Rights and Obligations of the Parties in the Guarantee Relationship

It is complicated when the legal representative does not directly sign the guarantee contract but authorizes another person to sign this contract. In the current banking system of Vietnam, due to the characteristics of monetary business activities, every bank establishes a system of branches and representative offices in administrative units at all levels. However, only the Central Bank has legal status, the remaining branches and representative offices in localities do not have legal status (Article 92 of the Civil Code). Representative offices and branches are not legal entities. The head of a representative office or branch performs tasks under the authorization of the legal entity within the scope and duration of the authorization. With this provision, it can be affirmed that the director of a branch or representative office of a bank in a locality does not have the right to sign a guarantee contract as the legal representative of the bank. In reality, commercial banks often have a separate authorization letter from the General Director to perform this guarantee. In principle, a legal entity can authorize any individual to participate in one or more specific tasks. A commercial bank can also authorize anyone to sign a guarantee contract on its behalf, but usually it is the branch manager.

Based on this principle, the Regulation on Bank Guarantee Operations issued together with Decision No. 196/QD-NH14 dated September 16, 1994 of the Governor of the State Bank (Article 15) and applicable to guarantees not for foreign loans (Article 4), stipulates: The person authorized to sign a bank guarantee document is the General Director (Director) of the bank. This person may authorize the Deputy General Director (Deputy Director), Director of a branch under his/her authority to sign the guarantee. The authorized person is not allowed to re-authorize.

This principle also applies to all other legal entities. A legal entity may directly sign a guarantee contract through a legal representative, or authorize another person to sign the guarantee contract.

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Thus, there are two types of people who are allowed to represent a legal entity to sign a guarantee contract, namely legal representatives and authorized representatives. Although both are representatives of legal entities, the authority of these two people is not the same. The authority of a legal representative is stipulated in the law and specified in the Charter of the enterprise and usually the authority of this person is comprehensive. The authority of an authorized representative is agreed upon by both parties, usually a case with specific content, valid for a certain period of time (one year, two years...) or limits the value of the guarantee obligation (the maximum guarantee amount is one billion, two billion VND...).

In case the guarantor is a credit institution, the guarantee amount for a customer shall not exceed 15% of the credit institution's equity capital, except for loans from capital sources entrusted by the Government, organizations, individuals or in cases where the borrower is another credit institution. The guarantee amount for a customer and the total guarantee amount of a credit institution shall not exceed the ratio to the credit institution's equity capital as prescribed by the Governor of the State Bank (Article 79, Law on Credit Institutions dated December 12, 1997).

With the aim of protecting the interests of legal entities, especially legal entities doing business in currency, Clause 3, Article 77 of the Law on Credit Institutions stipulates that credit institutions (except cooperative credit institutions) are not allowed to accept guarantees from the following persons as a basis for granting credit to customers.

- Member of the Board of Directors, Board of Supervisors, General Director (Director), Deputy General Director (Deputy Director) of a credit institution;

- Loan appraiser and approver;

- Father, mother, wife, husband, children of members of the Board of Directors, Board of Supervisors, General Director (Director), Deputy General Director (Deputy Director) [7].

For the guarantee of a spouse, as mentioned above, the purpose of the beneficiary is the property of the guarantor. However, when the marital relationship exists, the amount of family property is the joint property of both spouses (Article 27 of the Law on Marriage and Family 2000). In principle, each spouse has the right to guarantee a certain obligation. The act of guaranteeing an obligation of each person is not an act of property disposition because the nature of the guarantee is interpersonal. Therefore, this act does not violate Article 28 of the Law on Marriage and Family 2000. The remaining issue is to determine the property of the guarantor. In the case where one of the two people participates in the guarantee contract and has the consent of the other person even though this person does not participate in signing the contract, the property securing the guarantee obligation includes the guarantor's separate property and all the common property of the couple. On the contrary, if the husband or wife signs a guarantee contract without the consent of the other, the assets securing the guarantee obligation will only include the guarantor's separate assets and the joint assets that he or she owns in the combined joint assets of the couple. However, requesting the division of the combined joint assets of the couple during the existing marriage is a relatively complicated and time-consuming task. Therefore, in the condition that each individual does not have a large enough separate asset to guarantee the guarantee obligation, the best solution that the beneficiary of the guarantee should choose is to request that both the husband and wife participate in the guarantee contract as co-guarantors.

