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

Chapter 2: Dependent Personal Security (Suretyship Guarantees)

regular legal type of personal security and since the security provider is in this way best protected, especially by the formal requirement of a writing according to CC § 766 (cf. Staudinger/Horn § 765 no. 24). Similar arguments are used in AUSTRIA, although the dependent personal security does not enjoy better protection by a form requirement since that is applied also to independent personal securities. It is controversial whether banks as providers of security may invoke a presumption in favour of a dependent personal security; but prevailing opinion allows this (cf. Avancini/Iro/Koziol no. 3/32, but different at no. 3/25). Also in ITALY the general rules on interpretation of contracts (CC arts. 1362-1371) are applied and these also lead to a presumption in favour of a dependent security since this is the solution which is less onerous for the debtor (Bonelli, Le garanzie bancarie 56).

C.Presumption for an Independent Security

3.In the area of bank guarantees, especially those employed in international trade, there is a special situation. The “security provider”, i.e. the bank issuing an independent guarantee, is most interested in being involved as little as possible in the underlying transaction. Therefore, it prefers to perform upon first demand. The only requirement for its duty to perform is that the conditions expressly set out in the mandate to issue the guarantee are fulfilled by the creditor. The debtor of the underlying transaction, very often the buyer/importer, must and can see to it that these conditions are laid down so as to suit its commercial requirements (cf. for GERMANY: Graf von Westphalen 5-7; ENGLAND: Goode, Commercial Law 1017 ss.; ITALY: Bonelli, Le garanzie bancarie 56; NETHERLANDS: Pabbruwe, Bankgarantie 1-10). In FRANCE if the principal debt covers non-pecuniary obligations (e.g. in the case of building contracts), there is a strong presumption for an independent security (Simler no. 924 a)).

II. Binding Comfort Letters

4.Most EUROPEAN member states do not share the rule of Art. 2:101 (2). For details on the qualification of binding comfort letters in the various member states see supra national notes to Art. 1:102 nos. 6 ss.

(Lebon; Dr. Fiorentini)

Article 2:102: Terms and Extent of the Security Provider’s Obligations

(1)The validity, terms and extent of the obligation of the provider of a dependent personal security depend upon the validity, terms and extent of the debtor’s obligation to the creditor.

(2)The security provider’s obligation does not exceed the secured obligation. This principle does not apply if the debtor’s obligations are reduced or discharged

(a)in an insolvency proceeding;

(b)otherwise, in particular through negotiation or judicial reduction, caused by the debtor’s inability to perform because of insolvency; or

(c)by virtue of law due to events affecting the person of the debtor.

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(3)Except in the case of a global security (Article 1:101 lit. (f)), if an amount has not been fixed for the security and cannot be determined from the agreement of the parties, the security provider’s obligation is limited to the amount of the secured obligations at the time the security became effective.

(4)Except in the case of a global security (Article 1:101 lit. (f)), any agreement between the creditor and the debtor to increase the extent, to aggravate the terms or to predate the maturity of the secured obligations agreed upon after the security provider’s obligation became effective does not affect the latter’s obligation.

Comments

A. The Principle of Dependency . .	no. 1	E. Further Incidents of
		Dependency . . . . . . . . . . . . . . . . . . . . .	no. 14
B. Main Rule – Para (1) . . . . . . . . . . .	nos. 2-4

F. Consumers as Security

C. Exceptions – Para (2) . . . . . . . . . . nos. 5-7 Providers . . . . . . . . . . . . . . . . . . . . . . . . nos. 15-24

D. Amount of Security . . . . . . . . . . . . nos. 8-13

A.The Principle of Dependency

1. Article 2:102 is one of the two principal provisions expressing the guiding idea of a dependent personal security, namely the principle of dependency (or accessority, as it is called in the CONTINENTAL civil law countries); cf. supra Article 1:101 (a) and Comments nos. 15-27. Another important rule which is based upon the principle of dependency is Article 2:103.

