учебный год 2023 / Drobnig, Principles of European Law of Personal Security

Chapter 1: Common Rules

Comments

A. General Remark . . . . . . . . . . . . . . . .	nos. 1-5	C. Co-Debtorship and Personal
		Security Combined . . . . . . . . . . . . .	no. 9
B. Criteria for Security Purpose	nos. 6-8
		D. Applicable Rules . . . . . . . . . . . . . . .	nos. 10-15

A.General Remark

1.Delimitation. Co-debtorship for security purposes must be delimited from different, though closely similar agreements in which a third person intending to act merely for security purposes is drawn into a relationship between creditor and debtor. Three basic situations may be distinguished: First, the creditor and the third party agree that the latter should be or become a co-debtor for security purposes. Second, the original debtor and the third party agree in favour of the creditor that the third party should become an additional debtor for security purposes; this is a stipulation in favour of the creditor which entitles the creditor to demand performance from the new debtor as well (cf. PECL Article 6:110). By contrast, if the debtor agrees with a third party that the latter should assume the debtor’s obligation so that the latter is discharged, this agreement does not bind the creditor unless it agrees. If it agrees, this is a substitution of a new debtor (cf. PECL Chapter 12 Section 1) and not a co-debtorship. Only in the first two cases a codebtorship for security purposes is created.

2.Legal policy. If, in addition to a principal debtor, another person assumes a corresponding obligation towards the creditor in order to secure the principal debtor’s obligation, a trilateral situation arises which corresponds to that of a (dependent or independent) personal security. The additional security debtor assumes a function which is similar to that of a security provider. This co-debtorship for security purposes is defined in Article 1:101 (e). While it is certainly not a species of a traditional personal security, it is increasingly realised that functionally it has features of a personal security. For this reason, Article 1:102 (1) (c) includes co-debtorship for the purpose of security into the ambit of this Part.

3.The present Part regards co-debtorship for security purposes as a distinct legal institution. For this reason, it is mentioned expressly and separately in enumerating the major types of personal security in Article 1:102 (1) (c). It partakes of the features both of co-debtorship and of a personal security. Consequently, this institution generally is governed by the rules on co-debtorship; this respects the intention of the parties who have chosen this particular type of transaction for the purposes which they intend to pursue. However, if and insofar as the parties use a co-debtorship for the purpose of providing security for the creditor, this justifies the application of certain basic rules on personal security, especially Chapter 1.

4.If the “securing” co-debtor is a consumer, the special protective rules of Chapter 4 apply. In addition, Article 4:102 (1) refers to Chapter 2 on dependent personal security and in the framework of this reference the rules on dependent personal security become

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applicable and are mandatory in favour of the security provider (Article 4:102 (2)). The reason for selecting this regime is that the rules on dependent personal security are – generally speaking – the most protective ones for security providers. For details, cf. infra no. 15.

5. Two types of co-debtorship? Co-debtorship for security purposes may exist from the creation of the main obligation.

Illustration 1

A husband and his wife sign contemporaneously a credit agreement as debtors for financing the husband’s business; his wife, a house-wife, merely signs at the special request of the creditor and in order to assist her husband.

It may also be created later if a co-debtor for security purposes subsequently accedes to an already existing obligation of an “ordinary” full debtor. Also the reverse situation would be covered, although it rarely, if ever occurs in practice.

The consequences of this distinction are more linguistic than real. If co-debtorship does not exist from the creation of the obligation to be secured, there is no plurality of debtors and therefore no co-debtorship; it comes into being only at the time when an (additional) debtorship for security purposes is created. The same is true if the sequence of creation is reversed.

B.Criteria for Security Purpose

6.There is no generally recognised criterion for qualifying a co-debtorship as being assumed for the purposes of security. The test must be whether one of the co-debtors has the clearly greater direct interest in the credit extended and therefore is finally to be saddled with it. According to Article 1:101 (e) there is no co-debtorship for security purposes unless one of the debtors obliges itself “primarily” for purposes of security to the creditor. In the final analysis, this depends upon the interpretation of the credit agreement in light of all the circumstances.

