Part 1 of Chapter 5

Question 1

What is the General Guarantee of Obligations

Answer 1

The debtor’s things, assets or rather the debtor’s assets that can be seized, constitute the general guarantee of obligations.

Question 2

Can all things be seized?

Answer 2

No

Question 3

What are the things that cannot be seized?

Answer 3

Things that cannot be seized, that are in public domain, an object whose seizure may be deemed to offend common decency or lacking economic justification, considering small market value.

Question 4

Can things be partially seized?

Answer 4

Yes

Question 5

What are the things that can only be partially seized

Answer 5

Inter alia, 2/3 of the liquid part of salaries, wages, periodic instalments paid as retirement or any other social benefits, insurance, compensation for accident, annuity, or benefits of any kind to ensure the livelihood of the executed.
This exclusion has a maximum limit equivalent to the amount of 3 minimum salaries for seizure and a minimum limit equivalent to the amount of one national minimum salary

Question 6

Can inter alia be adjusted

Answer 6

It can considering the amount and nature of the credit as well as the needs of the debtor and his households, the judge may, exceptionally and at the request of the debtor, reduce, for a periods deemed reasonable, the seized proportion of the income and even, for a periods not exceeding one year, exempt it from seizure.

Question 7

Is there an in between Unseizable things and partially seizable things?

Answer 7

Yes, relatively unseizable things, assets of the state, other public entities, of concessionaires of public works or public services and of non-profitable entities with public utility allocated to public utility purposes (except in relation to debts with in rem guarantees). Work instruments and objects indispensable to the exercise of the activity and professional training of the debtor, except in the cases set forth by the law; good essential to any domestic economy that are within the house of the debtor. Except when the debt results from lack of payment of the selling price of the repair cost.

Question 8

What are securities

Answer 8

Special guarantees (securities) aimed at reinforcing, to the creditor’s benefit, the general guarantee of creditors (the debtor’s entire estate), offered to all creditor on an equal foot.
These securities can be be personal guarantees or in rem securities.

Question 9

Types of securities

Answer 9

Personal security
In rem securities (fixed charges)

Question 10

What are personal securities

Answer 10

Another person guaranties, with his or her assets, the fulfilment of the debtor’s obligations to the creditor

Question 11

What are in rem securities

Answer 11

A fixed charge attached to a particular asset (of the debtor or of a third party) and gives the charge holder/creditor preference in payment for the value of the sale of the asset in question.
Ex. Mortgage, or pledge

Question 12

What are provisions of security

Answer 12

Special guarantee of obligations that includes all situations in which someone is required by law, the court or as a result of a contract to provide a security without indicating its type.
Unless otherwise stipulated by the law, this security can be provided by different means, notably money bonds, precious stones or metals, pledge, mortgage, and personal guaranties.

Question 13

What is a personal security

Answer 13

A third party guarantees with his/her own assets, the compliance of the someone else’s obligations and therefore becomes personally liable to the creditor.
This means that the guarantor is liable to the creditor with his assets (and not with a specific asset, as in the case with a mortgage or other in rem securities)

Question 14

Details in regard to being a gurantor

Answer 14

• Benefit of prior excussio
  Grants guarantor the possibility of refusing payment until all the assets of the debtor are exhausted/judicially executed. - - However, the guarantor cannot resort to this benefit if:
  1. he/she renounced the benefit
  2. if he/she has assumed the role of primary debtor/payer

Question 15

What is a pledge

Answer 15

Grants the creditor the right to have his credit (money and interests) paid with preference over other creditors in relation to certain moveable things, credits or other rights that cannot be mortgaged, owned by the debtor or by a third party.

Question 16

The types of pledges

Answer 16

Pledge of things
Pledge of rights

Question 17

Pledge of things

Answer 17

Only takes effect with the delivery to the pledge creditor of the pledged thing (Ex. collection of old coins)

Question 18

What is a mortgage

Answer 18

Legal document which offers a building or land (or things that the law deems equivalent to immovable things, like cars, ships and aircrafts) as security (ex. loan)

Question 19

Go into more detail about mortgages

Answer 19

A fixed charge as it is attached to a particular asset. Grants the creditor the right to be paid by the value of those immovable things (or of things equivalent to immovable things), with preference to other creditors.

Question 20

Steps in getting a mortgage

Answer 20

Mortgages must be registered in order to be effective and enforceable. In addition a mortgage related to land/buildings (immoveable things must be executed by a public deed, a will or an authentic document.

Question 21

The different types of mortgages

Answer 21

1. Legal mortgage
2. Voluntary mortgage (may result from agreement or an unilateral contract)
3. Judicial mortgage

Question 22

What is prior ranking

Answer 22

Certain creditors, taknig into account the nature of their credits, and regardless of registration, are greanted prior ranking over other (being paid ahead of them).

Question 23

What can prior ranking relate to?

Answer 23

1. Moveable or immoveable things
2. Can be generic or special

Question 24

How are privileged credits classified

Answer 24

Are moveable if they affect moveable things and immoveable if they affect immovable things
Are special if they only affect certain movable or immovable property and general if they affect all moveable or even immovable property.

Question 25

Are credit privileges subject to registration

Answer 25

No

Question 26

What is the right of retention

Answer 26

A debtor who has a claim against his creditor enjoys the right of retention if being obliged to deliver a certain thing, his claim results from expenses incurred as a result of it or from damages cause by it.

Question 27

Go into more detail

Answer 27

Thus, if someone is obliged to return a certain thing, but simultaneously holds a credit over the person to whom he has to return that thing, and his credit results from expenses incurred because of it or from damages caused by it, he enjoys the right not to return the thing until credit is satisfied (and the right to be paid preferentially for the value of the thing retained.

Question 28

What is a Upon first demand bank guarantee

Answer 28

A personal guarantee provided by a financial institution.
The guarantor, at the request of the client undertakes to pay a third party, the beneficiary, a certain amount in the event the at the client breaches his obligation, stipulated in the base contract between the client and the beneficiary of the guarantee. Doing this without discussing the grounds of the request, notably without being able to discuss if in fact the default of the debtor/client occurred. The client will then be obligated to pay the guarantor (issuing bank).