Dutch Civil Code

Book 7 Particular agreements

Title 7.14 Surety agreement

Section 7.14.1 General provisions

Article 7:850 Definition of 'surety agreement'
- 1. A surety agreement is an agreement under which one of the parties ('the surety') has engaged himself towards the other party ('the creditor') to perform an obligation which a third party ('the principal debtor') is or will be due to the creditor.
- 2. For the validity of a surety agreement it is not required that the principal debtor is aware of the existence of the involved suretyship.
- 3. The statutory provisions for joint and several obligations apply to a surety agreement as far as the provisions of the present Title (Title 7.14) do not derogate from them.

Article 7:851 Accessory right; security for future obligations
- 1. The surety agreement is accessory to the obligation of the principal debtor for which it is concluded as security.
- 2. A surety agreement can only be entered into as security for future obligations of the principal debtor as far as these obligations are sufficiently determinable.

Article 7:852 Means of defence for the surety; right to withhold performance
- 1. Means of defence which the principal debtor can invoke against the creditor, can also be invoked by the surety against the creditor if they relate to the existence, the content or the time of performance of the obligation of the principal debtor.
- 2. If the principal debtor is entitled to nullify a voidable juridical act from which the secured obligation has arisen and he has been subjected by the surety or creditor to a reasonable period within which he must exercise this right of nullification, then the surety is during this period entitled towards the creditor to withhold the performance of his surety obligation.
- 3. As long as the principal debtor rightfully withholds the performance of his obligation towards the creditor, also the surety may withhold the performance of his surety obligation.

Article 7:853 Prescription
On the expiry of the prescription period of the creditor's right of action to claim performance from the principal debtor, the surety agreement ceases to exist.

Article 7:854 The object of the secured obligation is another performance than the payment of a sum of money
Where the object of the secured obligation of the principal debtor is another performance than the payment of a sum of money, the surety agreement is regarded to be entered into as security for the creditor's debt-claim for damages in money, indebted by the principal debtor when he has not performed his principal obligation to the creditor, unless the surety agreement explicitly provides otherwise.

Article 7:855 Auxiliary character of the surety obligation
- 1. The surety is not obliged to perform his surety obligation prior to the moment that the principal debtor has failed to comply with his obligation towards the creditor.
- 2. The creditor who, in accordance with Article 6:82 of the Civil Code, has given formal notice to the principal debtor that he demands performance, must at the same time inform the surety about this.

Article 7:856 Statutory interest and costs of suing the principal debtor
- 1. The surety is towards the creditor only liable for statutory interest over the period during which he was in default himself, unless the principal debtor is in default pursuant to Article 6:83, under point (b).
- 2. The surety is only obliged to compensate the costs which the creditor has made to bring his claim against the principal debtor to court if the creditor has given the surety the opportunity, by means of a timely notification, to prevent that these costs should have to be made.

Section 7.14.2 Suretyship accepted outside the course of a professional practice or business

Article 7:857 Definition of 'private suretyship'
The provisions of the present Section (Section 7.14.2) apply to suretyships which have been accepted by a natural person who, when entering into the surety agreement, did not act in the course of his professional practice or business, nor in the normal business conduct of a public limited company or private limited company of which he is a director and of which he holds, solely or jointly with the other directors, the majority of the shares.

Article 7:858 Maximum amount of liability must be mentioned in the surety agreement
- 1. If the amount of the secured obligation of the principal debtor is uncertain at the moment on which the surety agreement is entered into, then the surety agreement is only valid as far as the surety obligation has been fixed to a maximum amount in money.
- 2. Irrespective of this maximum amount, the creditor may claim from the surety the payment of statutory interest and costs in accordance with Article 7:856.

Article 7:859 Only a written document is allowed as means of proof
- 1. The surety agreement can only be proven against the surety by means of a written document which is signed by him.
- 2. When it has been ascertained that the surety has entirely or partially performed the obligation of the principal debtor, the surety agreement can be proven through all means of evidence.
- 3. The provisions of paragraph 1 and 2 apply as well to the proof of an agreement which engages a person as meant in Article 7:857 to enter into a surety agreement.

Article 7:860 More burdensome terms and conditions
The surety is not bound to the extent that his surety obligation is subject to more burdensome terms and conditions than those under which the principal debtor is bound by the secured obligation, except as far as these terms and conditions concern the way in which the existence and extent of the secured obligation of the principal debtor can be proven against the surety.