B.Main Rule – Para (1)

2.The main rule of the first paragraph expresses this basic feature. The security obligation must not exceed the secured obligation. The most important elements are mentioned in para (1), but this enumeration is not intended to be exhaustive. If any feature of the security obligation exceeds the corresponding element of the secured obligation, the security obligation does not become void. Rather, the respective element of the security obligation is reduced correspondingly.

3.One application of the principle of dependency occurs upon the transfer of the secured claim. Due to the practical importance of this phenomenon, this consequence of dependency is usually spelt out explicitly. For contractual transfers of claims, i.e. assignments, PECL Article 11:201 (1) (b) provides that “all accessory rights securing such performance” of the assigned claim are transferred to the assignee. This is supplemented for security rights which are not accessory by an obligation of the assignor to transfer such rights to the assignee (PECL Article 11:204 (c)). In addition, legal transfers are often provided for non-contractual transfers of claims, especially in the form of subrogation

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into a creditor’s rights if a person other than the (principal) debtor performs an obligation of the latter. Examples in the present Rules can be found in Article 2:113 (1) and (3) and provisions which refer to this rule, e.g. Articles 1:109 (1) first sentence and 3:108.

4. The principle of dependency of the security right upon the secured claim can not be applied to the reverse situation: the extent and terms of the security may well be more restricted than the secured obligation. There is no reverse dependency with respect to the amount of the secured obligation. Cf., however, the general reservation in Comments on Article 1:101 no. 19.

C.Exceptions – Para (2)

5.Debtor’s insolvency and equivalent events – para (2). However, the principle of dependency does not apply in the case of necessity for which the security has been designed, namely where the debtor’s obligations are reduced or it is even discharged in an insolvency proceeding. Generally speaking, an insolvency proceeding over the debtor’s assets does not affect the debtor’s liabilities. Even less does this occur when the opening of such proceedings has been refused, for whatever reason, especially due to insufficient assets of the debtor. Therefore, the relevant personal securities are not either affected.

6.However, modern insolvency laws tend to provide more and more for opportunities to discharge insolvent debtors, at least certain classes of debtors (para 2 (a)). Alternatively, the reorganisation of a commercial company and similar arrangements with creditors are provided for in which these may agree to reduce their claims. Nevertheless, the dependent personal securities securing obligations that are reduced or discharged should remain fully effective since they have been agreed upon precisely for the purpose of protecting the secured creditor against the risk of such insolvency (para (2) (b)).

7.The same is true if special laws enacted in times of war or general economic crisis liberate fully or partly national debtors or debtors who have fallen in distress. Such laws may for instance prescribe that debtors must make payments on secured obligations that have fallen due, to a prescribed national institution and that such payments discharge the debtor. Or the secured obligations may simply be declared discharged. Apart from specific legislation, such special rules may also be developed by court practice. Security providers living, or having assets outside these jurisdictions remain liable since they (or their foreign assets) are not subject to such measures which are directed at the person(s) of a circle of more or less closely defined debtors (para (2) (c)). However, even if such laws or practice discharge the debtor, personal security granted to the debtor is not affected since it would run counter to the very purpose of security which is meant to secure the creditor against risks of this kind.

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D.Amount of Security

8.Paragraph (3) gives rules on determining the amount of a security if this has not been expressly fixed by the parties, except if the security provider had assumed a global security (Article 1:101 (f)). The amount may either be determined from the agreement of the parties, e.g. if a security is provided for the purchase price of a specific new car according to the dealer’s price list. If the amount cannot be ascertained in this way, then the amount of the security is equal to the amount of the secured obligation at the time at which the security became effective. The security becomes effective upon its creation if at that time the claim to be secured had already come into existence. By contrast, if the claim to be secured comes into existence only after creation of the security, the latter becomes effective only at this latter point in time. This will generally correspond to the intention of both parties.

9.The question which ancillary obligations of the debtor are covered by the amount of the security, is answered separately by Article 2:104.

10.The last clause of para (3) indirectly confirms the earlier rule that future claims can be secured, although within the limits indicated by this rule (cf. Article 1:101 (a)).

