Suretyship is a personal guarantee, whereby the creditor may require the debtor to provide a guarantor in order to reduce the risk of non-payment. Through article 1925 of the Civil Code, it is evident that the principal characteristic of this contract is its accessory nature, whereby
“… a person binds himself towards the creditor to satisfy the obligation of another person, if the latter fails to satisfy it himself.”[1]
Unlike other forms of security, the surety is not meant to return a specific property which belongs to the debtor or third party to the creditor.[2] The duty of the surety is to satisfy the obligation of the principal debtor, so much so that;
“Whosoever has bound himself personally, is obliged to fulfil his obligations with all his property, present and future.”[3]
It is also possible that a surety is contracted for only part of the debt and due to this has less onerous conditions that the debtor.[4] Despite everything, the surety can never be asked to give more than what the debtor was due or be subject to more onerous conditions.[5]
Differences between suretyship and suretyship in solidum
The main difference between these two concepts is that the simple surety is only required to pay in case of default on behalf of the creditor.[6] Therefore, the creditor cannot go directly to the surety but has to try to obtain payment from the principal debtor beforehand. On the other hand, the surety in solidum authorizes the creditor to choose at his liking if he obtains payment from the debtor or the surety.[7]
The general rule is that surety is subsidiary in nature, however, the norm seems to be that sureties bind themselves in solidum with the principal debtor. Furthermore, in commercial matters, there is a juris tantum presumption, that sureties are jointly and severally liable[8]. If not, the burden of proof falls upon the surety to prove that he is not jointly and severally bound with the principal debtor.
This shall not be construed to be as advice but shall merely serve as a brief description of suretyship. If you would like to get to know more about this please do not hesitate to contact us on [email protected].
[1] Art 1925, Civil Code, Chapter 16 of the Laws of Malta
[2] Paul Anthony Cachia, ‘THE DEFENCES AND REMEDIES OF THE SURETY’, LL.D, June 2003, p 15
[4] Article 1927, Civil Code
[5] Ibid.
[6] Paul Anthony Cachia, ‘THE DEFENCES AND REMEDIES OF THE SURETY’
[7] Ibid.
[8] Article 1941, Civil Code