7.A major indication for a co-debtorship with security purposes rather than a full codebtorship is whether the co-debtor has a personal interest in the performance of the contract in which the main obligation is rooted. The fact that the co-debtor’s obligation is coterminous with that of the other debtor and that the co-debtor has co-signed the same document as the other debtor cannot be decisive since this would eventually place the result into the hands of the creditor. If doubts remain, it is preferable to assume that the third person has merely assumed a co-debtorship for security purposes. The fact that a house-wife as such indirectly may benefit from the success of her husband’s business cannot be relevant and does not suffice to saddle her with full liability.

8.Co-debtorship for security purposes has to be delimited not only from co-debtorship as such, but also from other types of personal security, especially from dependent security. According to Article 2:101 (1), any “undertaking to pay, ... to the creditor by way of

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security” is presumed to be a dependent personal security as defined in Article 1:101 (a). Therefore the creditor has to show that it was agreed otherwise (Article 2:101 (1) last half-sentence). Consequently, there will only be a co-debtorship for security purposes if the creditor can show that the parties unambiguously agreed upon this specific type of personal security.

C.Co-Debtorship and Personal Security Combined

9. An additional reason for covering co-debtorship is that in some countries the parties sometimes call the person assuming an obligation for security purposes a “co-debtor and security provider”. Since these two obligations involve different consequences, the meaning of the instrument, as intended by the parties, will have to be clarified. One possible construction may be that the security provider was meant to provide a dependent security with solidary liability (cf. Article 2:105). Another possible construction is that the combined formula is intended to express the security character of the assumption of debt.

D.Applicable Rules

10. For the reasons set out supra no. 3 it is not possible to subject co-debtorship for security purposes to all provisions of this Part because this would disregard the basic differences between co-debtorships for security purposes and dependent as well as independent personal securities and the intentions of the parties who have chosen this particular method of providing security. For this reason, it appears necessary to subject such co-debtorships only to the general rules laid down in Chapter 1 and to the special provisions on consumer personal security laid down in Chapters 4 and 2. For the rest, co-debtorships are governed by the rules on plurality of debtors laid down in PECL Chapter 10, Articles 10:101-10:111.

a.Applicable Rules in Chapter 1

11.According to Article 1:106, a co-debtorship for security purposes is subject primarily to Chapter 1 of this Part. However, only few rules of Chapter 1 appear to be directly relevant for a co-debtorship for security purpose.

12.In applying Articles 1:107-1:109, a co-debtor for security purposes can easily be put on the same level as one of several security providers. This is true for the relationship inter se (Article 1:107), recourse among several security providers (Article 1:108) as well as recourse against the debtor whose obligation is secured (Article 1:109).

13.Article 1:110 does not become relevant for a co-debtor for security purposes since Article 1:106 itself already declares PECL Chapter 10 Section 1 to be applicable.

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b.Rules in Chapter 4

14. According to Article 1:106, a co-debtorship for security purposes is subject also to Chapter 4 of this Part. Chapter 4 contains the special and mandatory rules for consumers who have provided personal security. The application of these rules to co-debtorships for security purposes assumed by a consumer is explained in the framework of Chapter 4.

c.Rules in Chapter 2

15. For the reasons set out supra no. 4, the regime for consumer providers of a codebtorship for security purposes is split: primarily, the rules of Chapter 2 on dependent personal security apply (cf. Article 4:102 (1)) and they are declared to be mandatory in favour of the consumer provider of security (Article 4:102 (2)). In general, these rules are the most protective ones for the security providers. Generally speaking, they are also more protective than the rules on co-debtorship which do not provide for any consumer protection. However, in a few instances, the regime for co-debtors laid down in PECL Articles 10:101 to 10:111 is more protective than Chapter 2 of the present Part. Where a comparison of the two regimes leads to this conclusion, exceptionally the rules of Chapter 2 are disregarded in favour of the general regime for solidary debtors in the aforementioned rules in PECL. The detailed comparisons are to be found in the Comments to the relevant rules of Chapter 2.

