Kindly guarantee a friend's loan
Unexpectedly, he put himself in "debt"
Three words "guarantor".
What does that mean exactly?
1
What is a Guarantee Contract?
A guarantee contract is a contract in which the guarantor and the creditor agree that the guarantor will perform the debt or assume the responsibility when the debtor fails to perform the due debt or the situation agreed by the parties occurs. The guarantee contract should be in writing, such as a separate guarantee contract, a letter of guarantee, and a guarantee clause in the main contract.
2
What is the difference between a general warranty and a joint and several liability warranty?
The types of guarantees are divided into general guarantees and joint and several liability guarantees, and there are big differences between the two in terms of the specific form of liability and whether they enjoy the right to defend in the first instance.
A general guarantee means that the parties agree in the guarantee contract that the guarantor shall bear the guarantee liability when the debtor fails to perform the debt. Generally, the guarantor has the right to defend in the first instance, that is, the guarantor may refuse to bear the guarantee liability to the creditor before the main contract dispute has not been tried or arbitrated, and the debtor's property cannot be performed in accordance with the law. Generally speaking, the debtor first bears the responsibility for debt repayment within the scope of its property, and if it cannot be repaid, the guarantor bears it.
When the time limit for the performance of the contract expires, the debtor fails to pay off the principal debt or the circumstances agreed by the parties occur, the creditor may require the debtor to bear the responsibility or the guarantor to bear the responsibility.
3
What kind of liability should the guarantor bear when the guarantee method is not agreed or the agreement is unclear?
If there is no agreement on the specific guarantee method or the agreement is unclear, the guarantee contract established before the implementation of the Civil Code (January 1, 2021) is generally recognized as a joint and several liability guarantee; Guarantee contracts established after the implementation of the Civil Code (January 1, 2021) are deemed to be general guarantees.
In order to avoid disputes, it is best to clearly agree on the guarantee method, scope of guarantee, guarantee period and other matters when entering into a guarantee contract, and it is best to use the expression "general guarantee" or "joint and several liability guarantee" to clarify the way of liability, so as to avoid damage to interests.
4
Can only the signature on the IOU be considered a guarantor?
In private lending, it is common for a third party to sign an IOU, and whether the third party is a "witness" or a "guarantor" sometimes arises. Generally speaking, if the words "guarantor" or "guarantor" are indicated at the signature office, it is deemed to be a guarantor; Where the word "witness" is indicated at the place where the signature is signed, it is generally found to be only a witness or witness to the establishment of the creditor's rights and debts relationship, and does not need to bear corresponding responsibility.
If there is no identity mark at the place where the signature is signed, the identity of the signatory and the borrower, the purpose of the loan, the flow of funds and other factors shall be comprehensively determined and the responsibility shall be determined.
Do not sign on the blank paper, if it is indeed a guarantee for others, you should also carefully assess the borrower's ability to repay, clarify the size of the responsibility, and do not put yourself in a disadvantageous position for the sake of face.
5
How is the guarantee period agreed?
The guarantee period is the period during which the guarantor bears the guarantee liability. The lender and the guarantor may agree on the guarantee period, but the agreed guarantee period shall neither be earlier than the loan performance period nor expire at the same time as the loan performance period, otherwise the guarantee period shall be deemed to have not been agreed.
If there is no agreement in the guarantee contract established before the implementation of the Civil Code (January 1, 2021), the guarantee period shall be 6 months from the date of expiration of the loan performance period; If it is agreed that the guarantor shall bear the guarantee liability until the principal and interest of the principal debt are paid off, or other similar content, it shall be deemed that the agreement is unclear, and the guarantee period shall be 2 years from the date of expiration of the performance period of the principal debt.
If there is no agreement or the agreement is unclear in the guarantee contract established after the implementation of the Civil Code (January 1, 2021), the guarantee period shall be 6 months from the date of expiration of the loan performance period.
The warranty period is free from suspension, interruption and extension. Therefore, the lender should assert its rights in a timely manner and not become a "sleeper on rights".
6
Can the guarantee amount be higher than the borrowing amount?