2.2. Rights and obligations of the parties in the guarantee relationship

2.2.1. Rights and obligations of the guarantor

The guarantee regime in the Civil Code does not have any provisions regulating the rights and obligations of the subjects participating in the guarantee relationship. Specialized laws do regulate the rights and obligations of the parties, however, such provisions are completely specialized for a specific field such as credit, banking, and labor export.

Synthesizing the provisions scattered in different laws, combined with the provisions of specialized legal documents, we can see some basic rights and obligations of the subjects participating in the guarantee contract as follows:

Based on the basic principle of civil law "freedom, voluntary commitment, agreement", the first right of the guarantor is to accept or reject the guarantee request. Before the guarantee contract, the guarantor receives a guarantee request, which can be from the guaranteed person or the beneficiary of the guarantee. When there is this request, the guarantor has the right to reject or accept the request. After accepting the guarantee request, the guarantor has the right to request the guaranteed person to provide documents and information related to the assessment of the guarantee and the secured assets (usually only professional guarantors have this request). In concluding the guarantee contract, the guarantor has the right to agree on the scope of the guarantee, the guarantee term. Joint guarantee or separate guarantee (status of the person with secondary obligations)...; The guarantor has the right to sue the guaranteed person or co-guarantors to request the performance of the obligation (Articles 365, 367 of the Civil Code). This is an important right of the guarantor, so we will analyze it in more detail in the following section. In addition, one of the important rights of the guarantor is to collect the guarantee fee. Normally, the collection of guarantee fee only occurs for professional guarantors, but in civil life, the guarantor

Guarantee is based on feelings and familiarity. With the collection of guarantee fees, the guarantee activities of credit institutions have become a profitable business. According to current regulations, the guarantee fee is agreed upon by the parties within the limits prescribed by the State Bank. This is a new point, previously, this fee was set by the State Bank. Giving credit institutions the right to agree with customers on the guarantee fee is suitable for the needs of credit institutions, ensuring the principle of agreement in guarantee transactions; ensuring healthy competition in the business strategy of each credit institution. That is also consistent with the principle of the market mechanism, according to which the State management agency does not interfere too deeply in the freedom of agreement of the parties participating in the guarantee relationship. On the other hand, this regulation is completely consistent with international practice.

Article 367 of the Civil Code stipulates that when the guarantor has fulfilled his obligation, he has the right to request the guaranteed party to perform his obligation to him... This provision only has practical significance in the case of joint guarantee, that is, when the obligation is due but the guaranteed party does not perform, and the entitled person has requested the guarantor to perform the guarantee obligation. After performing the guarantee obligation, the guarantor returns to request the guaranteed party to perform the obligation to him. At that time, the guaranteed party may still have a lot of assets, but the beneficiary of the guarantee does not request the performance of the obligation but immediately requests the guarantor to perform the guarantee obligation. Therefore, when the guarantor completes the obligation and returns to request the guaranteed party to perform the obligation to him, the guarantor still has assets to perform the obligation to the beneficiary of the guarantee. With non-joint guarantees, this right of the guarantor only exists in theory, because the beneficiary must prove that the guaranteed person no longer has assets to fulfill the obligation, only then will he have the right to request the beneficiary to pay.

guarantee to perform the obligation. But if the guaranteed person no longer has assets to perform for the beneficiary, then there will be no assets to perform the obligation again to the guarantor. If anything, that obligation will be performed in the future (when the guaranteed person has assets, then the guarantor will require the guaranteed person to perform the obligation).

With the provisions of Article 367 of the Civil Code, it can be seen that the guarantor's right to request only arises after the obligation has been fulfilled. How should we understand the concept of "fulfillment of obligation", does the fulfillment of obligation mean the full performance of the guarantee obligation? Certainly not. Because, let's consider a hypothesis, when the main obligation is due, the guaranteed person has performed part of the obligation, the remaining part is performed by the guarantor, the beneficiary has received the full debt, therefore, does not require the guarantor to perform anymore. In this case, the guarantor still has the right to request the guaranteed person to perform the obligation to him, this is certainly impossible. Thus, it can be affirmed that the guarantor who performs part of the guarantee obligation also has the right to request the guaranteed person to repay a corresponding part.

