Article 3 Where the parties agree on a special liability for breach of contract for the guarantee liability, or the agreed scope of the guarantee liability exceeds the scope of the debtor's liability, and the guarantor claims to bear the liability only within the scope of the debtor's liability, the people's court shall support it.
Where the liability borne by the guarantor exceeds the scope of the debtor's liability, and the guarantor recovers from the debtor, and the debtor claims to bear liability only within the scope of the liability it should bear, the people's court shall support it; Where the guarantor requests that the creditor return the excess portion, the people's court shall support it in accordance with law.
【Purpose of the Article】
This article is a provision on the subordination of the scope of the guarantee.
【Overview of Provisions】
Regarding the subordination of the scope of the guarantee, there are two levels of content:
First, the scope of the guarantor's guarantee liability shall not exceed the scope of the debtor's liability. If the scope of the agreed guarantee liability is greater than the scope of the debtor's liability, or if a special liability for breach of contract is agreed on for the guarantee liability, then after the guarantor assumes responsibility, the excess part will not be recoverable from the debtor, which violates the subordinate nature of the guarantee. Therefore, paragraph 1 of this article stipulates that if the guarantor claims to be liable only within the scope of the debtor's liability, the people's court shall support it.
Second, if the guarantor's actual guarantee liability exceeds the scope of the debtor's liability, it may request the creditor to return the excess on the basis of unjust enrichment, but in principle, it cannot recover from the debtor, otherwise the debtor will bear more than the scope of its liability.
【Controversial Views】
Can the parties agree on a special liability for breach of contract for the assumption of guarantee liability? One view was that, based on the principle of autonomy of will, the parties should be allowed to make such an agreement. Another view is that if the parties are allowed to make such an agreement, then after the guarantor assumes responsibility, the excess amount will not be recoverable from the debtor, which is contrary to the subordinate nature of the guarantee.
[Understanding and Application]
1. The connotation of the subordinate attribute of the scope of the guarantee
The guarantee liability is that the guarantor performs the debt or assumes responsibility for the debtor under certain conditions, so the scope of the guarantee liability is, in principle, the scope of the debtor's liability in the principal creditor's right relationship, unless otherwise agreed by the parties. According to the provisions of Articles 389 and 691 of the Civil Code, the scope of statutory guarantee liability includes not only the principal claim in the narrow sense (often referred to as the principal claim in the case of monetary debt), but also all ancillary claims such as interest and liquidated damages. There is no objection to the legality of the parties agreeing on a liability equal to or less than the statutory guarantee liability within the scope of the statutory guarantee liability. The question is, when the agreed guarantee liability is greater than the statutory guarantee liability, is the agreement still legally valid? There are differing views on this. The first view is that the provisions of Articles 389 and 691 of the Civil Code on the scope of guarantee liability are arbitrary, and if the guarantor voluntarily assumes liabilities beyond the scope of the principal creditor's rights, it does not violate the prohibitions of laws and administrative regulations, nor violates public order and good customs, and there is no need to deny its validity. However, in view of the fact that the guarantor can invoke the debtor's defense, the guarantor may claim not to be liable for the part beyond the scope of the main claim. The second view is that the clause is valid, but if the agreed guarantee liability is too high, the rule of discretionary reduction of liquidated damages can be applied. The third view is that the scope of the guarantee liability shall not exceed the scope of the principal creditor's right, which is an inevitable requirement of the subordination of the guarantee and an important content of public order and good customs.
All of the above have some truth and some flaws. The problem faced by the first view is that, unless there are circumstances such as defects in the expression of intent, the guarantor may be suspected of violating the principle of "estoppel" if it has expressly agreed on the guarantee liability beyond the scope of the principal claim, and then invokes the debtor's defense to claim that the debtor should be liable. In addition, this view, on the one hand, holds that the agreement beyond the scope of the statutory guarantee liability is valid, and on the other hand, it holds that once the guarantor makes a claim, it is not enforceable, and in essence, it interprets the excess part of the debt as a natural debt, and the legal basis seems to be insufficient.
