Suretyship and bank guarantees

Suretyship is subsidiary — the debtor comes first. Under the Civil Code, the surety must discharge the debt if the debtor has failed to do so despite the creditor's written demand (§ 548). In commercial relationships, the debtor must be given a reasonable period after the written demand; no demand is required if the creditor cannot make it or it is beyond doubt the debtor will not pay, particularly following a bankruptcy declaration (§ 306 of the Commercial Code). The surety may also raise the debtor's defences against the creditor — another reason to prepare enforcement carefully.

Civil-law suretyship is governed by § 546 to 550 of the Civil Code, and commercial-law suretyship by § 303 to 312 of the Commercial Code — with practical differences. Commercial suretyship can secure future or conditional obligations, the paying surety directly acquires the creditor's rights, and the demand rules are more flexible. We assess the applicable regime at the outset — a mistake leads to a poorly drafted declaration.

Banks and business partners commonly request this — but signing exposes all your personal assets, and the suretyship does not end when you leave office or sell your interest; it lasts as long as the secured debt. Before signing, the scope, including interest and ancillary claims, should therefore be reviewed and an amount or time limit negotiated. If you pay for the company, you have recourse — a right to reimbursement (§ 550 of the Civil Code, § 308 of the Commercial Code) — but it is only as good as the company's assets. We can review the declaration before you sign.

A person who agrees in writing with the creditor to fulfil the debtor's monetary obligation becomes a debtor alongside the original debtor — both are jointly and severally liable (§ 533 of the Civil Code). The creditor need not first demand payment from the original debtor and may claim the entire debt from either. This gives the creditor a stronger instrument than suretyship and creates an accordingly more serious obligation for the acceding person — but it applies only to monetary debts.

A bank guarantee arises from the bank's written declaration in a guarantee document (§ 313 of the Commercial Code) and is autonomous — unless the document provides otherwise, the bank pays on the creditor's written request without examining the parties' dispute or the debtor's defences (§ 317). The wording therefore determines everything — call conditions and documents, amount and validity period. If the creditor does not assert its claims in writing during the guarantee's validity period, the guarantee expires (§ 321). In construction, it replaces retention; in commerce, it secures advance repayment or proper contract performance. The debtor then reimburses the bank for what it paid, often secured through a counter-guarantee.