Dr Jasna Zwitter-Tehovnik Pursuant to section 1376 of the Austrian Civil Code, an amendment to an existing loan agreement constitutes a new debt obligation if either its object or legal basis has been altered. Apart from the contentious issue of determining which particular situations this covers and which it does not, section 1378 on its own creates more headaches. It stipulates that, by operation of law, each effected substitution of debt causes any kind of security (a guarantee, suretyship, or pledge of any sort) provided to collateralise the initial obligation to expire in full, save where the grantor has consented to the perpetuation of its contingent liability.
October 02 2011