Personal guarantees are represented by fideiusion, autonomous guarantees and other types of guarantees provided by law.
Fideiusion
Fideiusion is that contract by which a party, fideiusor, undertakes towards the party who is creditor in the obligation relationship, to perform the debtor’s obligation if he does not perform it. Fideiusion may be for free or performed in return for remuneration.
For its validity, the trust must be expressly assumed, by an authentic document or under private signature.
The nature of that guarantee is that of an ancillary obligation, which will follow the legal regime of the principal obligation. Also, it cannot exceed the principal debt and cannot be contracted under more onerous conditions. If its extent is not expressly provided for in the concluded contract, then according to art. 2290 Romanian Civil Code the fideiusor is bound by all obligations of the principal debtor, including ancillary ones.
Please note, when it is the fideiusor who performs the principal obligation, it is subrogated to all rights that the creditor had over the principal debtor.
Therefore, it is important that, when assuming such an obligation, the fissidium establishes precisely and in detail the obligations he wishes to guarantee, so as not to end up in a situation where he is required to pay more than he can perform.
Automone warranties
Automone warranties, this type of guarantees actually takes the form of a letter of guarantee and a letter of comfort.
The letter of guarantee represents that irrevocable and unconditional commitment by which the issuer undertakes, at the request of the originator, to pay a sum of money to a third person – beneficiary. It should be mentioned that there must be a binding relationship between the originator and the issuer, independent of the relationship based on which the issuer must pay the third party.
As in the case of suretyship, the issuer has a right of recourse against the authorising officer if he pays his debt.
The comfort letter is that irrevocable and autonomous commitment by which the issuer assumes the obligation to do or not to do, in order to support the debtor in fulfilling his obligations to his creditor.
If the obligation is not fulfilled by the debtor and the creditor proves that the issuer of the comfort letter has not fulfilled the obligation assumed under it, the latter may only be ordered to pay damages to the creditor.
In the case of this guarantee, too, the issuer has a right of recourse against the defaulting debtor.
As regards privileges and collateral, they are intended to ensure the fulfilment of a pecuniary obligation, and they are:
- privileges;
- mortgage:
- mortgage;
- real estate mortgage;
- pledge;
- the right of retention.
Privileges
Privileges are the preference given by law to a creditor in consideration of his claim. This means that the preferred creditor is preferred over the other creditors, even if their rights arose or were entered before his claim.
There are general privileges and special privileges, the general ones can exist on all movable and immovable property, under the conditions established by the Romanian Code of Civil Procedure.
With regard to special privileges, there are two cases provided for by the Civil Code, namely:
- the seller’s unpaid claim for the price of movable property sold to a natural person; and
- the claim of the person exercising a retention of title in respect of the property over which that right is exercised.
A mortgage
A mortgage is that right in rem over movable or immovable property affected by the performance of an obligation. It is accessory and indivisible over the goods to which it bears.
It is important to remember about this security that it is kept on the property in the hands of whichever person passes through, the mortgage lender being a preferred lender.
Depending on the property on which it is established, the mortgage is immovable or movable.
The real estate mortgage on a movable property is constituted by registration in the land book, being absolutely necessary to conclude an authentic notarial contract.
The following may be subject to real estate mortgage:
- buildings with their accessories;
- usufruct of such buildings and accessories;
- shares in the right to real estate;
- the right of suppression.
The movable mortgage is established by the simple conclusion of the mortgage contract, but it takes effect from the date on which the secured obligation arises and the settlor acquires rights over the mortgaged movable property. Unlike a real estate mortgage agreement, a mortgage agreement can also be concluded under private signature, not just in authentic form. It is important to bear in mind for this type of contract that it must contain a sufficiently precise description of the property encumbered.
Pledge
Pledge is that type of security which bears on movable tangible property or negotiable securities issued in materialised form. It is constituted by the material delivery of the property or title to the creditor, or by its retention by the creditor with the debtor’s consent, for the purpose of securing the claim. The ownership of the property by the lien creditor must be public and unequivocal, having the rights and obligations of one manager of another’s property. The pledge is also indivisible, bearing on all gripped property until the guaranteed obligation is fully extinguished.
The right of retention
The right of retention gives the person who has to remit or return an asset the possibility to retain as long as the creditor who fails to perform your obligation arising from the same legal relationship or does not compensate him for the necessary and useful expenses incurred for that asset or for the damages caused.
However, the retention of title may not be exercised as long as the possession of the property is derived from a wrongful, abusive, unlawful act or if the property is not capable of enforcement. This dept may be relied on as against third parties without any form of advertising.
Therefore, as can be well seen, in Romanian law there are quite a few variants to ensure the rights of creditors and to oblige the debtor to fulfil obligations, thus avoiding damaging and unfair situations for the parties to a legal relationship.
