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Responsibility for Another’s Debt: Suretyship, Solidarity, and Imperfect Delegation

  • Michelle Cumyn

…plus d’informations

  • Michelle Cumyn
    Professor, Faculty of Law, Université Laval

Citation: (2010) 55 McGill L.J. 211

Référence : (2010) 55 R.D. McGill 211

Corps de l’article

Introduction

The project for this article arose out of a previous study examining the rules of the Civil Code of Québec (Code) respecting delegation. [1] Delegation is the operation by which a person (i.e., the new debtor) assumes liability to a creditor for the payment of a debt owed to that creditor by another person (i.e., the original debtor). [2] A typical example occurs where the purchaser of an immovable (i.e., the new debtor) promises to reimburse the vendor’s hypothecary loan to a bank, and the purchase price for the immovable is reduced accordingly. In my previous study, I presented the argument that the Quebec delegation is best understood as an assignment or transfer by the original debtor of her debt to the new debtor. [3] A delegation is either “perfect”, where the original debtor is discharged by the creditor, or “imperfect”, where the original debtor is not discharged and remains liable in the event that the debt is not paid by the new debtor. [4] Although the Code contemplates both perfect and imperfect delegation, its provisions are incomplete as regards to the legal relations between the creditor, original debtor, and new debtor in situations of imperfect delegation. [5]

Like several authors writing on delegation, I have mentioned in passing that the relations between parties to an imperfect delegation are not unlike those arising out of a contract of suretyship. [6] The original debtor’s position with respect to the obligation owed directly to the creditor by the new debtor is indeed similar to that of a surety. [7] Alternatively, it has often been suggested that the original and new debtors are held in solidum, a characterization that brings into play the principal effects of solidary obligations. [8]

The specific goal of this article is to compare the legal regimes attaching to suretyship and solidarity in order to determine whether one or the other may be helpful in understanding the relations that arise between parties to an imperfect delegation. More broadly, it is hoped that the analysis will also contribute to a better understanding of suretyship, solidarity, and obligations in solidum. Finally, it is suggested that solidarity and suretyship may serve as models for understanding other complex relations in which several persons are responsible for the same debt. [9]

The rules governing solidarity and suretyship are complex and technical. Their detailed analysis makes it difficult to focus on their basic structure, which is not clearly revealed in the existing literature. Moreover, the existing literature fails to explain the essential difference between solidarity and suretyship. In this article, detailed analysis will deliberately be left aside in favour of a straightforward account of both solidary obligations and suretyship. It is particularly important to grasp their basic structure, since they represent alternative models that may help in understanding other complex obligations with a similar structure, notably imperfect delegation.

The idea that one may apply by analogy either the law of suretyship or the law of solidary obligations to other complex relations immediately raises an objection. There exists in both the cases of suretyship and solidarity a legal presumption that appears to deny their application unless they have been expressly stipulated by the parties or imposed by law. [10] The courts have already found it necessary to overcome this obstacle in order to import the rules of solidary obligations and apply them in a number of cases where the legal presumption established at article 1525 appears to prevent them from doing so. To this end, courts have resorted to the notion of an obligation in solidum[11] Such an obligation is not identical to a solidary obligation, but it enables courts to draw on the rules of solidarity by analogy. There is not at present a well-established practice of applying the rules of suretyship to analogous situations. There is a further objection to overcome if one wishes to do so: unlike solidarity, which at least is defined by the Code as a modality applicable to obligations in general, suretyship is a nominate contract, [12] not a legal regime of general application.

Despite these objections, I will argue that suretyship and solidarity represent alternative models, both of which are valuable in explaining and regulating complex relations in which several persons are responsible for the same debt. One must apply articles 1525 and 2335 in light of their underlying objective: the protection of an alleged surety or solidary debtor. This does not preclude the application by analogy of solidarity or suretyship in appropriate circumstances, as will be shown below.

I will begin with an attempt to capture the basic structure of solidarity and suretyship (Part I), before outlining the principal differences in their legal regimes (Part II), and discussing the conditions in which the rules of solidarity or suretyship may be applied by analogy to other legal relations and, in particular, to an imperfect delegation (Part III).

I. The Basic Structure of Solidarity and Suretyship

An obligation can be solidary only if it involves more than two parties. [13] Where the obligation has two or more creditors, it involves active solidarity; [14] where it has two or more debtors, it involves passive solidarity. [15] Only passive solidarity is addressed here. For the purposes of this discussion, I will assume the presence of two co-debtors. An obligation secured by suretyship is also one where two or more persons are responsible for its non-performance: the debtor of the obligation and the surety. I will assume the presence of a single debtor and a single surety.

Simply put, the difference between solidarity and suretyship is as follows: solidary co-debtors, on one hand, are true debtors. While the creditor may obtain payment in full from one or the other of the co-debtors, [16] the debt is ultimately shared between them. [17] The surety, on the other hand, is not a debtor. She is responsible only in the event that the debtor fails to perform the obligation. [18] The surety who has performed the secured obligation or indemnified the creditor is entitled to be reimbursed entirely by the debtor. [19] Thus, solidary co-debtors are described as being engaged toward the creditor on an equal footing, as principals (i.e., à titre principal), whereas the surety’s engagement is defined as secondary, accessory, or subsidiary in respect of the principal obligation of the debtor.

Certain features of the law of solidarity and suretyship challenge the aforementioned straightforward account. First, in the case of solidarity, co-debtors do not always share equally in the debt. In particular, the final burden of the debt may rest with only one co-debtor. [20] In such circumstances it becomes unclear whether the co-debtors are in a relationship of solidarity or suretyship. Second, in the case of suretyship, the creditor is not always compelled to pursue his claim first against the debtor, before turning to the surety for payment or an indemnity, since sureties often waive the benefit of discussion. [21] In practice, when a debtor becomes insolvent, a creditor frequently chooses to pursue the surety directly. Once again: is this suretyship, or is it solidarity? [22] A closer analysis of solidarity (Part I.A) and suretyship (Part I.B) is required before a new attempt is made to contrast them (Part I.C).

A. Solidarity

Sources on the earliest forms of solidary obligations are scarce and fragmentary. Their interpretation remains controversial even today. [23] In a few brief sentences, the Institutes of Justinian (Institutes) describe the form of solidarity that has passed into modern law. [24] They mention that an obligation contracted by stipulation may have more than one debtor. For such an obligation to be formed, the co-debtors must in turn each promise the same thing. Payment by one co-debtor will discharge the debt. Finally, the Institutes specify that it is possible for one co-debtor’s obligation to be unqualified, while the other’s is conditional, or for one to have the benefit of a term, but not the other. [25]

A recent work by Antoine Hontebeyrie has been very helpful in shedding light on the basic structure of solidary obligations. [26] The author articulates two conflicting perspectives that arise where an obligation has more than one debtor. Hontebeyrie describes them as external and internal, for reasons that will become apparent below, but I will refer to them respectively as the “creditor’s perspective” and the “co-debtors’ perspective”. The creditor’s perspective dominates in solidary obligations, whereas the co-debtors’ perspective prevails in respect of joint and divisible obligations (i.e., where co-debtors enjoy the benefit of division). However, both perspectives are always present in respect of an obligation with multiple debtors, whether such obligation is joint and divisible, or solidary.

