Libro Quinto Título XVII. De la fianza

By the contract of bond, a person undertakes to answer for the obligations of another.

The guarantor may stipulate with the debtor a remuneration for the service provided to the latter.

The suretyship must be in writing for its validity.

The guarantor shall be liable only for that to which he has expressly committed himself. He may obligate himself for less but not for more than the principal debtor, both in the amount and in the onerousness of the conditions. If he shall have obligated himself for more, his obligation shall be deemed reduced as to the excess.

The guarantor may limit their liability by constituting a pledge or mortgage. If the bond is not limited, the guarantor remains obligated not only for the principal obligation but also for the payment of interest, compensation for damage and losses in case of default, and judicial expenses. The guarantor shall not be liable for other damage and losses and judicial expenses, except for those caused after having been required to pay.

The bond covering an obligation that is not valid is void. Excepted is the case in which the nullity arises from the personal incapacity of the debtor, if the guarantor had knowledge of the incapacity at the time of becoming bound.

The guarantor may request that the principal guarantee him against the consequences of the bond:

1°.If the debtor is about to leave the Republic;

2°.If the debtor has suffered impairment in his property, so that he is at risk of insolvency;

3°.If there is justified fear that the debtor will conceal or dissipate his property;

4°.If the guarantor has been sued by the creditor for payment of the debt; and

5°.When the debtor has undertaken to obtain release from the bond within a certain time limit, and such time limit has expired.

The guarantor may not be compelled to pay the creditor without prior excussion of the debtor's property.

Excussion does not take place:

1°.When the guarantor has expressly waived it;

2°.When he has become jointly and severally liable with the debtor; and

3°.In case of bankruptcy or assignment of property of the debtor.

For the guarantor to avail himself of the benefit of excussion, he must raise it against the creditor as soon as the latter demands payment from him, and point out to him realizable property of the debtor sufficient to cover the amount of the obligation.

The guarantor may assert the defenses against the creditor that correspond to the debtor, even if the latter has waived them.

The guarantor may request to be released from the bond by making the judicial deposit of the amount of money owed and the interest until the expiry of the time limit.

The clause providing that the time limit of the principal obligation is extended at the will of both parties without the need for a new deed or document does not extend the bond, unless the guarantor expressly records acceptance of the extension clause and the duration thereof, which may be granted upon constitution of the bond.

If the guarantor becomes insolvent, the creditor may require the debtor to provide another solvent guarantor, and if he does not present him within the term set for them by the judge, the creditor may declare the time limit of the principal obligation expired.

The solvency of the guarantor is assessed with regard to his property and the state of his business affairs. Neither litigious property nor property securing any obligation shall be taken into account for this purpose.

The guarantor who pays or performs the debtor's obligation in whole or in part has the right to have the latter reimburse him for the total amount paid.

The guarantor is subrogated by payment to the rights that the creditor had against the debtor, but any reduction or benefit that he may have obtained from the creditor shall benefit the debtor and, consequently, he may not demand from him more than what he actually paid.

If there are several sureties, the one who satisfies the debt has the right to collect it from the other co-sureties, less the pro rata share corresponding to him.

The guarantor of an obligation who pays the debt of several debtors who are solidarily liable among themselves has the right to recover the total against all or each of them.

The extension granted to the debtor without the express consent of the guarantor extinguishes the obligation of the latter.

If the bond was given for an indefinite period and there is no express agreement to the contrary, the obligation of the guarantor shall be extinguished upon the expiration of one year from the date of the contract.

The guarantor of the guarantor is not obligated to the creditor except in the case where the principal debtor and all of the latter's guarantors have failed to perform the obligation.

The rights and obligations of the guarantor pass to his heirs in proportion to the share corresponding to them.