The concept of subsidiary and solidarity guarantee according to the law on obligations

Our case law shows that often the subject of litigation is the form of guarantee itself. Namely, in the court proceedings the question arises whether the guarantor has the status of a guarantor payer or it is a subsidiary guarantor whose obligations to the creditor arise in case when the creditor proves that he cannot collect the claim from the principal debtor.

The Law on Obligations, in Article 1043, prescribes the both forms of guarantee, i.e., subsidiary and solidarity guarantee.

According to the provisions of Article 1043 of the Law on Obligations, if the guarantor assumes an obligation as a subsidiary guarantor, the creditor has the right to address the guarantor for collection only after proving that he cannot collect his claim from the principal debtor, i.e., with the subsidiary guarantee, the guarantor may be required to fulfill the obligation only after the principal debtor fails to fulfill it within the time limit specified in the written summons.

With regard to the subsidiary guarantee, it is extremely important to point out that the creditor’s proof of the inability to settle his claims from the principal debtor is not conditioned by the existence of a final court judgment as proof that the principal debtor is unable to fulfill his obligation to the creditor, but it is sufficient for the creditor to prove that the principal debtor has not fulfilled the obligation within the deadline specified in the written summons.

Unlike the subsidiary guarantee, on the basis of a solidarity guarantee, the guarantor is jointly liable for the obligations of the principal debtor. In this case the guarantor has the status of a guarantor payer and on this basis the creditor can directly call the guarantor to collect his claim.

The guarantor-payer concept allows the creditor to address either one of the joint debtors or both at the same time when the claim is due.

After fulfilling the obligation to the creditor, the obligation under the main contract is extinguished, and the guarantor payer is entitled to recourse from the principal debtor.

In the implementation of the concepts of solidarity and subsidiary guarantee, the legislator also started from the character of the obligation. Hence, the legislator made a distinction between civil and trade transactions, guided by the entities that enter into an obligation relationship and the character in terms of whether it is a profitable or consumer transaction for meeting the needs of consumers.

Guided by the nature and scope of the trade, the legislator rightly envisioned a solution relating to trade agreements.

Although he gave the possibility for a different regulation of the relations from the guarantee in the trade transactions (he foreseen the dispositive character of the solutions), still as a rule he foreseen a general solution, as follows: the guarantor for a liability arising from a trade agreement is liable as a guarantor-payer, unless otherwise agreed.

This legal solution implies that in trade agreements, the creditor can address the guarantor directly without calling the principal debtor. In these situations the guarantor is liable to the creditor as the principal debtor for the entire obligation. The creditor can demand its fulfillment either from the principal debtor, or from the guarantor or both at the same time (solidarity guarantee). We can summarize that, as a rule, in trade agreements, unless otherwise agreed, the responsibility of the guarantor is always joint and solidary.

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