substitution.

(1) A debtor who may claim under Art. 1908 shall substitute himself for the creditor to the extent the amount paid by him to the creditor.

(2) The creditor shall had to the debtor who makes the payment all documents and make all formalities to enable the debtor to claim from the other debtor.

(3) Where the creditor makes substitution impossible, he shall be liable for the damage caused by him to the debtor.

Section 2. Joint creditors

Art. 1910. — Scope of application.

Unless otherwise agreed or provided by law, joint creditors shall not be jointly and severally entitled to claim payment.

Art. 1911. — Principle.

(1) Each joint creditor may require the debtor to pay the whole debt.

(2) Payment made to one of the creditor shall be effective against all the creditors.

(3) The debtor may, at his option, pay any of the joint creditors until he is informed that proceeding hare bean instituted by one of them.

Art. 1912. — Limitation.

Any act interrupting the period of limitation as regards one joint creditor shall interrupt it for the benefit of all.

Art. 1913. — Remission of debt.

A remission of debt made by one joint creditor shall release the debtor in respect of the share of that creditor only.

Art. 1914. — Novation.

The provisions of Art. 1913 shall apply to a novation agreed upon between one joint creditor and the debtor.

Art. 1915. — Set-off.

Where the debtor becomes creditor of one joint creditor, he may invoke a set-off against the other co-creditors only to the extent of such creditor's ultimate share in the claim.

Art. 1916. —Ultimate Sharing.

(1) Unless otherwise provided by the contract or by law, each joint creditor shall be entitled to an equal share of the debtor's payment.

(2) A creditor receiving more than his share shall account for the excess to the other creditors.

Section 3. Obligations other than joint obligations

Art. 1917. — Indivisibility.

The provisions regarding joint obligations shall apply by analogy to obligations which are indivisible owing to their nature.

Art. 1918. — Plurality of debtors.

(1) Obligations which are neither joint obligations nor indivisible owing to their nature shall be divided between the persons liable for the debt.

(2) Each debtor shall be liable for his lawful share or for such other share in the debt as may be prescribed by the contract or by law.

(3) Nothing in this Article shall affect the case where one debtor has acted as surety and guaranteed payment of the debt by the principal debtor.

Art.1919. — Plurality of creditors.

(1) Obligations which are neither joint obligations nor indivisible owing to their nature shall be divided between the creditors.

(2) Each creditor may only demand payment of his lawful share or of such other share as may be prescribed by the contract or by law.

Section 4. Suretyship

Art. 1920. — Principle.

Whosoever guarantees an obligation shall undertake towards the creditor to discharge the obligation, should the debtor fail to discharge it.

Art. 1921. — Consent of debtor.

A. guarantee may be given without any request from the debtor for whom it is undertaken or without his knowledge.

Art. 1922. — Form.

(1) A guarantee shall not be presumed.

(2) It shall be express and may not be extended beyond its contractual limits.

(3) The contract of guarantee shall be of no effect unless it specifies the maximum amount for which the guarantee is given.

Art. 1923. — Principal obligation void.

(1) A guarantee may not be given except in respect of a valid obligation.

(2) A debt resulting from a contract which, owing to mistake or incapacity, is not binding on the debtor, may validly be guaranteed where the guarantor, on undertaking the guarantee, was aware of the defect pertaining to the debtor which vitiated the contract.

Art. 1924. — Limits of a guarantee.

(1) A guarantee may not exceed the amount owed by the debtor, nor be contracted on more burdensome terms.

(2) It may be contracted in respect of part only of the debt and subject to less burdensome terms.

(3) A guarantee which exceeds the amount of the debt, or which has been contracted on more burdensome terms, is not void but merely reducible to the amount of the primary debt.

Art. 1925. — Future or conditional obligations.

(1) A guarantee may be undertaken in respect of future or conditional obligations.