11.A suggestion of requiring, for the protection of security providers, a maximum amount, has not been followed for commercial security providers since it would unduly restrict business practices. However, if a consumer (Article 1:101 (g)) provides a global security or a specific personal security without a fixed maximum amount, such a security is reduced to a fixed amount which is determined by the amount of the secured obligations at the date on which the security became effective (Article 4:106 (a)).

12.Subsequent increases of secured obligation. In the interest of protecting security providers, the extent of their security obligations is, as a rule, fixed to the time at which the security becomes effective; again, this is the presumed intention of both parties. Subsequent increases of the secured obligation, therefore, do not bind the security provider. This applies not only to an outright increase of the amount of the secured obligation; or an aggravation of the payment terms; or to a predating of maturity; but also to the aggravation of other terms of the personal security.

13.An extension of maturity, by contrast, usually will not increase the security provider’s burden provided it keeps within the time limit of the security, if any. If exceptionally there is an increase of burden (e.g., if the debtor has become insolvent), the creditor is liable according to Article 2:110.

E.Further Incidents of Dependency

14. Less frequently arising issues of dependency are not expressly regulated in these Rules on personal security. However, solutions can be derived via Article 1:110 from the

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general rules on solidary debtors laid down in PECL Chapter 10 Section 1. The Comments sub C to Article 1:110 apply to the relationship between debtor and solidarily liable security provider.

F.Consumers as Security Providers

a.Dependent Personal Security

15.Only the application of paras (3) and (4) calls for special explanatory remarks.

16.Paragraph (3) is supplemented in favour of consumer providers of a dependent security (as well as in relation to other consumer security providers, cf. infra no. 23) by Article 4:106 (a). Specifically this means that the exception spelt out in the first halfsentence of Article 2:102 (3) concerning global securities without a maximum amount is not applicable by virtue of Article 4:106 (a). For further details, cf. the Comments to Article 4:106.

17.Paragraph (4). Generally, agreements between creditor and debtor increasing in any respect the burdens of the secured obligation do not affect the security provider. The exception in favour of a global security in para (4) is qualified by Article 4:106 (a): unless a maximum amount had been agreed for the security, the amount covered by the security has to be determined according to Article 2:102 (3). Amendments can only bind the consumer security provider if they do not exceed the maximum limit of the security, which either is agreed by the parties or has to be determined according to Articles 4:106 (a) juncto 2:102 (3).

18.Mandatory rules. The rules on a consumer’s dependent personal security are mandatory in favour of the security provider (cf. Article 4:102 (2)).

b. Other Types of Personal Security

19.Paragraph (1) and para (2) first sentence. For consumers who have provided security in any form other than dependent security, Article 2:102 (1) and para (2) first sentence are also binding. For a consumer who has granted an independent personal security this follows from Article 4:106 (c) and for a consumer’s co-debtorship for security purposes this follows from Article 4:102 (1). These two provisions declare applicable the rules of Chapter 2 on dependent personal security, and in the present context these rules are mandatory in favour of the consumer security provider (Article 4:102 (2)).

20.For a consumer’s co-debtorship for security purposes, additional protective rules are to be found in PECL Articles 10:106 to 10:108 and 10:111. These provisions remain applicable in favour of a consumer co-debtor for security purposes.

21.Paragraph (2) second sentence. For independent personal security, the exception to the principle of dependency established by para (2) second sentence merely spells out the general rule: the fate of a possibly underlying claim of the creditor against the debtor in

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an insolvency proceeding over the latter’s assets is irrelevant for the security provider’s liability towards the creditor.

22.The effect of a reduction or discharge of one of several co-debtors as a consequence of an insolvency proceeding over the assets of that co-debtor is nowhere explicitly spelt out. However, it would seem that such partial or full discharge is a personal defence in the sense of PECL Article 10:111 (1) sent. 1 and therefore does not benefit any co-debtor. This result would also be in conformity with the security purpose pursued by a co-debt- orship for security purposes. The result conforms to Article 2:102 (2) sent. 2 and therefore is in harmony with the results reached for providers of dependent as well as independent security (supra nos. 6 and 21).

