Court of Cassation rules that a guarantee remains valid after the annulment of the main contract until the obligation of restitution is executed.
Extract
[...] To guarantee these loans, co-signers had personally committed to the professional creditor, in addition, by deed of 23 May 1984, the main debtor had recognized owing to the professional creditor an amount for unpaid supplies, and by a separate deed of the same day, the spouses Y had again become co-signers of this debt recognition. Following the liquidation of the assets of the debtor company and its manager (respectively 5 November and 3 December 1984), the creditor company sued Mrs. X in her capacity as a co-signer in execution of her commitments. The court of appeal had annulled the supply agreement, the loans and the acknowledgment of debt for indeterminacy of the price and indivisibility with the main agreement. [...]
[...] Nevertheless, it had condemned the guarantor to execute her commitment. Mrs. in her capacity as a natural person guarantor, appealed to the Court of Cassation, arguing that the annulment of the main contract should lead to the disappearance of her accessory commitment, limited to guaranteeing a valid contract. Thus, by condemning her to guarantee the execution of a null contract, the court of appeal had deprived the nullity of any useful effect. The question posed to the Court of Cassation was therefore to determine whether the guarantee subsists when the main contract guaranteed is annulled as long as the obligation of restitution born of this nullity has not been executed. [...]
[...] In fact, the guarantee, although accessory, does not immediately cease with the nullity of the main contract when there remains an obligation to return. The guarantor therefore remains liable until the parties are restored to their previous state. The Court here adopts a functional view of the accessory link, recognizing that the guarantee follows the fate of the restitution debt, as long as it has not been extinguished. This solution is constant in jurisprudence (Com nov. 1982) and reinforces the security of the professional creditor, preventing a contractual nullity from depriving the guarantee of any effect. [...]