National Notes

I. General . . . . . . . . . . . . . . . . . . . . . . . . . .	no. 1
II. Initial Co-Debtorship . . . . . . . . . . .	nos. 2-4
III. Subsequent Cumulative
Assumption of Another
Person’s Debt . . . . . . . . . . . . . . . . . . .	nos. 5, 6
A. Subsequent Cumulative
Assumption of Another
Person’s Debt: Regulated as
Co-Debtorship . . . . . . . . . . . . . . .	no. 7
B. Subsequent Cumulative
Assumption of Another
Person’s Debt: Different
Institutions but Identical
Results . . . . . . . . . . . . . . . . . . . . . . . .	nos. 8-9
C. Subsequent Cumulative
Assumption of Another
Person’s Debt: Different
Institutions and Different
Results . . . . . . . . . . . . . . . . . . . . . . . .	no. 10

IV. Criteria for Security Purpose

A. Initial Co-Debtorship . . . . . . . . nos. 11-15 B. Subsequent Cumulative

Assumption of Another

Person’s Debt . . . . . . . . . . . . . . . . . nos. 16-20

V. Co-Debtorship for Security Purposes: Prerequisites and Effects

A. Prerequisites . . . . . . . . . . . . . . . . . . no. 21 B. Effects . . . . . . . . . . . . . . . . . . . . . . . . nos. 22-26 C. Classification . . . . . . . . . . . . . . . . . nos. 27-30

VI. Additional	Rules on Plurality
of Debtors	. . . . . . . . . . . . . . . . . . . . . . . no. 31

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I. General

1.In most member states it is generally recognized that solidary co-debtorship, i.e. a plurality of debtors who are liable for one and the same obligation towards the creditor, reinforces the position of the latter and may therefore have the function of security for the creditor (e.g. for PORTUGAL: Teles de Menezes Leita˜o 165; SPAIN: Dı´ez-Picazo II

207). All member states seem to agree that, if two persons contemporaneously agree to assume an identical obligation, even though details may differ, they are co-debtors. By contrast, concepts and even effects differ where a person lateron accedes to an obligation which had earlier on be assumed by another person. Some countries regard both branches as one institution which is essentially subject to identical rules (e.g. GERMANY), whereas other countries regard them as two separate, although closely related institutions which are subject to more or less different, but closely related rules (especially the ROMANIC countries).

II. Initial Co-Debtorship

2.In most CONTINENTAL EUROPEAN countries the basic institution of solidary codebtorship is recognized and regulated by legislative rules as a modality of the obligation which is owed from its inception by several debtors; they are solidarily liable towards the creditor for the performance of one single obligation (AUSTRIA: Mitschuldner zur ungeteilten Hand, CC § 896; DANISH Promissory Note Act § 2 par 1 regulates a plurality of debtors without, however, using the term solidary liability. According to Karnov/Mø- gelvang-Hansen 5558 fn. 8 the debtors are solidarily liable towards the creditor (een for alle og alle for een). The term “solidary liability” is used in Law on Bankruptcy § 47

(solidarisk hæftelse); DUTCH CC art. 6:7 para 1 (hoofdelijke verbintenis); GERMANY: Gesamtschuld, CC § 421; BELGIUM, FRANCE and LUXEMBOURG: code´biteurs solidaires,

CC art. 1216; ITALIAN CC arts. 1292-1313, obbligazioni solidali; PORTUGUESE CC arts. 512 ss., Ccom art. 100, obrigac¸o˜es solida´rias; SPANISH CC arts. 1137 ss., Ccom art. 567, obligacio´n solidaria; SWEDISH Promissory Note Act § 2 par 1 regulates like the DANISH Promissory Note Act § 2 par 1 a plurality of debtors. According to Walin, Lagen om skuldebrev 26, this provision assumes a solidary liability (the provision says, that the debtors are liable “one for all and all for one” (en fo¨r alla och alla fo¨r en). Like in DENMARK the term “solidary liability” does not occur in the SWEDISH Promissory Note Act § 2 par 1 (the terminology solidariskt ansvar for several debtors is however used in the SWEDISH Law on Bankruptcy Chap. 5 §§ 4 ss.); see also PECL Articles 10:101 (1) and 10:102 (1)). Solidary liability exists even if the co-debtors are not liable on the same terms (ITALIAN CC art. 1293; SPANISH CC art. 1140; PECL Article 10:102 (3)). Towards the creditor each co-debtor is liable for the whole obligation, so that the creditor has the free choice to demand performance from anyone of the co-debtors (AUSTRIAN CC § 891; DENMARK: Karnov/Møgelvang-Hansen 5558 fn. 8 referring to the Promissory Note Act § 2 concerning plurality of debtors; DUTCH CC art. 6:6 para 1; FRENCH CC arts. 1200 and 1203; GERMAN CC § 421; ITALIAN CC art. 1292; PORTUGUESE CC arts. 512 para 1, 518, 519; SPANISH CC art. 1144; SWEDEN: Walin, Lagen om skuldebrev 27; cf. also PECL Article 10:101 (1)); in the internal relationship among co-debtors the obligation is divided into shares, for which statutory law usually establishes a rebuttable presumption that the shares of all co-debtors are equal (AUSTRIAN

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CC § 896; GERMAN CC § 426 para 1 sent. 1; ITALIAN CC art. 1298 para 2; PORTUGUESE CC arts. 516, 524; see also PECL Article 10:105 (1)).