23.Paragraphs (3) and (4) are provisions for the protection of the security provider; as such they are applicable for the protection of consumer providers of an independent security or of a co-debtorship for security purposes as well (cf. Articles 4:106 (a) and 4:102 (1), respectively). However, as in the case of a consumer provider of dependent security, paras (3) and (4) apply to the consumer security providers of an independent security or a co-debtorship for security purposes only subject to the specific consumer protection effects of Article 4:106 (a), which is applicable to all types of personal security by consumers. For these effects, cf. supra nos. 16-17.

24.Mandatory character. In the present context, the rules of Article 2:102 are mandatory in favour of the consumer, cf. Article 4:102 (2). And in the context of a consumer security provider’s co-debtorship for security purposes the term “debtor” in Article 2:102 means the debtor whose obligation is secured.

National Notes

I. Nature of Secured Obligation
A. Any Kind of Obligation . . . . .	nos. 2-4
B. Another Security Provider’s
Obligation as Secured
Obligation . . . . . . . . . . . . . . . . . . . .	no. 5
C. Future or Conditional Secured
Obligation . . . . . . . . . . . . . . . . . . . .	nos. 6-11

II. Extent of the Security Obligation

A. General Rule . . . . . . . . . . . . . . . . . nos. 12, 13 B. Specific Rules . . . . . . . . . . . . . . . . no. 14 C. Consequences of Accessority

upon Assignment of Secured

Claim . . . . . . . . . . . . . . . . . . . . . . . . . nos. 15, 16

III. Exception upon Discharge of
Debtor in Insolvency Proceed-
ings and Comparable Events
A. Insolvency Proceedings . . . . . .	nos. 17-19
B. Transfer Moratorium . . . . . . . . .	no. 20
C. Voluntary Arrangements
between the Debtor and its

Creditors . . . . . . . . . . . . . . . . . . . . . nos. 21, 22

D.No Release of the Security Provider despite Debtor’s

Discharge . . . . . . . . . . . . . . . . . . . . . nos. 23-25

IV. Agreement Aggravating the

Secured Obligation

A. Generally . . . . . . . . . . . . . . . . . . . . . nos. 26, 27

B. Details . . . . . . . . . . . . . . . . . . . . . . . . no. 28

C. In Particular: Extension

of Time . . . . . . . . . . . . . . . . . . . . . . . nos. 29, 30

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Chapter 2: Dependent Personal Security (Suretyship Guarantees)

1.In all member states the nature, terms and extent of the dependent personal security depend upon the nature, terms and extent of the secured obligation. This common feature, which has decisive consequences for the regime of dependent personal security, is the principle of dependency. In the national laws, especially of the CONTINENTAL countries, it is better known under the name of accessority. It is everywhere recognized as a general principle of EUROPEAN private law, basically aiming at the protection of the security provider (van Erp 309 ss.).

I. Nature of Secured Obligation

A.Any Kind of Obligation

2.By a contract of dependent personal security, the provider of security assumes vis- -vis the creditor responsibility for the payment of a third person’s obligation (GERMAN CC § 765 para 1; GREEK CC art. 847; PORTUGUESE CC art. 627). In general it is possible to grant a dependent personal security for every kind of financial obligation, irrespective of its source or object (GERMANY: Palandt/Sprau § 765 no. 17; GREECE: Georgiades § 3 no. 35, PORTUGAL: Pires de Lima and Antunes Varela 644). Hence, the dependent personal security can also secure an obligation to hand over a specific object or an obligation to do or not to do something (BELGIUM: Van Quickenborne nos. 178-184; FRANCE: Simler no. 209 s.; GERMANY: Palandt/Sprau § 765 no. 17; GREECE: A.P. 691/ 1955, A.P. 692/1955, NoB 4, 455 ss.; ITALY: Fragali, Della fideiussione 98; Giusti 27;

