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Commercial Law — Financial law — Commercial sureties — Form

Date Citation Note
31.05.1994 Com. 1310 Bull. Civ. n° 193 JCP E n° 18 04.05.95 Case Benech v. SOFEG Formal proof of commercial surety
French law is extremely protective of persons who agree to become sureties for the debts of another. A contract of surety falls under Article 1326 of the Civil Code, which provides that contracts by which a person undertakes to another to pay a sum of money must be in writing, be signed by the person to be bound, and contain a handwritten endorsement by the latter setting out in figures and in letters the amount of the undertaking. This rule does not, however, apply in commercial matters. This case concerns the application of these principles in a matter where two persons guaranteed the debt of a company in which one of the two was a manager and the other a shareholder. The case makes an interesting distinction between the two.
Held:
The contract of surety as signed, without the specific endorsement of Article 1326, is prima facie evidence of the guarantee obligation, which, however, must be further proved by evidence extrinsic to the document itself. In the case of the manager (who must be presumed to know the full extent of the surety he is signing, since he manages the company whose debt is guaranteed), the mere fact of his being manager provides this extra extrinsic evidence. In the case of the shareholder, however, even if he holds a majority of the shares, the fact of his having that status is not sufficient, for a shareholder cannot be presumed to know the extent of his undertaking.