Guarantor’s Rights: Case Study of Guarantor’s Rights before Debt Settlement

Abstract

This qualitative research aims to study the history and freedom of contract, guarantor’s rights before debt settlement, problem of exemption of guarantor’s rights before debt settlement under the Civil and Commercial Code Amendment Act (No. 20) B.E. 2557 (2014) and (No. 21) B.E. 2558 (2015) which provide the protection of rights before debt settlement. In case of violation, it becomes void.

The study found that the law ensured the guarantor the right before the debt settlement, but the creditor who had a higher bargaining power applied the principle of freedom of contract to ignore such rights from the contract unfairly so that the guarantor was unable to exercise the rights. Later, the Civil and Commercial Code Amendment Act (No. 20), B.E. 2557 (2014) and (No. 21) B.E. 2558 (2015) rendered a contractual clause excluding the guarantor’s right to defend void. The guarantor was able to exercise the rights before debt settlement against the creditor.

The author suggests that, at present, the guarantor is able to exercise the rights before debt settlement, but such rights are not enforceable against the creditor until a judgment of the court is given. Therefore, in order to ensure the compulsory condition, when the guarantor is prosecuted, the guarantor should submit an affidavit to the court on the issue of the right to defend and take witnesses on such issues. This makes the guarantor’s rights before debt settlement becomes legally enforceable