NETHERLANDS: Blomkwist no. 3; PORTUGAL: Pires de Lima and Antunes Varela 644;

SCOTLAND: Gloag and Irvine 645; SPAIN: Vicent Chulia´ 379) or secure against a “default or miscarriage of another person” (ENGLAND: Mercers of City of London v. New Hampshire Insurance Co (1991) JIBFL 144 (CFI); PORTUGAL: Pires de Lima and Antunes Varela 644; SPAIN: Guilarte Zapatero, Comentarios 89). Which obligation the personal security right secures, depends on the construction of the contract between the parties (DENMARK: Højrup 30 ss.; Pedersen, Kaution 15 s.; SWEDEN: Walin, Borgen 36 ss.).

3.If the dependent personal security secures a monetary obligation, also the security provider’s obligation will consist in a monetary obligation of the same content (GREECE: Georgiades § 3 no. 35) and, in some countries, the security provider also has to procure that the debtor performs its obligation (ENGLAND: Moschi v. Lep Air Services Ltd [1973] AC 331, 348 (HL); SCOTLAND: Erskine III, 3, 61; Stair/Eden no. 918).

4.If the dependent personal security is provided in respect of a non-monetary obligation, e.g. a non-monetary performance or a forbearance of the debtor, then the security provider is obliged to pay damages to the creditor to the same extent as the debtor for the non-performance of its obligation has to pay, but does not have to perform the

debtor’s obligation (AUSTRIA: expressly CC § 1350; Schwimann/Mader and Faber

§ 1350 no. 1; DENMARK: Pedersen, Kaution 49; ENGLAND: O’Donovan and Phillips no. 10-203; FRANCE: Simler no. 209; GERMANY: Staudinger/Horn no. 14 preceding §§ 765 ff.; GREECE: Georgiades § 3 no. 35; ITALY: Giusti 31; SCOTLAND: Stair/Clark no. 918), in particular when the non-monetary obligation of the debtor is not fungible (NETHERLANDS: cf. CC art. 7:854; du Perron and Haentjens art. 854 no. 1; SPAIN: Guilarte Zapatero, Comentarios 89). In GERMANY the same result is achieved by means of interpretation of the contract of security (Palandt/Sprau § 765 no. 25). See also national notes on Art. 1:101 nos. 19 ss.

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B.Another Security Provider’s Obligation as Secured Obligation

5.Almost in every member state the secured obligation may be the security engagement of a primary security provider (AUSTRIA: CC § 1348; BELGIAN, FRENCH and LUXEM-

BOURGIAN CC art. 2014 para 2 (since 2006: FRENCH CC art. 2291 para 2); ITALIAN CC art. 1948; GERMANY: Staudinger/Horn nos. 57-59 preceding § 765; NETHERLANDS: CC art. 7:870; PORTUGUESE CC art. 630; SPANISH CC art. 1823 para 2). But this security (certification de caution) is not very often used in FRANCE, because creditors prefer the more practicable securities with solidary liability (Simler no. 116).

C.Future or Conditional Secured Obligation

a.The Principle

6.Future and conditional obligations may be secured in all member states (BELGIUM: Van Quickenborne no. 186; DUTCH CC art. 7:851 para 2 for future obligations and art. 6:26 for conditional obligations; ENGLAND: prospective securities, cf. Andrews and Millett no. 4-016; FRANCE: (for future obligations) see new CC art. 2301 as proposed by the Grimaldi Commission and Simler nos. 210 ss.; GERMAN CC § 765 para 2; GREEK CC art. 848; ITALIAN CC art. 1938; PORTUGAL: CC art. 628 para 2; Almeida Costa 785; SCOTLAND: Stair/Eden no. 835; SPAIN: CC art. 1825; Guilarte Zapatero, Comentarios 99 ss.). The parties are free in GERMANY to agree to secure all future obligations that will be created in a specific period of time (Reinicke and Tiedtke no. 150). In these cases the security provider is liable for all obligations that will fall due in the agreed period of time and, contrary to the case of a security with time limit for the resort to the security (cf. Art. 2:108), the creditor is entitled to demand performance from the security provider even after expiration of the agreed time limit. Regarding global securities, see supra national notes to Art. 1:101 nos. 40-46.