(2) Where the time during which the guarantor is to be bound has not been stipulated in the instrument creating the guarantee, the guarantor may put an end to his undertaking so long as the primary debt is not yet dm.

Art. 1926. — Extinction of primary debt.

(1) The guarantor shall be released when the primary debt is discharged for any reason whatsoever.

(2) The guarantor may set up against the creditor all the defences available to the debtor, and the fact that the principal debtor might have waived them cannot be set up against him.

(3) The fact that the obligation of the principal debtor is null by reason of a defect in the latter's consent or of his incapacity shall not affect the guarantor, where he bound himself with fullll knowledge of these circumstances.

Art. 1927 — Substituted performance.

The voluntary acceptance by the creditor of an immovable or of any other asset in satisfaction of the primary debt shall discharge the guarantee even though the creditor may subsequently be evicted.

Art. 1928. — Variation of primary debt.

(1) Contracts entered into between the creditor and the principal debtor after the making of the contract of guarantee may not increase the liabilities of the guarantor.

(2) The guarantor shall be released where the creditor, without his being expressly authorised to do so, allow time for payment to the debtor.

Art. 1929. — Limitation.

Proceedings instituted against the principal debtor shall interrupt the period of limitation as regards the guarantor.

Art. 1930. — Interest.

Where the debt guaranteed bean interest, the guarantor shall, unless otherwise agreed, guarantee the payment of the interest within the limits of the maximum amount stated in die instrument of guarantee.

Art. 1931. — Legal costs.

The guarantor shall be liable, even beyond the limits of the maximum amount stated in the instrument of guarantee, for the costs of any actions brought against the principal debtor, provided he received sufficient notice thereof enabling him to forestall them by discharging the debt.

Art. 1932. — Maturity of debt.

(1) The guarantor may not be required to pay prior to the time fixed for the payment of the primary debt notwithstanding that the debt became mature at an earlier date owing to the bankruptcy of the debtor.

(2) Where the primary debt is exigible only after previous notice is given to the debtor, such notice shall also be given to the guarantor.

(3) The period of notice shall run as regards the guarantor from the day he was notified.

Art. 1933. — Joint guarantee.

(1) Where the person undertaking the guarantee described himself as joint guarantor, co-debtor, or used equivalent, terms, the creditor may sue him without previously demanding payment from the debtor or realizing his securities.

(2) The relevant provisions of this Chapter shall apply to joint guarantee.

Art. 1934. — Simple guarantee.

(1) Apart from the case mentioned in Art. 1933, a guarantor shall not pay the creditor unless the principal debtor fails to discharge his obligation.

(2) The guarantor may demand that the creditor, before requiring him to pay, should discuss the principal debtor's assets and, in particular, realize the real securities available.

Art. 1935. — Benefit of discussion.

(1) The creditor shall not discuss the principal debtor unless the guarantor so requires as soon as he is first proceeded against.

(2) The guarantor may not claim the benefit of discussion where the insolvency of the debtor has been judicially established.

Art. 1936. Assets to be discussed.

(1) A guarantor requiring discussion shall indicate the debtor's assets to the creditor and advance sufficient money for the costs of their discussion.

(2) He may not indicate such debtor's properties as are subject to litigation, or situate outside the country of payment, or mortgaged as security for the debt but no longer in the debtor's possession.

Art. 1937. — Failure to proceed.

Where the guarantor has indicated the assets as provided in Art. 1936 and has supplied sufficient money for their discussion, the creditor is answerable to the guarantor, up to the value of the assets thus indicated, for an insolvency of the principal debtor due to the creditor's failure to proceed.

Art. 1938. — Summons to proceed.

(1) Where the primary obligation has fallen due, the guarantor may demand that the creditor sue the principal debtor within six weeks for the enforcement of his rights.

(2) The guarantor shall be released where the creditor fails to comply with this summons or to continue the proceeding with reasonable diligence.

Art. 1939. — Tender of payment.

