No Risk, No Fun? Should Spouses Be Advised Before Committing to Guarantees? A Comparative Analysis

European Review of Private Law, Vol. 10, pp. 509-528, 2002

20 Pages Posted: 23 Nov 2005 Last revised: 24 Dec 2008

See all articles by Mathias Siems

Mathias Siems

European University Institute (EUI); University of Cambridge - Centre for Business Research; European Corporate Governance Institute (ECGI)

Date Written: 2002

Abstract

This article deals with the question of whether a spouse who grants a security for the business debts of the other spouse can escape liability because he or she has not been properly advised by the creditor. After an introduction into this topic, I outline the legal position in English, Scots and German law. As for English and Scots Law, I focus on the decisions of the House of Lords in Barclays Bank plc. v. O'Brien and Smith v. Bank of Scotland, and, as for German law, I deal with the reasoning of a duty to advise and the decisions of the German Supreme Court (BGH). The second main part of this article compares and interprets the similarities and differences of these legal systems. In particular, I consider the practical results as well as the existing and lacking legal concepts of each legal system. In the final part I expound my own solution. It is discussed whether the principles of good faith and culpa in contrahendo are sound and whether a duty to advise keeps the balance between the interests of guarantors and creditors. As a result, it is submitted that the answer to these questions is in the affirmative.

Keywords: Guarantees, contract law, comparative law, duty of advice, culpa in contrahendo

JEL Classification: K12

Suggested Citation

Siems, Mathias, No Risk, No Fun? Should Spouses Be Advised Before Committing to Guarantees? A Comparative Analysis (2002). European Review of Private Law, Vol. 10, pp. 509-528, 2002, Available at SSRN: https://ssrn.com/abstract=853885

Mathias Siems (Contact Author)

European University Institute (EUI) ( email )

Via Bolognese 156 (Villa Salviati)
Firenze, 50139
Italy

HOME PAGE: http://www.eui.eu/siems

University of Cambridge - Centre for Business Research ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.cbr.cam.ac.uk/people/research-associates/mathias-m-siems/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://ecgi.global/users/mathias-siems

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