b.Restrictions

i.Generally

7.However, there are general limits regarding a security provided for future claims: In

BELGIUM, FRANCE, GERMANY, GREECE, PORTUGAL, SPAIN and the NETHERLANDS there must be enough elements in the contract of security to determine the secured obligation at a later moment (BELGIUM: Van Quickenborne nos. 186, 188 and

191; FRANCE: CA Paris 17 Feb. 1998, RD banc 1998, 177; Simler no. 210; GERMANY: BGH 30 March 1995, NJW 1995, 1886; Palandt/Sprau § 765 no. 7; Erman/Herrmann § 765 no. 3; GREECE: CFI Athens 975/1997, EED 48, 704; Georgiades § 3 nos. 36, 51-55; ITALY: Cass. 18 July 1997 no. 6635, Giur.it.Mass. 1997, 651; NETHERLANDS: CC art. 7:851 para 2; PORTUGAL: STJ 11 May 2000, 250/00 www.dgsi.pt; SPAIN: CA Santa Cruz de Tenerife 12 Sept. 1994, AC 1994 no. 1517; Guilarte Zapatero, Comentarios 82 s.; Reyes Lo´pez 217). The future or conditional claim must be somehow defined in order to prevent an excessive burden upon the security provider (DUTCH CC art. 7:851 para 2: “sufficiently determinable”; Blomkwist no. 11; FRANCE: Simler no. 210; without

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the intention to impose excessive burden, in application of this principle GERMAN modern case law and most writers nowadays, cf. only BGH 18 May 1995, BGHZ 130, 19; Bu¨low, Kreditsicherheiten nos. 840-841; Reinicke and Tiedtke, B4rgschaftsrecht no. 21 in fine; GREECE: Georgiades § 3 no. 36; PORTUGAL: STJ 30 Sep. 1999, 436/99 www.dgsi.pt; SPAIN: Reyes Lo´pez 217). This determination does not have to be precise, but one should be able to identify the legal relationship which may give rise to the future claim. In FRANCE, the interest rates do not have to be mentioned in the contract of security for future obligations, contrary to the case of security for present obligations (Cass.com. 9 March 2004, D. 2004, 2706, note Ayne`s).

8.It suffices that the obligation has come into existence, or that the condition has been fulfilled, at the time when a demand is made against the provider of the security (BELGIUM: Van Quickenborne nos. 185-187; GERMANY: Reinicke and Tiedtke, B4rgschaftsrecht no. 9; GREECE: Georgiades § 3 no. 36; ITALY: CC art. 1938; Foschini 465; Giusti

156; NETHERLANDS: Blomkwist no. 11; du Perron and Haentjens art. 851 no. 5; PORTUGAL: Almeida Costa 786; SPAIN: CC art. 1825; Guilarte Zapatero, Comentarios 80 s.).

9.In the NETHERLANDS the validity of securities for conditional obligation is usually derived from CC art. 6:26, according to which the provisions on unconditional obligations apply to conditional obligations to the extent that the conditional character of the obligation in question permits (Blomkwist 24). In SPAIN the performance of the security can only be requested when the secured debt is fixed (CC art. 1825; TS 29 April 1992, RAJ 1992 no. 4470).