3.Some countries differentiate between civil and commercial transactions: While in BELGIUM, FRANCE, LUXEMBOURG, PORTUGAL and SPAIN solidary liability must expressly be agreed by the parties for civil obligations (BELGIUM, FRANCE and LUXEMBOURG: CC art. 1202; PORTUGAL: CC art. 513; SPAIN: CC arts. 1137-1138), for commercial obligations this is in many countries the rule and separate liability must expressly be agreed (e.g. FRANCE: Cass.civ. 18 July 1929, D.H. 1929, 556; PORTUGAL: Ccom art. 100). By contrast, in GERMANY and ITALY there is a general presumption in favour of solidary liability (GERMANY: CC § 427; ITALY: CC art. 1294).

4.Solidary co-debtorship for security purposes is more attractive in countries which establish subsidiary liability for dependent personal securities (e.g., AUSTRIAN CC § 1355 s.; FRENCH CC art. 2021 ss.; GERMAN CC §§ 771 ss.; PORTUGUESE CC art. 638; SPANISCH CC art. 1822) than in countries which provide for solidary liability such as ITALY (CC art. 1944 para 1).

III. Subsequent Cumulative Assumption of Another Person’s Debt

5.The subsequent cumulative assumption of an already existing debt by an additional debtor is recognized in the various member states in several different forms and is called by different names. However, most of the various forms result in a solidary co-debtorship between the new and the original debtor. This subsequent assumption of another’s debt can be considered as a variation of the general category of solidary co-debtorship to which also some specific rules may apply (BELGIUM, FRANCE and LUXEMBOURG: de´le´gation imparfaite, CC art. 1275; AUSTRIA, GERMANY and NETHERLANDS: Schuldbeitritt, which is mentioned in AUSTRIAN CC § 1347; in the GERMAN and the DUTCH Civil Codes it is not regulated, but is generally recognised, GERMANY: Palandt/Gru¨neberg no. 2 preceding CC § 414; NETHERLANDS: Asser/Hartkamp IV 1 no.102; GREEK CC art. 477; ITALIAN CC arts. 1268-1276, for delegazione, espromissione and accollo; PORTUGUESE CC art. 595, for assunc¸a˜o de dı´vida; SPAIN: Dı´ez-Picazo and Gullo´n 591 ss., for asuncio´n cumulativa de deuda, expromisio´n cumulativa and delegacio´n imperfecta).

6.If this variety of designations and rules is classified according to solutions, three groups can be distinguished: (a) countries in which the cumulative assumption of another person’s debt is basically identical with a co-debtorship, except that it comes into being after the first debt had been created: subsequent cumulative co-debtorship; (b) countries which utilize differently named institutions, but which all lead to the practical effect of a subsequent cumulative co-debtorship; and (c) countries in which the cumulative assumption of another person’s debt is not only regulated by institutions which differ from co-debtorship, but which also have more or less different practical effects.

A.Subsequent Cumulative Assumption of Another Person’s Debt: Regulated as Co-Debtorship

7.In AUSTRIA, GERMANY and the NETHERLANDS, the Schuldbeitritt consists of an assumption of co-debtorship subsequent to the creation of the primary debt. The new co-debtor assumes solidary liability towards the creditor. The rules governing this vari-

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ety of co-debtorship are the general rules of the ‘initial’ co-debtorship, except that the new co-debtor assumes the original obligation as to its conditions and extent as existing at the time of its assumption of debt (and not as it was at the time of its creation) (AUSTRIA: Koziol and Welser(-Welser) 124, 139; Rummel/Mader (Faber) § 1347 no. 1; GERMANY: Reinicke and Tiedtke, Kreditsicherung 1 ss.; Staudinger/Horn nos. 363 and 369 ss. preceding §§ 765 ss.).