The creditor’s perspective views the relation between the creditor and co-debtors in such a way as to escape the possible negative implications for the creditor of there being more than one debtor. [27] From the creditor’s perspective there is only one debt, and so it should be possible to obtain payment from either co-debtor; in other words, the creditor wishes to deal with each co-debtor as if he were the only debtor. [28] Thus, in a solidary obligation, where the creditor’s perspective is dominant, the creditor may sue a co-debtor for the full amount of the debt, [29] she may issue a single notice of default that will be opposable to both co-debtors, [30] prescription that is interrupted with respect to one co-debtor is interrupted with respect to the other, [31] the share of an insolvent co-debtor accrues to the other co-debtor, [32] and so forth.

From the creditor’s perspective, the proportions in which co-debtors share the final burden of the debt among themselves is strictly an internal matter. For example, consider the case where spouses solidarily contract a loan to purchase an immovable. It is an internal matter between them how they will divide ownership of the immovable, and the extent to which each will contribute to repaying the loan; their respective shares and contributions may in fact vary over time. [33] From the creditor’s perspective, this should not have any incidence on the external relationship between the creditor and co-debtors, in which each co-debtor is liable for the entire amount of the loan, and in which the creditor may deal with the co-debtor of his choice.

From the co-debtors’ perspective, however, each co-debtor is indebted only to the extent of his share in the debt. [34] The Code provides that such shares are equal, unless the co-debtors’ interests in the debt are unequal and can be established by other means. [35] From the co-debtors’ point of view, each should only have to pay the amount corresponding to his share to avoid the necessity of any contributions among them; each should also be permitted to deal with the creditor as if there were several debts. According to the co-debtors’ perspective, their individual interests should be protected, and it is not fair to assume that one of the co-debtors can be relied on to represent the interests of the other. Each should benefit individually from the rules of prescription when the creditor fails to exercise his rights in a timely fashion. Finally, the risk of one co-debtor becoming insolvent ought to be allocated to the creditor, not to the other co-debtor.

In a solidary obligation, the creditor’s perspective prevails nearly absolutely over the co-debtors’ perspective in governing the relations of the creditor to each of the co-debtors. The co-debtors’ perspective comes into play only to govern the contributions to be made between themselves where one has paid more than her share of the debt. Nevertheless, some rules allow the co-debtors’ perspective to generate limited effects as between the creditor and co-debtors. [36]

If the debt is not solidary and if it is divisible, a co-debtor may require that the creditor divide his claim among the co-debtors (i.e., through benefit of division). In such a case, the co-debtors’ perspective prevails over the creditor’s perspective. The creditor may compel each co-debtor to perform only his share of the debt, and he also bears the risk of a co-debtor becoming insolvent. In such a case, the obligation is said to be “joint” (conjointe). [37]

According to several authors in Quebec, the expression “joint and solidary” (conjoint et solidaire) is incorrect since an obligation must be either joint or solidary, but cannot be both at once. [38] One wonders, then, why the expression was so widely used until recently. [39] The answer appears straightforward if one refers to the ordinary meaning of the word “jointly” (conjointement): persons who are bound jointly are persons who are bound together, by the same obligation. [40] If the relation of joint to solidary or divisible obligations is understood properly, the expression “joint and solidary” makes perfect sense, as does the expression “joint and divisible”: a joint obligation is one where several persons are obliged together, as co-debtors. [41] The legal regime to be applied to such an obligation is open to a range of possibilities, due to the conflicting interests or perspectives that come into play. For the creditor’s perspective to prevail, the obligation must be solidary. For the co-debtors’ perspective to prevail, it must be subject to the benefit of division. A joint obligation is therefore solidary, divisible, or indivisible. [42] In the last case, it is incapable of being divided, although not necessarily solidary. [43] Joint obligations have certain rules in common, whether they are solidary or subject to the benefit of division. [44] The difference between solidarity and divisibility is therefore a matter of degree, not a fundamental opposition, as is commonly supposed. [45] Still, it has to be acknowledged that under current law in Quebec, a “joint obligation” refers to an obligation that is not solidary and not indivisible, thus making it subject to the benefit of division between the co-debtors. [46] This is unfortunate, since we are now deprived of a general term for describing an obligation with more than one debtor. In this article, the expression “obligation with multiple debtors” will continue to be used.

Hontebeyrie and others have made the argument that solidarity is the “natural state” of an obligation with multiple debtors. [47] That is why Hontebeyrie describes the creditor’s perspective as external and the co-debtors’ perspective as merely internal to the relations between them. As he indicates, the benefit of division was introduced as a favour to co-debtors, in order to counter the harsh effects of solidarity. [48] Thus, in Roman law, obligations with multiple debtors were initially viewed as solidary, and the benefit of division appeared later in its development. However, it does not necessarily follow that solidarity is more “natural” than division. As I hope to have shown, relations between the creditor and co-debtors can be governed equally well by the idea that each co-debtor can be treated by the creditor as if he were the only debtor (i.e., creditor’s perspective) or the idea that the debt must be divided among the co-debtors (i.e., co-debtors’ perspective). One solution does not appear to be inherently superior, more logical, or more natural than the other, although one is clearly to the advantage of the creditor, and the other to the co-debtors’. Moreover, the argument that solidarity is more natural than division is harmful: some codifiers in recent times have proposed to make all obligations with multiple debtors solidary, thus eliminating the benefit of division except where it is provided for in a contract or by law. [49]

Fortunately, the Code has upheld the presumption that an obligation with multiple debtors is subject to the benefit of division, unless it is contracted for the service of an enterprise or it is expressly declared to be solidary by the parties or by law. [50] However, because this rule makes it more difficult to apply solidarity in cases where a debt is not contracted for the service of an enterprise and solidarity is not provided for expressly by the parties or imposed by law, courts have resorted to the obligation in solidum where this was felt to be necessary in order to import the rules of solidarity. There is clearly a danger that the benefit of division will become eroded by continued expansion of the obligation in solidum, whose justification and scope have not yet been properly addressed. [51] I will return to this matter in Part III, below.

To sum up, a solidary obligation is an obligation with multiple debtors in which the creditor’s perspective prevails over the co-debtors’ perspective. On the whole, this entitles the creditor to treat each co-debtor as if he were the only one liable for the full amount of the debt. The co-debtor who has paid the creditor may claim a contribution from his co-debtor according to the latter’s share of the debt.

B. Suretyship

Suretyship is based upon the simple idea of imposing a sanction on a person other than the debtor where the latter fails to perform an obligation or comply with a duty. [52] This is most apparent if one considers primitive forms of suretyship, or non-contractual forms such as judicial suretyship. [53] The sanctions imposed on the surety have evolved through time, and have generally taken the same forms as those imposed on a defaulting debtor. Thus, hostage-taking is one of the earliest examples of suretyship, and it existed contemporaneously with imprisonment for debt: the surety was held prisoner by the creditor until the debtor paid his debt. In times where a debtor could be sold as a slave, so could a surety. A close analogy was drawn between suretyship and the pledge of a thing, since the creditor gained control over the surety’s body as if it were a thing (i.e., plegerie). In some instances, the rules on suretyship provided that the surety was to be imprisoned, sold, mutilated, or even put to death instead of the debtor. In such cases, the creditor who had accepted a surety had no recourse against the debtor. If the surety died, that put an end to any possible legal action by the creditor. The sanctions to which the surety was exposed could not be exercised against his heirs.

