Spain: The Position of the Guarantor in the Event of Non-Consensual Changes to the Obligation

The Supreme Court has once again ruled on the scope of joint and several security and shared liability in a case where a guarantor guaranteed a debt, the payment of which was subsequently modified between the creditor and the debtor, without the guarantor’s involvement. Although the total amount of the obligation was not altered, the method of compliance was changed by introducing a compensation system with commissions for services provided, which was never executed.

The guarantor sought to oppose payment, arguing that he was bound to comply “under the same conditions” as the debtor, and that the subsequent modification constituted an extinguishing novation of the debt. However, the Supreme Court rejected both arguments, holding that the debtor’s default cannot prejudice the creditor, nor release the guarantor. The Court further emphasised that, for an extinguishing novation to occur, the requirements of Article 1204 of the Civil Code must be met—which was not the case here.

Solidarity Between Debtors: External and Internal Effects

In a second judgment, the High Court examined the internal distribution of liability when several parties are jointly and severally liable to a creditor. It reiterated that, although externally each debtor is liable for the whole of the obligation, internally—if nothing else has been agreed—an equal distribution is presumed under Article 1138 of the Civil Code.

This rule is particularly relevant when the liable parties have not participated equally or derived the same level of benefit. The Court therefore underlined the importance of expressly agreeing in writing on a different distribution that accurately reflects the role and participation of each party.

Both rulings reaffirm the importance of understanding the risks inherent in assuming joint and several liability and shared responsibility, particularly in the absence of clear agreements regulating their legal and economic effects.

By Marimón Abogados, Spain, a Transatlantic Law International Affiliated Firm.

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