The autonomous nature of guarantees where sums are paid on account in real estate purchases

Abstract

The Ruling of Division One of the Supreme Court of 7 May 2014 reasons that, the importance of guarantees having been established, in the light of Act 57/1968, it remains to be determined whether a guarantee is autonomous in nature, i.e., depending only on the terms and conditions contained in the guarantee itself, or whether, to the contrary, a guarantee depends on the circumstances of the delivery obligation that the guarantee secures. The court finds that, where section 1, rule one of Act 57/1968 speaks of failures «due to any cause», it establishes a clear objective criterion concerning the requirement of the guarantee. Therefore, the guarantor cannot claim the grounds of objection that the guarantee recipient is entitled to claim, based on section 1853 of the Civil Code. The court so reasons because action in the proceeding is taken only against the financial institution; the plaintiff asks for neither rescission nor cancellation vis-a-vis the developer or vendor.