The purpose of suretyship has always been to secure performance of an act or of an obligation. In primitive forms of suretyship, the exposure of a family member or close friend to slavery or imprisonment must have created a powerful psychological incentive for a debtor to pay his debt. Sometimes the surety was chosen because he was in a better position than the creditor to control or influence the debtor; obviously, it was in the surety’s interest to exercise that control or influence with a view to obtaining the earliest possible payment of the debt.

The law of suretyship has evolved considerably if one compares its “modern” [54] and primitive forms, although its basic structure has remained unchanged. An important shift in the general law explains the transformation of suretyship over time. This shift pertains to the nature of legal sanctions for non-payment of a debt. The law has evolved from a system of dissuasive or punitive sanctions—where the debtor or surety was imprisoned, enslaved, mutilated, put to death, or even denied a proper burial—to one of sanctions designed to satisfy the creditor’s claim—where the debtor or surety’s property is taken to make good on that claim. [55] The perfect surety is no longer a person close to the debtor’s heart, but rather one who has sufficient property to make good on the creditor’s claim in the event of default. [56] That is not to say that the threat of legal action against the surety does not continue to have a dissuasive effect upon the debtor, nor that the psychological effects of the more primitive forms of suretyship do not continue to exist today. [57]

Modern suretyship provides a new and direct means by which the creditor may obtain satisfaction for his claim. Whereas primitive suretyship secured payment only indirectly by exerting pressure on the debtor, modern suretyship allows the creditor to seize the surety’s property in order to obtain the value of his claim. There is nothing to prevent the creditor from exercising his rights directly against the surety upon default of the debtor, just as he would have been entitled to punish him immediately under the primitive model. However, in the primitive model, punishing the surety did not provide satisfaction for the creditor’s claim; if anything, the creditor only incurred additional expense, since he had to pay for the room and board of the surety, if imprisoned. [58] In modern law, seizure of the surety’s property allows the creditor to satisfy his claim irrespective of the debtor’s ability or willingness to pay. Thus, it has become more expedient in many cases for the creditor to pursue his claim directly against the surety, without taking recourse against the debtor at all. This development has drawn suretyship closer to solidarity. [59]

The same development also provoked a reaction from commentators, however, and various mechanisms and doctrines were devised in order to ensure that the surety would be pursued only after it was shown that recourse against the debtor would not provide satisfaction. In other words, the subsidiary character of suretyship was being asserted, and this influenced the development of the law. In Roman law, it was considered to be an offence for a creditor to pursue a surety if the debtor was capable of paying his debt. [60] The benefit of discussion—requiring that a creditor first attempt to make good on his claim against the debtor’s property before pursuing the surety [61]—was introduced later into Roman law, as it was into French law during the thirteenth century. [62] Many believe this measure to be ineffective, because the surety may validly renounce the benefit of discussion in the suretyship agreement, which is nearly always done. [63] Moreover, exercise of the benefit of discussion is onerous for the surety. [64] Nevertheless, the benefit of discussion gives expression to the important notion that a creditor ought not to pursue a surety unless recourse against the debtor is ineffective. This is especially true where the surety was not remunerated and where she has not benefited from the debtor’s activities. [65]

The accessory character of suretyship has also been imposed consistently throughout the ages. The surety’s responsibility is accessory in the sense that its existence depends on the validity and continued existence of the principal obligation; its scope is likewise determined by the scope of the principal obligation. [66] Therefore, the surety is discharged in case of nullity, payment, or prescription of the principal obligation, just as he may invoke the debtor’s defences to reduce or repel the creditor’s claim. [67] The accessory character of suretyship is one of its fundamental attributes in the French legal tradition. An independent guarantee is not and cannot be a suretyship. [68]

The evolution of suretyship has made it increasingly difficult to set it apart from solidarity. Yet, as will be seen in Part II, below, there remain some important differences between them. Such differences relate to the idea, stated at the outset, that the surety is not a debtor. What, then, is the nature of the surety’s relation to the debt?

Two interpretations have been provided—one in the civil law tradition, the other in the common law tradition—that help us understand the nature of the surety’s responsibility for a debt that is not his own. In the civil law tradition, the dualist conception of obligations was developed by German scholars and has obtained a certain degree of acceptance in French law. [69] According to the dualist conception, the obligation has two aspects: the debt (Schuld), and responsibility for the debt (Haftung). [70] The debt describes what the debtor must do and that to which the creditor is entitled. In most instances, the debt is voluntarily performed to the creditor’s satisfaction. If so, responsibility for the debt is not called into play. By responsibility for the debt, it is meant that a person or thing is answerable in case of non-performance. A recourse or sanction may then be exercised against that person or thing. For example, the person who is responsible may be ordered to perform the obligation in kind or to pay damages representing the value of performance. [71] If necessary, her property will be seized to satisfy the creditor’s claim. [72] In modern law, the sanction is, in most instances, modelled on the debt itself; it is intended to satisfy the creditor’s claim, but no more. [73] Thus, it is not always easy to identify debt and responsibility as two distinct aspects of an obligation.

First developed by Brinz as a theoretical construct, [74] the dualist conception was applied to old Germanic law and to Roman law and was found by legal historians to provide a useful framework for analyzing a number of situations where there appeared to exist separate processes for creating debt and responsibility. [75] The dualist conception has also been invoked to explain modern institutions, in particular the natural obligation (i.e., debt without responsibility) and suretyship (i.e., responsibility for another’s debt). As many authors have noted, the surety is not a debtor, but is responsible—or answerable—if the debtor fails to perform the secured obligation. [76]

In the common law tradition, an analogous distinction is made between primary and secondary obligations. [77] A secondary obligation (e.g., the obligation to pay damages) arises when there is breach of a primary obligation (e.g., a contractual term). Suretyship is commonly analyzed as imposing a secondary obligation on the surety to pay damages where the debtor breaches his primary obligation, being the secured, principal obligation. The surety is not a party to the principal obligation; however, if and when the debtor defaults, the surety becomes liable by virtue of the secondary obligation to pay damages. This distinction between primary and secondary obligations is different from the dualist conception, although they are perhaps not as far apart as may seem at first. Indeed, proponents of the dualist conception do not view responsibility for non-payment of the debt as an “obligation”. It is the primary obligation itself that is composed of two aspects that may, in certain circumstances, become dissociated. It is not necessary to discuss further the relative merits or implications of these alternative interpretations of suretyship. It is sufficient to note that both recognize and give expression to the fundamental idea that the surety is not a party to the principal obligation she has undertaken to secure. [78]

C. Solidarity and Suretyship in Contrast

I have shown that a solidary obligation has multiple debtors who share the debt, while a surety is responsible for a debt that is not his own. Despite this distinction, some authors have brought the two notions together. First, one might be tempted to argue that the surety is in effect solidarily liable for the debt, especially if he has agreed to be bound solidarily by renouncing the benefit of discussion. [79] If the surety may be treated by the creditor in the same way as a co-debtor, the argument might go, then there really is no difference between suretyship and a solidary obligation in which one co-debtor has no interest in the debt. This view is sometimes entertained in the literature but is ultimately rejected. First, the surety, in contrast to a co-debtor, may invoke all the defences available to the principal debtor. Second, the surety, in contrast to a co-debtor, is also not a party to the principal obligation. [80] These differences and others will be discussed in Part II, below.

