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It is also stipulated in the article that the contract of surety may
only be concluded for a valid obligation. Therefore, if the primary
obligation is arising from a null and void transaction due to illegality,
immorality, initial impossibility, informality, simulation, lack of
judicial mind, then the surety granted will be deemed to be invalid.
However, if the person standing surety for performance of an
obligation arising from a contract that is not binding upon the debtor
as a result of error or incapacity to conclude a contract is liable for such
obligation if he was aware of the defect vitiating the contract at the
time he gave his commitment. According to article 582, the same
applies to any person who stands surety for performance of an obliga-
tion that is time-barred for the debtor.
The Form of Contract of Surety
According to article 583, the contact of surety is valid if the sure-
ty makes a written declaration and indicates the date of the surety and
the maximum amount for which he is liable.
The article provides for a specific written form since some clauses
of the contract of surety shall be drafted in handwriting. Accordingly,
the surety shall draft the followings in handwriting in the contract of
surety:
(i) maximum amount for which he is liable
(ii) the date of surety and
(iii) if he is a joint surety, then he shall state that he is liable for the
obligation as a joint surety.
The formal requirements applicable to the contract of surety also
apply to the subsequent amendments which increase the total liability.
The same formal requirements also apply to the conferral of spe-
cial authority to enter into a contract of surety and the promise to stand
surety for a third party.
The parties may agree in writing to limit the liability of the surety
with a certain portion of the obligation.
LAW OF OBLIGATIONS
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