The Legal Responsibility of the Guarantor of Those Who Are Bound by the Commercial Paper in The Jordanian Law"

Mohammad Migdad

doi:10.7176/jlpg/83-14

Abstract

The legal relationship between the reserve guarantor and the secured person and the rest of the obligators in the commercial paper may raise legal problems among them . This is evidenced by legal texts related to the effect of collateral and the presentation of jurisprudential opinions on this subject and the available judicial rulings. In this paper , an attempt is made to work out a methodology for comparative legal research which goes beyond the functional method . the researcher aims at using the comparative method as an instrument of learning and knowledge . In addition , the researcher is contributing to his own legal system : understanding it better , improving it , and using it as a means for interpreting the legal laws and legislations . The researcher explained the legislative shortcomings that have characterized the provisions of this relationship. He recommends that there is a need to review the drafting of some legal texts in a manner consistent with the legal problems that may arise from the relationship between the parties of the collateral . Key words: collateral , commercial paper , Jordanian legislator , guarantor , obligator, holder , drawer. DOI : 10.7176/JLPG/83-14 Publication date : March 31 st 2019

Highlights

The collateral was regulated by the Jordanian legislator in articles 161-163 of the Jordanian Trade Law No 12 of 1966, but this law, like other legislations(1), did not include an explicit definition of the collateral
Article 162, paragraph 3, requires that the name of the secured person be mentioned in the security form, otherwise the collateral shall be considered for the drawer, and a collateral may be incurred by any party committed to pay the value of the commercial paper
The collateral is a morphological commitment whereby the reserve guarantor intervenes by ensuring that the secured debtor complies with all the obligations stipulated in the commercial paper and is responsible for fulfilling it in solidarity towards the holder, whether the latter is the first beneficiary or the holder of the bond with a series of endorsements, in accordance with Article 163/1(4), which is understood to mean that the reserve guarantor is bound by the holder of the bond, as is the case with the secured debtor, which acts as a joint surety in solidarity with the secured debtor against the holder

Summary

Introduction

The collateral was regulated by the Jordanian legislator in articles 161-163 of the Jordanian Trade Law No 12 of 1966, but this law, like other legislations(1), did not include an explicit definition of the collateral. The business activity is based on credit, supported by a set of legal guarantees for the holder, which is reflected in the offer of the paper to the drawee for acceptance, and the solidarity of all signatories in fulfilling its value on time or determinable. These legal guarantees may not be sufficient, which makes the beneficiary of the commercial paper looking for other guarantees to ensure his right to fulfill the value, especially in cases where the holder is not sure of the debtor's ability to fulfill the value of the commercial paper on the maturity date. Article 162, paragraph 3, requires that the name of the secured person be mentioned in the security form, otherwise the collateral shall be considered for the drawer, and a collateral may be incurred by any party committed to pay the value of the commercial paper

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