Some authors have brought together suretyship and solidarity in a different way, by suggesting that solidary debtors are indebted to the extent of their share in the debt but act as sureties for one another in respect of the balance (i.e., théorie du cautionnement mutuel). [81] It is indeed possible to defend this point of view by applying the dualist conception to solidary obligations in the following way: the debt of each co-debtor is limited to his individual share, but each remains responsible for the whole. [82]

Solidarity, in contrast to suretyship, need not involve a dissociation of debt and responsibility. [83] The description of solidarity in terms of the conflicting perspectives of the creditor and co-debtors successfully accounts for the paradox that underlies solidary obligations—that each co-debtor is simultaneously debtor for the whole and debtor for his share of the debt. It also sets solidary obligations clearly apart from suretyship. As I have indicated, the creditor of a solidary obligation may treat each co-debtor as though he were the sole debtor and the only one responsible for the full amount of the debt (i.e., the creditor’s perspective). The co-debtors, as among themselves, share both in the debt and responsibility for the debt (i.e., the co-debtors’ perspective). Still, in the final analysis the most important reason for upholding the distinction between solidarity and suretyship is that there exist significant differences in the rules by which they are governed.

II. The Differences in the Rules Governing Solidarity and Suretyship

Suretyship and solidarity have many points in common. Their historical development has allowed them to converge: they frequently fulfill similar functions, and rules and remedies have from time to time been transposed from one to the other. Indeed, the laws of both solidarity and suretyship involve striking a balance between the conflicting interests of the creditor on one hand (for whom suretyship or solidarity provides security for payment of the debt), and the surety or co-debtors on the other hand (who run the risk of having to satisfy a debt which is not their own or not entirely their own). The creditor is entitled to pursue his claim for the entire amount of the debt against either a co-debtor or the surety. The co-debtor or surety who has paid the debt has the right to be reimbursed by the principal debtor or the other co-debtor to the extent of his share. It is therefore not surprising to find a number of elements common to both suretyship and solidarity, such as the complex set of rules regarding subrogation.

My purpose here is not to provide a complete overview of the law of suretyship and solidarity, nor to examine areas of convergence in their legal regimes, but only to outline the most significant differences between them. I hope to show that these can be accounted for and understood by referring to the idea that the surety, unlike a co-debtor, is not a party to the secured obligation, but is responsible only in case of non-payment.

I will now address, in turn, the rules that concern the creation and subsequent modification of the principal obligation (Part II.A), its payment or voluntary performance (Part II.B), the extent of the co-debtors’ or surety’s responsibility in case of non-payment (Part II.C), and the creditor’s duty to inform (Part II.D).

A. Creation and Subsequent Modification of the Principal Obligation

A contractual obligation is formed by the parties consenting to it. [84] It has effect only between those parties, except in special cases provided by law. [85] It will be shown that while the co-debtors are parties to the principal obligation, the surety is not.

There can be no doubt that co-debtors must both be party to the contract by which their obligation is formed; [86] they must likewise take part in any new agreement purporting to modify the terms of their initial obligation. [87] Thus, if a co-debtor is not involved in the renewal of a hypothecary loan, the new terms to which the other parties have consented are not opposable to the co-debtor who was excluded from the agreement. The same holds true where the credit limit on a credit card is increased without a co-debtor’s consent, [88] or when a lease is modified with the approval of only one lessee. [89] Any exceptions to this principle must be justified on special grounds, such as the presence of a mandate given by the excluded co-debtor to a person taking part in the agreement, [90] or the existence in the agreement of a stipulation for another, the benefit of which is accepted by the excluded co-debtor. [91] It is always possible for a new debtor to be joined with the consent of all parties concerned to an existing contract or obligation, in which case he becomes a party to it. [92]

A surety need not be party to the contract in which the principal obligation is created, nor to any subsequent modification of it. [93] A surety may in fact undertake to secure an obligation not yet in existence. [94] It cannot be argued that the principal debtor acts as the surety’s mandatary, so as to make the surety a party to the principal obligation. [95] Further evidence that the surety is not a party to the principal obligation is found in the fact that his responsibility may be limited in time or that he may have the ability to terminate the suretyship. [96] Bringing the surety’s responsibility to an end has no incidence on the existence and scope of the principal obligation or on the extent of the principal debtor’s liability.

B. Payment or Voluntary Performance

It has just been shown that the surety is not a party to the secured obligation. In Part I above, the argument was presented that in the civil law the surety is responsible for the debt, although the debt is not his own. [97] If this view is correct, it follows that the surety is not expected to perform the secured obligation voluntarily, whereas the debtor and co-debtors are expected to do so. The surety becomes responsible only in the event that the debtor fails to perform the principal obligation (see below). Is this view attested by the positive law?

The Code states that the surety “binds himself towards the creditor ... to perform the obligation of the debtor if he fails to fulfill it.” [98] More precisely, the French Code civil states that the surety undertakes to satisfy the creditor’s claim if the debtor does not do so. [99] The French definition underscores the surety’s responsibility for the debt, whereas the Quebec definition appears to consider the surety’s undertaking as one to perform the obligation itself. Still, the Quebec definition makes clear that the surety’s responsibility arises only if the debtor fails to fulfill his obligation, and that the surety’s assumption of responsibility attaches to the obligation of the debtor, not his own.

My position is that the statement according to which the surety undertakes to perform the debtor’s obligation must be understood as a shorthand for the following, more complex propositions. The surety is responsible for the debtor’s obligation such that all or some of the personal recourses normally available against a defaulting debtor may be exercised against the surety—and in particular, in the case of a monetary obligation, a judgment ordering the surety to pay the debt (see below). The surety may elect to pay the debtor’s obligation voluntarily in order to avoid legal proceedings being taken against herself. Where the surety pays the debt voluntarily before a judgment is issued in such a proceeding, the surety is still paying the debtor’s obligation, not his own. [100] Significantly, the surety may also take action against the debtor to compel payment of the debt [101]—a recourse not available among co-debtors of a solidary obligation, although this particular rule likely extends to a co-debtor with no interest in the debt by virtue of article 1537. [102] Unlike the surety, a co-debtor pays a debt that is her own, even when she pays an amount exceeding her share in the debt.

Accordingly, the debtor of the principal obligation must be in default before the creditor may pursue the surety. [103] In the case of a solidary obligation, it is not necessary for both co-debtors to be in default before one of them may be pursued for the full amount of the debt. In fact, putting one co-debtor in default has equal effect with respect to the other co-debtor. [104]

A surety may set up against the creditor all the defences of the principal debtor, with the exception of bankruptcy. [105] By contrast, a co-debtor may set up only defences that are common to both co-debtors: she may not set up defences personal to her co-debtor, even to the extent of the latter’s share in the debt, with the exception of compensation, confusion, and release. [106]

It follows that a creditor cannot invoke the rules of compensation against the surety in such a way as to apply amounts owing to the surety by the creditor—such as funds held by the surety in an account with the creditor—in payment of the principal obligation. [107] By contrast, there is nothing to prevent a creditor from taking an amount owing to him by a co-debtor in full payment of a solidary obligation. [108]

C. Responsibility in Case of Non-Payment

The surety’s undertaking is to satisfy the creditor’s claim, should the debtor fail to perform his obligation. A variety of remedies are available against a defaulting debtor. The surety may also be subject to these remedies, to the extent provided in the suretyship agreement or permitted by law. For example, a surety may conceivably be responsible for specific performance, damages, or payment of a penalty should the debtor default. In practice though, the surety’s responsibility nearly always takes the form of damages, while the surety is also at liberty to perform the debtor’s obligation in kind where possible. [109] For example, where a financial institution has guaranteed the timely and correct performance of a contract of enterprise, it may elect to hire a new contractor to remedy the debtor’s default in kind, but it is not required to do so. The actual responsibility undertaken by the surety in such a case is to indemnify the creditor by way of damages. [110]

As is well known, it is possible for the surety to limit his responsibility to a certain amount, or in such a way that the creditor will be entitled to satisfy his claim only against a specific item of the surety’s property. [111] In the latter case, the creditor is well-advised to obtain a hypothec against such property (e.g., real suretyship or cautionnement réel).