Article 7:861 To be secured future obligations of the principal debtor
- 1. Where a surety agreement has been entered into as security for future obligations, it may be terminated:
a. at any time if it is not concluded for a fixed term;
b. after five years if it is concluded for a fixed term.
- 2. After the surety agreement has been terminated, it continues to be effective for secured obligations which already existed at the moment of termination.
- 3. A surety is not bound for future obligations to pay damages for which the principal debtor is liable towards the creditor as far as the creditor could have prevented the arising of this damage by exercising such supervision as reasonably could have been expected of him in the circumstances.
- 4. A surety is not bound for future obligations arising from a juridical act which the principal debtor has performed voluntarily after he became aware of circumstances which have considerably reduced the possibility of recourse against him (thus against the principal debtor), unless the surety has explicitly agreed with this juridical act or this juridical act could not suffer any delay.

Article 7:862 Mandatory law for a private suretyship
It is not possible to derogate to the disadvantage of the surety:
a. from Articles 7:852 up to and including 7:856 and 7:858 up to and including 7:861;
b. from the duties (obligations) which the creditor, pursuant to Article 6:154, has to observe against the surety in view of the possibility that the surety will be subrogated to the rights of the creditor against the principal debtor.

Article 7:863 Application of Section 7.14.2 to other agreements
The statutory provisions of the present Section (Section 7.14.2) apply accordingly to agreements under which a person as referred to in Article 7:857 has engaged himself to carry out a certain performance in the event that a third person does not perform an obligation with another content to the creditor.

Article 7:864 Assignment to enter into a suretyship or a similar agreement
- 1. If a suretyship or an agreement as meant in Article 7:863 is entered into on assignment and for account of a person as referred to in Article 7:857 as security for an obligation of another person, then the person who has accepted this assignment is not entitled towards the person who gave the assignment, to claim a compensation for what he has performed to the creditor, as far as the present Section (Section 7.14.2) would have stood in the way of any liability as surety of the person who gave the assignment. Article 7:861 applies accordingly to the legal relationship between the person who gave the assignment and the person who accepted it.
- 2. It is only possible to derogate from paragraph 1 by means of a document, signed by the person who gave the assignment, in which the nature of the derogation is defined and if it involves instructions to a bank or another institution which makes it its business to provide surety.

Section 7.14.3 The effects of a suretyship between the principal debtor and the surety and between sureties and non-debtors who are liable for someone else's obligation

Article 7:865 Reasonableness and fairness
Article 6:2 of the Civil Code applies accordingly to the mutual legal relationship between the principal debtor and a surety and between sureties and non-debtors who are liable for someone else's obligation.

Article 7:866 Right of recourse of the surety against the principal debtor
- 1. Pursuant to Article 6:10 of the Civil Code, the surety may claim reimbursement from the principal debtor of the whole amount of the principal sum, interests and costs he has had to pay to the creditor.
- 2. The surety can neither from Article 6:10, nor from Article 6:12 of the Civil Code derive a debt-claim against the principal debtor for reimbursement of statutory interest over the period during which he, the surety, has been in default himself due to circumstances concerning him personally or for costs which concern him personally or which reasonably not needed to be made.
- 3. When a person has engaged himself as surety for the same obligation of two or more joint and several principal debtors, then these debtors are, contrary to Article 6:10, paragraph 1, and Article 6:12, paragraph 1, of the Civil Code, joint and several responsible (liable) towards the surety for reimbursement of the amount of the principal sum, interests and costs.
- 4. From the legal relationship between the surety and one or more principal debtors may result something else than what is specified in paragraph 1 up to and including 3.

Article 7:867 Performance by the surety as well as by the principal debtor
If the surety has performed the surety obligation without notifying the principal debtor thereof, and afterwards the principal debtor performs his secured obligation as well to the creditor, then the principal debtor may, in order to prevent that the surety takes recourse against him, transfer his debt-claim against the creditor, which is based on an undue performance, to the surety.

Article 7:868 Means of defence
The principal debtor who has been requested to make a reimbursement pursuant to Article 6:10 of the Civil Code may invoke against the surety all means of defence which he could have put forward against the creditor at the moment on which the right of recourse of the surety came to existence; Article 6:11, paragraph 2 and 4, of the Civil Code apply accordingly.

Article 7:869 Imputation of the irrecoverable part
The surety who has performed the secured obligation, may under application of Article 6:152 of the Civil Code impute the irrecoverable part of what he may claim as reimbursement to himself, his co-sureties and the non-debtors who were liable as well for this obligation.

Article 7:870 Sub-suretyship
A sub-surety who performs the surety obligation of the surety may exercise, on his own behalf, the right of recourse which the surety, if he would have performed the surety obligation himself, would have had against the principal debtor, his co-sureties or the non-debtors who were liable as well for this obligation.