B.Subsequent Cumulative Assumption of Another Person’s Debt: Different Institutions but Identical Results

8.In BELGIUM, FRANCE and LUXEMBOURG a subsequent cumulative assumption of another person’s debt may be created by de´le´gation imparfaite (CC art. 1275; BELGIUM: Van Oevelen no. 876; LUXEMBOURG: Ravarani, Rapport Luxembourgeois 421): The original debtor “delegates”, i.e. instructs a third person to pay a debt corresponding to its own obligation towards the creditor. The delegation is ‘imperfect’ since the original debtor remains liable together with the new debtor; both debtors are solidarily liable towards the creditor (FRANCE: Simler no. 35). It seems that, inspite of a differing name for the institution, the practical result is the same that is reached through the AUSTRIAN/GERMAN version of the subsequent cumulative assumption of debt. In FRANCE the security character of a subsequent assumption of debt («de´le´gation-suˆrete´»: Cabrillac and Mouly no. 473-3) is indirectly confirmed by Law no. 75-1334 of 31 Dec. 1975 on subcontracting: The customer has to provide to the subcontractor a personal security (garantie) in form of either a dependent personal security or a subsequent (partial) assumption of debt for the subcontractor’s claim against the main contractor.

9.The same can be said for PORTUGAL and SPAIN. In PORTUGAL, the subsequent cumulative assumption of another person’s debt implies solidary liability of the new debtor together with the original one, unless the creditor releases the old debtor (CC art. 595 para 2; STJ 17 Oct. 1975, RLJ no. 109, 281; CA Lisboa 2 Nov. 2000, 69272/00 www.dgsi.pt; Vaz Serra, Assunżo de d%vida 190; Teles de Menezes Leita˜o 170). In SPAIN, the Civil Code regulates only the substitution of the original debtor by another debtor (CC art. 1205, novacio´n). However, the cumulative assumption of another person’s debt, as well as the cumulative expromission, are admitted by virtue of the freedom of contract as atypical contracts (CC art. 1255; the first important decision was TS 22 Feb. 1946 cited by Dı´ez-Picazo II 842; see then TS 7 Nov. 1986, RAJ 1986 no. 6217; 15 Dec. 1989, RAJ 1989 no. 8832; 22 March 1991, RAJ 1992 no. 2428; Vicent Chulia´ 389). The liability of the original and the new debtor is solidary (TS 15 Dec. 1989 above and 7 Dec. 1971, RAJ 1971 no. 5154). Some legal writers consider these forms of cumulative assumption of debt as spontaneous personal securities (Bercovitz Rodrı´guez Cano a.o. 633 fn. 74).

C.Subsequent Cumulative Assumption of Another Person’s Debt: Different Institutions and Different Results

10.In ITALY the general effect of assumption of another’s debt may be achieved by the use of three different legal institutions, namely cumulative delegation, cumulative expromission and subsequent assumption of another person’s debt (accollo cumulativo). All these institutions have the same general effect, i.e. to provide an additional debtor to

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the creditor; in this sense they are similar – as to the operative results and economic function – to a dependent personal security (Casella 260; Nicolo` 971) and difficult to be distinguished from it (Rescigno, Studi 168; Rescigno, Delegazione 952 ss.; Mancini, La delegazione 483 ss.). However, their legal structures differ. Under a cumulative delegation a third party agrees with the debtor to perform the latter’s obligation to the creditor. The cumulative expromission is an agreement between the third party and the creditor for the assumption of the debtor’s obligation by the former, whereas the accollo cumulativo is an agreement between the debtor and the third party, through which the latter assumes the debtor’s obligation. In all three cases the creditor does not release the debtor, who will remain liable; however, this continued liability is only subsidiary (CC art. 1268 para 2 for the delegation; for the expromission and the subsequent assumption of another one’s debt this provision is generally applied by analogy: Rescigno, Studi 67; Mancini, La delegazione 500, 512; Ceci 292; Rodota` 787; Cass. 24 May 2004 no. 9982, Giust.civ.Mass. 2004, 1178). Thus, the original debtor’s liability, in these cases, while solidary with the liability of the new debtor (CC art. 1272 para 1 and 1273 para 3), is merely subsidiary: the creditor can demand performance from the original debtor only after having demanded it from the new debtor (CC art. 1268 para 2 by analogy). However, the creditor has not to bring execution against the new debtor before demanding performance from the original one (see authors and case law supra).

