Louisiana Civil Code

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TITLE XVI - SURETYSHIP

 

CHAPTER 1 - NATURE AND EXTENT OF SURETYSHIP

Art. 3035. Suretyship is an accessory contract by which a person binds himself to a creditor to fulfill the obligation of another upon the failure of the latter to do so. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3036. Suretyship may be established for any lawful obligation, which, with respect to the suretyship, is the principal obligation.

The principal obligation may be subject to a term or condition, may be presently existing, or may arise in the future. [Amended by Acts 1979, No. 711, §1; Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3037. One who ostensibly binds himself as a principal obligor to satisfy the present or future obligations of another is nonetheless considered a surety if the principal cause of the contract with the creditor is to guarantee performance of such obligations.

A creditor in whose favor a surety and principal obligor are bound together as principal obligors in solido may presume they are equally concerned in the matter until he clearly knows of their true relationship. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3038. Suretyship must be express and in writing. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3039. Suretyship is established upon receipt by the creditor of the writing evidencing the surety's obligation. The creditor's acceptance is presumed and no notice of acceptance is required. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3040. Suretyship may be qualified, conditioned, or limited in any lawful manner. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

CHAPTER 2 - KINDS OF SURETYSHIP

Art. 3041. There are three kinds of suretyship: commercial suretyship, legal suretyship, and ordinary suretyship. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3042. A commercial suretyship is one in which:

(1) The surety is engaged in a surety business;

(2) The principal obligor or the surety is a business corporation, partnership, or other business entity;

(3) The principal obligation arises out of a commercial transaction of the principal obligor; or

(4) The suretyship arises out of a commercial transaction of the surety. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3043. A legal suretyship is one given pursuant to legislation, administrative act or regulation, or court order. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3044. An ordinary suretyship is one that is neither a commercial suretyship nor a legal suretyship.

An ordinary suretyship must be strictly construed in favor of the surety. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

CHAPTER 3 - THE EFFECTS OF SURETYSHIP BETWEEN THE SURETY AND CREDITOR

Art. 3045. A surety, or each surety when there is more than one, is liable to the creditor in accordance with the provisions of this Chapter, for the full performance of the obligation of the principal obligor, without benefit of division or discussion, even in the absence of an express agreement of solidarity. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3046. The surety may assert against the creditor any defense to the principal obligation that the principal obligor could assert except lack of capacity or discharge in bankruptcy of the principal obligor. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

CHAPTER 4 - THE EFFECTS OF SURETYSHIP BETWEEN THE SURETY AND PRINCIPAL OBLIGOR

Art. 3047. A surety has the right of subrogation, the right of reimbursement, and the right to require security from the principal obligor. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3048. The surety who pays the principal obligation is subrogated by operation of law to the rights of the creditor. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3049. A surety who pays the creditor is entitled to reimbursement from the principal obligor. He may not recover reimbursement until the principal obligation is due and exigible.

A surety for multiple solidary obligors may recover from any of them reimbursement of the whole amount he has paid the creditor. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3050. A surety who in good faith pays the creditor when the principal obligation is extinguished, or when the principal obligor had the means of defeating it, is nevertheless entitled to reimbursement from the principal obligor if the surety made a reasonable effort to notify the principal obligor that the creditor was insisting on payment or if the principal obligor was apprised that the creditor was insisting on payment.

The surety's rights against the creditor are not thereby excluded. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3051. A surety may not recover from the principal obligor, by way of subrogation or reimbursement, the amount paid the creditor if the principal obligor also pays the creditor for want of being warned by the surety of the previous payment.

In these circumstances, the surety may recover from the creditor. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3052. A surety may not recover from the principal obligor more than he paid to secure a discharge, but he may recover by subrogation such attorney's fees and interest as are owed with respect to the principal obligation. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3053. A surety, before making payment, may demand security from the principal obligor to guarantee his reimbursement when:

(1) The surety is sued by the creditor;

(2) The principal obligor is insolvent, unless the principal obligation is such that its performance does not require his solvency;

(3) The principal obligor fails to perform an act promised in return for the suretyship; or

(4) The principal obligation is due or would be due but for an extension of its term not consented to by the surety.

The principal obligor may refuse to give security if the principal obligation is extinguished or if he has a defense against it. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]

Art. 3054. If, within ten days after the delivery of a written demand for the security, the principal obligor fails to provide the required security or fails to secure the discharge of the surety, the surety has an action to require the principal obligor to deposit into the registry of the court funds sufficient to satisfy the surety's obligation to the creditor as a pledge for the principal obligor's duty to reimburse the surety. [Acts 1987, No. 409, §1, eff. Jan. 1, 1988]