A bank was granted an ancillary guarantee (cautionnement) and an autonomous guarantee (garantie autonome) to secure the reimbursement of a facility made available to one of its clients. The bank subsequently failed to exercise its rights under the autonomous guarantee, and claimed payment against the debtors of the ancillary guarantee. The Supreme Court ruled that:
The bank could not be held liable for not exercising its rights under the autonomous guarantee before the agreed deadline.
In the absence of any fraud or abuse the mere failure to exercise its rights could not prevent the bank from claiming payment under the ancillary guarantee.
Source: Cour de cassation, commercial section, 2 June 2004, Dalloz 2004, p. 1807. Clotilde Dirnat, Jonathan Souffir, Herbert Smith e-mail: clotilde.dirnat@herbertsmith.com jonathan.souffir@herbertsmith.com