Guarantor’s recourse: Subrogatory or personal?

1/ Legal background The contract of suretyship provides for two actions against the principal debtor after the guarantor has paid: a personal action under article 2308 of the Civil Code and a subrogatory action under article 2309 of the same code. The choice of action is based on the fact that the first recourse offers the guarantor the possibility of obtaining from the principal debtor a larger sum than that actually paid to the principal creditor, as it includes any default interest, costs relating to the recovery of this debt and the payment of damages to compensate for the loss suffered as a result of the payment. The subrogation remedy allows the guarantor to take the place of the principal creditor, giving it all the rights held by the latter, in particular the securities it held. At the same time, however, this recourse allows the principal debtor to raise against the guarantor all the defences that he could raise against the principal creditor. A kind of translation. The question then is whether the guarantor exercising the subrogatory remedy has the right to declare the loan contract terminated in order to recover the entire debt immediately. This is an option available to the creditor in the event of non-payment on the due date of a sum that has become payable.  2/ The Court of Cassation ruling On 4 April 2024, the Court of Cassation ruled that subrogation transfers the debt and its accessories to the beneficiary, with the exception of rights exclusively attached to the person of the creditor, which include the lender’s right to demand early repayment of all remaining sums due under a loan, in the event of non-payment on the due date of a sum that has become payable. This decision states that the right to declare the acceleration of repayment does not represent a right ancillary to the debt, but a right attached to the person of the creditor which is not granted to the guarantor exercising the subrogatory recourse.  3/ Practical implications This decision is important for the guarantee of a loan contract, because the Cour de cassation does not recognise the forfeiture of the term as a transmissible accessory of the debt for the benefit of the guarantor. This solution limits the subrogation remedy and therefore encourages personal recourse, which is not covered by the exceptions linked to subrogation. Be careful, therefore, to choose the right action before taking action.