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LAW OF OBLIGATIONS
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Should the creditor fail to take any of these actions, he forfeits his
claims against the surety to the extent of any damage to the latter resulting
from such failure.
Relationship between the Surety and the Principal Debtor
Right to Security and Release.
Pursuant to Article 595 TCO, the
surety may require that the principal debtor furnish security and demand
his release from liability once the principal obligation falls due:
1. where the principal debtor breaches the agreements made with
the surety, and in particular his promise to release the surety by a
certain date;
2. where the principal debtor is in default or has relocated his
domicile abroad and legal action against him in foreign courts has
been substantially impeded as a result; and
3. where the surety faces substantially greater risks than when he
agreed to offer the surety because of a deterioration in the principal
debtor’s financial situation, a decrease in the value of the security
furnished or the fault of the principal debtor.
Surety’s Right of Recourse.
Pursuant to Article 596 TCO, the surety
is subrogated to the creditor’s rights to the extent that he has satisfied the
creditor. The surety may exercise the creditor’s rights when the obligation
falls due.
However, unless otherwise agreed, he is subrogated only to those
liens and other securities furnished when the contract of surety was
concluded or subsequently obtained from the principal debtor for the
specific purpose of securing the claim. If on paying only part of the debt,
the surety is subrogated to only part of a lien, then the part remaining with
the creditor takes precedence over that already paid by the surety.
Special claims and defenses arising from the legal relationship
between the surety and the principal debtor are reserved.
Where a pledge securing a claim under surety is realized or the owner
of the pledge pays voluntarily, he may only have recourse against the
surety for such payment where an agreement to this effect was reached
between the pledgor and the surety or the pledge was given subsequently
by a third party.