The second view is to use the discretionary system of liquidated damages to explain the subordination of the scope of security. The subordination of the scope of the guarantee is to consider whether the guarantee liability is too high compared with the main debt, and whether the liquidated damages are too high relative to the loss, and the two cannot be regarded as the same. In the case where the parties agree on a special liability for breach of contract for the assumption of the guarantee liability, according to the theory of the subordination of the guarantee, the agreed liability for breach of contract specifically for the assumption of the guarantee liability is invalid; However, if the interpretation path of discretionary reduction of liquidated damages is adopted, in practice, the annual interest rate of 24% or even 30% is often used as the standard for whether the liquidated damages are too high, and the guarantor has to bear part of the liability in addition to the debtor, which is often unfavorable to the guarantor. At the same time, in some cases, such as where the performance period of the guarantee liability is longer than that of the principal debt, it is difficult to achieve the purpose of reducing the performance period of the guarantee liability to the performance period of the main debt by adopting the system of discretionary reduction of liquidated damages.
According to the third viewpoint, the people's court should determine that the excess part is invalid ex officio, but the guarantor's right to claim the return of the invalid part is a matter that it can freely dispose of in accordance with the law, and in the absence of a claim, the people's court has no need to forcibly order the creditor to return it. In this way, if the guarantor does not make a claim, the people's court will face a dilemma: if it does not support the creditor's claim, it is inconsistent with the right of disposition enjoyed by the guarantor, and it is also inconsistent with the concept of the people's court's intermediate judgment; On the one hand, supporting the creditor's claim is inconsistent with the invalidity of the excess part, and on the other hand, there is also a logical obstacle, because the guarantor's failure to make a claim does not necessarily mean that the guarantor has waived the right to return the excess part, but may simply be due to ignorance of the law. Moreover, in the case that the guarantor does not appear in court to participate in the litigation, such a fiction cannot be made. If we take into account the issues of whether the court should interpret the theory if it was not raised in the first instance but was raised in the second instance, the theory will face a greater dilemma in practice.
In view of the shortcomings of the above-mentioned theories, the Interpretation of the Guarantee System of the Civil Code avoids the issue of the validity of the excess part in terms of writing, and only states in general terms that "if the guarantor claims to bear liability only within the scope of the debtor's liability, the people's court shall support it". From this expression, first, the guarantor must make a claim, and if the guarantor does not make a claim, the people's court shall not determine that the excess part is invalid ex officio; Second, the scope of liability borne by the guarantor is limited to the scope that the debtor should bear, and cannot exceed the scope that the debtor should bear. From an interpretivist point of view, it seems to be closer to the first view.
Finally, it is necessary to pay attention to the systemic effect of the subordination of guarantees, and the key is to accurately determine the nature of the guarantee liability. If it is considered that the essence of the guarantee liability is that the guarantor bears the responsibility for the debtor, it cannot stipulate an independent liability for breach of contract in the guarantee contract. When there are several guarantees on the same debt, after a guarantor assumes the guarantee liability, the following legal effects will be produced: first, the main debt and the guarantee liability will be extinguished, and the guarantor will enjoy the right of recovery against the principal debtor in accordance with the law, and the right of recovery will start to calculate the statute of limitations again; Second, at the same time, it also causes the other guarantees on the debt to be extinguished, and there is no right of recovery between the guarantors in principle, unless there is an internal agreement that can recover from each other. On the other hand, if it is considered that the guarantee liability is that the guarantor bears responsibility for its own actions, it is of course permissible to stipulate an independent liability for breach of contract in the guarantee contract. When there are several guarantees on the same debt, after a guarantor assumes the guarantee liability, it will only lead to the extinction of its own guarantee liability, and has no impact on the main debt and other guarantors, therefore: first, the guarantor who has assumed the guarantee liability can recover from the debtor in place of the creditor, and the statute of limitations will continue to be calculated; Second, the guarantor can also recover from other guarantors based on subrogation. In addition to this article, many provisions of the Interpretation of the Guarantee System of the Civil Code, such as Articles 13, 14, 18, 22 and even 46, are based on the provisions of the Civil Code on the subordination of the scope of guarantees. Only by grasping the key that guarantee liability is vicarious liability can we accurately understand the meaning of the relevant provisions.
2. Two situations of violation of the subordination of the guarantee
From the perspective of judicial practice, if the liability to be borne by the guarantor exceeds the scope of the debtor's liability, it mainly includes the following two situations: first, a special clause on liability for breach of contract is agreed for the assumption of the guarantee liability, and second, the scope of the agreed guarantee liability is greater than the scope of liability that the debtor should bear.
