Suretyship is the contract by which someone undertakes towards a creditor to perform the obligation of a third party. The surety is secondarily liable: their turn comes only once the principal debtor is in default.
Legal basis
Articles 7:850 to 7:870 of the Dutch Civil Code contain the regime. Article 7:855 provides that the surety can be pursued only after the principal debtor has failed to perform. Articles 7:857 onwards give special protection to a private surety: someone entering into the suretyship outside a profession or business. Such a suretyship requires a written instrument under Article 7:859, must in principle state a maximum amount under Article 7:858, and requires the consent of a spouse or registered partner under Article 1:88, failing which it is voidable. That consent is not needed where the surety is a director and majority shareholder of the company and the transaction belongs to the ordinary course of business. Article 7:866 gives the surety recourse against the principal debtor.
How it works in practice
Banks financing a BV routinely require a personal suretyship from the owner-director. Whether the spouse had to countersign is then the most common escape route: the exception is construed narrowly, and a suretyship for a refinancing or a risky expansion does not always fall within it. The bank’s duty of care also matters: it must warn a private surety emphatically about the risks.
Where it goes wrong
The spouse does not countersign and the suretyship is annulled years later, or conversely, annulment is invoked too late and the three-year period has expired. A second error is an unlimited suretyship given by a private individual, which is therefore vulnerable. Third, recourse is only pursued once the principal debtor is insolvent.
Related terms
Suretyship connects to joint and several liability, to the mortgage right as alternative security and to directors’ liability.
Are you being pursued as a surety? Our civil law specialists examine whether the suretyship stands.