Before a creditor may proceed to the seizure of the surety’s property in satisfaction of his claim, a judgment must be entered against the surety for a certain amount. [112] The judgment debt is a debt different in nature from the principal obligation. Only by virtue of a judgment does the surety truly become a debtor. The creditor may henceforth invoke compensation as between the judgment debt and an amount owing to the surety (e.g., funds in the surety’s account with the creditor). The surety is expected to pay the judgment debt and is subject to seizure of his property in satisfaction of the creditor’s claim. [113]

Several rules illustrate how the principal debtor’s liability and the surety’s responsibility for the debt do not operate on the same level. Although the surety’s responsibility is frequently limited to a certain amount, the debtor and surety never share in the debt, contrary to the co-debtors in a solidary obligation. In cases where a solidary obligation is also secured by a suretyship, the surety who has paid may pursue either co-debtor for the full amount of the debt. [114] The rule is of course different where a co-debtor has paid the debt: he may pursue each of his co-debtors only for their individual shares. [115]

D. Creditor’s Duty to Inform

Quebec law has seen considerable development in recent years of a creditor’s duty to inform, which may arise either during negotiations leading up to the conclusion of a contract, or during the contract’s performance. [116] Significantly, such a duty has frequently been imposed by the courts on creditors in the context of suretyship, but rarely, if ever, has it been found to exist in cases of solidarity. The Code itself expressly imposes on the creditor a duty to inform at articles 2345 and 2355, [117] whereas no such duty is prescribed in the provisions on solidarity.

The reason for imposing a duty to inform in the context of suretyship is that the surety, not being a party to the principal obligation, typically does not have any direct means of control over its evolution. Nor does the surety have ready access to information concerning the secured obligation. The surety cannot prevent a modification of the obligation, even when exposed to greater responsibility by an increase in the principal debtor’s credit limit, an extension of the term for repayment, or an increase in the interest rate. [118] Moreover, such a modification might easily take place without the surety’s knowledge. [119] The surety frequently does not know the terms of the principal obligation or the conditions for its renewal or modification, nor whether the debt is in good standing. Yet such information may be of crucial importance to the surety, not only when he initially agrees to secure the debtor’s obligation(s), but also thereafter, since the surety may have the means to influence the debtor, to demand that the debtor pay the debt, [120] or to terminate the suretyship altogether. [121] Except in cases where the surety does in fact have access to the relevant information, [122] the courts have readily imposed on the creditor a duty to inform. [123] Where the creditor is found to have violated his duty to inform at the time of contracting, the surety may have the suretyship annulled on grounds of error. Where the duty to inform is violated after the contract’s formation, the surety may invoke a fin de non-recevoir, through which the creditor’s recourse is declared by the court to be inadmissible. [124]

The creditor’s duty to inform has not taken hold in the law of solidary obligations, which is unsurprising, since both co-debtors are party to the debt and to any modification of its terms, failing which a modification is inopposable to the absent co-debtor. In suretyship, the existence of a duty to inform compensates for the surety’s lack of knowledge and control. In solidarity, both co-debtors as parties to the obligation normally have such knowledge and control. [125] Of course, that is not to say that a duty to inform could not arise in the context of a solidary obligation if special circumstances were present. The existence of a duty to inform always depends on the facts of each case. [126]

To conclude, suretyship and solidarity represent different manners in which two or more persons may share responsibility for the same debt. In the case of solidarity, the co-debtors are both parties to the obligation, either of them is expected to perform the debt voluntarily, and either may be held responsible in case of non-performance. As for the surety, he is not a party to the secured obligation, he is not expected to perform it voluntarily, but he is responsible in case the debtor defaults. To ensure protection of the surety’s interests, the creditor is required, as a rule, to inform the surety of any important changes affecting the principal obligation(s), including a deterioration of the debtor’s ability to meet his obligations. The question that remains to be addressed is whether solidarity or suretyship may be applied by analogy to resolve issues arising in the context of other complex relations, particularly in the case of imperfect delegation.

III. The Extension by Analogy of the Rules Governing Solidarity or Suretyship

This section considers whether the alternative models represented by solidarity and suretyship might be used to explain similar complex relations, even where such legal relations have come into being other than by a creditor contracting with multiple debtors or a surety undertaking to guarantee the payment of another’s debt. As mentioned at the outset, article 1525, in the case of solidarity, and article 2335, in the case of suretyship, appear to preclude this possibility. However, that view does not hold, as I demonstrate by discussing the meaning and scope of both articles (Part III.A), before noting that solidarity has been extended to analogous situations either by law or by the courts making use of the obligation in solidum (Part III.B), while a similar extension of the rules governing suretyship is also possible, although it has generally been approached with caution (Part III.C). Finally, I will explain why it is appropriate to apply by analogy the rules governing suretyship to imperfect delegation (Part III.D).

A. Scope of Articles 1525 and 2335 of the Civil Code of Québec

Article 1525 is found in the section of the Code concerning obligations with multiple debtors. It should be recalled that an obligation is “joint between two or more debtors where they are obligated to the creditor for the same thing but in such a way that each debtor may only be compelled to perform the obligation separately and only up to his share of the debt.” [127] An obligation is “solidary between the debtors where they are obligated to the creditor for the same thing in such a way that each of them may be compelled separately to perform the whole obligation and where performance by a single debtor releases the others towards the creditor.” [128] Article 1525 then states that “[s]olidarity between debtors is not presumed; it exists only where it is expressly stipulated by the parties or imposed by law.”

The purpose of article 1525 is to protect co-debtors by establishing in their favour a presumption that they are jointly liable for their common debt. To overcome the presumption, it must be stipulated expressly by the parties or provided by law that the obligation is solidary. Article 1525 also contains a reverse presumption in cases where the obligation is contracted for the service of an enterprise. In such a case, the obligation is solidary unless the parties have provided that it is joint. One reason for reversing the presumption is that the creditor in such a case is likely to be in greater need of protection than the co-debtors.

