AVOIDING SURETY CONTRACTS IN BANKRUPTCY PROCEDURE

Serbia’s courts jurisprudence has divergent attitudes with respect to the dilemma whether a surety contract represents a contract without consideration, which may be avoided once the guarantor is subject to bankruptcy procedure without any additional conditions, or an onerous contract.

Whether a surety contract is an onerous one has anyhow been disputed in the legal theory. One school of thought considers this contract as non-onerous one, since vis-a-vis guarantor’s obligation no benefit to be expected from the other contractual party (i. e. creditor) exists. The other school of thought understands surety (almost always) as an onerous contract bearing in mind that the guarantor who enters into this contract does not have intentio liberalis. There are numerous and nuanced views based on analyses of the relation between a guarantor and a debtor focused on the argument that surety is a contract without consideration if intentio liberalis existed vis-a-vis main debtor rather than vis-a-vis creditor.

Our legal literature did not pay much attention to that issue until recently. In a rare text dedicated to it the author’s basic standpoint is that surety represents a contract without consideration. An exception, depending on the circumstances of the case, could be surety given by a parent company for the obligation of a subsidiary, provided the former reasonably expected a benefit in terms of an increase in the value of shares. Commercial courts followed such reasoning.

In this article an opposite stance has been argued. Namely, the onerousness of surety must be assessed based on the relation between the guarantor and the main debtor rather than between the guarantor and the creditor. As a rule, surety is an onerous contract because the guarantor expects to collect from the debtor through subrogation the amount he paid to the creditor; exceptionally, surety may be a non-onerous contract if intentio liberalis existed vis-a-vis main debtor. However, this does not mean that the guarantor gives up his right to claim from the debtor the amount paid because otherwise such transaction would represent an indirect gift rather than surety. This does mean that there is no remuneration for surety – a benefit the guarantor could expect from entering into a surety contract.

Therefore, the author rejects the approach followed by a number of Serbia’s courts that bankruptcy trustee may request a declaration that, in accordance with the rules on avoiding debtor’s transactions, a surety contract has no legal effects.