If we only read the law in a forward direction, we will see that the guarantor has the right to request the guaranteed person to repay him the part of the obligation that he has performed with the beneficiary. However, if we put the question in reverse, is there a time when the guarantor has completed the guarantee obligation without having the right to request the guaranteed person? As mentioned above, the guarantee is a bilateral relationship between the guarantor and the beneficiary. Therefore, the guaranteed person may or may not know that there is a guarantee relationship for his obligation. When the obligation is due, the guaranteed person voluntarily performs the guaranteed obligation, but due to the request from the beneficiary and not knowing that the guaranteed person has performed the obligation,

The guarantor performs the guarantee obligation. In this case, does the guarantor have the right to request the guaranteed person to perform the obligation towards him? To answer this question, it is necessary to consider each specific case.

In case the guaranteed person requests or knows that there is a guarantor for his/her obligation, this can be considered as an authorization relationship to perform the obligation between the guaranteed person and the guarantor. And so, if the guaranteed person performs the obligation by himself/herself without the need for a guarantor, this activity of the guaranteed person is considered as a unilateral decision to terminate the authorization contract with the guarantor. However, along with this decision, the guaranteed person must have the obligation to notify the guarantor within a reasonable period of time (Clause 1, Article 588 of the Civil Code). If the guaranteed person has notified in advance but the guarantor still performs the obligation towards the beneficiary, the guarantor's right to request the guaranteed person will no longer exist, and instead, the guarantor must request the beneficiary to return what has been received according to the provisions of Article 599 of the Civil Code. On the contrary, if the guaranteed person does not give prior notice as prescribed by law, the authorization still exists and the guarantor is correct in performing the guarantee obligation, thus having the right to request the guaranteed person to perform the obligation to him.

In case the guaranteed person does not request and does not know that there is a guarantor for him/her. Obviously, if there is no request, it means that there is no authorization contract between the guaranteed person and the guarantor and when performing the obligation, the guaranteed person is also not obliged to notify anyone. Therefore, if the guarantor performs the guarantee obligation with the beneficiary when the guaranteed person has performed the obligation, the guaranteed person is not at fault. The obligation to find out belongs to the guarantor, if he/she does not find out carefully and performs the guarantee obligation, the guarantor is at fault, thus losing

the right to demand the person being guaranteed. However, this right does not disappear, it only transfers from one subject to another, specifically in this case, the right will transfer to the subject who is the beneficiary of the guarantee.

The above cases are considered in the case where the guarantor performs the guarantee obligation when the guaranteed obligation no longer exists. So, what if the guaranteed obligation still exists at the time of performing the guarantee obligation? More specifically, the guarantor pays the debt on behalf of the guaranteed person, then the guaranteed person also performs the obligation because he was not notified that the guarantor paid the debt on his behalf. According to Dr. Nguyen Ngoc Dien, the guarantor has the right to request the guaranteed person to perform the obligation to him, this right is obtained due to the legal status of the guarantor, because, after performing the guarantee obligation to the beneficiary, the guarantor will become the beneficiary's successor.

As the assignee, the guarantor is not responsible for informing the guaranteed person about the assignment of the claim: this responsibility belongs to the person transferring the claim (Clause 2, Article 309 of the Civil Code). It should also be clarified that the transfer of the claim does not require the consent of the obligated person, that is, the claim is transferred from the beneficiary to the guarantor without the consent of the guaranteed person, only the notice is required for the guaranteed person to know to perform the obligation.

Thus, in all cases the guaranteed person must be notified, either by the guarantor or by the beneficiary. On the other hand, the general spirit of the legislator is: the obligation to repay the debt belongs first of all to the guaranteed person, not to the guarantor. Therefore, if the guarantor pays the debt on behalf of the guaranteed person without informing this person, leaving them

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