Article 2335 appears in the chapter of the Code devoted to suretyship. It states that “[s]uretyship is not presumed; it is effected only if it is express.” Suretyship is well known to be a dangerous contract for the surety. The purpose of article 2335 is to ensure that no suretyship will be found to exist unless the surety’s consent to such a contract has been given in express terms. Indeed, it often happens that the intention to guarantee the debt of another cannot be made out clearly. In some cases, a person may have intended only to give assurances that the debtor is trustworthy, which must not be construed as a guarantee. [129] In other cases, it may be uncertain whether a person has signed an agreement in her personal capacity as surety, or only as a witness or representative of the principal debtor. [130] For example, it often happens that a clause is inserted in a loan or credit agreement to the effect that the undersigned, while signing the agreement on behalf of the debtor company, also agrees in his personal capacity to guarantee the debtor’s obligations. [131] In such instances, article 2335 plays an important protective role: a suretyship will not be found to exist unless the defendant’s intention to act as a surety has been clearly expressed. [132]

The function of articles 1525 and 2335 is to resolve a situation where the parties’ intention to create a solidary obligation or a suretyship is ambiguous by giving co-debtors or the alleged surety the benefit of the doubt. In a contract that creates an obligation with multiple debtors, the obligation is presumed to be joint if it is not for the service of an enterprise. In an agreement where a party’s intention to guarantee the obligations of another is uncertain, a suretyship is presumed not to exist. But where it can be established without doubt that two persons are each liable to perform the same obligation in full, it may be appropriate to apply the rules of solidarity by analogy, even though no express stipulation can be found to that effect. Where one person is undoubtedly responsible for the debt of another independently of the existence of any suretyship agreement, it may likewise be appropriate to apply by analogy the law of suretyship.

B. Extension of Solidarity

I have thus far considered only the cases where several debtors contract an obligation together. In such cases, one must determine whether the debt is joint or solidary. As we have just seen, article 1525 contains the rules that must be used to answer that question.

It is now necessary to consider the development of solidarity outside the realm of contracts, particularly in the field of civil responsibility, and in the case of joint wrongdoers. This development has followed a different course and raised a different set of legal issues. Conceptually, the situation initially presents itself as follows. Suppose that X and Y have each committed a fault resulting in a loss suffered by Z. Assume further that Z is able to establish independently a claim against either X or Y, each of which would allow her to be compensated fully for her loss. It is clear that Z cannot obtain full compensation from both X and Y. If Z obtains full compensation from X, then she will not succeed in an action against Y, since there will no longer be any loss to compensate. [133] Moreover, unless there exists a contractual relationship between X and Y (e.g., a mandate or insurance agreement), X initially does not appear to have an action to recover from Y any part of the amount paid to Z. The matter might simply have been left at that, with the plaintiff having the choice to pursue any or all of the persons responsible for her loss until fully compensated. A defendant in this scenario could not require others also liable for the plaintiff’s loss to share the debt, except in the presence of separate rules to that effect governing the relations between defendants.

Instead, it was determined—sometimes by statute, sometimes by case law—that applying the principal effects of solidarity would provide a more efficient and just result in such cases. [134] Accordingly, a plaintiff may still claim from any one defendant the full amount of a loss, but the defendant may now demand that all parties responsible for the loss share in the ultimate burden of compensating the plaintiff. The plaintiff’s rights are undiminished, except insofar as control of the allocation of the damages among the defendants is lost. Applying the rules of solidarity ensures that all parties liable for the plaintiff’s loss share in the debt, a solution that has been found preferable with a view to securing the dissuasive objectives of civil responsibility and equitable treatment of the defendants. [135] The legal means by which this result has been achieved have varied. In some cases, the defendants’ liability was defined by law as solidary; in others, the defendants were determined by the courts to be liable in solidum—a characterization found to bring into play the principal effects of solidarity. [136]

In other situations as well, courts have decided that rules governing solidarity should apply. It is not necessary to examine those circumstances here, although one instance—imperfect delegation—will be addressed below. It is sufficient to note that solidarity has frequently been extended by analogy to new situations. [137] The courts have generally reached this result by declaring the parties to be liable in solidum[138]

Until the nature and scope of the obligation in solidum are better known, there is a danger that the benefit of division will be lost in some cases where it ought to apply. In particular, courts must resist any temptation to apply the obligation in solidum to cases where an obligation is contracted in common by multiple debtors, not for the service of an enterprise, and without any express stipulation in the contract that the debt is solidary. [139]

C. Extension of Suretyship

While they have been relatively bold in extending by analogy the rules of solidarity to novel situations, jurists in France and Quebec have been very cautious in applying the rules of suretyship to instances where the relations between parties are similar to those between a debtor, creditor, and surety. [140] Yet article 2335 of the Code does not stand in the way of such an analysis, since the purpose of that article is to prevent a court from implying the existence of a contract of suretyship in cases where no clear intention to conclude such a contract exists. If, however, responsibility for another’s debt does exist independently of any contract, then there appears to be no reason why one could not draw on the rules of suretyship to the extent that they are consonant with the nature of the relations being examined. It should be noted that the rules of suretyship are likely to be invoked by the person responsible for the debt (who is in a position analogous to that of a surety) because they provide effective rights and remedies against the creditor and debtor of the obligation. It must be remembered that article 2335 is designed to protect the alleged surety, not the creditor or the debtor of the obligation. This provision should not be used to bar the application of rules and remedies that benefit the party whom it is intended to protect.

Where a person is responsible for the debt of another, although he is not himself a debtor, suretyship provides a valuable model for defining the relations between the parties, which present the same basic structure as suretyship. Solutions have been developed over time, in the context of suretyship, to respond to the legitimate needs and interests of the creditor, debtor, and person responsible for the debt. Many of the rules and mechanisms of suretyship were designed specifically to resolve difficulties inherent in such relations. It is therefore relevant to refer to suretyship where no other or better rules are available. This approach is frequently used in the law of obligations and in private law generally, and it is an important feature of civil law methodology.

In cases involving complex obligations, it will often be necessary to choose between applying by analogy the law of suretyship or the law of solidarity. One will then ask whether persons responsible for the debt are all true debtors, in which case solidarity should be referred to by analogy, [141] or whether one person is merely responsible for the other’s debt, in which case suretyship is the appropriate reference. Where the debt is ultimately to be shared among the debtors, the facts clearly point to solidarity. Where only one debtor has an interest in the debt, the solution is more difficult, because this factor does not exclude the possibility (nor does it imply) that the relations between the parties are analogous to suretyship. [142] As we have seen, a solidary obligation in which one co-debtor has no interest in the debt is distinct from suretyship, in particular because both co-debtors must take part in any modification of the debt, and either co-debtor is expected to pay the debt. The surety is not expected to pay until the debtor is in default and the surety’s responsibility has been converted into a debt by judgment (although he may elect to pay the debt before then, if only to avoid proceedings being taken against him). [143]

In D.I.M.S. Construction, the Supreme Court of Canada briefly considered applying the law of either solidarity or suretyship to an obligation with multiple debtors created by statute. [144] Section 316 of the Act Respecting Industrial Accidents and Occupational Diseases [145] provided that the Commission de la santé et de la sécurité du travail could claim from an employer the amounts payable to the commission by a contractor, in cases where the employer had retained the contractor’s services. [146] The section further provided that the employer had a right to be reimbursed by the contractor, after having paid the commission. The court analyzed the relations between the parties as follows:

In the case at bar, solidarity is not mentioned in s. 316 AIAOD and cannot be presumed. Nor can the employer’s obligation be characterized as being in solidum with the contractor, since the instant case does not involve two concurrent debts having the same object. The contractor must first be obliged to pay. It might be thought that this is a legal suretyship under art. 2334 C.C.Q., but the suretyship referred to in that article is one that a debtor must furnish when obliged to do so by the legislature. In the case of s. 316 AIAOD, the obligation is imposed directly on the warrantor, not on the debtor. This cannot be a true case of suretyship, since a warrantor under the AIAOD has no choice in taking on the obligation, whereas consent is an essential aspect of suretyship, which is by definition a contract. The Superior Court judge’s statement of the law to the effect that s. 316 AIAOD establishes a legal suretyship is therefore wrong. [147]

The court’s finding that the legal relations established by section 316 cannot be explained by the law of solidary obligations, obligations in solidum, or suretyship leaves the statute in a legal vacuum. It is difficult to believe that this result was intended by the legislature when it adopted articles 1525 and 2335 of the Code, especially in view of the preliminary provision, which states that “the Code is the foundation of all other laws.” [148] My argument is that it is appropriate and helpful in cases such as this to apply the rules of solidarity or the rules of suretyship, either directly or by analogy, in order to complete the relevant statutory provisions.