The guarantee contract has a subordinate nature and its guarantee should not exceed the scope of the borrower's debt. Therefore, in general, the agreed guarantee amount should not be higher than the loan amount. However, in addition to the principal of the loan, the scope of the guarantee also includes interest, liquidated damages, damages and expenses for realizing the creditor's rights, and if the two parties agree otherwise, such agreement shall prevail. Therefore, the specific amount of guarantee that the guarantor should bear depends not only on whether there is a specific agreement between the two parties, but also on the actual amount of interest, liquidated damages and other expenses incurred.
7
Under what circumstances can a guaranteed debt be forgiven?
If the lender fails to claim its rights within the guarantee period, the guarantee debt shall be forgiven. It should be noted that different ways of assuming warranty liability have different ways of asserting rights.
If the guarantee liability is assumed in the form of a general guarantee, the lender needs to claim its rights against the borrower by way of litigation or arbitration during the guarantee period, because the guarantor has the right to defend in the first instance, and cannot only claim the guarantee in ordinary ways such as oral demand and written notice.
If the guarantee liability is assumed by way of joint and several liability guarantee, the lender only needs to directly request the guarantor to assume the guarantee liability during the guarantee period, and does not make special requirements for the method of request.
8
How to calculate the statute of limitations for guaranteed debts?
The statute of limitations for guaranteed debts is 3 years. The starting time is different depending on the guarantee method.
If the guarantor's right to defend against the first action is established and the guarantor refuses to bear the guarantee liability, the statute of limitations shall begin to run from the date on which the guarantor's right to refuse to bear the guarantee liability is extinguished.
If the guarantee liability is assumed in the form of joint and several liability guarantee, the statute of limitations shall start to run from the date on which the lender requests the guarantor to bear the guarantee liability within the guarantee period, because the lender can directly claim rights against the guarantor.
9
Does the unauthorized change of the content of the IOU by the lender and the borrower affect the assumption of guarantee liability?
If the borrower and the lender change the content of the IOU, they shall obtain the written consent of the guarantor, and if there is no written consent of the guarantor, the principle of "starting with the old and treating it lightly" shall be followed.
If the changed content leads to an increase in the debt, such as an increase in the amount of the loan, an increase in interest, etc., the guarantor shall not be liable for the aggravated part; If the changed content reduces the debt, the guarantor shall bear the guarantee liability for the changed debt.
If the borrower and the lender extend the performance period of the loan contract, the changed term shall not affect the original guarantee period.
10
What rights does the guarantor have in the event of a warranty?
In addition to the right of first action defense unique to general guarantors, the guarantor also has the right of recourse, defense and refusal to perform when assuming the guarantee liability.
The right of recourse, that is, the guarantor may, after assuming the guarantee liability, recover from the borrower within the scope of its liability, unless otherwise agreed by the parties;
The guarantor may claim the borrower's right of defense against the lender, if the claim that the debt has exceeded the statute of limitations, and the lender claims that the interest is too high, the guarantor can still claim even if the borrower waives the above defense;
The right of refusal to perform, that is, if the borrower has the right of set-off or the right of revocation against the lender, the guarantor may refuse to assume the guarantee liability within the corresponding scope.
In judicial practice, it is easy for the guarantor to ignore these rights enjoyed by him, resulting in an increase in losses. Therefore, the guarantor should first actively assert its rights, and secondly, it should understand whether there are other creditor's rights and debts between the lender and the borrower, and cannot blindly guarantee it.
11
Can a company act as a guarantor?
The company has the status of an independent legal person, and if the company wants to provide guarantees for others, it shall be resolved by the board of directors or the shareholders' meeting in accordance with the provisions of the articles of association; Where there is a limit, it must not exceed the prescribed limit. If a guarantee is provided to a shareholder or actual controller, it shall be resolved by the shareholders' meeting, and the borrower shall not participate in the voting. Therefore, if the company is to be used as the guarantor, the lender needs to check whether it has the corresponding shareholders' meeting resolution to avoid affecting the validity of the guarantee.
In life, it is not uncommon to use the company as a guarantor, and most of them guarantee for affiliated companies, shareholders, executives, actual controllers, etc. Except for specific statutory circumstances, if the guarantee issued by the company without reasonable procedures is invalid, in order to better realize the creditor's rights, the lender should strengthen the formal review, not only to see whether the official seal exists, but also to see whether the procedure is proper.
Source: Yuyao Municipal People's Court, Zhejiang Tianping