IV. Criteria for Security Purpose

A.Initial Co-Debtorship

a.Express Agreement of the Parties

11.In the first line, the parties may agree that one of them is to act as co-debtor for security purposes. In ENGLAND, a co-debtor may assume the role of a security provider by virtue of a security agreement with the other debtor: both co-debtors agree internally that one of them is to act as a security provider only, while the whole burden ultimately is to fall on the other debtor (cf. Goode, Commercial Law 800; O’Donovan and Phillips no. 1-29 s.). This agreement is effective as between the co-debtors from the outset (cf. Halsbury/ Salter para 103); the creditor, however, is bound to treat the debtor who has assumed the position of a security provider as a security provider only once it became aware of this agreement (cf. Rouse v. Bradford Banking Co [1894] AC 586 (HL)); Goldfarb v. Bartlett

[1920] 1 KB 639 (CFI)). That the co-debtors may in this way unilaterally affect the creditor’s position vis- -vis the debtor who becomes a security provider has met strong criticism in the literature (cf. Goode, Commercial Law 800).

12.The AUSTRIAN Supreme Court also recognised an agreement between two solidarily liable co-debtors according to which one of them in future should merely act for security purposes. Since the creditor had not been informed, the new co-debtor for security purposes remained fully liable towards the creditor when the other co-debtor was unable to perform. Upon performance by the co-debtor for security purposes, the creditor’s proprietary security rights passed to the performing co-debtor as in the case of perform-

ance by a dependent security provider (OGH 28 May 1969, JZ 1969, 551).

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b.Interpretation of Contractual Terms

13.FRANCE: For the decision of whether an instrument creates a dependent suretyship or a solidary co-debtorship, FRENCH courts enjoy a considerable degree of freedom according to NCPC art. 12. In a case where a house-wife assumed a loan with which her husband as mere co-debtor financed its business, a first-instance court requalified the loan as a dependent personal security which was void due to lack of the required form (CFI Lons-le-Saulnier 18 Nov. 1997, CCC April 1998 no. 64 with approving note). In another case a plaintiff’s claim, although brought on the basis of a dependent security, was allowed as a claim on the basis of co-debtorship (Cass.civ. 22 June 1982, Bull.civ. 1982 I no.233 p. 199). Where the contract uses the ambiguous term “with solidarity”, the appellate court’s qualification as co-debtorship was accepted (Cass. 17 Nov. 1999, JCP G 2000 IV no. 1002). In other circumstances, the courts have denied such requalification if the contractual terms were unambiguous (Cass. 10 Dec. 1991, Bull.civ. 1991 I no. 347 p. 227). Two FRENCH cases dealt with clauses on AMEX credit cards issued to employees of a company, on the latter’s application for use in the services of the company and reimbursed by the latter; according to a clause of the contract the employee was to become co-debtor vis- -vis the issuer of the credit card company. After insolvency proceedings over the assets of the two companies had been opened, the courts upheld the credit card company’s claims against the employees, although the form for a dependent personal security had not been observed (Cass. Civ. 22 May 1991, Bull.civ. 1991 I no.162 p. 107) or although the creditor had not notified its claim against the company to the latter’s insolvency administrator (CA Paris 5 June 1992, JCP E 1993, Pan. no.176).

c.Objective Criteria

14.Without agreement of the parties, in many EUROPEAN legal systems the main criterion for qualifying a co-debtorship as being assumed for security purpose is the absence of a personal interest of the co-debtor as security provider in the performance of the debtor’s “secured” obligation to the creditor (BELGIUM, FRANCE and LUXEMBOURG: CC art. 1216; FRANCE: Cass.civ. 21 July 1987, Bull.civ. 1987 I no. 249 p. 182; Cass.civ. 22 May 1991, Bull.civ. 1991 I no. 162 p. 107; Simler no. 28: «co-de´biteur non inte´resse´ a` la dette»). The same is true in ITALY; CC art. 1298 para 1 uses the criterion that the contract is concluded in the “exclusive interest” of one of the contracting parties.