10.By contrast, in DENMARK, pursuant to the agreement between the DANISH Consumer Council and the Financial Council a security by a consumer for future and conditional obligations is not allowed.

ii.Maximum Amount for Future Obligations

11.In ITALY dependent personal securities for future obligations must indicate a maximum secured amount (CC art. 1938 as amended 1992); otherwise they are in toto void (for an analogical application of that rule to a binding comfort letter see CFI Roma 18 Dec. 2002, Giur.mer. 2003, 1661). Agreements exceeding an indicated maximum amount are pro tanto invalid (De Nictolis 207 ss.). In the NETHERLANDS, if at the time at which a non-professional party assumes a security the amount of the obligation of the debtor is not yet determined, the security is only valid to the extent of an agreed maximum amount, expressed in money (DUTCH CC art. 7:858 para 1). This provision is mandatory for consumer providers of security (cf. CC art. 7:862 lit. a). In PORTUGAL, the indication of a maximum amount seems to be indispensable (STJ 19 Oct. 1999, BolMinJus no. 490, 262). Furthermore, a dependent personal security that secures a future obligation may be terminated by the security provider before the obligation to be secured has actually come into existence, if the debtor’s financial situation deteriorates or if, unless another time has been agreed, five years have passed since it was provided (PORTUGUESE CC art. 654).

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II. Extent of the Security Obligation

A.General Rule

12.As a consequence of the principle of dependency, the security provider’s liability is no greater than that of the debtor, in terms of amount, time for payment and the conditions under which the debtor is liable. Security obligations exceeding the secured obligations are automatically reduced to the limits of the latter (BELGIAN, FRENCH and LUXEMBOURGIAN CC art. 2013 (since 2006: FRENCH CC art. 2290); DUTCH CC arts. 7:851 and 7:860; FINNISH LDepGuar § 5 para 2; GERMANY: cf. CC § 767 para 1 sent. 1; Palandt/Sprau § 767 no. 1; GREEK CC art. 851; ITALIAN CC art. 1941; PORTUGAL: CC art. 627 para 2 and 631; SPANISH CC art. 1826). The same is true for ENGLISH, IRISH and SCOTS law, where the security provider’s liability is said to be co-extensive with the debtor’s (ENGLAND: Andrews and Millett no. 6-002; IRELAND: White 541; SCOTLAND: Stair/Eden no. 918).

13.GERMAN CC § 767 para 1 sent. 1 provides that the extent of the secured obligation at any time determines the obligation of the security provider. Consequently, the security provider is bound by modifications, including extensions, of the secured obligation that are not based on agreement between creditor and debtor (cf. GERMAN CC § 767 para 1 sent. 2 and Palandt/Sprau § 767 no. 2).

B.Specific Rules

14.In the NETHERLANDS it is stipulated by a provision which is mandatory for consumer sureties (cf. CC art. 7:862 lit. a) that a security provider is not bound by more onerous terms than those by which the debtor is bound, except however to the extent that they concern the manner in which proof of the existence and extent of the obligation of the principal debtor can be made against the security provider (CC art. 7:860; Blomkwist no. 26). In SPAIN case law has expressly considered “valid a future security among consumers provided its terms comply with the ConsProtA as well as the General Contractual Terms Act, the secured obligation is determined or determinable and lastly, the security has been expressly agreed” (TS 23 Feb. 2000, RAJ 2000 no. 1242).

C.Consequences of Accessority upon Assignment of Secured Claim

15.As a direct consequence of the accessory character of the dependent security, in most of the European legal systems a dependent security right passes to the assignee automatically with the assignment of the secured obligation. This rule is widespread in European codes and doctrines which state that every accessory right passes to the assignee automatically with the assignment of the principal right, without the need for a separate act

of transfer (AUSTRIA: implicitly CC § 1393; OGH 17 March 1987, SZ 60 no. 46 at p. 244; DENMARK: Ussing, Kaution 98; BELGIUM, FRANCE and LUXEMBOURG for civil debts: CC art. 1692; FRANCE for professional debts: MonC art. L 313-27 para 3;

GERMANY: CC §§ 398, 401; ITALY: CC art. 1263 para 1; NETHERLANDS: CC art. 6:142 and 3:82; PORTUGAL: CC art. 482; SPAIN: CC art. 1528; SWEDEN: Walin, Borgen 88 s.). Under ENGLISH law, however, the assignee of the secured claim is entitled to the rights under the dependent security only if the benefit of the security

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