In D.I.M.S. Construction, either the contractor or the employer was expected to pay the debt: the commission could require payment from one or the other. It would therefore not be appropriate to apply by analogy the law of suretyship, even though only one party, the contractor, was ultimately liable for the full amount of the debt. The court appeared to recognize that the employer is treated by the statute as a debtor, not a surety, when it held rather ambiguously that “the obligation is imposed directly on the warrantor.” [149] The obligation created by the statute must be characterized as an obligation with multiple debtors. Where such an obligation is created by law, it is presumed joint, [150] but the presumption can be rebutted through the usual techniques of statutory interpretation. Here, since only one debtor is ultimately liable for the full amount of the debt, characterizing the obligation as joint would defeat the purpose of the statute: the commission could obtain nothing from the employer who would escape all liability by invoking the benefit of division. The obligation created by section 316 is therefore solidary.

One area in which an analogy is sometimes drawn with the law of suretyship—correctly this time—is the liability of partners for partnership debts. [151] The Code states that “[i]n respect of third persons, the partners are jointly liable for the obligations contracted by the partnership but they are solidarily liable if the obligations have been contracted for the service or operation of an enterprise of the partnership.” [152] One’s initial impression might be that the Code envisages partners’ liability as an obligation with multiple debtors, which is either joint or solidary depending upon the nature of the debt. In a legal system that did not treat partnerships as having any existence distinct from its members, there would be no “obligation contracted by the partnership,” but only an obligation contracted in common by the partners. With such a conception of partnership, it would be correct to view the obligation contracted on behalf of the partnership as a joint or solidary obligation of all its partners.

However, the law of Quebec has long moved beyond this conception, even though it has not recognized the partnership as a full legal person. The partnership, under Quebec law, is undoubtedly an entity separate from its members, with the ability to sue and be sued [153] and the capacity to contract in its own name. [154] When the Code describes “the obligations contracted by the partnership,” [155] this must be taken literally to mean that the partnership is a contracting party and a debtor in its own right. This provision affects the position of the partners in respect of the partnership’s obligations because it cannot be considered that an obligation of the partnership has as its debtors both the partnership and its partners, either jointly or solidarily. Indeed, how could one determine the respective shares of the partnership and its partners in the common debt? The solution cannot be that the partnership is the only debtor with an interest in the debt, since that would have the effect of releasing partners when the obligation is characterized as joint, whereas article 2221 states that partners are responsible for the debt in such a case.

The better solution is therefore to consider partners as quasi-sureties of the partnership. In other words, partners are not debtors: they are merely responsible for partnership debts if the debts are not paid by the partnership. In the presence of several sureties, it is common to refer to their responsibility as being either “joint” or “solidary”, with a slightly different meaning being attached to those terms in the context of suretyship. [156] It is entirely plausible that article 2221 contains an implicit reference to suretyship, and not to joint or solidary obligations.

Indeed, the relations between the partnership, its creditors, and its partners closely resemble those between a debtor, a creditor, and a surety. The partners are not parties to the partnership’s obligations, and they are not expected to pay them under normal circumstances. A creditor of the partnership could not invoke compensation with an amount owed to him by an individual partner. Moreover, the partner pursued by a creditor of the partnership could avail himself of all the partnership’s defences, with the exception of bankruptcy. [157] A partner should also be allowed to benefit from article 2359 in order to force the partnership to pay its debts.

Still, a difficulty arises with respect to this interpretation, stemming from the second paragraph of article 2221:

Before instituting proceedings for payment against a partner, the creditors [of the partnership] shall first discuss the property of the partnership; if proceedings are instituted, the property of the partner is not applied to the payment of creditors of the partnership until after his own creditors are paid.

This rule conflicts with the benefit of discussion as it applies in the context of suretyship. Indeed, a surety’s creditors may not demand that a surety’s property be first applied to the payment of their claims, before it is applied to the payment of the principal debtor’s obligation. The reinforced benefit of discussion provided at article 2221 exists notably for the protection of partners’ personal creditors; it thus detracts from the normal rules of suretyship. [158] Still, that does not mean that in other respects the analogy with suretyship is inadmissible or irrelevant. [159] The partners’ liability is best understood as responsibility for the partnership’s debts. As we have seen, it is appropriate and helpful to refer by analogy to the law of suretyship in order to complete the rules governing the partners’ responsibility under the law of partnership. [160] This is so even though article 2221 will prevail over articles 2347 and 2348 as concerns the benefit of discussion.

A more explicit reference to the law of suretyship can be found at article 1537, which states that where a solidary obligation is contracted in the exclusive interest of one co-debtor, the other co-debtors are considered, in his regard, as his surety. This rule applies only to the relations between co-debtors; its effects do not extend to the creditor. Thus it does not operate in such a way as to convert the solidary obligation into a relationship of suretyship. However, it illustrates the relevance of applying by analogy the rules of suretyship to other complex relations, in this case to the relations among co-debtors of a solidary obligation. [161]

D. Imperfect Delegation [162]

Traditionally, imperfect delegation was interpreted as the formation of a new and distinct obligation modelled on the original obligation that it was the parties’ intention to delegate. According to the traditional conception, the new obligation is entered into by the new debtor (i.e., delegate) and accepted by the creditor (i.e., delegatee). Its content or object is identical to that of the original obligation owed by the original debtor (i.e., delegator) to the creditor. An imperfect delegation therefore implies the coexistence of two distinct obligations, the original and the new. Payment of one obligation extinguishes the other, since they both relate to the same object. If the creditor discharges the original debtor, thus extinguishing the original obligation, the delegation becomes “perfect” and is equivalent to a novation of the debt. [163] In its traditional conception, imperfect delegation is correctly understood to give rise to an obligation in solidum. Both the original and new debtors are independently liable to perform the same prestation, by virtue of two distinct obligations.