(1) The validity of the special clause on liability for breach of contract
In judicial practice, it is not uncommon for a guarantee contract to stipulate a special liability clause for breach of contract for the assumption of guarantee liability, such as stipulating that if the guarantor fails to perform the guarantee liability, it shall bear the liability for breach of contract at a daily interest rate of 5/10,000. In such transactions, the main contract often also stipulates that the debtor shall be liable for breach of contract at the rate of 5/10,000 per day in breach of contract, and the guarantor shall provide joint and several guarantee for the debtor's debts. At this time, once the debtor defaults and the guarantor fails to perform the guarantee liability, the guarantor shall bear the liability of 5/10,000 of the daily interest rate of the debtor in addition to the liability for breach of contract, and the guarantor shall also bear the liability of 5/10,000 of the daily interest rate, and the result is that the debtor only needs to bear the liability of 5/10,000 of the daily interest rate, and the guarantor shall bear the liability of 10/10,000 of the daily interest rate, and the scope of its liability exceeds the part of the debtor, and the guarantor can only bear the excess part, and it cannot recover from the debtor, thus violating the subordinate nature of the guarantee. Therefore, the guarantor can claim that the specially agreed liability for breach of contract is invalid and that it is only liable within the scope of the debtor's liability.
The problem is that when there are two or more guarantors on the same debt, and both guarantors agree on the share of guarantee, if A has a claim of RMB 1 million against B, and C and D provide guarantees, but agree that they will only bear the guarantee liability of RMB 500,000. In this case, if the corresponding liability for breach of contract is respectively agreed on for the performance of the guarantee liability by C and D, is such an agreement valid? One view is that such an agreement is valid as long as the sum of the agreed liability for breach of contract and the agreed guarantee liability (500,000 yuan) specifically for the performance of the guarantee liability does not exceed the scope of the debtor's liability (1 million yuan). Another view is that since the guarantor expressly agrees to bear liability only within the range of 500,000 yuan, the agreement beyond this scope is invalid. In our view, the text of this article seems to favor the first view. However, the essence of this article is that the guarantor may invoke the defences of the principal debtor, thereby reducing its security liability to the same extent as the debtor. In the case that the guarantor expressly agrees to bear the liability of the guarantee according to the share, the scope of liability borne by the guarantor on behalf of the debtor is 500,000 yuan instead of 1 million yuan, and the part exceeding 500,000 yuan cannot be recovered from the debtor, thus violating the subordinate nature of the guarantee. In this regard, the article should be purposefully limited to apply to situations where the guarantor bears full liability rather than share liability.
(2) The agreed scope of guarantee liability is greater than the scope of liability that the principal debtor should bear
According to the provisions of the Civil Code on the subordination of guarantees, this agreement is invalid. In practice, there is also a situation where the guarantee period of the agreed guarantee liability is earlier than the expiration of the performance period of the principal debt. Generally speaking, the guarantee period is calculated from the expiration of the independent debt performance period. The guarantee period agreed by the parties is earlier than the performance period of the principal debt, that is, the performance period of the principal debt has not yet expired, and the guarantee period has expired. In this case, the agreement on the guarantee period is meaningless, and it is deemed that the party has not agreed on the guarantee period, and the statutory guarantee period, i.e., six months from the date of expiration of the independent debt performance period, is directly applicable.
3. Remedies for the guarantor's excess guarantee liability
After the guarantor assumes the guarantee liability, it has the right to recover from the debtor. In practice, if the debtor fails to perform the due debt, the creditor will often request the guarantor to bear the guarantee liability. In the case where the guarantor is a guarantee company, it will often assume liability at the request of the creditor based on considerations such as maintaining its own reputation, and when it recovers from the debtor, it may find that it has borne the part that it should not have bodied. In this case, if the guarantor is allowed to recover from the debtor the excess amount that the guarantor bears, the debtor will bear the excess amount that it should bear. On the other hand, if it is allowed to recover from the debtor, the debtor will have to request the creditor to return the excess after assuming responsibility, which is not in line with the principle of efficiency. In view of this, paragraph 2 of this article stipulates that: first, the excess part cannot be recovered from the debtor; Second, the guarantor may request the creditor to return the excess amount in accordance with the unjust enrichment rule.