Peculiarities of Liability for Secured Obligations

Abstract

The article analyzes peculiarities of manifestations of the civil liability juridical construction as applied to debtor-creditor relations arising as a result of a penalty, security, retention of the debtor's goods, surety, independent guarantee, and deposit and security payment. It has been concluded that, with respect to penalty and deposit, civil liability determines the basic elements of obligations. A security function of a deposit and penalty shall be exhausted by means of motivating to perform the obligation properly; thus, deposit or penalty agreements can be qualified as agreements to establish special measures of liability. With respect to security, retention and security payment, liability may be provided by an agreement between the Parties and is treated as an additional sanction for the breach of individual obligations. As to surety, the concept of liability is a key one and it allows separating the elements of a surety agreement from the principal obligation. The surety undertakes to fulfill his or her own obligation arising from a surety contract, rather than to recover losses or fulfill the obligation on behalf of a debtor under the principal obligation. The terms "solidarity" and "subsidiary" in relation to the "liability" of the surety refer to the relevant forms of surety. However, at the level of the judicial practice, an additional manifestation of an accessory character of surety was formulated - under the general rule, the surety is not held liable for the breach of his obligation, unless otherwise provided for by a surety contract. In respect of an independent guarantee, the opposite decision is formulated; under a general rule the guarantor is liable as any other debtor is under a monetary obligation. Therefore, such a manifestation of accessory means of obligation enforcement as the limitation of the liability of the surety or grantor may be regarded as a general rule for a certain group of security constructions.