The novel structure and new rules implemented in the Code now lend credence to a different conception of delegation. [164] Delegation can be interpreted henceforth in Quebec as an assignment of the original debt, rather than the creation of a new debt copied on the original one, as previously imagined. Indeed, there is no valid objection in principle to allowing the assignment of a debt under Quebec law, just as it is possible to assign a claim. [165] Where a debt is assigned, the creditor need not be party to the assignment. However, the original debtor remains responsible in case of non-payment by the new debtor, unless the original debtor is specially discharged by the creditor. In other words, the creditor need not take part in an imperfect assignment of the debt, but he must consent to a perfect assignment, since for the latter to take effect, the original debtor must be discharged by the creditor. [166]

There are several benefits flowing from the new conception of delegation as an assignment of the debt. For the sake of brevity, I will state only the three most important reasons why this conception should be preferred. First, an imperfect delegation can now be completed without the creditor’s consent. This of course benefits debtors, for whom it becomes much simpler to reorganize their business or family affairs in the context of a separation, a divorce, or the sale of a business or immovable. Debtors need no longer beg or bargain for the creditor’s consent before such reorganization can take place. [167] While creditors may stand to lose in that respect, they also gain in another. Indeed, debtors frequently do not request the creditor’s permission before agreeing among themselves to a delegation. The delegation usually takes place in the context of a contractual relation between the original and new debtors to which the creditor is not a party. Yet it may well be in the interest of the creditor to claim the benefit of the imperfect delegation, since he acquires a new debtor in addition to the original one. Under the traditional conception, the delegation takes effect only when the creditor accepts it. Where the creditor has not formally accepted the delegation, there is uncertainty as to its very existence. The delegation will fail, under the traditional conception, if the creditor dies or becomes bankrupt before accepting it, [168] or if the debtors revoke the delegation before such acceptance has taken place. [169]

A second advantage of the new conception of delegation is that the incidents of the original obligation are preserved, even in cases where the original debtor is discharged. This is because the new debtor is bound by the original obligation itself, not by a new obligation modelled on the original. Thus the new debtor may set up against the creditor the same defences as the original debtor might have set up, with the exception of compensation. [170] More importantly, hypothecs attached to the original obligation are preserved, even if the original debtor is discharged. This represents a significant advantage for the creditor, since it sometimes happens that the original debtor in a delegation is discharged unintentionally. [171] In such cases, if the traditional conception of delegation is followed, the creditor stands to lose not only his personal recourse against the original debtor, but also any security attached to the original debt. Under the new conception, hypothecs are preserved whether or not the original debtor is discharged, just as they are in an assignment of claim.

A third advantage of the new conception is that it provides a better fit with the parties’ purpose in carrying out the delegation, and with the legal regime implemented by the Code. In practice, delegation is nearly always used to transfer a debt. The new conception therefore provides a better account of delegation as viewed by the parties. It is less likely to bring about undesired legal consequences such as those previously described. Modifications introduced in the Code have moved delegation away from the traditional conception and brought it closer to a true assignment of the debt. For example, the Code no longer states that a perfect delegation is equivalent to a novation of the debt, whereas this was clearly the case by virtue of article 1173 in the Civil Code of Lower Canada. The Code has even introduced different rules for delegation and novation. [172]

In light of the new conception just exposed, I will now consider the relations between the parties to an imperfect delegation. The original debtor transfers his obligation to the new debtor, but continues to be responsible in case of non-payment. [173] The creditor need not take part in the delegation itself, but upon receiving notice of it, must pursue relations with the new debtor in respect of the assigned obligation. Payments are now made by the new debtor, not the original debtor. Modifications of the obligation (e.g., renewal of a loan agreement) are carried out by the creditor and new debtor, while the original debtor need not be present. Such relations are therefore analogous to those arising out of a contract of suretyship.

Indeed, the rules on suretyship represent a useful complement to those on imperfect delegation. The extent to which it will be appropriate to refer to them will need to be progressively worked out in light of the relevant practical and policy considerations. At first sight, it seems appropriate that the original debtor should be able to invoke the benefit of discussion and the benefit of subrogation. He might also have recourse to article 2359 of the Code in order to obtain the earliest possible payment of the obligation by the new debtor. [174] It is less certain whether the original debtor should be able to put an end to his responsibility after three years, in accordance with article 2362, but the possibility certainly deserves to be entertained. [175] As for the duty to inform, the courts have already transposed it from suretyship to imperfect delegation. [176]

One last point is worthy of note. If the new conception of imperfect delegation is correct, then the co-debtors in a solidary obligation have the ability to convert their relationship to one of quasi-suretyship without the creditor’s consent. One co-debtor need only delegate his share in the obligation to the other co-debtor. This solution has long been recognized in the common law: joint and several co-debtors may change their relation to one of suretyship by giving notice to the creditor. [177] This approach has proven valuable in contexts where co-debtors decide to go their separate ways and wish to reorganize their relations such that one co-debtor is no longer a party to the debt. Naturally, it is not possible for the latter to be discharged without the creditor’s consent, but at least his role can be reduced to that of surety. He need no longer take part in any agreements regarding the obligation, and he may benefit from the protections provided by the law of suretyship.

Conclusion

In the final analysis, complex relations in which several persons are responsible for the same debt break down into three broad categories. The first category is the obligation with multiple debtors: several persons are bound together by the same obligation to a creditor. Obligations with multiple debtors are either joint, solidary, or indivisible, as determined in accordance with articles 1519 and 1525 of the Code. The second category contains relations in which a person is responsible for the debt of another, though not as a co-debtor. Suretyship, imperfect delegation, and the liability of partners for partnership debts are members of this group. To the extent that it is appropriate, the legal regime of suretyship may be extended by analogy to other legal relations within this category. The third category involves situations in which several distinct obligations are joined together by their object, such that fulfillment of one obligation discharges them all. These have usually been named obligations in solidum, and they have largely been assimilated into solidary obligations.

Solidarity and suretyship have grown closer through the ages, but the difference that continues to set them apart is that a surety, contrary to a co-debtor, is not a party to the secured obligation. The laws of solidarity and suretyship both seek a balance between the reasonable interests of all parties involved. Accordingly, there exist many rules and mechanisms common to both solidarity and suretyship. The rules that differ relate to the idea that a surety, contrary to a co-debtor, is not a party to the principal obligation. That is why the surety may, under certain circumstances, bring his responsibility to an end, why he has certain means of pressuring the debtor who is expected to pay the debt, and why he has a right to be informed by the creditor.

The law has long hesitated to recognize that a debtor may transfer a debt to another without the creditor’s consent, whereas the possibility of assigning a claim was admitted much earlier. There are no good reasons to oppose assignment of a debt. There exist safeguards that protect the creditor’s legitimate interests, the most important of which is the rule stating that the original debtor is not discharged, but remains responsible in case of non-performance. [178] In the same manner, the Code provides that assignment of a claim may not be “injurious to the rights of the debtor or [render] his obligation more onerous.” [179] Even so, situations occasionally arise where an assignment reveals itself to be detrimental to the party who has no other choice but to act in accordance with it, such as in the case of a debtor in an assignment of claim or a creditor in a delegation. Still, on the whole, assignment and delegation are exceedingly useful operations, and the law has been relatively successful in facilitating such operations while providing sufficient protection to all parties involved.

Legal evolution is often achieved by taking a fresh look at venerable institutions whose interpretation over time has become thwarted, constricted, or stale. Presumptions established to protect debtors and sureties have prevented jurists from borrowing freely from the rules and remedies of solidarity and suretyship, even in cases where to do so is perfectly legitimate. I hope to have shown that solidarity and suretyship represent valuable models to understand other complex relations and that they may be applied directly or extended by analogy where the law is otherwise incomplete. Over the course of the last century, contractual and legal obligations have become progressively more complex and diversified. Legislatures have extended the scope of obligations beyond the original reach of contract or civil responsibility, with a view to protecting consumers, workers, or victims. Meanwhile, legal practitioners have invented new payment mechanisms, new ways of transferring obligations, and new means of securing them. [180] Yet statutory and contractual schemes are frequently incomplete. The civil law must engage with such innovations if it is to continue to provide a model and a guide.

Parties annexes