15.GERMAN and AUSTRIAN practice have reached similar results. The GERMAN Federal Supreme Court holds that a co-debtor who has personal interests in the granting of the credit and who may influence the decision about the paying out and the use of the loaned money is a co-debtor without security purposes, whereas a co-debtor who does not enjoy equal rights is a debtor for security purposes only; a merely indirect interest is irrelevant (BGH 14 Nov. 2000, BGHZ 146, 37, 41 s.; BGH 4 Dec. 2001, NJW 2002, 744). In AUSTRIA, in cases of doubt, courts and writers similarly use the co-debtor’s economic interest in achieving the purposes of the principal debtor as a criterion: if such economic interest is lacking, the co-debtorship is for security purposes only (OGH 19

July 1988, SZ 61 no. 174, BA 1989, 432 note Bydlinski; OGH 4 Feb. 1993, BA 1993, 819 note Bydlinski; already OGH 30 June 1960, RiZ 1961, 45; Bydlinski 27-28). In special cases, even a merely personal reason, such as assistance to a close, but poor

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relative in order to enable proper defense in a criminal proceeding, has been recognized as supporting a full-fledged co-debtorship (OGH 19 July 1988, supra). By contrast, a merely moral interest in supporting a debt of a dissolved company does not qualify as a cumulative assumption of debt, but is a suretyship (which in this case, due to lack of the required written form, was invalid: OGH 7 April 1976, SZ 49 no. 53). Also under the new DUTCH Civil Code it has been concluded that, where one of the two co-debtors is the only beneficiary under a contract, the other co-debtor may recoup any performance it has rendered to the creditor (AsserHartkamp IV 1 no.117).

B.Subsequent Cumulative Assumption of Another Person’s Debt

16.In those EUROPEAN countries where specific legal institutions for the subsequent cumulative assumption of debt are known (cf. supra nos. 8-10) it is generally acknowledged that these institutions may function like and can then be considered as a personal security.

17.In GREECE the subsequent cumulative assumption of debt which is the contractual promise of a third party to pay to the creditor the debt of another (cf. CC art. 477), must be distinguished from the promise of a third party to the debtor to discharge the latter (cf. CC art. 478). Several criteria have been proposed for this distinction, including the security purpose: when it is the purpose of the contract to provide security to the creditor and to reinforce the obligations of the original debtor, the contract is to be qualified as personal security, whereas when the intervening third party has its own immediate interest in the performance of the debt and this is perceived by the creditor, then the contract is regarded as a subsequent cumulative assumption of debt (Georgiades § 7 no. 61 ss.; ErmAK/Michaelides-Nouaros art. 477 no. 11; CA Athens 10465/1978, NoB 27, 979). Cases of doubt are resolved, by GREEK literature, as personal security (Erm- AK/Michaelides-Nouaros, art. 477 no. 11; Zepos A 644); by the courts, however, as a subsequent cumulative assumption of debt (CA Athens 4592/1972, ArchN 25, 138). None of these criteria, however, is deemed satisfactory by a minority opinion (cf. Kallimopoulos 1523 ss.).

18.In FRANCE, the cumulative assumption of the debt by a new debtor does not primarily serve a security purpose. Rather, it is mostly used as a simplified means of payment: the new debtor by performing to the creditor performs both its own obligation towards the initial debtor and the debt of the initial debtor towards the creditor (cf. Malaurie and Ayn7s/Ayne`s and Crocq no. 323; Cabrillac and Mouly no. 473-2). But the subsequent cumulative assumption of debt functions as a security if the parties so agree and if the new debtor has no interest in the performance of the obligation towards the creditor (Larroumet/Franc¸ois no. 487; Malaurie and Ayn7s/Ayne`s and Crocq no. 323; Cabrillac and Mouly no. 473-3: «de´le´gation-suˆrete´»; contra Billiau no. 7 s.: for in this case the subsequent cumulative assumption of debt disappears). Thus FRENCH court practice admits the validity of the cumulative assumption of debt irrespective of any obligation of the new debtor to the initial debtor (Cass.com. 21 June 1994, Bull.civ. 1994 IV no. 225 p. 176; RTD civ. 1995, 113 note Mestre).

19.In ITALY the similarity of the institutions of cumulative assumption of another person’s debt with a personal security is increased by the fact that the original debtor’s liability is

merely subsidiary (see supra no. 10 and Cicala 288 s.). However, the special feature is that the law itself determines the person of the security provider and that against

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