Standing Surety in Europe: Common Core or Tower of Babel?
| Published date | 01 March 2007 |
| Date | 01 March 2007 |
| DOI | http://doi.org/10.1111/j.1468-2230.2007.00633.x |
THE
MODERN LAW REVIEW
Volume 70 March 2007 No 2
Standing Surety in Europe: Common Core or
Tower o f Bab e l?
Mel Kenny
n
This article analyses the treatment of non-professional suretyship agreements across the EU in
the context providedby Commission initiatives aimed ¢rstly atcreating a single market in ¢nan-
cial services a nd secondly at improvingthe coherence of European private law. Predictably, given
their polycontextual function, we are confronted with starkly divergent national approaches
towards such agreements: a ‘Towerof Babel’ ratherthan a ‘common core’. The article proceeds to
consider how we may see elements of commonality arising through the tension between the
di¡ering national approaches ^ se en in terms of a Unitary Network. In the course of this analysis
the treble paradox of surety protection is described.The article ¢nishe swith a prediction of the
relevance of adual-track strategy in this ¢eld: involving measuresof sector-speci¢c, vertical har-
monisation, and a programme of common-law style, non-legislative harmonisation through
judicial convergence.
INTRODUCTION
Those surveying the increasinglyacrimonious debate onthe future of European
private law ^ caught between the calls for ‘greater coherence’ and the need for a
broad exercise in codi¢cation on the one hand,
1
those warning of the dangers
n
Lecturer, Durham University. Marie Curie Fellow, ZERP (Centre for Law and Politics), Bremen,
Visiting Faculty, Riga Graduate School of Law.The support of the European Community under the
Marie Curie host fellowship and the hospitality of the ZERP is gratefullyacknowledged.This paper
develops ideas from the 2005 Suretyships’ Conference in Bremen, the contributions towhich are to
appear in: A. ColombiCiacchi (ed), Protection of Non-ProfessionalSuretiesin Europe:Formaland Substantive
Disparity (Baden-Baden, Nomos, 2007). The author is grateful to Prof J. H. M. van Erp and Patrick
O’Callaghan for comments and analytical insights, to the SLS for providing a platform to develop
the paper atthe Keele Conference, 2006 and to the MLR.The usual disclaimer applies. Abbreviations
of German Journals cited: RIW (Recht der Internationalen Wirtschaft);GPR (Zeitschrift fˇr Gemein-
shaftsrecht); JZ (Juristen Zeitu ng);VuR (Verbraucher und Recht); KV (Kritische Vierteljahresschrift
fˇr Gesetzgebung und Rechtswissenschaft); AcP(Archiv fˇr die civilisatorische Praxis). ZHR (Zeits-
chrift fˇr das gesamte Handelsrecht und Wirtschaftsrecht).
1 C. von Bar,‘FromPrinciples to Codi¢cation: Prospectsfor European Private law’(2002) 8 Colum J
Eur L 379;O. Lando,‘Doesthe European Union need a Civil Code’(2003) 49 RIW 1;C. von Bar,
O.Lando and S. Swan,‘Communicationon European Contract law: Joint Response of theCom-
mission on European Contract law and the Study Group on a European Civil Code’ (2002) 10
ERPL183.
r2007 The Author.Journal Compilation r2007 The Modern Law ReviewLimited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2007) 70(2) MLR 175^196
involved in any steps towards codi¢cation and the ‘legal fragmentation’this could
be expected to generate on the other,
2
and those occupying positions describing
‘coherent fragmentation’ in the middle
3
^ may well be struck by the aptness of
Teubner’s picture of the beast of reciprocal misunderstanding in legal communica-
tion: the two-headed Janus,
4
or even, given the heated demarcation disputes, sug-
gesting anything but a common core of European private law, of a European
Tow e r o f B a b e l .
Amongst all the recriminations one striking casualty is a sober assessment of
the law in action, in both its substantive and adjectival aspects, and of speci¢c ¢elds
and their problems.This paper examines the hard case of suretyship agreements
and arguesthat, by focusingon particularproblem areaswe can gain an important
insight into just how ‘common’ or ‘uncommon’the ‘common core’ of European
private law truly is. To this end this paper deals with a comparative analysis of
the treatment of non-professional suretyship agreements: unilateral contracts
between non-professional sureties ^ in favour of family members, friends and
most frequently spouses^ e ntered intowith ¢nancial institutions.Given the close
emotionalties between principaldebtor and the spouse, family member or friend
standing surety, the surety may not be in a position to decline standing surety.
Here we are confronted with a stark choice between protecting vulnerable per-
sons in emotional dependency on the principal debtor, where, as Gernhˇber has
noted, no amount of pre-contractual information will dissuade the wife from
standing surety for her husband’s business debt,
5
and the countervailing claims
of contractual integrity, and the need to assert the fundamental freedom to enter
into unwise agreements:
6
we are caught between the claims of love and money.
Moreover, the limits of the information paradigm itself, as an instrument tradi-
tionally relied upon in EC consumer law, is illuminated in this special context
of family suretyships.
7
As this analysis discloses, whilst surety agreements are
‘common’throughout the EU, the approach taken towards the surety agreement
2 B. Markesinis,‘Whya Code is Not the Best Way to Advance the Cause of European Legal Unity’
(1997) 5 ERPL 519^524;P.Legrand,‘European Legal Systems are NotConverging’ (1997) 45 ICLQ
52; P. Legrand,‘Against a European CivilCode’ (1997)60 MLR 44, P. Legrand,‘TheImpossibil ity
of Legal Transplants’ (2003) 4 MJ 111, and most spectacularly P. Legrand, ‘Antivonbar’ (2006) 1
JCL 1 at: http://www.wildy.co.uk/jcl/pdfs/legrand.pdf?PHPSESSID=fa40dbdfob619b52a253485
89c18d43d(last visited 13 October 2006).
3 M.W. Hesselink,‘The Politics of European Contract Law: Who has an Interest inWhat Kind of
Contract Lawfor Europe?’ (2002) 2 Global Jurist Frontiers at: http://www.bepress.com./gj/frontiers/
vol2/iss1/art3(last visited 13 October 2006).
4 G.Teubner,‘TheTwo Faces of Janus: Rethinking Legal Pluralism’ (1992) 13 CardozoL Rev 1443,
1445^1448.
5 J. Gernhˇber, ‘Ruin˛se Bˇrgschaften als Folge familia
ºrer Verbundenheit’ (1995) JZ 1086, 1093:
‘Warnings and Advice . . . are Only Useful Where the Addressee is Prepared to Accept Them’
(author’s translation).
6Interalia in: UlsterBank vFitzgerald [2001] IEHC 159, at [10]:‘[T]he courts are not required to inter-
vene toprotect a contracting party from ill-advised action . . . the court is not entitled to relieve her
[MsWilliams] of her obligations...merelybecause a more prudent person might not haves igned
them.’
7 ie Article153(1) EC:‘In order to promote the interests of consumers and to ensure a high levelof . . .
protection, the Community shall contribute to protecting the health, safetya ndeco nomici nter-
ests of consumers, as wellas to promoting theirrights to information, education and to organise themselves
in order to safeguard their interests.’
Standing Surety in Europe
176 r2007 The Author. Journal Compilation r2007 The Modern LawReview Limited.
(2007) 70(2) MLR 175^196
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