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Sweden

Because Swedish statutory provisions on guarantees date from 1734, court practice has a decisive influence on guarantees under Swedish law.

One aspect of the law that has received increasing attention recently is the question of what duty is incumbent on a creditor, in the absence of an explicit agreement, to be active in preserving a guarantor's right of recourse against the debtor.

In NJA 1992 s 357, the Supreme Court held that a creditor as a matter of principle has an obligation to act to preserve a guarantor's right of recourse. Specifically, a creditor should notify a guarantor of circumstances that could have an influence on the recourse and of which the guarantor cannot be expected to be aware. In the case, a bank had not informed the guarantor that a short-term trading credit was long overdue, and by the time the guarantor became aware the debtor was bankrupt. The court held that banks and other financial institutions should apply high standards and that a guarantor is not under an obligation to honour a guarantee to the extent it has suffered a loss by the creditor's negligence.

In NJA 1994 s 381, the guarantor was the sole owner of a company applying for a credit card. He did not inform the card issuer of his sale of the company, and the card issuer's belief that the guarantor had first-hand information on the debtor was therefore justified. The Court therefore held that the card issuer had not been negligent.

Recently, the Supreme Court decided to hear a case in which the guarantor was an employee of the debtor and claimed negligence on the part of the creditor. The judgment in this case can be expected to throw further light on the obligations of a creditor.

Lars Fredborg

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