(1) Where the primary obligation has fallen due, the guarantor may require that the creditor accepts the payment from him.

(2) The guarantor shall be released where the creditor does not accept such payment or refuses to transfer to the guarantor the securities he enjoys.

Art. 1940. — Guarantor's indemnity claim.

(1) The guarantor who has paid shall be indemnified by the principal debtor, whether the guarantee had been given with or without the tatter's knowledge.

(2) Such indemnity claim shall apply to the principal, interest and costs incurred.

(3) The guarantor may claim to be refunded with such costs only as he incurred since he notified the principal debtor of the proceedings directed against himself.

Art. 1941. — Damages.

(1) The guarantor may claim damages from the debtor where it was owing to the latter's fault or negligence that the guarantor had to pay the creditor.

(2) The amount of such damages shall be fixed in accordance with the rules laid down in Chapter 2 of this Title (Art. 1790-1805).

Art. 1942. — Lapse of indemnity claim.

(1) The guarantor has the right and the duty to set up against the creditor all the defences available to the principal debtor unless they are excluded by the nature of his guarantee.

(2) The guarantor who fails to set up such defences is debarred from his remedy in so tar as they would have relieved him of payment.

(3) The provisions of sub-art. (2) shall not apply where the guarantor can prove that he was in ignorance thereof without his fault.

Art. 1943. — Second payment.

(1) The guarantor shall lose his indemnity claim where the debtor pays a second time because the guarantor failed to inform him of his own payment.

(2) He may claim from the creditor what the latter unduly received from the debtor.

Art.l944. — Subrogation.

(1) The guarantor shall be subrogated to the rights of the creditor to the extent of his payment to him.

(2) The benefit of such subrogation may not be waived in advance.

Art. 1945. — Duties of creditor.

The creditor shall hand over the documents of title to the guarantor who pays him and perform such formalities as will enable the guarantor to exercise his remedy and realize the securities available to the creditor.

Art. 1946. — Impossibility of subrogation.

The guarantor shall be relieved of his obligation towards the creditor where the guarantor's subrogation to the rights, mortgages and liens of the creditor can no longer be effected owing to the creditor's act or omission.

Art. 1947. — Debtor's bankruptcy.

(1) Where the debtor becomes bankrupt the creditor shall prove in the bankruptcy.

(2) He shall inform the guarantor of the bankruptcy as soon as he is aware of it.

(3) Where the creditor fails to comply with these rules, he shall lose his rights against the guarantor to the extent of the latter's loss resulting from such failure.

Art. 1948. — Securities due to guarantor.

The guarantor, even before he has paid, may take action against the debtor and demand securities from him where:

(a) the debtor has been given notice to pay his debt;

(b) the debtor has been declared bankrupt;

(c) either by reason of the losses the debtor has suffered or as result of a fault committed by him. the guarantor runs a considerably greater risk than when be undertook the guarantee.

Art. 1949. — Counter- guarantor.

The counter-guarantor guarantees towards the guarantor the effectiveness of his indemnity claim against the principal debtor.

Art. 1950. — Secondary guarantor.

(1) A person may stand surety not only for the principal debtor but also for his guarantor.

(2) The secondary guarantor shall he in the game position towards the guarantor as a simple guarantor is towards the principal debtor.

(3) Merger between the principal debtor and the guarantor shall not extinguish the creditor's right of action against the secondary guarantor.

Art. 1951. — Plurality of guarantors.

(1) Where several persons became at the same time guarantors of the same debtor in respect of the same debt, each of them shall be liable as simple guarantor for his share and as secondary guarantor for the shares of the others.

(2) Where the guarantors entered into their undertakings by successive acts, he who bound himself in the second place shall be held liable as secondary guarantor of the guarantor who bound himself before him.

(3) Where the guarantors expressly bound themselves as joint guarantors either with the principal debtor or as between themselves, each of them shall be answerable for the whole debt, subject to contribution from the others proportionate to their shares.

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